DOMINION FUNDS

Dominion, Volume 34, Issue 124, 19 February 1941, Page 8

DOMINION FUNDS

Effect Of Britain’s War Finance (British Official Wireless.) LONDON. February 14. The "Financial Times” complains that the Treasury's order of February S transferring all United Kingdom holdings of Indian dated sterling to the Indian Government introduces a new and in some respects undesirable element into British war finance. Speculation is rampant about possible further moves embracing New Zealand and Australian stocks. It is recognized that India’s sterling resources are altogether exceptional and that the acute shipping shortage is sufficient to preclude at present any possibility of the reinforcement of New Zealand and Australian sterling assets. However, some quarters express the opinion That part of the substantial flow of Dominion funds, now returning a bare 1 per cent, in the bill market, will eventually be diverted to the repatriation of long-term loans and also to the costly sterling debt.

It is argued .that whila New Zealand and Australian exports are curtailed Britain’s exports to New Zealand and Australia are likely to be restricted still more, correspondingly affecting the balance of trade.

The Treasury vesting order was announced on February 8, and provided that United Kingdom holders of Indian dated sterling stocks will receive cash for their holdings, the securities then transferring to the Indian- Government. The significance of the move is that the Treasury has decided to utilize India’s large sterling balances for the repatriation of Indian loans. British arms purchases have given India a favourable balance privately estimated at £l-10,000,000.