CONTROL OF MARKETING

Sun (Auckland), Volume III, Issue 834, 30 November 1929, Page 10

CONTROL OF MARKETING

BANK CHAIRMAN’S WARNING PERILS OF INFLATION A banker's viewpoint on the Question of marketing control in respect to primary produce was expre«t€ by Mr. Thomas Buckland, president of the Bank of New South Wales, in his annual address to shareholders at Sydney yesterday. As against this question of restriction of imports, we have certain sections of the community who have resorted to, or wish to resort to, artificial means of controlling the realisation of their produce. I do not think that any such artificial tampering with the course of marketing will in the end achieve the objects aimed at, but the serious aspect of the case, from our point of view, is that those who have sponsored such schemes have apparently overlooked the question of finance. How is it possible for us to carry over a considerably extended period the product already harvested or shorn, while at the same time we are called upon to finance the growing harvest or clip? In times when money is plentiful it might be possible to go a long way toward achieving this object, but in a period when our loads are already heavy, it is very doubtful whether our financial resources will enable such schemes to be carried through without denying the necessary finance to those in need of it for the current season’s requirements. There is another aspect of this question. It is unsound for the producer to become a speculator in his produce. It has been suggested that proposals are being considered to extend the note issue. It is a feature of any elastic currency system that it should be capable of extension to meet the seasonal requirements of the community from time to time, but it is a very different matter, when, either by design or otherwise, reduction in the percentage of gold backing occurs, apart from seasonal requirements. If by design, such a movement, when divorced from the genuine trading requirements of the community, becomes inflation, bringing about higher prices, with an increased cost of living, which bears most hardly on the workers and those on fixed incomes. Any such inflation would increase the burden which is already a heavy one upon our exports and consequently our agricultural industries; while on the other hand, it would encourage imports. Another effect would be the continued drain of gold until, no doubt, resort would be had to an embargo on the export of gold. The Australian note would then become inconvertible, and the doors would be flung wide open for inflation in its worst form. The proper means to check any such drain would be to raise the interest rates, and so preserve the common measure of value we have today with all other commercial countries.