INTERNATIONAL PAYMENTS

Waikato Times, Volume 112, Issue 18778, 28 October 1932, Page 8

INTERNATIONAL PAYMENTS

DIRECTIONS REVERSED. » ■" »■— \ GERMANY AN EXPORTER. (From a Correspondent.) GENEVA, September 2.. Much curious information on the effect of the economic crisis on international business transactions, particularly on capital movements between countries, is contained in a study of the balances of payments and capital movements in 1930 and 1931 just published by the Secretariat of the League of Nations. The direction of capital movements, this study shows, has been completely reversed: Some countries which are normally lending countries —for example, France and the United Kingdom—have begun to Import capital on a large scale, while tile country which since the war has borrowed most —Germany—has become a capital exporter. A similar reversal has taken place in the oase of a number of smaller countries. New capital Issues In the creditor countries for foreign account have fallen off rapidly; the supply of large French balances of short-term capital, which previously, directly or through intermediaries, flowed to debtor countries, Is po longer available, and instead France lias drawn heavily upon her short-term assets abroad —a fact which, at least temporarily, has put the United Kingdom and the United States of America, which, though they are oreditors on long-term, are debtors on short-term, In a position similar to that of debtor countries. Seourlty More Important than Yield. There has also been a rush for the liquidation of other short-term obligations, and the wish to avoid taxation or the fear of currency Inflation has caused' a heavy flight of capital from the poor to the rich countries. This’reversal of capital movements is reflected in a corresponding reversal of the trade balance of numerous countries, and in a heavy flow of gold towards a few' countries which are considered to afford the best security for short-term investments, such as France, the Netherlands, Belgium and Switzerland. 1 On the whole, the security of the investment has become a more important factor than the yield; while in normal times the movement of capital from a country is largely determined by relative interest rates, there has'recently been a marked tendency for capital to move from countries where interest rates are high to countries where they are low. The disastrous effect of these developments on the poorer countries and the close relation between trade and the movements ' of capital is clearly brought out and illustrated by graphs and data covering the years 1921 to 1931. A chapter is devoted to explaining certain important aspects of the changes in business prosperity during the post-war period in the light, of the data contained in the rest of the volume.

Comprehensive Information. The same chapter contains full statistical information on the movement, of long and short-term capital in recent years, an analysis oT the capital market in 1930 and 1931, and comparative tables showing international .dividend payments, Emigrants’ remittances and tourist expenditure. The volume, which contains about 180 pages, gives In addition detailed estimates, official or private, of the balance of payments and ihe outstanding international debts and assets of about 30 countries. ■ The statcments arc arranged according to 'a Common scheme, and in most cases figures lire given over a scries of years up to 1930 inclusive.