Grey River Argus MONDAY February 11th., 1929. DEARER MONEY.

Grey River Argus, 11 February 1929, Page 4

Grey River Argus MONDAY February 11th., 1929. DEARER MONEY.

The anticipation in this country that loans would this year become more costly in London has soon been realised. While the Federal Reserve Board of America has taken conservative action, it nevertheless transpires (that gold had been going to that country from Britain in large quantity, so that in less than six months, over twenty-six million noilnds worth had befcn shipped from London to New York. The advancement of the bank rate to 5| per cent, in Britain is really a reflex of American industrial activity and speculation, it being stated that capitalists have found it more profitable to transfer money across the Atlantic from Britain on account of higher returns being obtainable on investments in America. One result of the rise in the bank charges has been the desired halt in gold ship ments, which in a week recently had risen to over £3,000,000, and an improvement in the English rate of exchange to such an extent that gold shipments are no longer profitable. There are, however, the ultimate consequences to consider. The borrower nations may now find still further inducements to seek loans at New York, instead of London, although it is very unlikely that this country will attempt there to convert the remaining loans falling due this year, in view of the fair terms secured for the recent conversions in London. With Australia, however, it is another, matter, and if the slump in share values which in New York has followed the action of the big banks in calling loans in has a lasting check upon purely speculative dealings, there may be easier terms for foreign borrowers later on. An interesting point about the raising of the English bank charge is the possible impetus which it may give to the agitation for a reform in the banking system, it being considered that a few men, such as govern the Bank of England, with the countenance of the Treasury, should not longer be allowed arbitrarily to alter the rate without giving more than general and indefinite reasons for their action. The Labour Party has stood out for years in favour of the State assuming many of the prerogatives now possessed by that institution. The “Daily News’’ now declares that the public are right in their demand that the Chancellor of the Exchequer shall take responsibility in regard ,to such decisions. Most of the Conservative papers in London defend the increase in interest charges, on the score of international credit exigencies, whereas other sections of the press condemn it as a blow to industry that is not. warranted by regard for speculation in the United States, where on the average interest rates are certainly greater than in Britain at normal times. In fact, the effect of the simultaneous action on conservative . lines at London and New York has been to illustrate the insecure and indeed gambling nature of many share market operations in Wail Street and Chicago. It is this gambling of which the Federal Reserve Board, occupying a position somewhat analogous to the heads of the Bank of England, is at present afraid, and has sought to cheek. Nothing illustrates better the nervy nature of present-day capitalism than the latest report of a record slump in Radio Corporation and other American shares, soon after a boom, as the result of .the Federal Reserve. Board’s threat largely to limit credit. Nevertheless, whilst illustrating the interdependence of AngloAmerican capitalism, the latest developments do not exactly emphasise the contention of Sir Joseph Ward that London remains the centre of gravity in the sphere of finance.