STERLING FALLS

Taranaki Daily News, 21 September 1931, Page 9

STERLING FALLS

ATTACK BY SPECULATORS MARKING DOWN OF PRICES REFLECTION IN AMERICA BRITISH ELECTION ISSUE WARNING BY FINANCIERS By Telegraph—Press Assn. —Copyright. Rec. 11 p.m. London, Sept. 20. Mr. Ramsay MacDonald unexpectedly returned to London on Saturday night and, conferred with representatives of the Bank of England. His return was due to financial problems, especially the speculators’ attack against the sterling in New York, Mr. MacDonald will come to London again on Sunday for consultations on the election issue. The first Saturday reopening of the Stock Exchange since April, 1917, was marked by a renewal of heavy selling of British funds on foreign account, with a further serious marking down of prices of mine shares. Holland is at present the chief source of Britain’s gold drain. Another £1,790,000 has been withdrawn and sent to Amsterdam, making the week’s total £3,300,000. The Amsterdam Stock Exchange Committee has reported against closing the exchange but has issued grave warnings against sellings, with the result prices recovered slightly. M. Flandin, French Minister of Finance, interviewed by the Matin, emphasised the sinister consequences of the speculators’ attack on the pound sterling, for there would be universal disaster with a catastrophic slump if the British were to lose confidence in the sterling. That was why France was ready to intervene again. No decision on the election question can be expected until next week. Mr. MacDonald is reported to be making up his mind in the quiet of The Chequers during the week-end, and he will probably announce his own conclusion to the Cabinet on Monday. Financial circles’ opposition to an election is unabated. The Economist says a dissolution at the present juncture would mean the inevitable collapse of the sterling. The whole Press now takes it for granted that whenever the election campaign conies Mr. MacDonald will take the lead as a national Prime Minister, but in some quarters it is suggested he will probably go to Washington to make room for Mr. Stanley Baldwin.

SHARES DROP IN NEW YORK ALL THE. MARKETS AFFECTED. FOREIGN BONDS SUFFER MOST. Rec. 7.35 p.m. New York, Sept. 19 With all the markets approaching a “selling crisis,” London influence and general bear sentiment here continued to drive prices down in all fields to-day. Leading stocks dropped two to four points and other issues more drastically. Federal mining and smelting shares, for instance, lost 21 points in to-day’s two hours’ trading. Prices generally were the lowest since 1924. To-day marked the second anniversary of the collapse of the “college market.” The value of all limited stocks has dropped 60 per cent, since then and lost 50,000,000,000 dollars in value. United States steel, which was the pivotal issue to-day, closed at 7'51.4, representing a loss of I'B6} points within two years. The foreign bond market to-day was all but demoralised and large losses were generally recorded. British, Danish and Argentine issues were the hardest hit. The Brazilian Government’s announcement to-day that a partial moratorium on the foreign debt had been made complete pending the creditors’ agreement helped to depress the bond market. Commodities also suffered to-day. Cotton lost 15 points, selling at the lowest since 1699. October delivery closed at 6.2 cents. Sugar, coffee, rubber and grains were influenced by the securities markets and also sold off. British Government bonds and pound sterling were subjected to sharp pressure on Saturday’s financial markets, when stocks suffered another sinking spell. The United Kingdom 5% per cent, issue of 1937 dropped more than £lO per bond of £2OO par value. Sterling dropped to 4.84 J and- cable transfers were off one cent from Friday. Efforts were made to sell sterling short, but the banks declined to accept short sales. Some future offerings at lower than 4.75 have been reported. It is believed the selling reflected the growing uncertainty over Britain’s ability to maintain the current gold parity of 4.80 5-8. A local report that American banks and insurance companies were unloading weak stocks which had been held as collateral since 1929 caused the collapse, of insurance shares, which suffered heavily. The Sun Life Assurance lost 300 points in the bid price and other companies lost from one to 20 points. Australian Commonwealth lost up to 4A points, New South Wales 3 and Sydney 3. The Canadian dollar sank to the lowest level of the day and the lowest for several years as the banks closed-to-day. The discount rate was 23-32 cents lower than at tho opening. The banks are loath to ascribe a. reason, although some circles blame the low prices for Canadian wheat.