1953-07-01 — Page 9

THE CHINA MAIL, WEDNESDAY, JULY 1, 1953.

Danger Ahead, Unless Rich New Coal Gilt-Edge Share

Major Moves Made Towards Convertibility

The key-note of this year's Report by the Bank for International Settlements is that "never before has a worldwide inflation been stopped at so small a cost from the economic and social point of view.” It remains to be seen whether this luck can hold.

The BIS itself emphasises that there are "still great difficulties to be overcome:" that governmental borrowing from commercial banks is fraught with considerable danger; and that there are very real dangers unless recent achievements are promptly followed up by major moves towards convertibility.

In the next few months the U.S. Government will be borrowing heavily from the commercial banks and will not be helping towards con- vertibility.

Britain's Gold Reserves

The rise in the gold reserve during May was not so Kreat as in April, $48m. against $167m, says the "Finamelat Tim:s."

##Forshadowed by

It intenda to take at least a policy in New York, including year before helping the sterling, those concerns (which ተገረ ̊ | urea-OEEC_convertibility drive: extend to some dushee compatties the post-Coronation Common-and Industrial companies as well wealth conference in London was us pubile utilities) which have that prospect, had to postpone or shelve their Considering the strength of the projects for raising more money, protretionist (not

to Ray isolationist) forces in the US

RUSSIA PRAISED its helpreven a year hence cannot be assumed, unless some sort of internal and international setback forces IL 10 reconsider its policies and its timing.

Import restrictions, says the BIS, "must be regarded as in-

Nor

endorse the BIS's favourable ac- will everybody wholly count of its two earliest converts, Belgium and Italy.

Germany,

Even for Western where it reports that a flexible credit policy has created "an

abundant flow of genuine domestic savings"

Scams Found

In Lancashire

to

еди

Manchester. June 30. Agecrofi

Colliery. Pendlebury, which cloved more than 20 years ago, is the be reopened by North-West Divisional Coal Board to

newly. work discovered rich coal status under the Prestwich area. Preliminary estimates are that the new SCEN

provlile more

than 1,000,000 tons of coal

year. To set to them, new ronds about three

mile* will have lo be Fong made acid more than a tillon pounds will be required to bring ile colllery Into action again.

For

months, test borings were sunk in the Prestwich and Heaton Park They went down hundreds of feet and samples were brought to the surface for study by geological ex- perts. Bore holes indicate coal seams six to ten feet thick, far beiler than most

of the thlu seams in the

Lancashire coalfield,

"

and

the new field will provide welcome bonsi to coal resources in the county,

Objective Can Be Attained

Market Decline Was Overdue

(By Sydney S. Gampell, Reuter's Financial Editor)

The only real puzzle about the supposedly puzzling break in the London gilt-edged market on June 19 is why it did not happen earlier. It was almost certainly overdue.

MESSAGÈRIES

P.O. Box 68. Queen's Bldı.

M

MARITIMES

Tel: 26651.

M

PASSENGER/FREIGHT SERVICE

Leaves Marseliles .. Balled

Outwards "FELIX ROUSSEL" "LA MARSEILLAISE", July "VIETNAM" July Horsewards

Leavra tongkOBE "FELIX ROUSSEL” ..21 July "LA MARSEILLAISE" Aquat *VIETNAM” ........22 Augu

[Iongkong 10-11 July.

2-4 Aug.

Por Yokohama Saigon Yokohama

-19 A.

Dun Marsstilen via

23 Aug.

Manila

27 AVE.

Balcon

14 Sept,

Nalgon

vlu Marseilles to nli Medlierronean & West Africa poris. vla Djibouti to Madagascar.

"SILVERSANDAL"

All this year the London market had been outwards rising while the New York one had been falling-- "MEKONG" and though exchange control is supposed to Homewards insulate the London m. rket it in fact does nothing "SILVERSANDAL of the sort.

