TRADE AND THE WAR.

New Zealand Herald, Volume LIII, Issue 16408, 9 December 1916, Page 11

TRADE AND THE WAR.

BRITAIN'S SOUND POSITION.

STABILITY OF FINANCES.

MOBILISING RESOURCES

[BY TELEGRAPH.— PRESS ASSOCIATION".] J WELLINGTON. Friday. ! "Phe economic and financial conditions of the Empire and the favourable position in ' which Great Britain stands in regard to i the question of tho successful prosecution I of tho war weie referred to at the half- : yearly meeting of tho shareholders of tho ' Bank of New Zealand to-dav. Mr. Harold Beauchamp, chairman of the , bank, in his speech stated that information had been received from a reliable source that, in less than sis months hence. Great Britain s industries and resources would be mobilised to such an extent that eho would be able to supply all her own requirements in respect to ammunition and big guns, and largely to assist her allies. Tho marvellous ease with which, so far. • the enormous financial requirements for military and other purposes of Great Britain and her allies had been met. whilst' at the same, time London has maintained its traditional reputation as a free gold i market was referred to. On the outbreak 1 of wai Germany, as had been pointed out by the Statist, shut down oil her gold, i and had ever since hoarded it jealously, • whereas Great Britain, from the start, and ' the other allies at a later period, so far ! from shutting down upon her own gold ■ supplies, must have sent abroad since the : war began very little short of £250,003.000. ; most of which has come from our own; stores, including the output from Soi<tb ' Africa. And yet, in spite of the freedom ' with which this gold has been outpoured, the central British stock of the metal was some £15,000.000 greater than it was. previous to the war. j Bank of England Rates. | The Bank of England rate. Mr. Beau- j champ continued, was advanced from 5 to 6 per cent, on July 13 last-. Ati the end; of September the rate for Treasury bills ; was fixed at 5j per cent, for all currencies, j and a new issue of Exchequer bonds was! announced carrying interest at 6 per cent, I and maturing on February 16, 1920. The design of this arrangement was doubt-! less to divert money from the short- ! dated Treasury bills (of which an enor- i mous amount — some £1,040,000,000 ' were current) to the longer, though: still short, term Exchequer bond, j The effect of the new Exchequer . bond issue on a 6 per cent, basis • was very depressing upon all invest-; ment stocks, and a permanent lowering of quotations on the exchange took' place. The British Government appears ; to prefer to finance meantime on short- ; dated bonds, and is apparently desirous of nostponing the funding of its floating ' liabilities in the expectation that some. decided change in the war situation, in ' favour of the allies, will afford the op- i portunitv to float a loan on more favour i able terms than would at the present time be obtainable. The amount thus out- i standing on these short-dated obligations ' at the present time exceeds considerably | £1,000,000.000, or, if Exchequer bonds ' be included as short-dated obligations, ! £1,500,000,000. British Government's Borrowings. j Proceeding, Mr. Beauchamp pointed out ' that the total British Government borrowings since the commencement of the war amounted at September 16 last to £2,40a,269,000, and as the expenditure was at the rate of about £5,250,000 per day, the debt would since have been largely increased. Britain, however, was becoming more self-reliant, and was consequently spending less outside and more within her own borders. This meant, of ; course, that while th© indebtedness of , the State as a collective unit was enor- ! mously increased, the wealth of the in- I d;viduals, constituting the State in whim * the borrowed money is expended, was ! also largely increased. Whilst the de- ! mands for munition supplies from the ' United States of America were now greatly ! reduced, considerable importations from ! America both of munitions and merchan- i dise, were still going on to Britain and ' British Dominions, and an adverse state ; of the American exchange still continued. ! By careful manipulation, however, it had ' been found possible to prevent the violent ■ fluctuation in the exchange rate which ' marked the autumn of 1915, and for prac- ' t;cally the whole of the current year the rate has been fairly steady, fluctuating between 4.77 dollars" and 4.76 i dollars, or a discount of roughly £2 per £100. A ! few months ago a loan of £50,000.000 1 known as the "collateral loan" was ar-' ranged in the United States, it bein<* sup- ' ported, collaterally, by deposit of Ameri- ; can, Canadian and other securities bor- ; rowed by the British Government from : British investors. There, however, was now talk of a further loan without my ! collaterals, which in itself indicated the ! growing confidence of the United States 1 in Britain's ultimate victorious issue from the war. Business on the London Stock ' Exchange as once more free of any price restrictions, all remaining minimum prices having been removed on July 3 last. j Remarks by Sir James Mills. ! Sir James Mills, a member of the bank's London board, in referring to the work if the London board during the war, stated that the position was a very anxious one some days before declaration of war and for a short while afterward, until the Imperial Government was able to formulate a scheme for the relief of the money market. This bank, however, was in a very satisfactory position at the time, and liad matters turned out worse it would have been as well able as older banks to meet the difficulties. He complimented the chairman on his address dealing with the position of the bank, and giving so nut h valuable information as to the trade of the Dominion. This would be verv reassuring, especially the figures given of the excess of exports over imports. This would be ■■{ interest to the London board, as there ,vas a tendency for accumulated funds to find their way there. It was the duty of the London board to find safe investments, so that the money would not be tied n r ., but be available for use by the bank if required. Position After the War. It was difficult. Sir James continued, to forecast the position after the war, but thev need not doubt there would be difficulties before commercial men and banks. It would be no easy task for Great Britain to recover the trade which bad been lost or scattered through attention being occupied with the war. and which had fallen into the bands of neutral countries. We must also look forward to our present enemies making a great bid to recover their trade as soon as the seas were open to them again. To meet this situation better organisation and co-opera-tion between banks and commercial men would he necessary. They must piepare not for to-morrow but for future generations by the better education of young men in tanking and commercial pursuits. They should do this in the secondary schools in Great Britain and here hv providing that Greek and Latin should take second place in their system of educa-