TRADING BANKS’ CREDIT POLICY

Press, Volume XCI, Issue 27669, 27 May 1955, Page 15

TRADING BANKS’ CREDIT POLICY

TWO ALTERNATIVES IN AUSTRALIA

Lending policy of the Australian trading banks during the next few months wil depend largely upon the Central Bank s administration of the special account. This is the opinion of the Bank of New South Wales given in an article on banking in the May issue of the ‘Review,” just released.. At the present time Australia’s international resources are running down and vull probably continue to do so until September. This will have such a deflationary effect that substantial releases from the special account by the Central Bank will be* necessary if the current rate of business activity Is to be maintained.

However, inflationary forces are increasingly at work in the community and Central Bank is faced with two alternatives, says the “Review.” It can release some of the £295,000,000 frozen in the special account and allow bank advances to rise, or it can enforce a tighter credit policy as part of a plan to reduce demand.

K the Central Bank follows a mildly deflationary policy, it will be faced with a problem of deciding whether credti should be rationed:—(a) by the banking system on existing lines of open competition at a fixed interest limit; (b) by Central Bank directive as to what forms of lending are allowable; or (c) by allowing a flexible interest rate structure to equate the demand for loanable , funds >pth the supply. If the Central Bank decides to maintain the present rigid interest rate structure within- the banking system and not release funds from the special account, many credit-worthy borrowers will be forced to seek accommodation outside the banking system, at considerably enhanced rates of interest, with attendant dangers to the credit structure.

GROCERY NOTES

HIGH AVERAGE PRICE FOR JERSEYS

With the likelihood of increased overseas freight rates taking effect on July 1. an inctease in the price of imported goods will be inevitable. The increase will be 5 per cent, on all freight, and some l of the lines affected will include canned fish, crisp breads, jam, confectionery and cornflour. Orders to be shipped before July are being accepted by some manufacturers so as to avoid the higher freight. Canary Seed.—For some times the Australian market for canary seed has been advancing. This has been mainly because of the shortage of stocks on hand and a poor crop. Recent reports from Australia predict that the prices will approach record levels and they will not fall until further stocks are available, and that is at least seven months away. Spaghetti and Baked Beans.—Before the war there was a wide range of sizes in these two lines. During the last few years there have been only two sizes available, lloz and 16oz. However, an Auckland canner is introducing an Boz size which has already proved popular in the North Island. The prices will be lljd for the Boz baked beans and lid for the Boz spaghetti. Australian Dried Vine Fruits.—The Commonwealth Dried Fruits Control Board has announced the new season’s prices for the plain grades in sultanas and currants. Last year these grades were not quoted, but it would appear that prices are in line with last year’s quotations for other grades. Shrimps.—Peeled shrimps have been becoming more and more popular during the last year or so. Until the dollar restrictions were lifted from fish importations, Norwegian shrimps were the main sellers However, now that the American ones are available sales have swung more in this direction. Up till the present there has been a shortage of the latter, but this has bee i relieved temporarilv with a shipment that has just arrived.

(New Zealand Press Association) HAMILTON. Mav 26. The high average of 2Qsgns for 60 head and a total realisation of about 12.300gns were secured at the annual sale of the Glenmore Jersey Stud, the property of A. C. Lovelock, of Tauwhare. Top price of the day was 960gns for a yearling bull.

There was a complete clearance of the catalogue of 60 head. The 38 bulls sold averaged 235}gns, eight cows 184gns, and 14 heifers’l3sgns.

MINING Clutha River.—Returns for this dredge are:—quarter ended March 31: 1575 hours for 1847 oz; for the year ended March 31. 5832 hours for 59470 z. Last year. 5794 hours were worked for 59570z.—(P.A.)