“A HALT MUST BE CALLED”

Dominion, Volume 18, Issue 178, 22 April 1924, Page 6

“A HALT MUST BE CALLED”

FINANCIAL POSITION IN AUSTRALIA BANKS PURSUING RESTRICTED POLICY AN IMPASSE REACHED _ INTERVIEW WITH SIR HAROLD BEAUCHAMP “The financial iiosition in which Australia now finds herself is due to the determination of the Note Issue Board to do all in its power to stop which has been going on uninterruptedly for some years past. This infiation is due to the various Governments embarking upon alt kinds of schemes involving large sums of money; employers paying high wages, combined with less efficiency; the enhancement of land values, both in town and country; and to the reckless extravagance of all classes of the commuliity.”

Such was the pronouncement which Sir Harold Beauchamp, who returned by the s.s Maheno yesterday from a visit to Australia, had to make upon the financial position at the present time in the Commonwealth. “Before leaving New Zealand, he informed a Dominion reporter, “I had heard several times of the financial difficulties with which Australia was confronted, but before visiting that continent I had no idea that these were so serious or such a source of embarrassment to traders and financial institutions, who until recently have had no difficulty in carrying on. Time to Call a Haft. “It is pretty generally recognised,” proceeded Sir Harold Beauchamp, “that the time has arrived when a halt must be called; failing which it is hard to see what will happen. Most Australian banks have large sums of money in gilt-edged securities in Loudon, and in the ordinary course the requirements of traders would be met by the transference of funds from London to Australia. That in the past has been done by the sale of exchange in Loudon at a premium or discount. “To-day, however, as the Note Issue Board has decided not to enlarge the amount of its present currency, which exceeds £50,000,000, there are scarcely any buyers of telegraphic exchange at the heavy discount of from 60s. to 655,, the nominal rate quoted by banks. In the open market there are small sales to traders at 305., and to protect their cost the banks are quoting that figure for limited amounts. Contrast that position now with that which existed over two years ago, when it cost merchants and others £4 per cent, premium ;to remit by telegraph to London. No Way Out of impasse. “In discussing this subject with many prominent financial people in Sydney,” proceeded Sir Harold Beauchamp, “none could suggest a modus ■ vivendi for the present impasse which has arisen. Deflation can be brought about by the curtailment of public expenditure, by the restriction of bank credits, and by the practice of rigid economy, processes wiiich are all exceedingly distasteful to the Australian (temperament-, which is already chafing at the application of the financial curb. Overdrafts Being Cut Down Right and Left. “Bankers, in the matter of accommodation, are pursuing a most restricted policy, and the overdraft limits are being cut down right and left without hesitation; in fact, with a curtailment of currency they are forced to adopt a policy of rationing. “As is well known,” proceeded Sir Harold Beauchamp, “between 1924 and 1930, the Commonwealth and State Governments have to arrange for the renewal of loans maturing in Australia and London of not less than £450,000,000—a colossal sum for a young country, and the providing of this money by renewal or otherwise will tax the brains of Ministers of Finance to the fullest extent of their powers. Monetary Shortage Affecting New Zealand. “The monetary shortage in Australia, for the reasons I have given, is having a reflex action in New Zealand by making it almost impossible to transfer funds from the Dominion to the Commonwealth to provide for our financial obligations in that country. “There is a strong demand for money for mortgage purposes in Australia at 7 per cent, and over, and the Commonwealth Government is still offering debentures for sale over the counter at 45 per cent., these debentures being (subject to Federal tax only. “In spite of what I have said,” concluded Sir Harold Beauchamp, “I believe that Australia, with its almost (limitless resources and the indomitable will of its people, will sooner or later surmount and overcome the financial problems with which she is faced today.”