COMMONWEALTH CREDIT

Taranaki Daily News, 31 January 1930, Page 9

COMMONWEALTH CREDIT

DEPRESSION IN AMERICA BANK BALANCES DEPLETED BORROWING NOT REMEDY Jf. By Telegraph—'Press Assn. —Copyright. Rec. 8.45 p.m. New York, Jan. 30. A somewhat steady downward pressure is being exerted on Australian credit here, particularly as reflected by prices of Commonwealth stocks, and the difficulty in securing the transfer of funds to and from Australia, due to exhausted bank balances. Business houses intimately familiar with the Australian and American trade, moreover, look forward to continued stringency for 11 months. The last purchases of bonds made here on account of the Australian sinking fund were at 30s. Cd. Doubt is expressed whether sufficient funds are available at the present time for any extensive purchases sufficient to have any appreciable effect on prices. As concerns money transfers, which now merchants “arrange with the greatest difficulty, and for which they must pay through the nose,” condition? are expected to grow worse before they become better. The bank balances arc fairly widely exhausted, and it is generally expected Australia will stringently curtail her American exports during the year. The recent American financial collapse has reduced the American purchase of raw materials abroad. Nothing like an improvement can be in sight. One bright spot does, however, appear. It is stated on excellent authority that Boston banks have just arranged some credits for a contemplated purchase of Australian wool. It is, understood New England textile interests have decided to enter the market,- and this may offer some temporary relief.

There is the conviction here that the Australian banks continue drastic curtailments of credits to locp.l merchants for financing time payments on luxury goods, notably automobiles. This is expected further to reduce Australian imports of American manufactures. Exporters here look upon this and upon the fact that Australians will make a voluntary effort to curtail all imports as an essential step to redress the unfavourable balance as certain.

Some fears are expressed concerning the possibly serious results of the actual export of capital from Australia? at the present time. Should this continue the feeling is that it will prove even more

difficult for Australia to overcome the economic depression. It is necessary to make it clear that while the Australian situation is frankly canvassed here by financiers, who do not hesitate to reaffirm that loads will not prove the remedy and that they themselves would hesitate to undertake any Australian flotations at the present time, no matter what the terms, their confidence in the soundness and basic strength of the Commonwealth and its people is in no way diminished.