FINANCE CRASH

Gisborne Times, Volume LXXII, Issue 11622, 23 September 1931, Page 5

FINANCE CRASH

BRITAIN TAKING THINGS < VERY QUIETLY BANKS CARRYING ON AS „ "■ , , USUAL EFFECT ON N.Z. EXCHANGE! NOT KNOWN (U.P.A. by Elec. Tel. Copyright ) LONDON, Dec. 21. The city is Staking tlritogls' very, quietly except. for a crowd of curiosity seekers watching groups pf temporarily Unemployed stockbrokers and. clerks, discussing the affairs of Throgmorton Street. Everything appears perfectly normal and. no one would imagine that England was in the midst of a financial crisis Tho hanks are carrying on business quietly and calmly as usual, and little out of tho ordinary is apparent in tho produce markets, although the prices of many commodities showed an advance, notably cotton, Jd per lb; rubber, 7-lGd a lb.; and also metals, . sugar and wheat. Business in foreign exchange is practically at a standstill awaiting events on Continental exchanges. It fs recognised, in well-informed cirolys that some depreciation in the value of the pound for the time being is inevitable,, but it is unlikely to be anything so great as tlio falls which occurred on the Continent. No one is prepared to hazard an opinion of what effect the gold standard decision will have on 'Australian and Now Zealand exchange. Australian banking circles consider it is too early to sayl Theoretically, of course, tho Australian pound should improve, but as Australian bankers say, “Yon can’t depend on theories.”

Tflo Slock Exchange will remain closed to-morrow. Financial interests in the City are of tlfe opinion that it will remain closed for several days. Agents in London arc quoting the following rates for sterling: Paris, 100 francs. New Y0rk..240 i cents. Tho Reich.shank in Berlin has fixed the sterling rale at 19.1 marks. The closing of the Stock Exchange is generally considered a wiso step to meet the unprecedented selling of foreign securities; also a reduction in the value of sterling will mean a riso in commodity prices and lead to better business ou the Stock Exchange. The Bourses .at Zurich, Geneva, and Basle have {provisronalljy suspended sterling quotations. The Bourses at Brussels, Stockholm, 01so and Copenhagen are not open today. GOVERNMENT TAKEN FIRM . MEASURES BUSINESS COMMUNITY NOT GREATLY SURPRISED (British Official Wireless.) RUGBY,’ Sept. 21.

Tho decision of the British Government to temporarily suspend the gold standard has not greatly surprised,’ tho business * Press ’opinion, which is generally shared in, City circles, is generally has yet been expressed, is tliat tllo Government has taken a. well-con-sidered measure to deal with’ a situation tliat was becoming impossible, and that the eventual position will bo of benefit to Britain and tho world at largo by fostering international consideration of currency problems affecting almost every country. BANK OF ENGLAND'S GOLD The gold-holding of the Bank of England, after heavy withdrawals of foreign capital, still remains at £130,000,000, and it is considered wise, ill view of all the contingencies, to prevent further reductions of this reserve. The decision, of course, does not affect obligations of the Government, or the bank payable in foreign currencies. DIFFICULTIES ONLY TEMPORARY Tho Government’s belief that the present exchange difficulties will prove only temporary, is generally shared in informed unofficial quarters. Tlio decision has been received Wiffii complete oalm everywhere. Parliament will pass through all stages to-day legislation suspending the section of tlio Gold Standard Act, 1925. Britain, which was on the gold standard before tho war, reverted to -it in April, 1925, when it was announced that tlio export of gold would be free. The Gold Standard Act was passed in tho following month, requiring the Bank of England to- sell gold bullion at par. At the time considerable controversy took place as to the merit of this decision. GOLD PRICE DROPS The price of gold was fixed this morning at a nominal quotation of 84s 9Jd per ounce lino. Saturday’s price was 84s TlJd. FEELING OF OPTIMISM , In general an optimistic • feeling prevails that the spectacle of a great financial power such as Britain being forced off tho gold standard, not through any internal weakness, but by a malfunctioning of tho world’s monetary < system, followed by demoralisation, w'ill have a salutary effect in waking world opinion to the , need for conceited action to. deal with tho fundamentals of the depression. It is announced that the Stock Exchange will remain closed tomorrow. In the absence of official quotations,, only a very small volume of foreign exchange business has been done. Tlio dollar is unofficially quoted at 425 cents.

