TRADE NOT HAMPERED

Hauraki Plains Gazette, Volume 48, Issue 2887, 31 March 1939, Page 8

TRADE NOT HAMPERED

DEFENCE OF THE POUND MEASURES TAKEN IN BRITAIN Unlike the experience of New Zealand, the various embargoes which the British authorities recently placed on foreign exchange dealings were not to prevent a flight of capital, but mei’ely to place difficulties in the way of speculation in sterling. E3w since 19'35 the British Treasury has been anxious that bankers should, as far as possible, curb speculation against the pound, although at the same time taking care not to hamper legitimate trade. That intimation at once raised the delicate question of where to draw the line. Consultations among the Varied interests in London resulted in the issue of a circular from the /Foreign Exchange Committee to all London banks in mid-January, defining in some detail the classes of business which either would or would not be regarded as legitimate. Broadly speaking, stated the Economist in reporting this development, any trader will remain perfectly free to follow his normal business, even if that involves forward exchange transactions, provided that they are a normal and proper hedge against future exchange fluctuations. The same applies to stock brokers with connections in foreign centres. There is no impediment against the transfer of funds abroad, either for investment or for deposit in foreign banks. Nor is a customer deterred from borrowing from his bankers against normal collateral, and it is not the banker’s business to ascertain how the customer proposes to use his loan. On the other hand, a banker will not henceforth lend sterling against gold or foreign currencies. In some instances, the bankers will not have sufficient information at their disposal, and for this reason the co-op-eration of the Stock Exchange was formally sought. It has also been made known that the authorities in certain centres have agreed to help, notably in New York, Amsterdam, and Switzerland.