After a discreet interval--as will feel called upon to do all In this case - London nearly the more of theirs. nlways follows the major New European economists are con- York trend. That used to happen eineing themselves that the even during the war and the right U.S. policy at present early post-war years, when would be a Daltonian reflation- exchange control really did in a budget defleit of $10 or sulate the London market. At billight andl present, London cannot "go it soft money policy. In present correspondingly alone," in defiance of the New conditions, Washington's present York trend, without endanger- ing the dollar reserves.

Typifying

position, the

louched

of Junc

Lory managers would not

DO 15

be

dead doing Another London but argu-

would!

*MONKAY"

"MEKONG"

FREICHT SERVICE

Leaver

..Europe Balled ' „Utamburg--Sailed

Hongkong

6-7 July 23-26 July

For Japan Japan

Hongkong

Fut..

· Leaves.

Resting-12 July

34 July

..Keelung—4 August B August Keelung-19 August 20 August

↑ Salgon, Martellies, Algiers, Oran, Tanglera, Casablanca, Le Havre, Antwerp, Rotterdam & Dunkirk. Bubject to change without notice.

MAERSK

LINE

FAST FORTNIGHTLY SERVICE TO:

NEW YORK, BOSTON, BALTIMORE & PHILADELPHIA - VIA SAN FRANCISCO, LOS ANGELES AND PANAMA,

3

NEXT SAILINGS

m.V. m.v. m.v.

"HULDA MAERSK" "CHARTINE MAERSK“

Juve

July 17

TREIN

MAERSK

Aug.

✓

ARRIVALS FROM U.S.A.

m.v.

"ELBE MAERSK"

July

4

m.v.

"THEIN MAERSK” m.v. "MAREN MAERSK"

July 0

July .14

to

The previous rise in London had depended on a great expan- ntent was that the budget im- sion of the money supply which plied some softening of money: itself held dangers for Britain's that the budget's tax reliefs had export competitiveness and

so done only part of the refintion for her reserves.

that the Chancellor regarded as over-bought ne:ded, and that the other part decline was would be done by

lowering off by the British bank rate and softening money. Government's £100 million loan

FOUND OUT 18 which

was the

This was contrary to what the alfidest possible of funding Chancellor said. The nub of his operations.

budget speech was that, if con- No particular

Particular significance, tolerable hindrances to a healthy

Since the loan was not ditions however attaches to monthly flow of trade-and a high forlif

which have

remained unchanged, suitable for most other types they Ructuations; and

require M con- is in itself a permanent Import enabled the undertaking of a Akal, lo fuel, if

Inst

of Investors, that part of it tinuance of the existing money montir's Agures--which & restriction."

large volume of investment, the

which was genuinely Issued was polley, without either hardening unexpectedly gond-tire taken in With the Turiff Commission BIS complains that savings are Convertibility of the taken up by the banks, and re-or softening. (11 conditions

still chanelled with this month's it can be seen being enlarged to give it

to a dangerous

current pound sterling on

their liquidity. (The rest have changed since the budget, duced that, by and large, the movement Republican majority,

with the extent vin the

the banking system,

changes are of a kind la according to

account is an attainable ob- was only nominally taken up-the Tiny to expectation.

voking

the protectionist as there has been considerable

Giment the

Depart need a

hardening rather than a During the first quarter of this Section 22

jective for 1951 and there- ments, the of the Agricultural delay in re-establishing wide and

stage," who

softening), year the average monthly rise] Adjustment

Act, with

the effective capital markets.

after, provided the US is will peddle it out over n period). in the reserve was $106m; during shelving for at least

Its white-headed boys are willing to co-operate whole-

But it was a kid-glove opera- the months of April and May this any intention to grant any tariff Holland and, believe it or not.

heartedly to rate has dropped to an average

tion, this the

a technical preparation concessions

bring Reciprocal Soviet under the

Government' decided · about, according to a leading tighten money later, rather than article in the New York; an actual Ughtening of money Journal of Commerce.

now. It is significant of a weak technical position that so trining official move found market so vulnerable.