STATEMENT BY CHANCELLOR BILL PASSES BOTH HOUSES BRITAIN’S HONORABLE RECORD (British Official Wireless.) RUGBY, Sept; 21., Immediately , after question time in..the .Houso of.. Commons, the Prime Minister introduced, a threeclause bill to . hrnend' thp , Gold Standard . Act, .i&is’. 1 .>. ... . • , ~,The, : second reading was. moved- by Mr Snowden/ and' then Mr A*. H«nei/scn announced fhal’ Xdfecig

pArty would not oppose the bill. '■ In the House of Lords a Government statement was made by Lord Reading. The , bill having passed through all its stages in both Houses by emergency , procedure will receive Royal Assent late to-night. The Gqld Sitandard Amendment Bill, .'provides for the 'suspension ‘‘until His Majesty, by proclamation, otherwise directs”! of the section of the Act of 1925 which requires the Bank of England to sell gold at a fixed price. Tho third clause authorises the ■ Treasury to take such measures as may bo expedient in connection with exchange aqd the difliculließ from the suspension of tho gold standard. Speaking on the general aspect of the situation, tho Chancellor of the Exchequer said the distribution, of the, world’s supply of gold had long been under the consideration of the British Government and the Bank of England. They would have called a conference,, but it was made abundantly clear that such a proposal would have been unwelcome to ether Powers, and therefore was foredoomed to failure. It might he that tlio present crisis would bring homo tho pressing necessity of concerted action, and the British Government would miss no opportunity' of urg mg- the importance of a conference on this problem. Britain’s ' posit-war financial record, declared Mr Snowden, was an honorable one. W/e had set an example both as to meeting our obligations and helping in reconstruction, and if we had failed it was because the undertaking - was too heavy.

“It does not seem to me”, he added, “that other countries can challenge our endeavours. Wo exported to America during and immediately after the war actual gold to tho value of £322.000,000 to discharge our obligations. We funded our war debts to the United States. I understand wo •paid £280,000,000, representing nearly 30 per cent, of the debt, at tho date of funding. Although the - British debt to the United States represented only 4.1 per cent, of the total war debts owing to tho United States, our payments represent 83 per cent, of the total payments they received.” The Independent Labor party group moved the rejection of the bill 011 the ground that there was no provision for checking the rise in tho eo-st of living. Mr Henderson and other leading members of the Opposition did not support the motion and tho closure was applied to tho debate. The bill was tread a third timo by 275 votes to US', and passed the third reading without division. In the Lords, 14 peers passed the bill through all stages in a few minutes without discussion, and a royal commission' immediately signified Royal asent.

CRISIS PRECIPITATED BY OTHER NATIONALS SIR S. HO ARE ADDRESSES INDIA CONFERENCE BRITAIN MUST PROTECT HERSELF (British Official Wireless.} RUGBY, Sept. 21. Referring to the gold standard decision. at the Indian federal structure committee, Sir Samuel Hoare said: “Britain’s system of national finance is as sound and honest as any in tlio world, and tho inherent wealth and productive power of tho nation are almost limitless. Tho way had already' been paved for a revival of confidence in this country when the- crisis broke upon us, precipitated by action, not of British citizens, but of other nationals, nervous as to tho conditions in their countries and ignorant of tlio true position of Britain. For a temporary period, therefore, this country will be obliged to protect itself in the manner announced.

“The case must, however, be viewed in, its true proportions. At a moment when almost every other country is faced yvith a large deficit, Britain is now balancing the budget. Heavy burdens are being willingly - shouldered by the taxpayer, and drastic retrenchments are being made in all possible directions. Unemployment finance has been overhauled, and borrowing for this purposo is ended. A basis of stability lias thus been laid, and the foundations necessary for the full restoration of confidence firmly secured.”

