LONG-TERM LOANS

New Zealand Herald, Volume LXXIII, Issue 22352, 25 February 1936, Page 5

LONG-TERM LOANS

INTEREST BATES CRITICISM BY MR. KEYNES POLICY OF THE TREASURY LONDON, Feb. 23 A slight rise in gilt-edged securities was evidence of tho extraordinary respect tho City pays to the pronouncements of, tho famous economist, Mr. J. M. Keynes. Speaking at tho annual meeting of the National Mutual Life Assurance Society, of which he is chairman, Mr. Keynes insisted in the urgency of a further reduction in tho long-term rate of interest. He strongly criticised tho Treasury in this connection. Mr. Keynes declared that instead of attempting to promote confidence and stability in low short-term rates, which are required in order to lower long-term rates, tho Treasury was starving the banks and the money market of shortterm socuritic-s and refunding the floating debt at a higher rato of interest. Ho gave an example of recent operations when tho Treasury borrowed at 1J per cent on a five-year term and at 2J por cent over 25 years in order to repay a short-term debt costing $ per cent. There was 110 national explanation for this except that tho lreasury lacks confidence in short-term rates remaining low. Siuce tho Treasury largely controls the situation it is natural that, humbler folk aro influenced by tho Treasury's apparent apprehensions. Mr. Keynes also considers that tho timo has come for a further increase in tho volume of bank money accompanied by an increased supply of Government securities suitable for bank holding. Tho Bank of England deserves credit for steps in this direction, but has not gone far enough, even to sustain the level of long-term Government securities. Mr. Keynes considers the present industrial prices unduly high, as they presume not merely a maintenance of present activity, but a substantial improvement. Although tho immediate result of Mr. Koynos' speech has been to strengthen gilt-edged securities, tho financial press considers that tho ultimata effect will be to weaken them, as Mr. Keynes has clearly revealed to investors the trend of the Treasury and Bank of England policy. MELBOURNE MINT MORE GOLD RECEIVED SMALL DOMINION INCREASE A net increase of 27,158.24 fine ounces of gold is shown in the annual ieturn of the Melbourne branch of the Royal Mint. The total received in the year ended December 31 is 229,255.85 fine ounces, compared with 202,097.61 in the previous year. The roceipt of new gold is greater and the amount of light gold coin nnd gold from unknown resources, comprising old gold and jewellery, is smaller than that received in 1934. Tho reduction in these two items is 12,914.550z., so tho actual increase in new gold is 40,072.790z. The greatest increase was shown bv Victoria, the quantity being 10,535.430z. ahead of tlnat of the previous year. Other increases wore: —Queensland, 10,074.950z.; New Guinea, 5,440.22; South Australia, including North Australia, 4,855.60; Now South Wales, 2,471.61; New Zealand, 636.96; and Tasmania. 106.66. Decreases were:— Western Australia, 19.96; Fiji, 20.58; Malay, 8.10; light gold coin, 952.91; and unknown, 11,961.64. Of the gold received last year, 240,784.590z. standard were reissued for export. Receipts of gold in the last thrco years compare as follows: — 1933 1931 1935 Source Oz. Oz. Oz. Victoria .. 60,494.38 69,777.99 86,313.42 NSW . . 10,(500,8(5 8,870.62 11,342.23 Now Zealand 20,830.52 15,027.25 1G.5G4.21 Queensland . . 20,577.21 43,550.50 53.631.40 S.A. and N. Aust. 6,179.11 7.733.16 12,588.76 Tasmania .. 879.11 872.82 979,48 Western Aust. 15.91 28.0G 8.10 Sew Guinea 11,527.7-1 8,853.20 14,293.42 Fiii . . • Malay . - "3.01 114.91 Light gold coin 4,720.04 n-o'si Unknown .. 57,150.20 45,034.1 a 33,0(2.51 Total . . 102,984.74 202,097.61 223,255.85 Gold bullion issued during 1935 amounted to 250,080.06 ounces stands ard, valued at £937,750. GOLD AND SILVER WORLD MARKETS REVIEWED UNITED STATES POLICY Reviewing the gold market, Mocatta and Goldsmid, of London, recall that the main feature of 1934 was the liquidation by the United States of a favourable trade balance through foreign purchases of bullion. In 19.30, they state, "America's silver purchases alone have more than sufficed to correct this balance; her gold imports during the year, which amount to about £300,000,000 sterling, must represent the counterpart of capital which has been repatriated or has taken refuge from abroad. Belgium, too, has enjoyed, though on a more modest scale, an inflow of capital as a consequence of dovaluation; although such capital seeks employment primarily in the short-term market, its influence in easing the immediate financing problems of countries where money is tight ought not to be overlooked in assessing the futuro prospects of the gold bloc. "The pound sterling, although technically oil : gold, han in the last six months varied very little more than tho gold currencies, as the British Exchange Authorities, by making brilliant use of tho large resources at their disposal, have imposed a period of actual stabilisation with tho franc and dollar, contrasting with the wide fluctuations of the early part of the year. For the rest, India has continued to sell on about the same scale as last year—her exports amount to about £30,000,000 over the year —and there has been an intermittent but at times very keen demand from tho Continent for gold coins of all denominations and for sovereigns in particular." Jtegarding silver, the firm states that tho American silver-purchasing policy has had results very different from that hoped for by its sponsors., though its results have justified the expectations of Eastern bankers and others connected with China, the latest of these expectations being the complete dislocation of tho silver currencies and markets of the world. PUKEKOHE PRODUCE < [from OUlt OWN COKRKSrOXDBNT] PUKEKOHE, Monday The market for locally-grown potatoes and onions has remained quiet through the month. Potatoes aro still quoted at 'la to 4s Od f\ cwt, f.o.r. Pukekohe and onions at 4s Gd to ss. Pickling onions, which are in short supply, sell at 7s Gd, cabbages at 5s Od a large sack, pumpkins at 4s Od to os Gd a cwt, carrots and parsnips at 4s a sugar bag, swedes at 3s Gd a sugar bag, and rhubarb at 3s a dozen bundles.