BANK RATE IN ENGLAND'

Otago Witness, Issue 3942, 1 October 1929, Page 28

BANK RATE IN ENGLAND'

ADVANCE OF ONE PER CENT. EFFECT ON UNEMPLOYMENT. LONDON, September 20. Ihe bank rate has been advanced to, Cl per cent., which is the highest since April, 1921. It did not cause any. serious decline on the Stock Exchange, as most brokers anticipated it would.’ There was, however, a slight weakening in gilt-edged securities, and some industrials, though rubber shares remained steady, despite the raw commodity declining a farthing. REASON FOR THE RISE. RUGBY, September 26. The increase in the bank rate by 1 per cent, to 64 per cent, was announced to-day after the weekly meeting of the board of directors of the Bank of England. The discount rate had remained at 54 per cent, since February 7 of this year, when it was raised to "that figure from 44 per cent. The last occasion on which a 6j per cent, bank rate prevailed was in April, 1921. The rise is attributed to the continued efflux of gold. Yesterday a further large amount of approximately £1,000,900 was withdrawn from the Bank of England, partly for shipment to America, and partly ior export to the Continent, bringing the total for the week up to nearly £3,500,000, and reducing the total stock of gold in the bank to £133,000,000. The withdrawals of gold have been exceptionally large during the year, but the anticipated rise in the discount rate will check this tendency.

HIGHER RATE UNWELCOME. LONDON, September 27. The Daily Telegraph, in an editorial, says that the higher rate is unwelcome in both commercial and financial circles. It goes without saying that dear money impedes enterprise of every kind anil is not calculated to assist the revival which has become manifest of recent months. Yet it would be unwise to exaggerate the consequences of Germany s revival, which has been achieved despite a far higher bank rate. It must further be remembered that there is no sound alternative. The Daily Telegraph’s parliamentary writer says: “ No doubt the Government deeply regrets the necessity for an increase in the bank rate on account of its restrictive effect on productive work generally, as well as on the financial floating debt, which will substantially affect the Budget and the financing of schemes for the relief of unemployment undertaken by local authorities'.” The Times says: “A rise in the bank rate was inevitable and unavoidable in consequence of unprecedentedly large gold withdrawals. The object < f the Bank of England is to stop the export of capital, which threatened to deprive our trades and industries of the credit supplies which they at present enjoy.”

CREDIT POLICY OT BRITAIN. LONDON, September 26. The Daily Herald recalls that ths Turner-Alond Committee last year deelared that it was not convinced that it was either practicable or desirable that the credit policy of Britain should be determined more or les* automatically by gold movements. The paper expresses the opinion that the raising of the bank rate strengthens the committee's demand for an inquiry into the best form of the credit policy. SCANDINAVIAN RATES RAISED. LONDON, September 26. The Scandinavian bank rates have been raised following the London announcement, Danish and Swedish to per cent., and Norwegian to 6 per cent.