Regarding tho effect in India, Sir Samuel Hoare said that sinco the fixing of the rupee by statute at Is 6d, sterling.• had, until to-day, been synonymous with gold, and for all practical purposes the stability of Indian exchange bad been based on sterling. Indian trade was financed through the sterling, and the greater part of Tndia’s external obligations was in terms of sterling. To follow gold and so to increase the sterling value of the rupee at this juncture was out of the question. It was therefore decided to maintain the present currency standard on a sterling basis. Ho was satisfied that this was ' the right course for India,, and most conducive to Indian interests. The Viceroy tq-day issued an ordinance temporarily .relieving the Government of its obligations under the Currency Act to sell gold and sterling. The banks and markets throughout - India will remain, closed to-morrow.

LONDON PRESS COMMENT NO PAUSE FOft ALARM BENEFIT TO WHOLE WORLD (U.P.A. by Elec. Tel. Copyright.) LONDON. Sept. 21. Commenting on wthej situation, tlio Times says: ‘"There is no cause for alarm in the decision.. On the contrary, the Government’s action will conduce? to the benefit, not only of this country, but also of the whole world.” j.- The' Times’ city.,editor points out that: th®^withdrawals, from London wore, chiefly" .for the. purpose of; supporting the position' in foreign centres, which have been feeling acutely the effects <>f Llio world

crisis. He say's the responsibility for the temporary abandonment of the gold standard belongs to those coun tries -which have been hoarding gold on an unprecedented scale. This point is emphasised in most papers.

AMERICAN SPECULATION IN POUND STERLING NEW LOW LEVEL, THEN A RALLY NO CALL FOR CANADIAN FUNDS (U.P.A. bv Elec. Tel. Copyright.) NEW YORK, Sept. 21. Fluctuating widely, the pound sterling dipped to a new low level far the present decade to 375 cents before rallying to around 435 cents. Bankers experienced difficulty in establishing the market for foreign currencies. In only a few instances were rates more than nominal. The Italian lira sagged two cents, and the Spanish peseta was ofF 10 cents, but the French and Swiss francs were unchanged. Silver advanced cents to 29% cents, the highest level since July. The board ol : governors of the New York Stock Exchange, before opening to-day, issued a notice prohibiting short selling. Selling cables on the foreign exchange market sold at 400 cents compared with Saturday’s close of 435 cents. The Canadian dollar dropped to nominal value of 9.45 cents, ou local foreign exchange markets to-day, the lowest in many years. Brokers, however, said there was practically no call for Canadian funds. Some banks went so far as to refuse quotations. WORLD ECONOMIC CRISIS SECOND ONLY TO WAR HOOVER APPEALS TO AMERICAN LEGION TO AID IN ECONOMY (U.P.A. bv EW. Tel. Ony right.) DETROIT, Sept. 21. President Hoover to-day called upon the American. Legion io enlist in peace time and fight for government economy designed to lead, the world out of tlie slough of depression. He issued a warning to the annual convention of the legion against the grave risk of an increase in Federal expenditure. either through' further grants to veterans or other legislation. Hie President said tlio world economic crisis was second only to the war. He expressed confidence in the fact that by united action we will lead the world in recovery, and pointed out that the Treasury was facing another large deficit. Income taxes had declined 50 per cent, since the period of prosperity. The nation was carrying a high and unnecessary extra burden of public works to aid unemployed and agriculture, and to give increased benefits to veterans.

BUSINESS CONDITIONS WILL TURN SUDDENLY TORONTO MILLIONAIRE’S OPINION (U.P.A. by Elec. Tel. Copyright.) TORONTO, Sept. 21. When a turn in business conditions comes it will be sudden, predicts Mr Harold Ritchie, the Toronto millionaire exporter and business lender, who is returning to Europe. A curtailment of production of grain and cattle and other foodstuffs would result in a shortage when world finances recover. He blames foreign exchanges for the depression.

AUSTRALIAN EXCHANGE SYDNEY BANKERS NON-COM-MITTAL {V P.A by Elec. Tel. Copyright.) SYDNEY, Sept. 22. Bankers arc disinclined to discuss tho possible effects of Britain’s abandonment of the gold standard, beyond admitting that the announcement id not come as a surprise. Mr Kiddle, governor of the ( mmonwealth Bank, said the effect on Australia would depend chiefly on tho ability of Britain to maintain its exchange. THE FIRST EFFECT SUEZ CANAL DUES TO BE PAID IN GOLD (U.P.A. by Elec. Tel. Copyright.) (Received Sept. 22, 7 p.m.) PARTS, Sept. 2.2. Tho Suez Canal Company has decided that dues formerly payable in sterling must now be paid in gold. Franco’s decision involves increased expense to British shipping.

