AUSTRALIAN CREDIT

Otago Daily Times, Issue 20962, 27 February 1930, Page 11

AUSTRALIAN CREDIT

BAN BY LONDON BANKS. BALANCES SERIOUSLY DEPLETED. (United Press Association.) (By Electrlo Telegraph—Copyright.) LbNDON, February 20, (Received Feb. 27, at 0.30 a.m.) Under the heading “ Financial Crisis, in Australia,” the Daily Telegraph prominently displays on it's main news page a story, from a special corresppondent, udiich begins as follows:—“Australia is faced with a financial crisis which threatens to have a crippling effect oft her internal and export trade for some time to come. The position is so serious that balances held by Australian banking houses in London are so depleted that it is necessary to place an almost complete ban on the granting of letters of credit for London to customers in Australia.”

The article proceeds: “It ip an almost revolutionary departure in banking practice that the banks’ clients should be called on to undergo a form of inquisition before being granted ordinary business facilities.” The correspondent gathers that the banks intend to withhold letters of credit when the purpose may be considered luxury. The City of London ,is hazy how the ban has arisen—whether it is the result of Government pressure or an agreement among the banks themselves in order to prevent depletion of the reduced balances.

A prominent ship'per is of the opinion that it is.the most serious blow possible to Australian credit here, adding that if it was persisted in it would mean the end of credit altogether. While i\ is too earlyi to measure the effect on trade and travel, there is little doubt that it would lead to considerable restriction in both, which apparently was the avowed aim. The manager of one of the Australian banks in London said that Australia was out to put her house in order. She had been over-buying, and it was necessary now to reduce imports.