MONEY CONTROL

Gisborne Times, Volume LXXXIII, Issue 12751, 6 January 1936, Page 5

MONEY CONTROL

MIDLAND BANK’S REVIEW,

(U.P.A. by Emc. Tei. ■cccyßetit) (Received Jan. 5, 11 p.m.). LONDON, Jan. 4.

Ihe Midland Bank Review-, -urcoying the Dominions’ monetary policy, declares that the deflation arising from the decline in sterling reserves in 1935, if it had been permitted to continue, might have had dire results, especially in respect of hanks winch were forced to sell securities. Foiitunately the 1935,6 tracing season may prove more profitable to Australia. leadmg to restoration.

London funds are easing the internal monetary situation. Some deflation may possibly be necessary, but it might well have serious effects on trade and industry if continued. There is a strong case for monetary management, whereby the Government and; the Central Bank, acting in concert, could mitigate the deflationary consequnces and the shrinkage in London fund-. Such deflation as is required, should bo _ achieved through the curtailment of advances to importers, not the restriction of supply of Treasury Bills.

The banks' facile notion that Au 5 - tralian. New Zealand and South Africa pounds are "normally’’ on parity with sterling its. it adds untenable. Each unit must be regarded as separate, and. subject to independent management, without fixed rehitionrhlp to sterling.