TRADE REVIEW

Southland Times, Issue 20013, 29 October 1926, Page 8

TRADE REVIEW

THE MONEY MARKET EFFECT OF STRIKE CREDIT RATES CERTAIN TO REMAIN HIGH (Special to the Times.) Wellington, October 27. It is quite obvious that the general strike in May last and the long drawn out coal strike have had a very depressing effect on British trade and considerably depleted the resources of the country. This must have a direct and bad effect on the London money market, where the rates for credit are certain to remain high. Mr J. M. Keynes, who is a noted economist, and editor of the Economic Journal, suggests the imposition of an embargo on foreign loans owing to Britain’s depleted resources. He states that Britain’s foreign trade for this year will yield an excess of only seventeen millions in visible and invisible exports over imports compared with a surplus of eighty-eight millions last year. Even allowing for increased shipping earnings—and there is just now a boom in Atlantic freights —reparation payments and the enhanced profits of international banking the surplus for foreign investment cannot exceed fifty millions. It is to be hoped that some such thing will happen otherwise it will rn h-’T'l with the dominions that desire to borrow in London next year. These foreign loaus generally carry a substantial rate of interest and are therefore exceedingly popular. The dominions cannot compete against such issues, that is they cannot afford to offer correspondingly high rates of interest and may therefore have considerable difficulty in loan flotations. On the other hand if such difficulties do arise and force the dominions to modify their demands the taxpayers will not be sorry. The .Auckland City Council is raising a loan of £500,000 at 51 per cent, with the issue price at 99, and the loan has been underwritten. This is Auckland’s second venture on the London money market. In January the City of Auckland placed a 5 per cent, loan for £400,000 at 97, the loan was underwritten, and the underwriters had to find 66 per cent, of the amount. The loan now offered carries a higher rate of interest, but the price has been increased by 2 per cent. There is scarcely any prospect of the loan being a success notwithstanding that the dominion premiers are in London. Early in July the Auckland Electric Power Board offered £250,000 worth of 5 per cent, debentures at 97, and of this amount £175,000 was expended in Britain. During the current year the Auckland district has obtained in London £1,150,000. The interest at the rates named will amount to £58,750, and the sinking fund will mean providing another one per cent. FREE TRADE MANIFESTO. The manifesto issued by international financiers, bankers and industrialists has met with a very cool reception in practically every country. Tariffs will continue, and perhaps raised considerably in some countries, and thus trade between nations will be hampered and restricted. The United States will not abandon its protective duties at least not so long as the Republicans remain in control of the Government of the country. But there is a revolt against this high protection by the farmers of the United States who, like the farmers in New Zealand, are suffering from the fall in the values of primary products. This season there is a bumper cotton crop and there is a demand for the valorisation of cotton on the lines of the valorisation of coffee in Brazil. This is now a burning question in the United States, and has caused a scare in manufacturing centres, as they fear that if the United States officially endorses the exploitation of national monopolies, the whole of the world supplying raw materials to .American industries will follow suit, and something like an industrial and commercial revolution will result. CONTROLLING TOOLEY STREET. The “Memorandum of Instructions” issued by the Dairy Control Board to the agents who are to receive consignments of NewZealand dairy produce through the board are well calculated to cause irritation, for the board sets out to dictate to these big Tooley Street firms how the business is to be carried on, and even goes so far to impugn the commercial integrity of these great provision merchants. That irritation has been caused is proved by the fact that one of the first statements made by the Hon. J. G. Coates on reaching London was to repudiate the Government’s connection with the board. Later it was stated that he was seeking detailed information respecting the board’s relations with the merchants and particularly as to the memorandum of instructions, and later it was stated that he was to receive a deputation representing all branches of the trade. The memorandum of instruction consists of 21 clauses, and the first clause deals with the fixing of minimum prices, for it says—Minimum prices for sales will bo fixed from time to time, as found necessary by the London office of the Dairy Board after consultation with agents. The board is also determined on 8 holding policy for clause 20 says that agents must not proceed with sales until auuionsja l-> the board. If any agent is unwilling lo hold or continue holding the board may transfer the parcel or parcels. Sales and stock reports are to be sent in each day by agents and these reports must show the grades, brands, prices obtained and stocks on hand. Account sales are to be rendered in quadruplicate, separate account sales being required for butter, cheese and whey butter. A separate sheet is to be rendered for each brand. Statements of accounts in triplicate must be sent with each account sale or group of account sales, and all handling charges covering port rates, landing charges, receiving and warehousing in London, etc., must be debited in account sales as actually paid out and not subject to any flat rate. Agents are not permitted to trade with each other on the board’s consignments unless authorised by the board. And the final clause reads—“A firm of chartered accountants will be appointed by the board to audit the transactions of the agents relating to the disposal of the board’s stocks, with the object of checking the accuracy of the account sales and ascertaining that each agent is conforming to the regulations set out by the board. The agent’s goodwill will be fully protected, but the auditor’s duty will be to report to the board any irregularities in connection with sales and any breach of the board’s regulations.” It is stated that the “memorandum” was not sprung upon the merchants, but was the subject of a conference between the importing merchants and the London agency of the board—a conference at which 36 importers and traders were present, which amended the “memorandum” in certain respects, and finally agreed to it. Difficulties have apparently arisen since the “memorandum” was issued necessitating the hurried departure of the chairman of the board (Mr W. Grounds) to London. It is also evident that the difficulties, whatever they may be, have not been overcome, hence the deputation of the trade to the Prime Minister. The board appears to have displayed a lack of discretion and commonsense, and has succeeded in causing irritation to those whose co-operation and goodwill it should have cultivated.