Money from America

Hawke's Bay Tribune, Volume XI, Issue 242, 17 October 1921, Page 5

Money from America

NO CHEAPER THAN ENGLAND CREDIT OF COMMONWEALTH. COMMENT BY “FINANCIAL NEWS.” [By Cable—Press Association.—Copyright.] London, Oct. 15. 1 The “Financial News” welcomes Iffir Joseph Cook’s announcement that the Commonwealth’s £5,000,000 loan will be floated in London. There appears to be some disposition to believe that Australia would make the question of borrowing in London or New York a party issue. Admittedly neither the Commonwealth nor any State Government isi tied to London. It is open for them to borrow elsewhere on better terms if they can. It has been asserted that money can be obtained more cheaply in New York at the present rate of exchange. On the contrary, Queensland’s New York loan was* the most expensive Australian issue yet contracted. There could be no greater mistake than to suppose American investors would be less critical than British of measures they might consider repudiatory. They would be much more critical. Australian credit depends on the Australians themselves. The Commonwealth’s credit stands higher in the London markets than elsewhere.—(A. and N.Z.) AS A BANKER SEES IT.

Mr. Theodore, Premier of Queensland, according to a cable message from Brisbane on Friday, explained why Queensland went to New York for a loan. The arrangements were made, he said, for investment of the money in London. If this meant that the money will be utilised for purchases in Great Britain of State requirements, this is hardly in accordance with the idea of American finances. From a high banking authority the Wellington “Post” learns that the large sums of money that are available in New York for investment in British Dominions are no doubt readily obtainable, because they will enable various traders ni the borrowing countries to purchase American goods—not British goods. They could buy American goods at a much more reasonable rate of exchange than at present. The value of the sterling in New York ,however, was improving daily, as the press cablegrams indicated. United States trade returns showed that exports from that country have seriously fallen in volume, obviously as a result of the very high exchange rate. The rate. lidVever, has been stimulated, so far as sterling is concerned, during the past few days. “It is evident that the export trade of America has responded to the recent appreciation of sterling. Americans are fully alive to the position, and are doing their utmost to provide all facilities for the development of trade. With a high wall of protective duties erected against the world, against all goods from Australia and New Zealand, such are practically excluded from the markets of the United Stated. Tn the absence of loan facilities, such as the Queensland transaction, the rate of exchange has been going from bad to worse. Americans are out to supply all the goods they possibly can, and, by means of loans, will to some extent mitigate the consequences of the high -exchange and high tariff wall. Thus the exchange position will be improved. Moreover, business will be done that would otherwise go to the United Kingdom, for the reasons I have stated.

“It will be interesting to see what amount of business will be placed by Queensland with America as the result of this loan. No doubt the borrowing State is needing railway and other material for public works, which will be imported from America instead of from Great Britain. That, I think, is the idea actuating American financiers. They want the trading business if they provide the loan money. That is a reasonable view for them to take, too.”

COMMONWEALTH £5,000,000 LOAN Melbourne, Oct'. 15. The House of Representatives passed a Bill authorising the Treasurer to raise a loan of £5,000,000 in London for general purposes. RAISED BY COMMONWEALTH BANK. NO COSTLIER THAN IN BRITAIN. (Received 17, 10.15 a.m.) Adelaide, Oct. 17. Sir Denison Miller, Governor of Commonwealth Bank, in an address to the Chamber of Commerce, explained that the Commonwealth -Bank raised the Queensland loan at New York at a cost no more than if it were raised in London. The method of payment was such, that the principal would be paid when the loan fell due.—(A. and N.Z.)