DOMINION FINANCE

Evening Post, Volume CXIII, Issue 25, 30 January 1932, Page 12

DOMINION FINANCE

AS VIEWED IN LONDON

As was only to bo expected,,the news that the Government of' New Zealand had decided to control exports was received and -discussed with considerable interest by financial authorities in the City of London. The course taken was unusual, but it was accepted as probably unavoidable. However, the opinion was expressed, so it has since been learned, that in the best interests of f»ew Zealand further depreciation of its exchange should at all costs be avoided, and.it would certainly load to some degree.of inflation if the Government resorts to Treasury bills to finance itself. New Zealand, it was also pointed out, could not affoid to inflate on its own (account and independently of the rest of the world, because of its= heavy external indebtedness and its necessity.to import manufactures to a very largo extent, "not being industrially independent. .And besides, any departure in the exchange in the direction of advancing the rate would inevitably react.upon the London market for New Zealand. Government long-term stocks, and depress their values. .These investments had recently .improved in price which was a trustworthy indication of a more favourable view being taken of the^Donunion by, the market. Depreciation,of exchange, too, it was stated, would-also defer 'still longer the possibility ; of. Government and Jocal body loans being advantageously raised in London when the money market will again be propitious for such transactions. ■>

It was considered a matter of doubt whether production in New Zealand U^i° restliPted t0 any extent or at all if the 10 per cent, rate were maintained. Considerable advantage, however, had been received by New Zealand since England departed from the gold standard in September last from those exports of its produce sold to countries Winch- remain-upon the^ gold 'standard