were

of $77m. But this fall conceals favourable change the underlying dollar balance

of

1

year of

Russia which the BIS

Trade Agreements Act, and with felicitates on having "completely needle Congressional fight com- discarded the idea of luving ing next year, there is oliviously recourse to inflationary eredit ex-

the BIS: Says

"It must be

the

trade in visibles and invisibles, some permanence In the US pansion.” from un verge of $40m. a month tariff and in the administrative In the last two months, and is procedures which are often worse recorded as an event of consider wholly due to the reduction in trade barriers than the tarif able importance that in the yeara FI.P.U. gold emmings and in

If the BIS is right, there is an 1951-52 the United States, Canada American i. E.P.U. earnings obvious prospect of unhealthiness and the countries of Western enme down from the high in world trade, which might| Europe succeeded not only in average figure of $71m, a month react on the U.S. economy. Since reversing the inflationary rise in

the last quarter of 1952 toj the economy dominates world! prices but also in Improving $32m. in the Birst quarter of trade, ahere is inter-action.

have cannot

assured wholesale and retail prices, wages have averaged

the cost of living. etc. prosperity unless world trade 49 and American aid, which averaged healthy, and world trade cannot notwithstanding an increase in U.S. is their aggregate armaments ex- penditure from $20 milliard in 1049-50 and $70 milliard in 1982-53."

In

1153: iR the last two months U.S.

they

$10m.

Just over $30m. both in the last quarter of last year and the first quarter of this year, came down to only $16m. as an average in April and May.

be healthy unless prosperous.

the

The basic relationships between

It must indeed. AS

TO BE SEEN

Considering such things Of these movements only the France's various economic silut fall in American aid was unex-tion, and the inadequate reflux of pected; and the error has been. British reserves while the U.S. as it were, on the right side, has been booming, it remains to because it is due to the lag in be seen how such countries will uctual

payment; some old which fare if die U.S. has anything less might have been received in than a boom. Even a successful the last two months will now braking of the U.S. economy- be received fater on. ..

down without any appreciable jelt- might still not be good enough for them. As during the past stveral

months, markets seeni kely to renam

Chiracautious until the U.S. prospect becoines much clearer.

May's figures do not, there fore, alter the general picture of the sterling area's gold earnings

PAINFULLY SLOW

from 75 to 60 miles an hour

were a

There are, however, two points which deserve some further en phasis. First of all the prospec- No doubt, if there tive fall in Ainerican afd is now slump or even a serious selback, beller documented. During the the U.S. would reverse many of American fiscal year, 1952-53.

*** its present policies: nunelary the year which ends at the end

dom was

ceivest.

- policies certainly; fiscal policy

very doubtful (protec-

But it must

also be asked whether Be ex- perience may not prove to be too Rood to continue true, now that any stack is no longer to be taken up by that spectacular expansión of arins spending,→Reuter,

Singapore Stock Exchange

Singapore, June 30, The Singapore share market

of this month--the United King probably; commercial and treat one stage last week did look

Just over policy allocated $-100m.; it looks as though rather tionism might be aggravated by as though interest was being re- less than this will actually be ren alump): attitude to the price vived, but this soon petered out of gold conceivably. But all and the market fell back into a President Eisenhower has pro- this begs the question of how to listless condition, sold the Stralis posed that for the next American avoid a stump or serious sclbach; making his regular survey.

selback. Times financial correspondent Ascal

only half as mueli

Incidentally, the BIS dues not should be appropriated for de-

come out for

year

amount of dollars should

is

a higher price of

The volume of business trans-

+

at

Tin continued to full and M$3407% per picul (100 cattles) is the lowest point reached for more than three years. Rubber

fence nid; but since it is expected gold. In contradiction of some acted in all sections was small, that about $100m, will be paid for other students, it calculates that most of it again being in the In-

Mother deliveries under the Difshore in December 1952 the net geld dustrial section. purchasing programme the actual and foreign exchange holdings of

receivable countries other than

the United be $300m. There is, of States represented about the course, always a gap between the

the same proportion of the value of allocation of funds and their their annual Imports-some 30 receipt; but, since the gap 15 per cent-s they had done in also recorded a loss on the week.. fairly, constant, dollars coming in 1913 and 1928.

