MONEY AND BUSINESS AFFAIRS.

Manawatu Standard, Volume LIX, Issue 95, 22 March 1939, Page 4

MONEY AND BUSINESS AFFAIRS.

CONFIDENCE WRECKED. (By “H.J.K.”) For six consecutive weeks the London Stock Exchange showed a revival in business and growing confidence, but Germany has once more wrecked it. Germany cannot now expect to have her word accepted as her bond, for she has shown with brutal frankness that she regards solemn international agreements an mere scraps of jviper to be destroyed when found to be inconvenient. The annexation of Bohemia will cause a general break in confidence throughout the Continent of Europe, and there is sure to I>e a recrudescence of the flight of capital from Central Europe to England, Franco and the United States. Tho foreign exchanges will be gro.-i.tly disturbed and international trade will again be made to suiter. Commodity prices, too. are bound to be affected.'The expenditure on armaments will bo increased, more men will bo taken from industry for armament work, and altogether the world appears to be entering upon a difficult period. The United States is .affected by this lalest German movement, both from political and financial aspects. It is now quite forgotten that in the six years to 3926 the United States investments in Europe by way of loans, etc. totalled the astronomical figure of '£12,000,000.000. At that time Europe was impoverished while America w.as rolling in the money obtained from tho Allies for war material. This free lending on the part of America showed the confidence of the financiers in the rehabilitation of Europe, but a poor appreciation of economics. A foreign loan has no security beyond the promise of the borrowing country, and tho maturity of the promise is generally n. generation nr two ahead. For the United States with a policy of isolation to lend so large an amount to impoverished Europe was financial folly. Of course, America lost a great part of the money, and the absorption of Bohemia will mean more losses, for Germany is not likely to ray although she mops up the credits in the Czech Central Bank. BRITISH FINANCE. There is every indication that the Chancellor of tho Exchequer (Sir John Simon) will be able to present the House of Commons with a balanced Budget and perhaps a small surplus. British national finance is not'-a party matter, for all parlies in the State take a keen interest in seeing that tho Budget is balanced. On March 14, the revenue totalled £85!),781,074, and it is probable that the total revenue at the end of the month will not be far short of £900.000.000, if it does not exceed that amount. When Mr Lloyd George was Chancellor of the Exchequer, some years before flic outbreak of the Great War. the revenue for the first time in British history reached the £200.000 000 mark, and now it is four limes that amount. Another outstanding feature of British finance is that the Treasury figures are available at the close of each week. At the end of Lho month the final figures will be available within a few hours, and tho Budget will be opened in tho House within a month. This is in striking contrast with the practice in New Zealand. It would he remarkable if the Treasury figures were available before May. and the Budget will not bo presented to the House before August. RESERVE BANK RETURN. The sterling funds of the Reserve Bank on March 13 were about at thenlowest level, amounting to £4,591,6815. a decrease of £114,711 on tho week. Tliis is somewhat difficult to understand in view of the control of exchange and sales of dairy produce in London, and the only conclusion that ono can come to is that it is the Government that, is making demands on tondon funds to pay tor imports ol defence equipment, railway material, and other goods required by the State. It will be some time before the Reserve Bank will he able to accumulate funds in London, and the Government will therefore he obliged to rely ■ on tho trading hanks for help. The proportion of reserve to notes and other demand liabilities stands at_ 25.026 per cent., a shade fj-ottcr than m tho previous week. Advances to the Primary Products Marketing Board increased by £17.610 to £7,517,326. hub advances to the State for other purposes declined by £60.1X10 and stood at £12,665.00th This reduction no doubt it purely of a temporary nature. The note issue decreased by £10,815 to £14,799.266, and is £1,232,446 in excess of the note issue of a year ago. The return is not at all satisfactory; in fact it may lie described as disappointing. P.O. SAVINGS BANK. Since September last, a definite setback is disclosed in the Post Office Savings Bank returns. Up to September the deposits had exceeded the withdrawals bv a substantial sum. I'or example, for the six months to the end of September the deposits exceeded the withdrawals by £672,137 which was a normal movement lor that period of the. rear. In the lour months following, that is to the end of January last, withdrawals exceeded the. deposits hv £3,190,413. while at the corresponding date, of the previous financial rear tho deposits exceeded the withdrawals by £3.005,979. It is difficult to say what is the cause of his, for there has been no marked slackening of work, nor have, there been any cuts in wages. December and January arc the busy months when men are earning big money and yet, this adverse showing is seen. In the ' l ', al ended March 31, 1931. "hen the depression was gaming in strength the withdrawals exceeded the. deposits b> £3 531.769. and in ten months ol he present, financial year that total has pearlv been reached. I Ins movement must'have caused tho Government considerable embarrassment, for not only •ire tho people not supplying the Omit with credit, but they arc also forcing the State to refund the credit previously granted. It would to very interesting to know the cause ol tins movement.