Manawatu Daily Times [ESTABLISHED 21st MAY, 1875.] MONDAY, MARCH 27, 1922. BRITISH FINANCE.

Manawatu Times, Volume XLVI, Issue 2084, 27 March 1922, Page 4

Manawatu Daily Times [ESTABLISHED 21st MAY, 1875.] MONDAY, MARCH 27, 1922. BRITISH FINANCE.

The London "Times," in a financial and commercial issue at the end of January, states that for a proper understanding of the monetary developments in 1921 it is necessary to recall the outstanding features of the previous twelve months. The year 1920 was a year of dear money with a 7 per cent, bank rate ruling from April 15th to December 31st. That dearness resulted mainly from the heavy demands of active trade and . high prices (in the first five months), united to heavy Government requirements in connection with the financing of an unwieldy lloating debt. The continuance of a high bank rate long after trade had passed the peak was part of a deliberate policy designed to bring down prices. Criticism of that policy has been widespread, on the ground that it had the effect of accentuating the difficulty of restoring trade activity by maintaining i..

charges for money at a time when it is desirable to encourage borrowing for legitimate trade purposes. The precipitate fall in prices endangered advances and froze up masses of credit given to traders. The thawing of frozen credits has, however, shown some acceleration in the closing month of the past year. Comparing the position at the end of 1921 with its beginning, the advances of the clearing banks have been reduced from 801 millions to about 792 millions, and the acceptances have dropped from 90J millions to less than 00 millions. The total of commercial bills, which at the start of the year amounted to 350 millions, or to nearly the 1914 volume, has come down to approximately 100 millions. These conditions, says the "Times," are in themselves sufficient to account for the change from dear to cheap money, the suggestion here involved probably being that as industrial and commercial activities revive a hardening of rates may be expected. As to the prospects of such a revival it is said that "the credit machine is again working with comparative freedom, and the industrial situation in so far as it is affected by the influences under our own control, is such as to justify the expectation that, in the absence of fresh disturbing incidents, a reasonable revival may lie the feature of the new year. No full return to prosperity is possible until some real advance has been made towards the solution of the European problem, but that we have succeeded to some extent in putting our own house in order is a matter for real congratulation." Since this was said a "fresh disturbing incident" has, of course, occurred in the shape of the engineers' strike, which, if of any lengthy duration, must necessarily and seriously retard any full return to conditions of restoration.