AUSTRALIAN CRISIS

Sun (Auckland), Volume III, Issue 908, 27 February 1930, Page 11

AUSTRALIAN CRISIS

GRAVITY OF FINANCIAL POSITION RIGID ECONOMY NEEDED LONDON, Wednesday. In an article entitled “Financial Crisis in Australia,” the “Daily Telegraph” gives prominence to a message from its special correspondent in Australia, who says: "Australia is faced with a financial crisis which threatens to have a crippling effect on her internal and export trade for some time to come. The position is so serious, and the balances held by the Australian banking houses in London are so depleted that it is necessary to place almost a complete ban on the grantinr: of letters of credit on London to customers in Australia. “It is an almost revolutionary departure from banking practice that the banks’ clients should be called on to undergo a form of inquisition before being granted an ordinary business facility.” The correspondent says he gathers diat the banks intend to withhold letters of credit when the purpose may be considered a luxury. The City of London is hazy as to now the ban has arisen, and whether it is the result of Government pressure, or of an agreement among the banks themselves, in order to prevent the depletion of their reduced balances. A prominent shipper said he thought it was the most serious blow Possible to Australian credit in Lon“°n. If persisted in it would mean M end to her credit altogether. While >t was too early to measure the effect °n trade and travel, there was little doubt that it would lead to a considerable restriction in both, which apDa 7ently was the avowed aim. The manager of one of the Austrahan banks in London said Australia w ns determined to put her house in °rder. She had been buying too much, . it was necessary now to reduce imports.