DOLLAR " CREDITS."

Otago Witness, Issue 3270, 15 November 1916, Page 26

DOLLAR " CREDITS."

THE SYSTEM EXPLAINED

AUCKLAND, November 13. In order to facilitate trade between New Zealand and the United States, the Bank of New Zealand some months ago arranged to issue dollar credits instead of or alternative to sterling credits. An explanation of the system was given by Mr Harold Beauchamp, chairman of directors of tho Bank of New Zealand, on his return last evening by the Niagara from a visit to America and Canada. lie said xhat tho new method would obviate the necessity of financing on the London market as heretofore. In the past, for payment of goods imported to New Zealand, it was customary to draw on customers in New Zealand under letters of credit cstablithed through London banks. Under the new dollar credit system, payment is'made by representatives of branches of the Bank of NewZealand in various cities in America, end remittances to provide for these are made from New Zealand to the Stares, either by telegraphic transfer or otherwise. "I do not take any credit," said Mr Beauchamp. "for inaugurating this system, as provision was made for it prior to my departure from New Zealand. I found both in the United States and Canada that tho altered system was very greatly appreciated, and that it would tend to facilitate trade between both countries and New Zealand. In conversation with several New York bankers, I was led to understand that when conditions had again become normal it would bo more convenient to revert to the old scheme of financing. The alteration in tho manner of financing is due to the fact that America for the time being is a creditor nation, with the result that. owinp to the large accumulations of gold in New York, money in that city is to-day appreciably cheaper than it is in London. When I left Vancouver on October 25 the rate for call money in New York was frolic 2 to 2£ per cent., as against 5 to 6 per cent, for money in London."