Manawatu Evening Standard. WEDNESDAY, NOV. 21, 1928. THE WORLD’S FINANCIAL CENTRES.

Manawatu Standard, Volume XLVIII, Issue 304, 21 November 1928, Page 6

Manawatu Evening Standard. WEDNESDAY, NOV. 21, 1928. THE WORLD’S FINANCIAL CENTRES.

It lias been stated that, should Sir Joseph Ward fail to obtain the money he needs to carry out his seventy millions programme, he will be able to procure it in New York. Thus far, New Zealand has been able to resist the blandishments of American financiers, who have intimated pretty plainly that they have the money for investment in British Dominion securities and have financed certain Australian loans as an earnest of their goodwill. Following the war, and as the result of its financial entanglements, New York for a time became v tke world’s financial centre displacing London which, in prewar years, held that position. The ten years that have intervened since the signing of the Armistice have, however, brought about a substantial recovery in British finance and London is becoming more or less independent of the American financiers and bids fair to regain its old position as the world’s chief money market. It is certainly cheaper and more reliable, and, as hiew Zealand has been assured that any money it requires for develoximental purposes can be obtained there at reasonable rates, it would be a big mistake to seen to raise money in New York. Sir Joseph Ward’s difficulty will be in finding the sixty millions he has announced his intention of borrowing for advances to settlers and workers, for London financiers have expressed the very decided opinion that they are not j prepared to finance loans for lending out purposes to our own people, and have suggested that if such moneys are required they should be found within New Zealand. While money is in plentiful supply, and at the present time the banking returns indicate a considerable surplus of deposits over advances, it may be possible to obtain moneys locally. The progress made by the rural advances and intermediate credit shows, indeed, that the investing public is quite prepared to take up the bonds issued by the boards in carrying out the provisions of the dual Acts. It is, however, very doubtful if the very large sums required under Sir Joseph Ward’s scheme for financing rural producers, and home seekers, would be procurable within the Dominion, and we should be very sorry to see any attempt made to launch a loan for the purpose in America, for more .than one reason. We certainly could not expect to receive the whole of the money in hard cash. It would largely represent credits Upon which we could draw for

the pui’cliase of goods, manufactures and machinery, and on moneys actually paid over tlie exchange rates would leave us at a disadvantage. There is, however, another and more serious side to the business. It happened in connection with the first Queensland loan placed on the New York market. Moneys raised in New York on the Queensland . bonds actually became a source of embarrassment to London through the bonds being subsequently- sold on the London market, many of those who bought the bonds in the first instance quitting them in that way. With any extensive holdings of Dominion stock, say in New York, their transfer to and sale in London might seriously affect further loan flotations on the part of New Zealand or other of the Dominions. Hitherto, our Dominion financiers have kept to the London financial market, and there also the bulk of our trade is transacted, for Britain is the chief market for the sale of our primary products and, unlike the United States, does not levy duties on our produce. American financiers, in their dealings with the South Amerian States, have generally stipulated, in the case of loans floated by them for the benefit of the latter, that the moneys advanced shall be largely represented by purchases of such things as railway rolling stock, motor machinery and appliances, and trade requisites generally. They have a habit of imposing terms which are not thought of in London, and there is no reason to doubt that they would do otherwise if the New Zealand fly accepted the invitation to walk into the American spider’s parlour.

LONDON CHEAPER THAN NEW YORE.

Money is actually easier in London than in New Aoi'k. It is tlie cheaper money market. The Lopdon -f inancial Times of [September 25 says that “one of the large lenders charged 4 per cent, during the early hours ior fresh advances over night, but the general rate soon receded to and iff per cent., while conditions became very easy before the end of the day, as low a rate as per cent, being mentioned in some instances for balances. . . .

The discount rate tor three months bank bills was ,£4 3s 'Jd per cent, and for three months nne trade bills £4 10s per cent. In New York, on the same date, call money was renewed at 74 per cent., but in the afternoon dropped to 7 per cent. Time money ior thirty to ninety days was H per cent., but it was stated that little money was available.” It was also reported that “loans were being’ made at higher than the published rates. I'or example (the correspondent said) it is known that a New Jersey Trust Company has just paid 8 per cent, for 4,000,000 dollars (£i!00,000) for four months.” The truth appears to be that money is scarcer m New York than in London —a surprising fact in itself considering America's pretensions to dominate the world's money markets, and one indicative of the steady recovery of British finance. So tar as Europe is concerned the British position appears to. be unchallenged and London remains as its chief money market.