BANK RULE,

Waikato Times, Volume 107, Issue 17984, 1 April 1930, Page 9

BANK RULE,

TRAVELLERS RESTRICTED. ABUSE OF BANK NOTES. REASON FOR ACTION. (From a Correspondent.) SYDNEY, >larch 13. The announcement ol’ the Commonwealth Bank that the privilege of cashing Australian notes abroad would be withdrawn does not mean that a completc embargo has been placed on travel by Australians beyond their own shores. There has been no general refusal to grant credit to those who desire to travel abroad, hut it is a fact that, the expenditure of those who leave these shores has been Severely Restricted. Few travellers have been able to obtain letters of credit for the whole amount that they have required. It is certain that many travellers have abused the services of the banks. Therefore letters of credit nave been rationed, and people have been asked to do with loss than they originally intended to lake away with them. Cases have come under notice where obviously all the amount asked for has not been for travel. The largeness of the amounts has made it appear that some of the money was required for the purchase of merchandise. Naturally, in such cases, only the amount needed for travel has been granted. Some travellers have believed that they were entitled to take away with them as much money as they liked. They know different now. Extravagance abroad will be impossible for each letter of credit has been restricted to what the issuing bank estimates to be the strict travelling and living expenses of the applicant. In the past many travellers took .sufficient money with them to buy wearing apparel and other commodities to bring back to Australia. As imports by merchants are being restricted, it is fell that to allow travellers to use London credit for the purpose of bringing back to Australia goods that the merchants are prohibited from importing would be unjust, it would be closing one door and leaving another open. The banks have been strict in refusing letters of credit to people who are not their customers. Each man must go to his own bank. An exception has been made with the depositors in the savings bapks. Were letters of credit absolutely refused outward passenger traffic on the shipping lines would come to a Complete Standstill, whereas the tourist traffic this year is quite as big as in an ordinary year. Credit facilities are brought into the country just as they are taken out. In a general way it is a reciprocal business, and any interference on one side would lessen the business on the other and bo to the general detriment of Australia. ’J'lie action of the Commonwealth Bank in cancelling arrangements with foreign banks to encash Australian notes presented to them by travellers lias been forced by the abuse of the privilege. Travellers from Australia have had the privilege of encashing Australian notes in amounts of not more ih-an £25 at any port or town where there were Commonwealth Bank agents. For nearly .12 months past llie hank has found a continual increase in Hie notes that have been presented abroad, and of recent months the amount has swollen enormously. It has been apparent that the privilege lias* been used first to obtain cheap exchange, and later to defeat the object of restrictions, when the restrictions were placed: on imports. It has been apparent that notes in amounts of thousands of pounds have been .sent away by post and on reaching their destination have been Exchanged in Instalments for goods purchased. In Great Britain exchange was arranged at par, and in some other countries too, but in others it was arranged on the basis of the most favourable terms, that is, terms on'“which transactions would take place between the two banks. So far as is known the nationals of no other country have the privilege which hitherto lias been accorded to the people of Australia—exchange on these favourable terms of their hank notes while travelling abroad. It should he clearly understood that the restriction on the encashment of Australian notes in no way reflects on the general credit of Australia, which to-day is quite sound. Certainly the country is passing through a difficult time owing to the serious falling off of the value of its imports, hut most people have greath faith that there will be a rapid recovery, and that.the lesson now being taught will for ever be remembered.