AUSTRALIAN FINANCE

Hokitika Guardian, 2 August 1930, Page 6

AUSTRALIAN FINANCE

EXCHANGE PLAN

SIR OTTO NIEMEYER’-S VISIT. SYDNEY, July 24. Events are miving in such a way as to suggest that Australia’s financial crisis is really a blessing in disguise. It has certainly taught the geneial public more of complications of finance; it has brought the banks and the politicians together in a way never before approached ; it has taught the need for economy; and it has brought about a realisation of the dangers of financial drift. But more than all these, it has emphasised to Australians the absolute need of putting their house in order. Apart from the national service which it promises to render the exchange scheme which has been presented by the bankers to the executive of the Commonwealth Loan Council will have a definite place in the financial history of Australia. The fessence of the plan is that Australia must meet her obligations abroad, national and private, from the proceeds of her exports —in other words, she promises, for the first time systematically to pay. her way. The prospects may be illustrated by supposing that credits arising from exports amount to £90,000,000. As " a charge on these credits the banks’ proposal is that exchange shall be provided to cover the Government’s commitments over, seas, say £30,000,000. The balance of £60,000,000 and no more will then be available to supply accommodation for payments of imports and for other purposes. THE BANKS’ CO-OPERATION. To achieve this end it is understood that the banks have agreed to pool their London resources, from which Government requirements will be earmarked on a proportionate basis for each bank, according to the contribution to the pool. Once the roposals have been approved by the Loan Council there will, no doubt, be a favurable reaction on Australia’s credit abroad. There will probably be considerable improvement in the prices of Australian Government securities, and consequently a much brighter prospect for the funding of the Australian Government overdraft in London. The banks, it is generally considered, have acted commendably in co-operating to devise means, in a time of need, to overcome the Government’s embarrassment in finding cover for national obligations, and in this respect they are rendering further service to the community as a whole. For that reason the scheme is said to warrant the wholehearted support of the community to ensure that the exchange position shall be turned to the best advantage. In the meantime Sir Otto Niemeyer, the Bank of England authority who has come to Australia ,at the invitation of the Commonwealth Government, to advise Australia as to its, financial posi r tion, is deep in his enquiries. His'chief; message on arrival was “Australia must help herself,” but it is clear that he is sparing no effort to do his utmost to help Australia. His message, however, discounted the vague rumourswhich had encumbered him with the dictatorial role of an official dispatch?d to bring a debtor nation up with a round turn, and impose conditions for a new “readjustment” loan. Really he has come here to help Australia help herself, and he gives the impression that he is hot only amply -strong •or the task, but that he . can ■do it with abundant sympathy—and with a smile. Stockily built—he used to play Rugby—with .strength written in every line of his slightly acquiline profile, his keen grey eyes dance with the light of humour as often as they glitter at the prospect of a hard financial problem. He is fair-haired, -and looks much younger than his 47 years. He is. not slave to finance. Classics are his hobby, and lie plays good golf, even . though he is left-handed. “Finance is largely a matter of common,sense,” he. says. He states that a machine will add a column of figures, but finance may embrace the study and characteristics of the people, and it certainly must give attention to production, primary and secondary, to prospective developments in these fields and to the preparations of national Bludgets. Here politics creep in, he admits, for a Budget that is purely financial in its aim is something of a phenomenon. Sir Otto says plainly that Australia must make a momentous decision —to cut her-coat according to her cloth. This at least she appears to be tackling. All sections of the people, he implies, must join together to make a success of whatever play is evolved by the Commonwealth Government and the Commonwealth Bank, after the consultations with ' the. Mission, of which he is the head. Apparently there is no limit to the extent of the consultations. Australia, lie says, has a financial problem of many ramifications, and it is impossible for him to say which of those ramifications would lead to a solution of the whole problem. Sir Otto was asked whether he would bo able to find time to visit New Zealand, and he replied rather enigmatically: “Sydney is the end of the world as far as lam concerned. I don’t know how long J will stay here.”