TRADE DEPRESSION.

Press, Volume LXIV, Issue 19317, 23 May 1928, Page 11

TRADE DEPRESSION.

AUSTRALIAN BANKER'S VIEWS. Reasons for the trade depression prevailing in the Australian States, and to a less extent in New Zealand, were suggested by Mr H, W. Lloyd, chairman of the Bank of Adelaide, addressing the annual meeting of shareholders of the bank. "During the past year a gradual depression has been settling over trade generally in South Australia, and, indeed, in all of the other States of Australia," said Mr Lloyd. "It has been frequently stated that this depression in our own State is accounted for by the relatively bad season. There has, however, not yet been sufficient time to feel the effects of the reduced wheat yield, and, as a matter of fact; the harvest in this State, with its estimated yield of 22} million bushels, has not resulted so badly as was anticipated in the earlier part of the season. Probably, however, this threat of a bad season lias, to a certain extent, awakened people to their responsibilities and to the necessity for economy. "Our other principal primary product, wool, has this year brought exceptionally high prices. The selling season was one,oorf r the most satisfao tory on recoi'd, prfoes having steadily advanced throughout. The firmness of the market is well illustrated by the fact that the average price realised for greasy wool in all selling centres from July Ist, 1927, to close of the sales in' March, 1928, was le 7£d per lb and £25 3s 3d per bale—Both as regards the average price per lb and per "bale, values were a great deal better than for either of the two previous seasons. It is computed that the total sales of wool in Australia for the season realised about £56,000,000. Under the influence of the bounty, it is estimated that wine to the value of over £865,000 was exported overseas from South Australia between March 31st, 1927, and March 31st, 1928, as against £428,000 for the . previous twelve months. In view of these facts, it' is, I think, necessary, to look elsewhere for the reasons underlying-the depressions in this and other States. I regard it as one of the effects of three great causes: — (1) National and individual extravar gance and over-spending. (2) Industrial conditions. (3) The comparatively small increase in primary production as compared with the increase in the numbers of those who lire on and share in the proceeds of such primary produce. . Orgy of Borrowing. It is a matter of fact that since the war the Commonwealth and the several Stated have indulged in a veritable orgy of borrowing—unfortunately at times competitive borrowing.. Borrowed money has been spent lavishly and without due regard to the earning power or productiveness of the' project entered upon. The circulation of this borrowed money, and the credit based thereon, has created a fools' paradise, from which the Treasuries have been ousted only by" a sudden realisation of huge deficits and the necessity to borrow to make ends met. Their belated attempts to restrict borrowing and to set the Stat© House in order, in some instances ' attempts all too drastic in their suddenness, have caused a reaction and created a situation which is affecting all sections of the business and industrial oommunity. It should be realised that the influence of years cannot be counteracted suddenly', without risking violent reaction which, might be as disastrous as the erils sought to be remedied. "So also with the individual. Money, under the influenses I have mentioned, coupled with bountiful harvests and good prices, has been plentiful, easily, obtained, and easily spent. Luxuries have in many instances come to be claimed as necessities, and the everincreasing clamour for more luxury and easier living has created demands from which have arisen strikes and industrial disputes, with their inevitable aftermath of wasted energy and resources. Facile borrowing has built up such a mass of inflated credit as to be a serious menace. Credit is like fire—an excellent servant but a very poor master."