But, it adds, there are grounds These declines in prices, the or another during 1053-54 will for thinking

that the ratio in writer sald, have been caused by. probably in fact be some $100m. 1028 was too low and that in ordinary supply and demand less than in

in 1952-53.

any case the relative amount of posillons. Ho sald the prospects Secondly, though the reserves reserves desirable at present is of a real peace in Korea have tre rising and have been rising probably grezier than that not affected the prices for both for the last eight Imonths, the required in the 1920s and rubber, ond tin, and other politi- rate of increase is painfully

cal factors too have exercised no influence on the declines.

from American aid in one form

Glow

1930s.

in relation to anything that could remotely be described as an ade- quate total. On the

the basis of the

ANXIOUS DEBATE

As the production of both fin

corres-

lost eight months, for example, So It reports that there i and rubber now appears id ex- it is possible to calculate that anxious-debate whether the ceed consumption, the would take nother twenty months

before

existing reserves pre adequate,

pondent believes it is more than- reserves and it says that "the resources ilkely that further declines in reached the level of $4,000m. Yet necessary to provide a firm basis prices will occur.

the last eight for the new order must be made months Includes figures for earn- available in one way or another, The rubber brokers, Lowls and

from E.P.U. and ings American ald considerably higher maintenance

the average of

for

by

than those that can be reasonably reserves." forecast for next year. Before

the

formation

of

organisations

.or

Moderate demand from the Japan

"The forthcoming Bermuda conference scheduled to coen rhortly may make clear whether the United States is willing to do what is needed to bring about this desirable end' t said.

by

an

the

It was also contrary to coin- inonsense. !! the Chanceller had more reflation to do, both polities, andt economics would incline him to do it in the bud- get rather than in the m by market. There are a lot more votes in tax cuts than lower bank rate.

The Chancellor's twin econo-" nie objectives were to stimulate investment for productive while encouraging Inventories. The combine for the

WEAK ARGUMENT Market gossip on the break was that this Government loan economy, in

a way to do that is to had tightened bank money

one budgetary incentives another little and that

investiment with a tightening of would tighten it a lot.

On the long step towards res toring the convertibility of

In itself this is a weak argu-money for the inventorles. sterling tension of

would be the CX-

All told, it looks as if the ment, since there is nothing to the Trade Agree-indicate

Government London market has been found ments

another Acl already

ip-

out--none too soon-in I proved by the

In the Immediate future. House.

An-Joan other step towards lasting con-

But it may signify that the phoney rise which was becoming the market realises the weak-dangerous.-Reuter. vertibility was the taxiellef

less of sonic of its previous bull provided by the 1953/54 budget presented by the Chinneallor of

arguments the Exchequer Mr Butler, Parliament earlier in the spring, the newspaper sald.

"A return to convertibility at this time would not be prudent however unless it were accom-

substantiat panied by guards to aware, the ability of the sterling area to pass through temporary periods when the balance of

of payments will be.un- favourable without being forced anow to impose exchange strictions. This would be all the more needed if a rocession curred in the United States.

re-

bulls

50

of al

and

Harvest Outlook

Madrid, June 30. Government oficials over the

Rarely have the blatantly tried to have it both ways, On the rise, it was! being

seriously suggested in London that tight money in the U.S., imposed for the sake would be reversed safe dogina,

the first hint of any setback and

have grin so would allow Britain to lower voiced alarm the bank rate

and to soften prospects for the 1953 harvest. money; or, alternatively, that The reason is simple: insufficient would cause a U.S. recession

Croutid" moisture:

Copious from which Britain could

rainfall produced insulate would

herself by bumper wheat

crops and feed lowering bank rate and

easing during the past two years, Rain- money!

fail. however,

to failed this materialize

and even U.S. VERSION

year, Bulls of Wall Street had their the Government is admiting One such safeguard would

own variant of trying to have that the outlook is sombre.

