BEYOND PROPHECY.

Auckland Star, Volume LXV, Issue 3, 4 January 1934, Page 3

BEYOND PROPHECY.

ECONOMIC PROSPECT.

SMALL COUNTRIES' DEPENDENCE.

COMMENTS BY BANKER. How the backwash of world affairs may rock small countries, discounting the efforts of those countries themselves, was emphasised in Sydney on December 18 by Mr. A. C. Davidson, general manager of the Bank of New South Wales, in an address to the Constitutional Association. He said that Australia's economic troubles were not yet over, and that her prospects were beyond human prophecy. Mr. Davidson, referring to outside influence, said that while the issue of the experiment in the United States was in doubt they could not go into the New Year with any surer footsteps than when they went into the preparation of the Premiers' Plan two and a half years ago. Such tremendous issues were in doubt that they could not be blamed if they regarded the future as ( being "very slippery ground." Whether the experiment succeeded or failed, Australia would feel the effect. British Agriculture. Economic recovery was also bound up with the policy of other countries. If the Government of France decided to give back to the Bank of France the right to hold foreign balances, it would, i for instance,' have a great effect. What I was occurring in Great Britain would I also influence recovery. If Great Britain pursued her new agricultural and industrial policy with greater and greater restrictions, it would seriously react on Australia. Neither Australia nor Great ' Britain would be able to sell its surplus produce. That might result in debtor countries, like Australia, being unable to meet their obligations. !• "Political has caused i most of the troubles," Mr. Davidson remarked. "In many countries welli designed plans of financial authorities and business men have been foiled and brought to nought by political interference. Political interference has been largely responsible for the world crisis and its continuance." Australia could not be considered "out of the wood" until every efficient unit in it wa.-; working at a profit. Under the machinery set in motion by the Premiers' Plan, Australia was in a position to take full advantage of world recovery oace it came; she might even initiate recovery in a small way. They might even say the Premiers' Plan had been successful, but the greatest influence would come from what occurred in other countries. "We Cannot Ease Up." "We find that our only important product to show a material improvement is wool," he added. "Meat prices are still low; butter, after some recovery, seems to show a tendency to fall; international trade is etill falling off, and as long as that downward ten--dency prevails it muet exert a downward pressure on prices. Then, unfortunately, there ie no prospect of the many restrictions on trade being lifted. "We must not imagine that the time hae come when we can eas.e up, or reduce our efforts. Many of us would like to see further reduction of interest ratee to provide a greater stimulus to industrial recovery, but at the moment this is blocked largely by burdens of taxation, by deposit rates, and the reduction of Treasury bills. Then prices of our exports are still too low to take the risk of reducing the exchange rate. "If it was possible to reduce the interest rates still further, maintain the liquid resources of the banks by the maintenance of the volume of Treasury bills, so as to provide investment for the cash resources of the trading banks, and at the same time maintain the exchange rate, the banks would be a>!e to continue to play their part in bringing about industrial recovery."