ECONOMIC AUSTRALIA

Evening Post, Volume CIX, Issue 46, 24 February 1930, Page 10

ECONOMIC AUSTRALIA

■'ARTIFICIAL PROSPERITY"

Mr. B. W.'Dalton, the British' Trade Commissioner, in a report to his Government now to hand, expresses the opinion that the economic position of Australia to-day is due, not so much to any radical change for the worse in the conditions of production, but to unfavourable conditions supervening on a period of inflation, says the "-Sydney Morning Herald." Trading interests in the past have found their reliance on the development of the seasons as a guide to general conditions justified. But that would not be the case in the season opening as the review was being prepared, although the prospects were not, at their worst, very much worse than the actual average results of the past few years, when conditions were .generally considered to be prosperous. The- fact is that last yeaawe felt definitely the effects of a discontinuance of tbe inflation brought about by heavy borrowing, aud tfie problems therefrom arising we have to face at a time when there has beau a fall in the. prices, of some of the most important Australian, products.' In seven years, Mr. Dalton points out, Australia has added £173,500,000 to her oversea indebtedness. In the same period the interest due on oversea debts amounted to £179,600,000. Were these the only factors there would have been necessary an excess of exports amounting to £6,000,000. As a matter of fact there was registered an excese of imports of £50,000,000. Because of ,tlie values of sugar and butter over five of the years being calculated on a wrong basis, it is probable that this estimate of excess of visible imports is under the mark by at least £13,000,000. Part of the excess of imports is no doubt accounted for by capital reaching the country for the establishment or development of industries.

Making every allowance for the private import of capital, the British Trade Commissioner believed' that the figures he' has quoted indicate that a great deal of the prosperity which has been experienced during recent years has been artificial,-owing-to. the influence of borrowings, and that the adversity now being experienced is due in an important degree to processes of deflation, rather than to 'any .radical alteration in the results of the yield of Australia's staple products. It is another way to saying that the depression is due partly to the great curtailment of loan money from abroad, and as to the rest to the fall in the prices of staple products. As the volume of production has not diminished, Mr. Dalton cannot see in the figures anything to indicate- causes for distress, though he' points out that the distribution of the returns from abroad may havo changed, and that the change may be in some measure not entirely for the economic good of the country.