AUSTRALIAN LOAN

Greymouth Evening Star, 11 July 1925, Page 3

AUSTRALIAN LOAN

STOCK EXCHANGE COMENT.

(Australian and N.Z.-Cable Association.)

LONDON, July 9. . Stock Exchange men declare that the money market never suggested a resort to Wall Street in preference to London. This came omy from the Treasury and the Bank of England, and probably was due-to anxiety over the gold standard, and the desire to maintain the present bank rate,// because a large loss at present to Australia would put the Commonwealth in a position of being able to command gold from Britain. Stock Exchange men declare that this did not represent their advice to the Commonwealth as- they believed she could obtain money as advantageously in London as in New York, though they admitted London might not be able immediately to absorb a twenty million loan. Underwriters .state that they would be pontent even if left with a large portion of the issue, as they realise it would eventually be absorbed by the investing public. Past experience ha& always shown that Americans are not an investing people. It is regarded as a certainty that if the loan is floated in New York it will not be long before it is unloaded on the London market, when the quotation of the dollar stock on the Exchange will probably be strongly opposed on the grounds that they interfere with sterling securities. The “Evening Standard” says The report that the loan will be floated jointly in New York and London is doubtful, because it would be difficult to obtain support here for Colonial dollar stock, which would not find favour with investors. In all circumstances, the Commonwealth Government would probably find it better to come to London than transfer affections to New York, where it might find its new lover fickle in troublous times. Queensland had not. found America encouraging, and had repented its experiment. PRESS OPINIONS. LONDON, July 9. The “Morning Post’s” financial editor dealing with the question of Australia borrowing in America, says “The departure of the Commonwealth Government in borrowing in another centre than London is both interesting and important. It brings into prominence the whole question of the policy of other foreign lands, regarding for the moment the Dominions’ loans as coming under the heading “Foreign.” Naturally, there is a divergence of opinion —some holding that the trade of Britain sllould be stimulated by foreign loans, and that, until the embargo is removed, the gold standard cannot be regarded as completely effective. On the other hand, it must be remembered that no reliance is to be placed on signs of Britain having surplus savings for foreign loans at the present time, and a need of cheaper production and Jor larger exports is becoming clearer every day. There was Talk yesterday of blocks of the Australian loan being absorbed here, but we fail to see the wisdom of such a course. Either it is safe and proper to make the issue ourselves, as we could do, or the matter should be left entirely in American hands. Presumably even a Dominion loan, even if it were floated in the United States, would not come under the category of “trustee securities.” The city is keenly discussing the possible details of the issue. In some respects the announcement is being well received, because it is regarded as being calculated to help . the general foreign exchange position, and to throw some of the burden of financing Australia upon New York. At the same time, there are regrets that even for a brief time. America, rather than the Home Country, should be meeting the necessities.of Australia. The news shows there is a need of an early recovery of our trade, for the whole thing works in a vicious circle. The financial power of London is still great, but it docs not consist merely in credit or hot air. It reeds the backing of surplus wealth, created by industry and of an exportable surplus of goods and services. There must be a revival of trade if our financial supremacy is to be maintained.” The “Financial Times” says: The decision of the Australian Government to raise its loan in the United States is the subject of widespread discussion, and considerable criticism on the Lon-

don Stock Exchange. The common opinion being expressed is that the issue should be made in London. It is pointed out that such an issue will not enjoy the status of trustee security here. The consol market has gravely discussed the Australian plan. Considerable regret is expressed at this handing over to the United States — officially as it were—of the business of lending money to our colonies. Doubtless an eagerness to return all the gold possible, now that the gold standard has been reintroaduced, ] ics at the root of this rather startling departure from the good ,old-fashioned theory that London should maintain its position as the world’s money market.” The “Financial News” says: “Admittedly we have been suffering from a steady demand for our money from the Dominions, and ,if the Commonwealth can obtain better terms elsewhere, they are justified in obtaining them, but it must be realised that no dumping by the American interests will be allowed on this side.”