BANK’S STRENGTH REVEALED

Timaru Herald, Volume CXXXVI, Issue 19093, 28 January 1932, Page 7

BANK’S STRENGTH REVEALED

REPAYING FOREIGN BORROWINGS INSTANTANEOUS EFFECT ON STERLING. United Press Association—By Electric Telegraph—Copyright LONDON, January 26. The Bank of England’s payments led to a brighter tone on the Stock Exchange. Gild edgeds firmed on the strength of the sterling. Australian and New Zealand mostly advanced £l. An appreciable improvement in the Sterling this morning followed the announcement that the Bank of England will complete next week the repayment of outstanding credits to the New York Federal Reserve Bank, and the Bank of France. The New York cable rate rose from the overnight figure of 3.44 dollars to 3.462. Press Congratulations. The “Times” city editor describes the statement as extremely gratifying, adding: “The fact that credits are not being kept open is a demonstration of the strength of the Bank’s position, for had the Bank felt it was desirable, as a matter of precaution, to keep the liabilities open in case of need, there would have been no difficulty in arranging for their renewal. Large sales of gold by India may have indirectly proved a helpful factor. No one foresaw that the suspension of gold payments would lead hoarders of gold, who in the last 30 years had absorbed about £365.000.000, to begin to dispose of it. Already about £30.000,000 has been shipped from India since September 21, and shipments continue. In this way India is not only making a profit for herself, but making a useful contribution to world economy.” The "Manchester Guardian” says the fact of repayment being effected without a reduction of the Bank’s gold reads as an agreeable surprise. The arrangement the Bank made was to repay in gold and avoid the exchange loss of about 20 per cent, if dollars and francs were purchased at the recent rates of exchange. The “Morning Post's” financial editor says that the Bank of England's announcement yesterday marks the completion of the transaction which, together with the credit obtained by the Government, will always stand as a record of the sincerity of Britain's attempt to maintain the gold standard against overwhelming odds. Repayment without resort to gold shipments shows the skill with which exchange operations are conducted, and the fact that no renewals of loans was sought indicates the strong positions. There remains outstanding £40,000,000, which the Government obtained from France and the United States in August for a year.