TRADE OUTLOOK

Nelson Evening Mail, Volume LVI, 20 July 1925, Page 5

TRADE OUTLOOK

RUBBER SHARE BOOM

COMMONW V. VLTH’S AMI'.RICA N LOAN

EFFECT ON LONDON DISCUSSED

I A HOUR TROUBLE AFFECTS WOOL

BA EES

BUTTER AND CHEESE FIRM

(Bv Electric Telegraph.—Copyright.; (* U M.-aiWv k Ai-Z. Cuhle Association.)

LONDON, July lb

The features of the Stock Exchange during the past week have been, the rubber share boom ana the marked strength of gilt-edged stocks, the latter of course, being responsible, for the de-ci.-ion to none the Commonwealth s loan forthwith. The. rubber boom oil Monday produced tiic* wildest stock and exchange scenes witnessed since the war, feverish buying Being carried out without regard to pi iee or values' nt particular shares, this wild orgy received a check on Wednesday when, in consequence ot slight reaction in the price ol raw rubber, tens of thousands of shares were pushed on the market. These, however, were soon absorbed and the market rallied. No real slump in these 'shares need he expected till the price of raw rubber drops, eon sider.ihly. Hitherto the Government lias refused to interfere in the (Stevenson product ion and control scheme, regarding the present fancy of raw rubber prices as merely a temporary phase, which will soon right itself. The Commonwealth's loan policy departure in going to New York for threequarters of the present loan requirements, has occupied a conspicuous place in all financial commentators’ writings, both in the daily papers and the more considered judgments of the weekly financial reviews.

The London portion of the loan was well received and will meet a. gilt-edged market which has steadily improved in the past turn* weeks, under the influence of the Bank of England gold position and strong bank returns. Now that the Commonwealth’s arrangement has taken definite shape, the reasons and influences which brought about the decision to partially foresake the London market, form the basis of innumerable newspaper articles upon London’s general position as lender to the dominions and colonies. The tone of the financial writers' comments upon this subject seems everywhere to vary in accordance with their views upon the wisdom or otherwise of the recent returns to tht> gold standard. The Nation, for instance, says “The financial press does not seem quite clear as to its attitude towards the Commonwealth’s decision to go to New York. On the one side, it in argued that we have dangerously over-lent, bad trade and over-high consumption having reduced our cajpaeitv to lend abroad.”

The Statist on the other hand says:— “It is urged that only by lending abroad, can trade be improved. There are many factors tending to check over lending, but, the effect of the Trustee Act has been to enable Colonial governments, whatever their financial records or capacity, to raise money on almost as good terms as Britain. For our part, it seems more important to know whether Australia has been over-borrowing, than whether we have been over lending.” Other writers emphasise that the return to (be gold standard was decided upon with the dominions’ concurrence and support, and it was probably recognised at the time that it would necessarily entail limiting London’s external landing.

The Statist welcomes, as a virtue of the gold standard, the fact that it has given a clear indication how far the country is capable of lending abroad. To the argument that the embargo on foreign investments and the necessity for the Commonwealth to go to New York proved that the gold standard has been inimical to the country, The Statist replies that the country cannot lend morethan it. saves-, that Britain at present is barely making ends meet, and that consequently the gold standard’s automatic check to over lending should be welcomed. The results of the London wool sale?, both merino and crossbred, infused a better spirit -into the raw material section of the Bradford trade, but developments at the manufacturing end has been more disappointing than was anticipated a week ago. New business in partially and fully manufactured goods has not increased to the extent- expected when the sales opefied, owiing largely to the wages dispute caused by the employers" intimation of intention to enforce five per cent- reduction in wages and as the workers are determined to resist the strike appears) inevitable from present indications. In vew of this possibility, neither the spinners nor manufacturers are anxious to buy till the outlook is clearer, with the result that neither London nor Australian sales had much effect on Bradford, where prices for tops have not followed the lead set, by raw material. The continuance of dry weather lias bad the effect of increasing butter and cheese prices It is noticeable that Australian and New Zealand butter continued to harden, despite slight weakening of Danish. The former has advanced, even since Thursday. Arrivals from Australia and New Zealand during June were heavy and there were large quantities in cold stores, but in view of (he expanded consumptive demand, it will all be needed. The Trade forecasts firm prices, both, for butter and cheese for some time to come. The canned and dried fruits trades have both been of the quietest. The latter is suffering a lull following on heavy sales prior to the removal of the duty. It is too early to say whether sellers will be enabled to maintain present prices.