WORLD FINANCE

New Zealand Times, Volume LII, Issue 12151, 30 May 1925, Page 19

WORLD FINANCE

AND NATIONAL CREDIT LONDON STILL THE MONEY CENTRE STRENGTH OF BRITISH BANKS. In a special issue of the “Financial Times” of London, a very remarkable article was contributed by Viscount Inchcape, whose standing in the financial world may be gauged by the fact that at the present time he is a director of the National Provincial Bank, chairman of the P. and O. Banking Corporation, extraordinary director of the Bank of Scotland, chairman and joint managing director of the.P. and O. and British India Steam Navigation Companies. Viscount Inchcape wrote as follows: —London remains the money centre of the world; our great banking institutions are unequalled in resources and stability; our investments abroad are reckoned at £300,000,000; no country’s credit with the solitary exception of America’s stands so high us ours; our stock of gold amounts to about £155.000.000; our early reversion to a gold standard seems probable; our percentage of the world’s export trade is at least equal to our pre-war ratio, and bills drawn to-day in any part of the world still bear the hallmark “payable in London.” In spite of enormous sacrifice and the financial aid given without stint to our Allies —in spite of the diminished purchasing power of former customers, with its repercussion on our trade and industry—we are paying our way and reducing our indebtedness, while our debtors are still unable to reimburse us for any part of the obligations wo incurred on their behalf. OUR “INVISIBLE EXPORTS.” A recent Board of Trade return allows that, while our imports of goods in the past year exceeded our exports by £341,000,000 in amount, our “invisible experts” were valued at £370,000,000, so that a seemingly adverse balance was converted to one of £20.000,000 in our favour. What are those “invisible exports” which constitute so vital a factor of our national economy? Overseas investments accounted for an increase of £185,000,000 ; shipping services, £l3O- - commissions, £40,000,000: and other services, £15,000,000. Our net income from shipping in 1924 was actually £36,000,000 larger than that for 1913, but £210,000,000 less than for 1920, the post-war “boom” year. It was, however, £29,000,000 more than in 1922 and £15,000,000 in excess of 1923. Considering how important is the shipping industry’s contribution to the 'national receipts, State control,- which was advocated in some quarters before the experience of America and, Australia proved itsfolly, would be calamitous. Fortunately we have now a stable Administration in this country, and the economic heresies 8f clamant, hut ignorant agitators have ceased to be a menace. The good sense of the British people has decreed thfit all such dangerous quack remedies for social ills as a capital levy, nationalised industry and State-controlled banking would intensify instead of curing the evils incidental to a complex civilisation and a population greatly in excess of domestic food production. REMEDIES FOR ECONOMIC LIFE. Rational diagnosis indicates that the real remedies are increased production, cheap but remunerative prices that command orders in the, markets of the world, and economy in national and municipal expenditure. These may be unpalatable truths; but only their realisation can ensure a restoration to health. British tradd and industry are, of course, handicapped by the load of taxation which is the aftermath of the war. Its reduction with the least possible delay is greatly 1 to be desired, hut I realise that, to our credit’s sake, we must shoulder our burden instead of having recourse to the vicious system of fresh borrowing. The ‘ncideiice of onerous taxation can most quickly be mitigated by cheap production, labour’s intelligent co-operation, and the consequent expansion of our industry and .trade. There are. fortunately, signs of improvement in the last-mentioned respect. Thanks, moreover, to the formulation of the Dawes plan and other ameliorative measures, Europe is slojvly but surely getting back to the normal. and that is of good augury for British industry and trade. We are not. in the least jealous of our neighbours’ prosperity—all we ask at home or abroad is a fair field and no favour —and the sooner the purchasing power of Europe is .enhanced by a Tevival of prosperity the better we shall be pleased. BANKING BUSINESS EXPANDING Although British industry and trade did not recover in the past year to the extent that had been hoped for, there was a gratifying expansion in banking business, and the profits were satisfactory. Adequate credit facilities were not lacking for legitimate requirements, but merely speculative commitments were discountenanced. Our banks have been criticised tor their conservatism in that respect, but the experience of other countries has shown that British banking policy is the only safe and sound policy, Inasmuch as our great institutions maintin their invulnerable strength while fostering trade to the utmost. Panics and dislocations, due to shaky bank foundations, still occur in other countries, but they are absolutely unknown here, and public confidence in our great institutions grows year by year as these wax in strength and augment their resources.