DOLLAR FUNDS

Dominion, Volume 33, Issue 98, 19 January 1940, Page 12

DOLLAR FUNDS

Significance Of Need

It has yet to be generally realized in Australia that there is one fundamental difference, on the economic side, between this war and that of 1914-18, namely, the policy of the United States. This point is emphasized in the annual report of the Australian Association of British Manufacturers. “The significance of the phrase ‘cash and carry’ as applied to American policy in supplying goods to belligerents.” the report states, “does not appear to have been fully appreciated as yet. It means that, whereas twenty-five years ago the United States provided both goods and loans with which those goods could be paid for, on this occasion goods only are being supplied to the Allies —and they have to be paid for with dollar exchange. As supplies of such exchange are limited, itMollows that Empire purchases of essential war materials, from foreign countries are only possible to the extent that purchases of other goods are reduced or foreign investments are sold to procure exchange. Australia has fewforeign investments. One highly important consequence may be that Britain will suffer less permanent loss of overseas trade in this war than in the previous one.”

Touching upon what is described as a certain amount of organized effort by the commercial community to secure relaxation of the import restrictions so far imposed, the report declares that it would appear that in some quarters in Australia it has yet to be realized that a colossal effort will have to be exerted by all parts of the Empire before the war is won, and that a great deal of dislocation of normal trading conditions will be absolutely inevitable. The measure of such dislocation in Australia up to the present has been insignificant in comparison with the effects of Governmental control in the United Kingdom. As shortage of non-sterling exchange becomes more acute, the degree of restriction necessary tinder the licensing system so far as goods for commercial purposes are concerned, will undoubtedly be intensified. An opinion is expressed in the report that it seems improbable that Australia will suffer from any shortage of sterling exchange in the predictable future; and therefore neither a further depreciation of Australian currency relatively to,sterling. nor the application of the licensing system to imports of United Kingdom goods, seems a likely contingency. But, of course, in time of war it is unsafe to prophesy on any subject.