Agricultural officials have so the provision of n

it Loth ways, Their line large

was

to comment dollar credit to protect con-

that Congress would be lenient for declined vertibility. This dollar credit

about taxes, and that the Federal estimated harvest. @gures for

Farmers to 1953. would ease money

and reports Reserve wou would be provided by 1 In- ternational Monetary Fund

business and the market. renching Madrid from the pro- by the international Bank for

the first half is probable: vinces bluntly predict that the Resonstruction and

Develop- Congressional

the 1053 wheat harvest, despite good by the Federal Re- budget defeit scems only too rops in the couth-eastern part. serve banks or by the kely to enlarge it. But this is of the peninsula, will not reach Federal Reserve banks

The 1952 Incompatible with the second 35,000,000 quintals. halt. it Congress does lees than harvest for wheat was 48,000,000 Its duly, the money managers' quintals.-United Press.

be

ment,

meat.

DOLLAR CREDIT

or

one

by the United States Gover- ment

directly or through

of its agencies.

"A secund safeguard that the British may be expected to ask is that sterling area exports to the United States be protected for a period of years. This

proTM inction can take two forms. agre First, it could consist of price agreements settling minimum and perhaps maximum prices for the chlet commodities ported by sterling to

dollar countries. Secondly, the British have Indiended they hope that the US. Government's stocic- piling programme can be used to assure

minimum purchases by the United States of these commodities for a period of years."

CX-

action

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The objective of convertibility of sterling "cannot be attained cheaply or easily," the publica- tion sald, hdding "The American SAILS: people and Congress must de- elde whether this objective is worth the cost involved. - Reuter.

Committee To Study Cotton

London, June 30.

A committee of experts, to

NOTICE TO. PASSENGERS

BAGGAGE:

FRIDAY the 3rd July at 12.00 noon forthe-UNITED KINGDOM via Straits, Colombo, Bombay, Aden and Port Said.

Passengers are requested to send ALL baggage to the Hongkong & Kowloon Wharf Co.'s Godown at No. 2 Gate, CANTON ROAD ENTRANCE, by NOON on Thursday, 2nd July, 1953.

study the cotton market and SPÉCIAL NOTE: With the exception of hand packages

various Issues connected witt

the colton_trude, has been set

and Peat, sald, however, that prices adequate in the rubber market during the week fetuated through a very But it does not specify a higher narrow range and no noticeable the sterling area can be con-gold price as one of the ways of trend had developed.. sidered secure some means must doing this. It thinks that it be found of lifting the reserves should be done "through the permanently to at least twice action of already established in continent (Europe) and Their present level.

ternational

for low grades continued, but through the creation of specially that was in itself insufficient to constituted national convertibility cause any advance in price for FOR THE SOVIET funds."

the commodity, the report sala.

up by the Pakistan Government, As the BIS has for years been The Malayan production of

a message in the Financial Times Stockholm, June 30. preaching the need for flexible] rubber in the month of Muy was

staled statonic The Lidingce Yards near interest rates, it naturally wet-47,720 tons and stocks al the

committee will make Stockholm have delivered the comes the conversion of so many end of last month were 100.264 recommendations on questions DBD deadweight ten refrigerated countries to its creed, albeit the teas, some

lans higher such as

the reintroduction of cargo motor vessel Medveditzen conversion In Some cases is than at the end of April.

hedge contract, exercise of Stofe to the Machinoimport of Moscow: belated.

In the Federation of Malaya, control on.

storegs the trade The Medveđitzên in the last of

that Westlington's production Its view

for the first five facilities, insuratice, financing EMBARKATION: Passengers should embark between five 980-ton refrigerated eatge money policy "has been out-months of the year was 293.763 rachities to growers, and pinners

9.30 mid 11.00 am: FRIDAY, the 'Erd motor ships built by the Lldingoo stondingly successful" will not tons, compared with 230,018 and relaxation of duties" yards for the Soviet Union,necessarily be shared by some of tons in the corresponding period paper's Karachi correspondent

July, 1958. Reuter.

the present sufferers from the of 1952-United Press.

'added.—Router, -

6,478

the

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BUSINESS

REGULATION

ORDINANCE 1952

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