ACTION BY BANKS

New Zealand Herald, Volume LXXII, Issue 22030, 9 February 1935, Page 13

ACTION BY BANKS

COMMODITY GAMBLING

CHECK ON THE PRACTICE

RESTRICTED LOAN POLICY

PEPPER FIRM IN TROUBLE

By Telegraph—Press Association—Copyright (Received February 8. 5.5 p.m.) LONDON, Feb. 8

The Daily Hemld states that the heads of the " big five " banks, at the request of Mn Montagu Norman, governor of the Bank of England, and the Treasury, have agreed to launch a drive against commodity speculation. Mr. Norman and the Treasury believe that the wz.ve of gambling in commodities threatens the entire cheap money policy of the Government.

The paper stales that the banks have refifted to aid pepper gamblers, who will be allowed to crash. To-day brokers, the Stock Exchange arid commodity dealers will be informed that the banks propose to call in all loans u.niess it can be shown that the money advanced is being employed strictly in non-speculative buiiiness. There was a dramatic development in the pepper market to-day when a petition was presented for the compulsory winding jp of James and Shakspeare, Limite J, of which Garabad Bishirgian is director. He is regarded as the leader of a nyndicate which accumulated a pepper pool although the firm nominally is engaged in metal broking. In the meantime a moratorium has been declared and the discussion between bankers and Mincing Lane brokers continues.

In answer to a question in the House of Commons the Chancellor of the Exchequer, Mr. Noville Chamberlain, said he disagreed with the suggestion that speculation in commodities was stimulated by the abnormally cheap money. Such speculation generally arose when there was increasing confidence in future prospects. The firm of James and Shakspeare, Limited, was converted into a public company at the end of last year with a capital of £500,C00, of which the greater part has b*;n issued.

A cablegram fro ri London on Thursday stated: The crisis in the pepper market necessitated a five clays' moratorium on all sales while Mincing Lane brokers negotiated with the banks to finance 6500 tons of pepper coming to London which necessitated raising £2,000,000 before ibe end of the week. The banks are disinclined to assist firms which have weakened themselves by speculation, but. are willing to help sound firms who have not over-traded. The Daily Herald says efforts are being made to form a cartel to take over altogether about 25,000 tons of pepper which is either here or due within a few days.