SUGGESTED INCLUSION OF LABOR IN GOVERNMENT

MR HENDERSON WELCOMES IDEA V (U.P.A. by Elec. Tel. Copyright.) (Received scpt. 22, 7 p..m.) LONDON, Sept. 22. Negotiations have been opened between Messrs MacDonald and Henderson for the inclusion of the Labor Opposition in tho National Government. It is stated that Mr Henderson welcomes the idea, as he considers the first duty of all parties at present is to support the nation’s welfare. Sir Austen Chamberlain is consulting Conservative opinion. ■ VALUE OF STERLING FALL LESS THAN PREDICTED (U.P.A. by Elec. Tel. Copyright.) (Times Cable.) (Received Sept. 22, 7 p.m. LONDON, Sept. 21. Tho Times says- that the fall in the value of sterling is less than predicted. At the end of tKe day, it was inclined to appreciate in tennis of dollars and francs.

Our new stocks of mantel and bedroom clocks have just arrived and now are on show in our window. Prices are lower than ever and Tange from 20/- up. Have a look at our -clock window display. —A. Stoneham and Co., Jewellers, Gisborne.

CHANCELLOR BROADCASTS APPEAL FOR NATIONAL STEADINESS BUDGET SECURELY BALANCED GOLD TROUBLE DUE TO OTHER NATIONS (U.P.A. by Elec. Tel. Copyright.) (Received Sept. 22, 7 p.m.) LONDON, Sept. 21. Mr Snowden, in a broadcast throughout England, gavo a concise resume tof the whole sensational week-end (happenings, the Jxeynote of which was an urgent appeal far national steadiness. He said that the pound will not go the way of the mark or the franc. The Government was able to avoid inflation. Once that vicious circle was started it might bo impossible to check it. The British Budget was now most securely balanced. The Chancllor proceeded to outline the causes of the drain on gold also renewed foreign uneasiness over the exaggerated fleet reports. He explained that it was not internal troubles, but the troubles of other countries which rendered the gold standard impossible, as inquiries revealed that sales of sterling were predominantly on foreign account. He emphatically insisted that there was no cause for the slightest anxiety about the money iu British banks, which was secure. ‘‘Though the value of the pound may fall in terms of foreign currency”, he said, ‘‘we can bo assured that the extent of the fall will be limited. It is likely to result in higher prices on imported foodstuffs hub these should not be great. That was (really the worst the great mass of the people had to fear. While the country was well stocked with essentials, there was not the least danger of shortage.” Mr Snowden concluded by saying that British nationals abroad on pleasure, might render a service by returning forthwith and spending their money at home. UNANIMOUS APPROVAL OF PRESS. SHOULD STIMULATE EXPORT TRADE. NO NEED TO FEAR FLIGHT OF POUND. (Received Sept. 22. 5.5 p.m.) RUGBY, Sept. 21. The “Daily Herald,” referring to the gold standard says, “Great Britain has gone off the gold standard because France and America have been hoarding gold. It will force their bankers and governments to reconsider the whole problem of the working of the fold standard.” The Daily Mail describes the decision as welcome news, which takes a load oft" British hacks, and praises the Prime Minister for the strong line he has taken.

The “Morning Post” says, “If the pound should fall that circumstance will at least afford a stimulus to our export trade, of which our manufacturers should not be slow to take advantage.” The Daily Telegraph says, “There is no need to fear the flight from the pound on the parallel of the flight from the mark or the franc. British currency is not inflated and the financial condition of the country is fundamentally sound. Nothing therefore in the shape of a currency slide need be anticipated, though some depreciation must be expected.” RAPID SETTLEMENT OF WAR DEBTS. GENEVA VIEW OF BRITAIN'S ACTION. (U.P.A. by Elec. Tel. Copyright.) (Received Sept. 22, 8,5 p.m.) GENEVA, Sept. 21. An official of the Bank of Interjiational Settlements, interviewed, declared that the suspension of tho gold standard was likely to result in the rapid settlement ol war debts and reparations. CHEAPENING OF STERLING. WILL BENEFIT OVERSEAS DOMINIONS. *.U.R.A b.V Elec. Tel. Copyrights (Received Sept. 22, 9.10 p.m.) LONDON, Sept. 22. The Morning Post points out that the cheapening of the sterling will make it easier ior Australia, India, and Argentina to meet their sterling obligations. The Daily Telegraph says:— “The British people must make the protection of their home market their primary aim. They must buy Britisli or Dominion goods.” The Daily Express says: “We must prepare to establish an Empire system of upon the sure foundation of an Empire Customs Union.” TORY TARIFF POLICY.

