LESS MONEY

Evening Post, Volume CI, Issue 18, 21 January 1921, Page 8

LESS MONEY

IMPORTATION RESTRICTED

POLICY OF THE BANKS,

Severe restrictions, are fl being, 'placed upon importation ■'through tho policy adopted by tho banks in respect to financial accommodation to importersl (writes tho Auckland Herald). The position, briefly, is that partly owing to excessive, importations during the past year and partly 'to the fact that uncontrolled produce- has not yet created a substantial: credit in 'London, the banks have not' sufticient funds in London to meet the debts of New Zealand importers.' 1 In Australia, where, it is said, the positionis much more acute than it is. in New Zealand, it is at present almost impossible to remit money to London; One instance given by a recent, visitor was that a Melbourne importing firm with..a. bank credit to the amount, wished to send to' New York the sum of. £80,000, in payment for goods ordered. .• In no circumstances would any bank remit the money, but the importer succeeded in making an'arrangement with a produce concern with' a credit in London. In New Zealand, such private; arrangements cannot be made to any. extent, even if importers .were prepared' to pay high rates fqr this private accommodation, seeing that : butter is i goingto this British Government, that meat-killing is only beginning, and that the wool clip is still in storevwith a- very indefinite market ahead of it. , '. It. was stated by a. local merchant that the banks, before agreeing to remit any money to London "or New York, demanded to know what it was to purchase, and from the experience of one man ho was of the opinion that for such imports as motor-cars money would not be remitted at all. Information -gleaned elsewhere, however, did not bear this out. Itis probable that none, of the banks ,is following any hard and fast rule.. The clients ol one institution are being,accommodated, in turn according to the state of credits in London. It is possible, however, that the banks aro looking more kindly upon essentials than upon those things which are not of chief importance. Tho general attitude of banks seems to be to epread the drafts on London over as long a period as possible, and in accordance with that policy 1 they are not-issuing drafts for less'than 90 or 120 days. '. • . ■' Discussing the matter, one prominent merchant said that the policy which had been adopted—and he would noc say that it was a wrong policy—would capitalise the stocks of the merchants of New Zealand, perhaps to the extent of £7,000,000 during, the ooming twelve ■ months. 'Merchants \vero> in the habit of carrying reserve stocks, but the financial restrictions' would turn these stocks into money. Thia would -camo about gradually, ■ through orders abroad being cut down to a minimimui'jl -, The'-head of;a large firm o£- motor imk .porters said the .financial stringency would put. a cheek upon, the importation of motor-cars. Some firms like hiij: own had established credits abroad a few months ago, but generally speaking these would hardly meet liabilities for more than a month or two more. While stating this he mentioned that fairly good ,shipments of cars' had. been coming to- hand, 1 and he was not inclined to be pessimisfe'io over thai present outlook. t , ' One aspect of' tho heavy importations of the past year was touched iipon by a hardware merchant. Speaking not merely of his own line of trade.^but of.'commerce generally, he said that as soon, as prices in England and America showed a tendency to fall, manufacturers accelerated their deliveries, the orders for which had been standing for some time. i The result had been little less than "dumping," and the Dominion's indebtedness had swelled to extraordinary dimensions. Asked if the adverse exchange with America was not now driving- trade to Britain, - lie said the tendency was in that direction,, but. unfortunately British . importers, generally speaking-, had taken advantage of the high rate of exchange which had to be paid to America, and, instead of undercutting- the Americans, as they might easily have done in many directions, they had "raised their prices to New Zealand. British manufacturers, in many instances, had raised their prices without warrant. Another importer of hardware said that, in consequence of the exchange impost, he had sept regular orders to England for aluminium goods, and such lines as lawnmowers, wringers, and mangles, and these had given every., satisfaction.' 1 With the American exchange rate at a-figure which pave only 14s worth ior'-':£l, 'the United States could not retain the volume of trade she. had enjoyed. - V ;.-.'■■ '-, -. '-. .-■