BANKING REVIEW

Hokitika Guardian, 26 November 1932, Page 2

BANKING REVIEW

FINANCE AND TRADE.

AUSTRALIAN CONDITIONS

•In its Monthly Summary of Australian conditions for October, the National Bank of Australasia discusses the i-ocent trend of finance, trade, and commerce in the Commonwealth. The Summary notes that there has been some slackening in . trade turnovers, for which there is a number of reasons. One is the uncertainty with regard to the Government’s finanriail operations, which gave some check to investors’ confidence. This wa s removed late i n the month by the announcement that the Loan Council had rejected proposals far the flotation of a £20,000,000 loan in favour of one for £8,000,000, of which half will be used for funding the floating debt and the ‘ balance far financing loan works dfiring the coming year. This loan is now open for application at par. Its term is ten years, and it will bear 3$ per cent, interest, which will be on the same basis so far as taxation is concerned as the existing Consolidated Loans. It is underwritten by the banks. Another disturbing factor is the weakness in oversea prices of Australia’s main export commodities. This is most pronounced for wheat, and frozen meat, though butter, also, has exhibited a marked .price decline. The most favourable feature in the Australian position is the excellent reason which is being experienced i® all States excepting Queensland. Notwithstanding the droughty conditions over the greater part of Queensland and in limited sections in the other States, a very large output of rural products is virtually assured for the current season. In many country districts it is confidently stated that a better seas o n has never been experienced.

A .SATISFACTORY FACTOR. Another outstanding favourable factor is the marked increase in oversea trade shown far the P ast quarter, and particularly in the total value of exports for September. Exports since Mhy 'have been running below last year’s level, but for September they show an improvement of approximately £1,700,000 on a sterling basis, bringing, merchandise exports for the three months up to £13,258,000 (sterling),-or <£1,000,000 (stealing) above the ' total for the corresponding three months of last year. While far-reaching'adjustments, tending to rectify . alterations in conditions which the general depression has brought in it s train, have been made in (many directions, it i« dear that, in 6 ome branches of our economic life, resistance to necessary adjustments has .retarded the movement towards a new and stable condition. During the past period of high prices, many items of costs were pushed up to unduly high levels, which have not been reduced since in proportion to the fall in other directions. A MAJOR PROBLEM.

Wages and salaries have been reduced in keeping with the downward movement of an index based upon the cost of a. limited range of commodities and housing. At the same time, a much larger dumber of necessities and con. ventional luxuries in the form of both goods and services shows no adequate lessening in cost. This fact is evident to the ordinary householder, who finds that, while the official cost of living index is on a lower level, he is unable to translate the benefit h« should derive from that factor into a corresponding reduction in the sum of his own outgoings. This refractory element in •cogts and prices constitutes one of the major problems of a period of depression and deflation, and a serious effort should be "made to bring it into line with other economic factors.

It is not suggested that a return to the relation existing in pre-riepressi©** days is possible or would be advantageous, but it i s certain that a lessening in the present wide disparity would be distinctly Helpful.