WHY CONFIDENCE LAGS

Evening Post, Volume CXII, Issue 85, 7 October 1931, Page 12

WHY CONFIDENCE LAGS

SIR LENNON RAWS ON

CREDIT

"The Next Step to Economic Recovery" was the subject of a recent address by Sir Lennon Raws, in Melbourne. • After reviewing the circumstances which led to the present economic crisis, he said, the more one thought of it, the more remarkable was the success of the recent conversion loan. It settled effectively any doubt that the great majority of the people were on tbe side of sound finance, and were prepared to make sacrifices to maintain it. But a return of confidence was impossible whilst present political conditions continued in New South Wales. Some looked to an expansion of credit to enable farmers to be assisted, and certain public works restarted. Suggestions of that nature were plausible because they seemed to offer a quick and c- -„ way out. They were not a way out, however, but a means of postponing a way out. Australia should improve the quality of its existing credit before it released quantities of fresh credit. The first essential preliminary to release of credit was reduction of costs, so that the employment which might .be..given by. the. creation .of credit could be profitably employed. Manufacturers were faced with two obstacles in their war on costs —the tariff and Arbitration Court awards. Was there any valid reason why a flat reduction of 22% per cent, in all tariff items could not be applied forthwith? Probably this would not be sufficient, but would be a step in the right direction. The obstacle of arbitration awards was not so much in regard to actual wages as in the rigidity of the system. Why could not trade union leaders and manufacturers get together and. short cir-cuit-the politicians? There was no escape from the equilibrium between costs and prices. To endeavour to avoid it either by raising loans or increasing credits was futile.