FUNDS IN LONDON.

New Zealand Herald, Volume LX, Issue 18298, 15 January 1923, Page 6

FUNDS IN LONDON.

' — —: — '«» ' — ;- . .The exchange position H between Australia ..and New: Zealand . and London, which : has recently; been the cause; of, some embarrassment to bankers, is apparently; being adjusted by what may be called natural processes., The result of the last producing season, ended June 30, was -an excess of ' over imports: from both • countries, the balance- in the case of Australia being nearly £27,000,000 and New Zealand's over £13,500,000. The actual ; balances 'were > swollen by public borrowing in London:;. while Australia also:, ; receivedv £10,000,000 from ijhe profits.' of resales of ,Bawra ; wool. On the other hand, payments of debfc charges and other ''invisible; imports" had to be made, but the net result was the creation of a plethora of funds in London. The course of trade since the half year ; has, substantially relieved the position. For the four months from July to October, the imports into Australia : exceeded exports by ! £9,767,000,. or about 30 per cent., while the New; Zealand returns for the same period show an < excess of imports of. £2,502,000: In the latter case the excess ..'of exports continued in July, ; the balance * being adverse for the three -following months to the extent of £4,161,000, while November also - showed imports in excess' by ££50,000. , v Hence against the favourable balance for the preceding'■-[ twelve months of £50,000,000 for the two countries, the trade of the July-October period, set an ad- : verse factor of £12,270,000. To the latter figure : must be added remittances for debt and other * services, diminished to only a small extent by new capital issues—Mr. Massey's I raising' of £1,000,000 at 3 per cent, j appears to have been the only, loan i operation during the half year. 'The shipment of the new season's produce now affects the situation. So far as Australia is concerned, the Banking Record states that the payments to be made will be , substantially less 'than in : the previous year. In 1921-22, woolgrowers received '. payment for the new clip, for 600,000 bales of old wool, and £10,000,000 1 from, Bawra. This year, there "will \ be no deferred wool in the account, { while the payment >pf - £6,000,000 ' from ': Bawra has apparently been i withheld until the exchange position i eases. Wheat exports are estimated, against £46,000,000 in 1920- , 21 and £22,000,000 in 1921-22, to yield only £12,000,000 or £13,000,000. I These forecasts suggest that for Aus- ! tralia the exchange position is be- '-. ing gradually, adjusted. For New I Zealand, however, ■. the prospect - seems to be one of greater taccumu- ■ lation of funds rin London,, since J there is no evidences of importations • keeping .pace with the rise in* exi. port values that will result from '■';> ,;:■'.'•'; ■■ ■'■■. .'<:"'.:-',- : - '■;.', '." : ' ;•-'' :•" ■•''•■ '7;'..;: : : : ---\ ': ■'"■''•■ • . . ■■;■"'■• ': :- :^-: ': v :':-' l *

/ the larger production and /the good i prices ;of the principal commpdi ties." ;■ There could be ho inore, gratifying ; embarrassment for- the.- Dominion I than; such a plethora of fun in ,:■ London. .It creates difficulties for . the bankers, wh6 ' have to arrange -payment in New Zealand for produce . sold in England, but it represents a condition that suggests the solution of these perplexities. / ; The excess of funds in 'London beyond obligations for imports,: interest on ; debts, and .;-. other liabilities, constitutes a definite addition to the, national wealth, available for permanent'.in-" vestment." :; In these circumstances; the conditions invite the raising; of loans.: in New Zealand instead : of. abroad. ■; The issue of the next Government; loan :in the Dominion would not only .relieve: the r exchange position, ,; but it would. be advantageous in other respects since the interest would remain for circulation in 'the- country and be available for taxation. ';