PRODUCE & MARKET REPORTS FROM DAY TO DAY

Evening Post, Volume CVII, Issue 22, 28 January 1929, Page 12

PRODUCE & MARKET REPORTS FROM DAY TO DAY

BRITISH TRADE

■A -BRIGHTER OUTLOOK

WHAT OF THE BANK RATE?

United Tress Association—By Electric Tele-

eraph—Copyrinlit. Australian Press Association.

LONDON, 20th January. 'i'he London "Economist," in its monthly survey of the state of trade for December, observes that the present trend of trade is on the whole good. "Encouraging reports are being received from such staple industries as coal, iron, and steel, engineering and cotton. It ;m<ly seem misleading to speak of an encouraging situation in the coal industry at a time when the distress in the mining area has become so acute as to call for a big sustained national relief. scheme, but the position to-day is both simple and tragic. At the cost of closing numbers of pits, throwing hundreds of thousands of miners out of work, the rate o£ output has been reduced to a point where it corresponds with the demands. The.result.'is, a paradox: Acute unemployment on one hand, against firm markets and a hardening tendency of prices on the other, though prices are too 'low to. yield a profit to the owners. "In. other heavy trades the most^ encouraging event is the revival of activity in shipbuilding, proving a distinct help to iron and steel and marine engineering."

GOLD FOR AMERICA. The shipment of a million and a half in gold to New York this week caused some uneasiness on the .money l/iarket, and the- question of the possibility of an advance in the bank rate has been freely discussed. The ".Financial News," however, declares that there is no need to become alarmed over the etflux of a few million- pounds in gold./ The journal adds: "The Bank of England is in a position to neutralise the ef- 1 feet of the efflux on the market through the purchase of securities. Those responsible for our monetary position are determined not to impose on the trade an additional burden through .nu increase in the bank rate. The Currency and Bank Notes Act has provided a means to be used in emergency, namely, the possibility of raising the fiduciary issue. The effect of the rise in the bank rate on trade at the present stage would be sufficiently grave to justify the employment _of this weapon. Although the bank is most reluctant to raise the fiduciary issue from' 260 million's, it is likely to choose the alternative in preference to increasing the bank rate."

1 Note.—The Bank of England rate has been iVz per cent, since 21st April, 1927, when it was lowered from 5 per cent. STOCK EXCHANGE BUSINESS.

Although the Stock Exchange has been somewhat less active during the last day or two than it was earlier in the month, business generally has been good, especially in industrials, the Imperial -Tobacco bonus having apparently stimulated interest in speculative shares. The strength of gilt-edged securities has been well maintained, despite the withdrawals of gold above referred to. This has had an adverse effect on monetary conditions. , : A remarkable feature has been the oteady absorption of new issues,.notably the Australian and Indian loans, which opened at large discounts, and have now reached par and one-eighth discount respectively; This must be regarded as an indication of a steady demand for sound investment stocks yielding 5 per cent. THE COMMONWEALTH LOAN. Certain newspaper writers have been commenting on what they describe as the failure of the Australian loan, because the underwriters were left with 84 per cent, of it, but one of the best-informed financial journalists says the result seems to have been due to the high price rather than to any congestion of new issues on the market.

Discussing the subject with the Australian Press Association, a prominent banker said: "The fact is investors have got to know that dealings in these large loans, issued at comparatively high prices, will open at a discount, and so, instead of applying for the stock first-hand, they wait till dealings begin, v and buy it at a discount. Some stock-brokers advise their' clients to do this. The rapid extinguishing of the discount on the Australian loan shows what a good demand tjxere is for it. It is absurd to cBH the Igijn a failure because it was not rushed by the stags."