ROCKS AHEAD

Evening Post, Volume CIX, Issue 144, 21 June 1930, Page 10

ROCKS AHEAD

AUSTRALIA'S PLIGHT

A PUZZLING PROBLEM

DANGER OF BOUNTIES

(By Telegraph.)

(Special to "The Evening Post.")

PALMERSTON N., This Day.

With his wide knowledge of commerce and finance, Mr. F. J. Nathan, head of the firm of Joseph Nathan and Co., Ltd., in Australia and New Zealand, is peculiarly fitted to give an impartial view of the position in Australia to-day. He has just returned from an extensive tour of the Commonwealth, and to a "Post" representative, he gave his impressions of the trade depression there.

Mr. Nathan stated that a readjustment of trade and general conditions had yet to take place, but it was difficult to say where a start should be made. He had thought about the matter quite a lot, but it puzzled him. How great the problem was could be judged from the fact that the Commonwealth Government was bringing out Sir Otto Niemeyer, a member of the Finance Committee of the League of Nations, to confer with them on,the, adjustment of a delicate financial position. Mr. Nathan stated that, without being hard on Australia, its problems had been brought about by its own peculiar ideas of how business and trade shouuld, be done. TARIFF BOOMERANG. As an example, the Commonwealth had just readjusted its tariff because it wanted more income, but the readjustment was going to bring about at least a £10,000,000 shortage in Customs revenue through thq prohibition of many articles it had .been-in the habit of importing. By this means it was hoped to encourage and found secondary industries. The result would bo every possible encouragement to local people to-establish companies. Those outside people who had established trade in .Australia to-.day were going to erect their own factories, and with their large capital and mass production, in two or three years would drive into liquidation or bankruptcy the small manufacturers who were making a comfortable living at present. Three companies were about to establish large factories for the manufacture of silk hosiery, and they would be _ able to make in six months all the hosiery Australia required in twelve months. Anr other example: Australia had prohibited the importation of canned goods, with the result that the American firm of Heinz had expressed the intention of building in Sydney and Melbourne. What was going to happen to the small factories? FALSE PRICES. Referring to the farmers' point of view Mr. Nathan stated that when pointing out how unsound the Paterson scheme was, the farmer answered that he could not produce butter at world's parity. It was impossible. Everything ha used —labour, manures, implements, clothes, the things he needed for food, dried fruits, etc. —were all protected to a very high extent which made it utterly impossible for him to produce butter "and live. It seemed there was a vicious circle which the people were just beginning to become aware of. The world's parity for butter to-day was round about Is Id per Ib, and it was sold in New Zealand from Is 4d to Is 5d over the counter. In Australia it cost Is lOd to 2s per lb over tho counter. Cheese and bacon were on the same level. ■ For sultanas and currants, merchants had to pay over £70 per ton and the same fruit was sold in London at £28 per ton. So'as to encourage sugar growing with white labour in Queensland, there was a bounty system, with the result that it cost £37 per ton. In Now Zealand it was something like £17 per ton. One could see that the whole of Australia was paying a false price so that a small section of the community could grow sugar at the 'expense of the others. LOWER WAGES? It had been suggested that wages would have to fall, but how was it possible or reasonable to ask a working man to take less than he was receiving to-day if the necessities of life were being bolstered up on a false basis? The coal strike, was settled after 16 months by the Government offering .a 3s per ton subsidy. The effect, Mr, Nathan thought, would be moro £ai-reaching than recognised at the moment. The bounty in Now South Wales was bound to affect the industry in Victoria when something similar would have to be done. They got farmers to form a wheat pool with a Commonwealth guarantee of 4s per bushel at country stations or from 4s 9d to 4s lid" at shipside when the world's parity was.under ss. That would only tend to increase the cost of living. ; They we're now faced with the happenings in America where it was reported that elevators held 250,000,000 bushels of wheat carried over from one crop to the next— an amount greater than the entire export from America in 12 months. American' finance was bound to be affected by this position and what happened there would be felt the world over. It was extremely unlikely that the American taxpayer could afford it and certainly Australia could not. DAY OP RECKONING. Australia had to find at the end of the year £70,000,000 to s£SO,OOO,OOO of loans due and it. had been told plainly by America and England that they had no money to lend, so it was difficult to visualise tho whole of the problems in front of the Commonwealth. However, the production of tho. country was so huge that given good seasons, freedom from droughts, and rains in the produce ing areas, the return of wool, meat, and dairy produce would see the country over its troubles for the time being. That "had been happening, but the day of reckoning would come. Many recogr nised the seriousness of the position. Trade was b'ad.t Sydney was over-built. There hsid to be a readjustment of values and the process was going to be particularly painful. Australia would pull through, but the pulling was going to be long and arduous ami somebody was going to find it-irksome.