BALANCE OF PAYMENTS.

New Zealand Herald, Volume LXVIII, Issue 20841, 7 April 1931, Page 5

BALANCE OF PAYMENTS.

UNITED KINGDOM ESTIMATES. INVISIBLE INCOME REDUCED. SEVERE REDUCTION OF SURPLUS. I lie Bi itisli Board of Trade's estimate of the national balance of payments for last year is considerably less favourable than was generally expected. The advei se visible trade balance for the year at £392 millions was £26 millions larger than in 1929. As the estimated net credit balance of "invisible items" amounted to only £431 'millions, a reduction of £73 millions on the 1929 figure, the final estimated credit balance of £39 millions was £99 millions' lower than that for 1929.

Hie drop in the net balance of invisible receipts was chiefly due to a heavy declino in riot income from shipping and overseas investments, which fell by £25 and £35 millions respectively. ihe following tf.ble shows the estimates for the last three years, in millions 'of pounds, setting against the excess of imports of merchandise and bullion the estimated net receipts under the various headings of "invisible exports": T f . . 1928. 1029. 1930. excess of imports . . 358 3GG 3!)2 government receipts . . 15 24 "l Shipping income . . . 130 130 105 Overseas investments income . . i 270 270 *"*3s Short interest and commissions .. .. R5 03 55 Other receipts ~ . . 75 75 ■195 504 431 Credit bnlnnce .. .. 137 133 39 As in former years, it has been found necessary to revise several of the estimated figures for the previous year. At the beginning of any one year, only estimates of the principal Government transactions for the previous year are available. Thus the publication of final accounts lias led to an increase, from £22 to £24 millions, in the net Government receipts from overseas during 1929. The 1929 estimate of net shipping income has not been disturbed, but the estimate for investment income has been reduced by £ls millions, to £270 millions. A similar change lias also been made in the 1928 estimate.

The estimated net receipt from Government transactions (which consist chiefly of net receipts 011 loans between Governments, reparations receipts and those on account of Indian homo charges) is lower, owing chiefly to a sharp drop in reparations receipts, partly offset by an incrcnso in other directions. , The heavy reduction in the estimate for net shipping income, from £l3O to £lO5 millions, was chiefly due to the heavy fall in freight and time charter rates, to the reduction in the actual volume of trade, and to a small drop in earnings from passenger traffic. The reduction of £35 millions in the net receipts from overseas investment is based upon the assumption that the net receipt from investments in fixed-interest securities has remained unchanged. It is then assumed that the net income from holdings in the "variable" group has fallen by 25 por cent., owing largely to the sovere slump in rubber, oil, nitrate, tea and non-ferrous metals profits. The last item, receipts from short commissions, includes acceptance credits, discount on foreign bills, bank interest, commissions, etc., 011 new issues paid by overseas borrowers, merchanting commission on overseas produce, brokers' commissions, insurance remittances, and earnings on exchange transactions. As a result of the fall in short money rates and the lower value of the world's trade—to quote the chief reasons—the estimate for net receipts under this head has been reduced by £lO millions, to £55 millions, although it is admitted that the actual drop may have been less than £lO millions, but was certainly substantially in excess of £5 millions.

CAPITAL UNEMPLOYED. AUSTRALIA'S POSITION. NEED FOR OUTSIDE HELP. [FROM OUR OWN CORRESPONDENT. ] MELBOURNE, March 31. Prompt external financial help is a prime necessity in any scheme for the restoration of Australia. The result of the last New South Wales general election is the criterion by which we are still judged, and unless at the next Federal election Australia shows a complete reversal of public opinion, an utter rejection of repudiation and inflation and a wholehearted acceptance of the principles which Mr. Lyons has so clearly expressed, there is little hope of any external financial assistance. Without that the outlook will be very dark indeed. The "credit" needed by Australia is a matter of quality, not quantity; that is to say, she does not need something that can bo "released" or be expressed in terms of a "fiduciary" note issue. Australia needs confidence.

There is plenty of capital both in Australia and overseas waiting, almost impatiently, to bo put to work in Australia. This is not capital in posse such as those credits which the banks arc accused of withholding, but capital in esse, actual cash, which is lying idle under the paralysing effect of present conditions. Capital is literally one of the unemployed at present, and like the rest of the unemployed can only liope to get useful and profitable work again when confidence is restored.

The seven principles in Mr. Lyons' statement contain the essentials for the restoration of confidence and the rehabilitation of Australian finance. Let it, be seen that they are being put into effect by a Government strongly supported by the people, nnd there will be no lack of assistance from Great Britain; within Australia enterprise will bo stimulated; those with money will bo prepared to lend or to spend it; the wheels of industry will gradually gather speed and the, necessary financial support to carry the primary industries on which we so greatly depend, over the period of depressed world prices, will bo readily available.

The people of Australia are sound at heart mid tlioy are being awakened by events to a sense of political responsibility sneli as they have not' previously experienced.

BRITISH MOTOR INDUSTRY. The Danish postal authorities have placed orders with a British motor firm for a licet of delivery vans, which shows that efforts of British manufacturers in Continental markets are meeting with success. FINANCE COMPANY'S .DIVIDEND. The Mercantile Finance Corporation, Ltd., Christchurch, lias paid its preference dividend for the half-year ended March 31 at the usual rate of 7 per cent, per annum.