GILT-EDGED STOCKS

Otago Daily Times, Issue 27241, 18 November 1949, Page 12

GILT-EDGED STOCKS

Artificial Resuscitation

British Government’s Intervention NZPA Special Correspondent

LONDON, Nov. 15. The fact that the Government last week found it necessary to send its official broker—Who happens to be a cousin of the Chancellor of the Lxchequer, Sir Stafford Cripps—into the gilt-edged market to buy Government securities and thus bolster up the sagging price of gilt-edged stock is only one indication of widespread uneasiness in the Treasury and official Government and financial circles abpul the persistently low level at which sterling is being quoted abroad and the failure of devaluation to engender a return of market confidence at home. , The Swiss rate for sterling, which is regarded as the most reliable barometer of Continental feeling, has fallen from 12.60 Swiss francs on September 26 to 10.55 francs at the end of last week. At home, the steady decline in the value of gilt-edged stock has been causing increasing uneasiness among insurance companies and big financial houses, who are the chief supporters of this type of investment, and the intervention of the Government to force up prices has therefore been greeted with some relief. This has hO'-Tw^-surprise, for though Mr Hugh Dalton during nis term c.o - - Exchequer several times resorted to the-expedient of sending the Government broker into the market to buy up slocks, Sir Stsfford has so fai avoided this form of artificial resuscitation and was indeed believed to be opposed to it. Critics of Government financial policy have not failed to point out that the Government action in pushing up the price of gilt-edged stock by these means is inflationary and therefore directly contrary to Sir Stafford’s professed "policy. It is now being predicted that the Government will be forced to take further remedial action if the price of sterling abroad is to be restored. In Government circles there is widespread disappointment that Britain's improved trade figures following devaluation have not already brought about this revival and some disposition blame the anti-Government feeling on the part of British industrial and financial interests, who,are accused of influencing the feeling abroad. This may go a long way to explain the state of veiled hostility which now exists between the Government and the City of London, and which found its expression in the frigid reception given to the Prime Minister at the Lord Mayor's banquet last week.