FINANCIAL STRINGENCY.

New Zealand Herald, Volume LIVIII, Issue 17684, 20 January 1921, Page 8

FINANCIAL STRINGENCY.

<a. IMPORTATION RESTRICTED. POLICY OF THE BANKS. EFFECT OX LOCAL TRADESevere restrictions are being placed upon importation through the policy adopted by the banks in respect to financial accommodation to importers. The position briefly is that partly owing to excessive importations during the past year aind partly t6 the fact that uncontrolled produce has not yet created a substantial credit in London, the banks have not sufficient funds in London to meet the debts of New Zealand importers. In Australia, where, it is said, the position is much more acute than it is in New Zealand, it is at present almost impossible to remit money to London. One instance given by a recent visitor was that a Melbourne importing firm with a bank credit to the amount, wished to send to Now York the sum of £80,000, in payment for goods ordered. In no circumstances would any bank remit the money, but the importer succeeded in making au arrangement with a produce concern with a credit in London. In New Zealand such pri-' vate arrangements cannot be made to any extent, even if importers were prepared to pay high rates for this private accommodation, seeing that butter is going to the British Government, that meatkilling is only beginning, and that the wool clip is still in store with a very indefinite market ahead of it. Banking Procedure. It was stated yesterday by a local merchant that the banks, before agreeing to remit any money to London or N<ew J York, demanded to know what it was to purchase, and from the experience of one man he was of the opinion that for such imports as motor-cars money would not be remitted at all. Information gleaned elsewhere, however, did not bear this out. It is probable that none of the banks is following any hard and fast rule. The clients of one institution are being accommodated in turn according to the state of credits in .London. It is possible, however, that the banks are looking more kindly upon essentials than upon those things which are not of chief importance. The general attitude of banks seems to be to spread the drafts on London over as long a period as possible, and in accordance with that policy they are not issuing drafts for less than 90 or 120 days. Discussing the matter, one prominent merchant 6aid that the policy which had been adopted—and he would not say that it was a wrong policy—would capitalise the stocks of the merchants of New Zealand, perhaps to the extent of £7,000,000 during the coming 12 months. Merchants were in the habit of carrying reserve stocks, but the financial restrictions would turn these stocks into money. This would come about gradually, through orders abroad being cut down to a minimum. Position Regarding Motor-Cars. The head of a large firm of motor importers said the financial stringency would put a check upon the importation of motor-cars. Some firms like his own had established credits abroad a few months ago, but generally speaking these would hardly meet liabilities for more than a month or two more. While stating this he mentioned that fairly good shipments of cars had been coming to hand, and he was not inclined to be pessimistic over the present outlook. One aspect of the heavy importations of the past year was touched upon by a hardware merchant. Speaking not merely of his own line of trade, but of commerce generally, he said that as soori as rorices in England and America showed a tendency to fall, manufacturers accelerated their deliveries, the orders for which had been standing for some time. The result had been little less than " dumping," and the Dominion's indebtedness had swelled to extraordinary dimensions. American Exchange Rate. Asked if the adverse exchange with America was not now driving trade to Britain, he said the tendency was in that direction," but unfortunately British importers, generally speaking, had taken advantage of the high rate of exchange which had to be paid to America, and, instead of undercutting the Americans, as they might easily have done in many directions, they had raised their prices to New Zealand. British manufacturers, in many instances, had) raised their prices without -warrant. Another importer of hardware said that, in consequence of the exchange impost, he had sent regular orders to England for aluminium goods, and such lines as lawnmowers, wringers, and mangles, and these had given every satisfaction. With the American exchange rate at a figure which craye only 14s worth for. £1, the United States could not retain the volume of trade she had enjoyed.