CREDIT CONTROLS IN AUSTRALIA

Press, Volume LXXXVIII, Issue 26633, 19 January 1952, Page 9

CREDIT CONTROLS IN AUSTRALIA

EFFECT OF MEASURES DESCRIBED “NORMAL DEFLATIONARY INFLUENCES” LISTED “Credit restriction imposed by the Commonwealth Government in recent months were of the type that could very well have been imposed with good effect a year or 18 months ago,” says an article in the latest issue of Jobson's "Investment Digest." "But the Government delayed its acjion until other deflationary processes became active, with the result that many businesses have been pushed against the wall." The article lists the following "normal deflationary influences" of recent months: a fall in wool prices; an adverse trade balance of £111,090,000 for the September quarter; forced consumer resistance to high prices; and growing inability to manufacturers, because of the rising cost structure, to compete with Imported goods, irrespective of tariff protection. “Piling credit restriction on top of these otherwise normal developments not only achieved the Government's aim of putting a brake on inflation; it jolted some businesses almost to a standstill,” says the “Digest.” The article says that there have been persistent reports of businesses cutting down staff and points out that employees put out of their jobs are also potential consumers deprived of their purchasing power. “This must build up a certain amount of consumer resistance.” The Government's credit restriction had caused other firms to reduce production so as to maintain a liquid position. "Many of the smaller traders are finding they cannot afford to mark time. . . . There are more small businesses for sate than there have been for a long time.”z The article claims that the principal inflationary pressure at present is the Government’s own spending. “Possibly the present difficult situation will have some effect on employees who, in the past have not been pulling their weight. If this is so, then the drastic effects of the credit squeeze, in part, will be justified. But the credit squeeze cannot be considered to be rational if it imposes undue hardship on the taxpayer white the Government continues its own profligate spending," the article concludes.

GRAIN AND PRODUCE MARKETS

(By Our Commercial Editor.) The main point of interest in the grain and seed market at present is the effect of blind seed disease on the ryegrass crop. Figures obtained from the Department of Agriculture show that the fungus is making heavy inroads on this year’s smaller acreage of perennial. The wet season which has caused the heavy incidence of blind seed disease has delayed the harvest of ryegrass and other crops by two or three weeks. Until seeds start arriving on the market in appreciable quantities, merchants are reluctant to quote prices. Merchants report, however. that there have been no overseas inquiries. Good yields of most grasses and clovers are expected. The white clover crop promises to be one of the best in memory, the abnormal rainfall this summer having encouraged prolific growth. Although there is little activity in the market for blue lupins, some early lots have been threshed. Good clean growers' lots are realising up to 6s a bushel, on trucks. Good quality Algerian oats are fetching the same price, although some farmers’ ideas of the value of this crop are somewhat more optimistic than merchants’. Indications are that heavy crops of cocksfoot, for which the season has been ideal, will be harvested. Merchants report that prices will be considerably lower than those ruling for some time, and figures of Is to Is 3d per Ip, according to quality, have been suggested. Claims lor a further 200 acres, bringing the total in Canterbury and North Otago, to 877 acres, have been lodged with the Wheat Committee for compensation for wheat crops damaged by hail. Blind Seed Disease The total acreage of perennial ryegrass entered for field certification this season with the Department of Agriculture in the Waimate. South Canterbury. MidCanterburv, Christchurch, and North Canterbury areas is 30,336, compared with 33,193 last vear. The comparable figures for Italian are 3357 and 5424, and for short rotation 12,062 and 12,548. Of the 545 samples tested at the department’s Timaru station in the week ended Januarv 4. the Mid-Canterbury and Christchurch samples showed the highest infestation in perennial—so to 60 per cent, and 40 per cent, respectively. Italian and short rotation ryegrass samples from the same areas tested no more than 10 per cent, infested. In the week ended January 13, 757 samples from Canterbury were tested. In each area, except South Canterbury, where the percentage of infested perennial remained at 20 to 30, the percentage was higher. Figures for the other districts were: North Canterbury (103 samples), 40 per cent., Christchurch (112), 50 to 60 per cent.; Mid-Canterbury (162). 60 per cent.; and Waimate (117), 30 per cent. In the Christchurch area, Italian and short rotation samples tested 10 to 20 per cent., but elsewhere the incidence was no higher than 10 per cent. Officers of the testing station describe an incidence of 50 to 60 per cent, as far worse than in most previous years.

GROCERY NOTES

As usual during school holidays the grocery trade quietens down after the Christmas rush, but business appears to be relatively good. Many overseas vessels have discharged here recently and nearly all merchants were requested to receive cargo during the Christmas break, out cartage contractors co-operated well and store staffs were called on only at fixed hours so that no time was wasted in waiting about for loads to reach their destinations. Most warehouses are now chockfull of merchandise, and the task of distributing much-needed stock is hindered as goods received in a rush period cannot be properly sorted and stacked. New season’s bulk and packet dates arrived by the Waitaki during the holidays. Customs clearance has now been issued and deliveries to retailers have begun. Prices of one well-known proprietary brand are expected to be the same as last year—ls 2d for the 12oz unstoned pack and 2s 11 id for the 21b stoned pack. These prices are still subject to Price Tribunal approval. Condition of the fruit is excellent, and stocks should be sufficient for some time. The Karitane is carrying the first consignment of last season’s lexia raisins, together with the remaining quantities of currants and sultanas. Lexia raisins were urgently needed for Christmas baking, but they keep well and will be welcome even at this late date. The King Edgar is bringing a mixed shipment of Queensland pineapple and tropical fruit salad. Prices are a trifle higher than previously, but it is considered that they are good stock as indications for the future point to still higher rates. Swedish safety matches have also arrived in sufficient quantity to relieve the present shortage. Price alterations this month have been few, the main one being a substantial increase on dried milk. Skim milk powder: I’s now retails at Is lid tin, 2s country; whole milk (full cream). I’s at 2s“lod and 2s lid and 2J’s at 6s 6d and 6s 7Jd. Bulk packings remain unaltered. Meat extract: An Auckland pack nas been advanced by more than 4d on the 4oz size, and Is 4d on the 16oz. Rat poison: Prices of a well-known Auckland pack have advanced to 2s 9d for 2oz and 14s for 16oz. Icing sugar: A recent price order fixes both wholesale and retail prices, the latter being IOJd town and UJd country. Vinegar: The advanced prices advised by the Auckland manufacturers are not yet operative locally as fairly heavy stocks were held and no higher costing stock has yet arrived. Sugar: The shipment from England will not arrive until well on in February, but present stocks appear to be sufficient to cope with demand; by the time the flush season of stone fruits comes on the English sugar should be available in quantities to satisfy all requirements Overseas markets: In practically all cases prices remain firm and advancing the only notable exception being desiccated coconut, which is still comparatively weak. South African dried apricots for shipment in new season’s pack have been quoted at from 10d to lid per lb above last season's opening prices.

COMPANY NEWS

Mutual Life Assurance.—New sums assured by the Mutual Life and Citizens' Company. Ltd., in 1951, totalled £47,400,000 in Australian currency, according to advice from the company’s Wellington office. The ordinary branch new business totalled £37,650,000, and the industrial branch £9,750,000. Smith and Smith.— Smith and Smith. Ltd., Wellington, has increased its capital to £560,000 by the creation of 21,000 additional fully-paid £lO ordinary shares ranking pari passu with existing ordinary shares. The capital came from the general reserve.

British Steel Output.—The British Iron and Steel Federation has announced that British steel production dropped by 654,200 tons last year. Production for the 12 months was 15,638,500 tons, compared with the record of 16,292,700 tons in 1950.