FRANCE’S GOLD

Taranaki Daily News, 1 August 1931, Page 7

FRANCE’S GOLD

TEN MILLIONS INCREASE AGREEMENT WITH BRITAIN INROADS EXPECTED TO END INCREASE IN BANK RATE EFFECTS UPON INDUSTRY gy Tele£raph-*“Preis Assn. Copyright. Rec. 8.30 p.m. London, July 30. Though, the increase in the bank rate from 3J to 4J per cent, was expected, the announcement caused a drop in British funds of from one to two points, which will necessarily postpone for a long time Mr. Snowden’s conversion plans. Indian and Australian stocks were practically unaffected. The Evening Standard’s city editor says that though the increase was necessary to prevent funds going abroad, the new rate will injure industry and commerce, which will have to pay at least 5} for bank loans. As the banks will not give industry the full benefit of cheap money they should not pass on the increased rates immediately. Simultaneously with the increase in the bank rate in England the Bank of France announced that its gold holdings had increased by £10,000,000 to £463,250,000, representing 50J per’ cent, of the note issue.

Overdrafts long stationary at 5 per cent, have been increased by one-half per cent, as the result of the rise in the bank rate. It is understood that France has not granted an actual £20,000,000 loan or credits to Britain, but has agreed to a private arrangement whereby a consortium of the leading French banks has agreed to provide £20,000,000 for purchasing sterling bills rediscountable at the Bank of France. Thus France has agreed to make no further inroads on sterling, which has already strained the resources to the utmost.