DEADLOCK IN MONEY MARKET TO BE TERMINATED.

New Zealand Herald, Volume LI, Issue 15687, 14 August 1914, Page 5

DEADLOCK IN MONEY MARKET TO BE TERMINATED.

BANK OF ENGBAND GIVEN GOVERNMENT GUARANTEE

SCHEME TO REVIVE TRADE ACTIVITIES OF THE EMPIRE.

BUSINESS ALREADY RESUMED BY AUSTRALASIAN BANKS. (Received August 13, 8.50 p.m)

London, August 13.

Arrangements have been completed with tho Bank of England by Mr- Lloyd George, Chancellor of the Exchequer, to terminate the present deadlock in the money market, and to enable trade and

commorco to resume.

The Government has agreed to guarantee the Bank of England against any loss incurred in discounting .bills of exchange either » on a Home or a foreign bank, or as the result of trade accepted prior to August 4, the day on which war broke out.

The Bank of England announces that it is prepared upon application by the holder of any approved bill of exchange, accepted before August 4, to discount tho bill at the baDk rate without recourse to such holder, and upon maturity the bank will give the acceptor opportunity until further notice of postponing payment, interest being payable at the rate of 2 per cent, over the bank rate.

The Ban?: of England is prepared to approve such bills of exchange as it customarily discounts, and also good trade bills and acceptances of such foreign and colonial firms and bank agencies as aro established in Great Britain.

The Bank of England received £450,000 in gold to-day.

The Australian Associated Banks- aro resuming, at discretion, the buying of bills on Australasia at the' following rates: On sight, 2?, per cent, discount; 30 days, 3 per cent.; 60 days, 3t per cent., and 90 days, 4 per cent.

Since the outbreak of war between England and Germany, financial transactions between London and Australasia have been completely suspended, and it has been impossible to effect exchanges at any price. Shortly before the war, tho demand rates in London for bills on Australasia were greatly reduced, owing to the excessive accumulation of money to the credit of the Commonwealth and the Dominion. The rates at which the banks were buying bills wore then as follows'.—Sight, J per cent; 30 days, li per cent.; 60 days, 1J per cent; and, 90 days, 2} per cent.