Wairarapa Daily Times [Established Over 50 Years.] SATURDAY, 19th MARCH, 1932. BRITISH FINANCE.

Wairarapa Daily Times, 19 March 1932, Page 4

Wairarapa Daily Times [Established Over 50 Years.] SATURDAY, 19th MARCH, 1932. BRITISH FINANCE.

Hoav has Great Britain managed in five months before due date to pay £30,000,000 of the total amount of £40,000,000 advanced to the Government by United States bankers in August last in order to preserve the gold standard, an effort Avhich Avas acknoAvledged as a failure by suspending the gold standard on 20th September. Made shortly after the suspension of the standard, the forecast of events by the Midland Bank has been justified, just as events have also proved to be the justification of the suspension of the standard. Before the suspension of the standard the balance of international payments and receipts on current account had been running heavily against Great Britain. On the suspension the revieAv of the Midland Bank forecast that the process Avould be naturally checked by the resultant fall in the external value of. sterling. Imports Avould be deterred, and exports stimulated. On capital account, too, it Avas explained that relief Avould naturally folloAv. NeAV oversea lending and purchases of securities abroad, even AAdien regulations permitted, Avould be discouraged by the loAver exchange value of sterling, Avliile sales of foreign assets by British holders Avere rendered more attractive. On both capital and current account, therefore, the tendencies should Avork towards a material strengthening of sterling, until appreciation took place to a point approximating true equilibrium. From month to month, oversea financial transactions between Great Britain and other countries have on balance been favourable to Great Britain. The high price of gold in terms of sterling has brought forth hoards , from India —estimated at £25,000,-

000 up to the middle of January, and there were then hopes that the movement from India would continue until £100,000,000 had been released. Foreign assets have been sold by British holders with good results in terms of sterling. All these transactions have proved what is the financial strength of Great Britain, and have placed her in the position in which the world finds her to-day. Has sterling been stabilised? Experience in the course of exchange over some months will be required to show this. That the restrictions on foreign exchange, slight though they were, compared with restrictions imposed on dealings in foreign exchange in other countries, have been removed, is an indication that equilibrium is considered to be in sight.