MR MACDONALD WILL GO TO ELECTION IN FAVOR

The Daily Express understands that Mr. MacDonald is prepared to go to the country on a lull Conservative tariff programme. A meeting of one hundred members of tho Conservative 1932 Club decided Ln favor of an immediate election and pledged support to Mr MacDonald, conditional on his advocating a tariff.

ADVERSE EFFECT ON RIVIERA

BRITONS TREKKING HOME

'UP A. by Elec. Tel. Copyright.) (Received Sept, 22 11 p.m.) v PARIS, Sept. 22. The effects of the fall in sterling are already beuig felt in the Ria iei a. A "Teat "trek homeward lias begun among British expatriates, who settled there when the franc was soar, in". Now the £ is unofficially quoted at°ioo to 10S italics, they are losing three to four shillings on every £ und are offering to lot or sell yrlhis to French people who will miss their money also, as it is estimated. tu - British tourists spend £2O,OOU,UUO yearly in France. This will be cut down by at least half next year. NEW YORK EXCHANGE BUSY HEAVIEST DAY’S TRADING FOR IS MONTHS FALL IN CANADIAN AND AUSTRALIAN BONDS (U.P.A. by Klee. Tel. Copyright.) (Received Sept. 22 v. 8.10 P-™-> NEW YORK, Sept. 21. Montreal exchange is completely stagnated, very little trading taking place as the result of the exchange order. , , The New York market, after eu,ly losses,' staged <a remarkable recovery, stocks gaining one to 26 points. United States steel reached 831, being up 5$ points. The market then reacted again shortly before the close, but closed very strong, most -issues showing a gam. Four million shares were traded in the heaviest day’s business for 18 months. •

The smaller stock exhanges throughout tl(o country followed the example of the larger bodies, stringently /controlling short 'selling, demanding that all such transactions be revealed, including the interested parties. A heavy liquidation occurred on the foreign bond market of the New York Stock Exchange. Australian and Canadian bonds broke sev-: erely in the heavy trading. Canadian National Railways lost up to 10 points, Australian Commonwealth--5 per cent. 1955, 36 points, 5 per cent. 1957, 37 points, 41 per cent. 30 points, Brisbane 5 per cent., 29 points, Sydney 51 per cents. 30 points. United Kingdom 5) per cents, .remained firm around last week’s quoting price, £94 10s. German Government and South American bonds also fell. Even. United States Government issues were unable to resist the selling wave, declining half a point. Heavy selling occurred on the American grain markets on the theory that Britain would temporarily " suspend the buying of American" grains. Chicago wheat, delivered September, sold at 471 cents, December 473 cents, March 50| cents, May 521 cents. UNOFFICIAL STOCK MARKET LIVELY STREET SCENES (U.l’.A. by Elec. Tel. Copyright.) (Received Sept. 23, 12.50 a.m.) LONDON, Sept. 22. _ The dollar sterling rate is. 4.25. Although the Stock Exchange was closed members thronged Throgmorton Street and carried on active marketing. The commit-teo _ told brokers unofficially that .mb objection would bo mado to dealing outside the house. Consequently there was a lively street market, quotations being .shouted across the street. It seemed impossible for business to be transactable with such a pandemonium. PARIS, Sept, 22. Newspapers, of all political creeds, seo hope of the World economic recovery iu M, Laval’s visit to Washington on October. EFFECT OF NEW BANK RATE SHARP RISE IN INDUSTRIALS AND METAL STOCKS (U.P.A. by Elec, Tel: Copyright.) (Received Sept. 22, 8.20 p.m.) LONDON, Sept. 21. Tho rise in the bank rate caused a sharp advance in industrials and metals, tin rising sharply £7 16$ 3d a ton and other metals sharing in the general appreciation. :