NEW CAPITAL

Wanganui Chronicle, Volume 73, Issue 413, 3 November 1930, Page 10

NEW CAPITAL

BRITAIN’S OUTPUT ITS empireTmstribution FOREIGN DEMAND. The comparative ease with which the Dominions have borrowed in London has tended to conceal from the public, of the Dominions what a vital factor in Empire the supply of new enpitnt is. Australia has bought very largely outside the British market. Now that she cannot borrow in Britain, are those nntion* —. traded with—those nations wlr. Gid don’t buy—rushing to offer her cheap loans? Taking- an a vertigo over the years 1927, 1928, and 1929, new capital issues in Britain show a yearly average of £317,000,090. This figure, writes Sir Basil Blackett, “is not large in comparison with the corresponding figure before the war when due allowance is made for the fall in the purchasing power of money. The proportion taken by the United Kingdom is higher than was usual before the war, though it is exaggerated by the fact that nearly one-fifth of the, amount was for purposes of investment trusts, which prob ably used a considerable part of the money for external investment. The British Fmpiro outside the United Kingdom took only 24 per cent, of the whole, and the amount that went to dcvehm foreign countries was not very miii-li less than that which went to Im-

perial development. Indeed, in the year .1929 foreign countries with £52.109,000 almost overtook the British Empire’s drawings. “The United Kingdom is of course the main source of supply of new capital within the Empire for lending outside its own boundaries. There has, however, been a striking advance in the last two decades ja the provision of new capital for (heir own internal needs by Empire countries. India* is not very far short of being self-supporting, though British capital has recently been flowing out of India rather faster than its place can be taken by Indian capital, with the result that the Indian Government has had to borrow considerable sums in London. “The most remarkable advance in the provision of new capital has been made by Canada. On balance Canada is'now a lender, not a borrower. But with the exception of the West Indies, Canadians in search of external investments have not acquired the habit of investing in other Empire countries. There is room for greater co-operation between British and Canadian finance, both in Canada and in other parts of the Empire. Most of Canada’s external investment is in the United States. No other part of the Empire as yet lends appreciable sums externally, though Malaya, Ceylon, anfl possibly one or two other colonies are not far from being self-supporting. “Great Britain’s geographical proximity to Europe, as -well as her nineteenth century industrial history, have made it necessary for her to take an important share in financing European reconstruction. Her many commitments in Latin America have similarly prevented her from closing her money market since the war to demands for now

capital in South America Yet it is difficult to deny that old-established methods and the machinery of the London money market may have tended to draw new capital away from the Empire which might with advantage have been employed within. The needs of industry both in the United Kingdom during the difficult period since the war and the Empire as a whole for new capital for development have exceeded the suppip. “In recent years the speculative attractions of the New York stock market and in general a belief in the superior attractions of the United States, in respect of both safety and prospects, as a country in which to invest money have, drawn away very large sums for short-term and long-term employment in the American money market. Whether the individuals who have chosen to send their money to the United States have done well for themselves or not, it re mains true that even when allowance is made for the converse action of American citizens in investing their money in the securities of Great Britain, Canada, and other Empire countries, the Empire; as a whole has suffered from a shortage of capital ready and willing to take advantage of Imperial opportunities.”