The Hokitika Guardian WEDNESDAY, MARCH 29, 1922. THE FINANCIAL OUTLOOK.

Hokitika Guardian, 29 March 1922, Page 2

The Hokitika Guardian WEDNESDAY, MARCH 29, 1922. THE FINANCIAL OUTLOOK.

The financial position at Home governs very largely the outlook for the oversea'Dominions, and for that reason it is interesting at this juncture when matters financial in New Zealand are somewhat strained to study a review of the British position as seen by a prominent banker. To this end we reprint from a financial journal at Home, the following remarks and comment on a recent address by one in high authority in banking circles. The paper says that in these days the speeches ' of the chairmen at the annual meetings of our great banks are studied with far greater interest than when tire remarks were largely confined to a review of the principal financial events of the preceding year. The utterances are the more important now if only because the great banks, by reason of the magnitude of their operations, are able to form a more comprehensive view of general conditions than when the number of these institutions had not been greatly reduced by the policy of amalgamation. A perusal of the various speeches shows that, in the opinion of the banking world, the worst of the commercial depression frfrm which this country suffered so greatly has been seen, and that there are indications, faint though they may be as yet, of a revival in trade. Perhfcp# a characteristic of the speeches W&s the common sense of th® views expressed by the chairman as a whole upon the most important economic questions of the day. In regard to monetary inflation and deflation, for example, about which a great deal has been written in the last' few years, the Rt. Hon. R. McKenna, the chairman of the London Joint City and Midland Bank, was not alone in expressing the view that both policies are bad. What is needed is stability of prices. When we have that we have a basis upon which can be carried on with confidence, and merchants, manufacturers and retailers are able to make contracts with reasonable assurance that the debts created under the contracts will be pnid in a currency of the same purchasing value ns it had when the obligations ware assumed. \

Mr McKenna was also not alone in showing the fallacy of the view thnt by restricting output more work becomes available for the working community. All restriction _ of output, he said, raises price of the article produced, and if the restriction operates over a- wide enough field it must increase the general cost of living and thereby reduce the real .value of the wages received by all workmen. This, indeed, was exemplified in the constant demands made a year or two ago for increases in wages, the granting of which simply caused a fresh advance in commodity prices, thus raising still more the cost of living and making the real wages--that is, their purchasing power—no greater than they were before. He said' that if the unwritten rules respecting output did in fact prevent unemployment, we could not hope to see them given «p. but since the supposed remedy for unemployment is itself a powerful aggravation of the evil, what is needed is to convince thy workmen that their economic theory is false. In dealihg with this matter, Mr McKenna to some extent went over the ground revered by him a year ago, emphasising on c e again hi.s view that if Germany is compelled to make reparation on the scale laid down the payments must necessarily largely take the form of iin export of goods, and before Germany could develop her foreign trade, to the extent necessary to make the payments the foreign trade of this country, her chief competitor, must dwindle into insignificance. In regard to taxation, Mr McKeniia holds the view that this probably exceeded the limit which c .an he imposed without impairing in any morked degree the national spirit of business enterprise. In a healthy condition of it State, he said, no more should bo raised in taxation than will raise an amount available for capital develops ment sufficient to meet all the needs of business. Lookihg at our declining reveitue, tb ( > state of our trade, and the dangers which confront us, he had no hesitation in saying that, whatever the difficulties, the strictest economy in our national expenditure has become the first and most imperative necessity.