AUSTRALIAN FINANCE

Nelson Evening Mail, Volume LXIV, 3 January 1931, Page 3

AUSTRALIAN FINANCE

GOVERNMENT’S POLICY STRONG BANKING CRITICISM The December issue of the monthly summary of Australian conditions of tho National Bank of Australasia, to hand by Wednesday’s mail, criticises severely the Federal Government policy in regard to the country’s finance. It says: — There are no indications of improvement in the general outlook. Wholesale and retail trade continue dull, with hand-to-mouth purchasing the _ general practice. Secondary are quiet, excepting a few whose activities have been stimulated by a demand for Christmas goods. Luxury trades and distribution of luxury goods are particularly dull, while collection of book debts is slow and difficult.

Notwithstanding substantial reduction in the national income, which is indicated by the above statement, our legislators have signally failed to make corresponding adjustments in the total of Governmental expenditure, and they have also failed to assist industry to reorganise its operations by repealing legislation whereby industry is restricted in so many directions, including payment of fixed wage, rates, based upon the cost of living, and not upon the capacity of the industry to pay them. Private individuals and trading corporations have, made substantial adjustments in their operations and expenditure with a view to meeting the change in conditions which has accompanied the fall in prices and tho coincident industrial depression. Willingly or unwillingly, the owners of property have sub forc’d heavy losses of principal and interest, as, apart from tho depreciation of values of commodities, real estate, and stocks, and shares, there must have been a. fairly large wastage of capital during the. past, two years. Our difficulties, duo to extravagant spending in tho past, excessivo borrowing, and payment of wages at an unoconomically high standard, and more recently the fall in prices, would constitute a quite sufficient problem for solution, even if the leaders of production, trade, and finance in Australia were given adequate assistance by legislative bodies toward preparing the way for future progress. Instead of that, certain groups "of legislators have been sufficiently active and powerful to prevent the Governments —excepting some of the State Governments—from making any adequate contribution toward tho solution of our difficulties, and in some directions have been able to _ create definitely substantial barriers, which not only block the way out of our depression, but tend to drive us deeper into the trough. INFLATION DANGERS The most unsettling activity of “tho extreme left” group is connected with the control of private finance. This group has, for many years past, asserted a continual pressure, either direct or indirect, upon Governments, tending toward the increase of expenditures, and consequently toward unsound finance, with the results which now have to bo overcome. Heedless of the troubles which their policies have induced, they are strongly advocating the establishment of a central bank, which shall have control over the financial institutions of Australia, thus placing the banks completely unded the dictation of the dominant political group. They clamour for huge inflations of the note issue; they wished to postpone repayment or conversion of the loan which matured on 15th December. They want the Commonwealth Bank to make loans Io tho Government regardless of the ability of the bank to do so, excepting by the process of inflation. lb is difficult to understand the motives of this extreme group, as the lessons of history, not only in European countries after the war, but in Australia in the early nineties, and on various occasions in England, U.S.A*, and France, show that the policy of inflation has inevitably brought _ great hardships and misery to the working classes in_ all those countries. “The extreme left,” though it claims to represent workingclass opinion, is anxious to have Australia take that great risk, in order to obtain some benefit which its members are either unable or unwilling to define. Yet not one of them could guarantee that inflation, if pursued, would bring about any of the benefits which the group claims for it. Nobody could claim that an inflation of the currency, which enabled tho Government to obtain a forced loan from the people by printing notes, would bring benefits to the community. It should also be emphasised that an, addition to our currency media, caused by inflation, would not bo sufficient, in itself, to stimulate commercial activity and increase employment. The London and New York short-loan markets are, apparently surfeited with money. Interest rates are down to tho lowest level for years past, with call money at times obtainable at less than 1 per cent. Recent flotations of acceptable loans in England have been greatly oversubscribed. If money alone were sufficient to create employment and stimulate trade, it is certain that America, with her huge gold holdings and easy credit conditions, would not be suffering almost unexampled unemployment and marked trade depression. If money alone could force up the price level, then the monoy available would be effective in forcing tho prices of wheat, wool, and other commodities up toward the level of tho previous four or five years. It is futile for proponents of inflation to say that the money is not allowed to operate in the countries named. Any sound proposition can usually obtain all tho money it wants in America and in England, and at present at exceptionally low cost. The way out of present difficulties is not easy, but it will not bo shortened or rendered less difficult by further interference by Governments with the operations of finance and trade. _ What is demanded beyond everything is a reduction in Governmental interference and an increase in the liberty of industrial leaders in the conduct of their operations.