AVOIDING INFLATION

Dominion, Volume 34, Issue 140, 10 March 1941, Page 3

AVOIDING INFLATION

Bank Chairman’s View

The duty of all citizens, whether of the United Kingdom or of the Commonwealth or the Dominion, was to restrict their petsonal expenditure and-“save to lend to the Government, stated Major-General Sir John H. Davidson, chairman of the Union Bank of Australia, Limited, when addiessing shareholders at the annual meeting in London late in January. It was only by such means, assisted \where necessary by rationing or other compulsory restriction, Sir John added, that the evils of inflation could be avoided. Control of finance, exchange, imports, etc., in New Zealand, was similar in degree to that applied to Australia, he said, and the purchase of primary productsUy the British Government was also applicable in respect of the Dominion. The disposal of its products at reasonably satisfactory prices and the control of imports had enabled the Dominion not only to restore its economic balance, but to prosecute the war in a deterpined and effective manner. Th'e seasonal outlook in the Dominion and prospects generally were satisfactory. Referring to the results of operations, Sir • John Davidson said the figures of the trading banks now exhibited a highly satisfactory degree of liquidity. The improvement was in part ascribable to the satisfactory prices ruling for wool and most other primary products, proceeds of which had been promptly accounted for under the contracts with the Imperial Government, while the great volume and value of business now being transacted owing to the stimulus to secondary industry, and circulation of money through war contracts, had also been contributing factors.

The improvement in- the bank’s own ratio of advances to deposits was marked, and the degree of liquidity showed a great improvement over that which had existed during the past few years. It was satisfactory that while that had occurred the blink’s earnings for the year were maintained.