DROP IN LONDON FUNDS

New Zealand Herald, Volume LXXV, Issue 23201, 22 November 1938, Page 15

DROP IN LONDON FUNDS

Sir, —New Zealand's official trade statistics of exports and. imports for the nine months ending September show that, while imports are approximately the same this year as last, exports have fallen by £7.2 million. Any fall in London funds, therefore, that can be attributable to trade should bp charged against a fall of exports rather than against excessive imports. The reasons for the fall in exports are due no doubt to several causes, such as facial eczema, higher production costs and bad seasons. To what extent each is responsible it is impossible to say. Exports, however, still show a surplus over imports for the nine months of £GJ million, which surplus for the nine months is approximately sufficient to meet. New Zealand's overseas interest bill for that period. There is, however, one possible reason which, so far as 1 am aware, has not been previously pdvanced. As a result of what was recently described by the Prime Minister as a campaign" in Great Britain, the market value of New Zealand stocks on the London Stock Exchange fell somewhat. Some £l7 million of this stock is due to mature next year, and it may be that holders of this stock, believing that New Zealand may not be able to redeem the loan, have been prepared to dispose of their holdings at lower rates than would otherwise have obtained. 1 suggest that the New Zealand Government, realising that it had available considerable quantities of London funds earning very low rates of interest. thought it could better utilise these funds by purchasing maturing New Zealand stocks on the open market at lower than their par value. No public pronouncement to this effect has been made, but it appears to me to be a likely explanation of the sudden diminution in our overseas funds which cannot adequatelv be accounted for by trade or other factors. Gainor Jackson.