COMMERCE AND FINANCE.

Lyttelton Times, Volume CXVIII, Issue 18599, 29 December 1920, Page 7

COMMERCE AND FINANCE.

(By OUR FINANCIAL EDITOR.)

AUSTRALIA’S LONDON BALANCE.

The widely-circulated statement that Australian banks have no funds in London, and are therefore unable to help their importing clients to face the tinusual liabilities caused by tho recent heavy volume of imports from the United Kingdom to Australia and New Zealand, is difficult to reconoilo with the known facts concerning Australasian trade during the war period. Australian newspapers are now recalling a statement made by the Prime Minister of the Comonwealtli in dime last, when Japan was experiencing a financial crisis. In support of his contention that “conditions in Australia are tho exact opposite to those of Japan,” he gave an estimate of the amount of Australian money lying to credit in London or likely to accumulate in the ensuing twelve months. His estimate was as follows: £ Money now in London on Australian account on short bill . 40,000,000 Excess of exports over imports for year ending June, 1921, at present rate .... 65,887,000 Australia’s share of profits on wool to be sold . . . 30,000,000 Increased value of 1020-21 wool clip 40,000,000 Total £175,887,000 Even admitting that Mr Hughes’s estimate was far toe optimistic; that the balance of exports over imports for 1920-21 is likely to materialise in a substantial balance of imports over exports; that the “increase” in value of the wool clip must give place to a decrease, and that the share of wool profits must he heavily, discounted, w r e yet know that up to the end of October payments to Australian woolgrowers totalled about £13,000,000, which, wiping out the wool and trade balance items altogether, should give £33,000,000 to finance Australian imports, after deducting £20,000,000 which had to he paid away in interest in London up to the end of the present month. The interesting query arises as to where the money has gone, since the Australian banks at the end of September last, or three months after Dir Hughes forecast a gigantic balance in London, declared that they were short of funds. All tho available facts seem to show that New Zealand’s position should be, relatively, more favourable than that of Australia, yet the snmo story of “no funds in London ” seems to be current here also. This is a matter in which the Minister of Finance might considerably assist the trading community by giving some enlightenment.

NEW ZEALAND’S TRADE BALANCE. For eleven months of the present year New Zealand’s balance of imports over exports stands at £13,072,179. At the end of June last this adverse balance stood at £1,373,802, bo that £11,698,577 has accrued in tho last five months. Commenting on the situation, the “New Zeeland Trade Review’’ says:—

“ 'While the position is rendered less serious than it would otherwise have been by the splendid trade balances accrued during the war period, yet it is one that requires immediate attention. It can only be rectified by severe curtailment of importation, and increased production to restore the balance. The only other methods of settling the trade difference, as stated recently by the chairman of the Bank of New Zealand, are tho shipment of gold, the raising of loans, and the selling of securities. These courses aro not open to New Zealand at present, except to the extent to which the Bank of New Zealand can realise on its London holdings. So far not very much of our new season's produce has gone forward, and it will be another two or three months before sufficient of this will get Homo to improve the situation, and till then, money must remain in somewhat short supply.” JAVA SUGAR SHIPMENTS. Importations of Java sugar, expected next month, will receive every support frgm the Department of Trade and Commerce, according to the secretary, Mr J. TV. Collins, says the Wellington newspapers. “We welcome anything that will increa«e the available supply,” said Mr Collins in an interview. “As the existing supply is inadequate, we cannot give grocers or shipping people or consumers generally what they require; hence wo welcome any new source of supply, and to encourage merchants to secure it wo* leave them a free hand in its disposal when they have got it.” Java sugar, it seems, is not of tho very highest grade, and tlierofore cannot be used for certain trade requirements where tho first grades alone are suitable. But for ordinary domestic purposes it is excellent. It is understood a decrease has taken place in prices at Java that have a favourable effect on future cargoes shipped tbenca to New Zealand.