AUSTRALIAN APPEAL TO NEW YORK

New Zealand Times, Volume LII, Issue 12196, 22 July 1925, Page 6

AUSTRALIAN APPEAL TO NEW YORK

We have the Commonwealth Treasurer’s explanation of the financial appeal of Australia to New York. It is not a question of Australia’s credit, which stands very high in London. It is not a case of some Australian pplicy probability causing distrust among the financiers. It is simply that the London money market cannot supply the Australian demfind. The money is not all there. The Australian Finance Minister does npt put it so baldly. He says that “the necessity for appealing to the. American market is due to the London market not being capable of immediately absorbing all flotations offering.” It comes to the same thing.. There was a time when the London market’s absorbing capacity was equal to any possible reasonable demand. Now that capacity is unable to absorb a very reasonable demand, for an amount which, however large it may bulk in the experience of Australia) is small in comparison with the great issues the market was once in the habit of absorbing easilyi The market was able to absorb a portion of the Australian demand, hut appeal had to be made to New York for the balance. The proportion allotted to New York was fifteen millions of the twenty required by thp Commonwealth. New York was rated by high financial authority as at the moment three times, as strong as London, and responded Within one hour of the appeal. In the event there was no hasty determination. Neither was there any desire to leave London. On the contrary, the Australian Loan Council was very loath to go away from London, where Australia had always received generous treatment. The Council, therefore, persisted in its preference for London. But, as Dr Page has explained, the “advice of the best London finance authorities” forced the Council to the opposite conclusion. It was London’s own admission that caused the appeal of Australia to New York. And it is very evident, from all the circumstances detailed, that it was by the best expert London advice that the capacities of the two money markets were gauged at three of New York to one of London. In the immediate flotation of the larger proportion, New York has strongly justified the gauging. 1 As Australia wanted the money, and feared pressure, we must conclude that New York has in this transaction come substantially to the help of a British Dominion in a moment of temporary crisis. Surely a reason for satisfaction. We say temporary, because it is at present unthinkable that the capacity of the London money market will not again reach its old absorbing power. That power is derived from the profits of commerce. For the moment these profits are meagre. The fact is proved by the huge list of unemployment in Britain. There is every reason—in the predictions of financial writers and in the improving European political situation—to hope for a recovery and a re-establishment of the; old scale of profits. The appeal of Australia to New York does not mean that the predictions of recovery have been falsified, but that their fulfilment is delayed by causes which most people understand, and all hope to see ended before very long, provided reasonable ideas prevail in the diplomacy of the world.