INDEBTEDNESS OF COUNTRIES.

Hawera Star, Volume XLV, 29 April 1925, Page 9

INDEBTEDNESS OF COUNTRIES.

TO BE SETTLED IN GOLD

BRITAIN AND AUSTRALIA LEAD

That New Zealand will follow the lead given by Australia in connection with a return to the gold standard as far as the settlement of exchanges is concerned, is the opinion held by local financiers who were approached to-day by a Star reporter. They pointed out that naturally the action of Britain and Australia in returning to the free export ol gold will have a beneficial effect upon the exchange rate in New Zealand, as the 1-ate of exchange in this country is practically governed by Australia. As has been pointed out hv the Prime Minister of Australia, it is not intended to substitute gold for notes in the internal currency, as the use of gold by individuals would tend to deplete the gold reserves held by the banks.

The position may he better understood when, it is explained that when the date of exchange between two countries goes up and up it reaches the specie point, or point where it is cheaper to ship gold to meet the indebtedness nather than, buy the exchange. Up to the. present the export of gold front Britain has been prohibited, hut now that- a free export of gold has (been arranged there will he a, beneficial effect on exchange as the result of nf more even balance of indebtedness. Tn the case of New Zealand, this country would possibly get a shipment of gold from London bhait would ease the money market. Ait', present New Zealand was too much of a creditor country with Britain, but if gold were sent out. from London balance of indebtedness could be 'overcome .