LOANITIS

Evening Post, Volume CX, Issue 71, 20 September 1930, Page 11

LOANITIS

IS THERE A CURE?

ANTS-DEBT VACCINE NEEDED

CULPABLE CBEDITOBS

Experience shows that democracy is «o defence against the borrowing disease. Even in the face of the terniying edifice of post-war debt revealed in 1929-30, the world went on ton-ow-ing, and in Australia particularly the decade 10X8-1928 was hectic with loaiiites. The appetite increased with eat"if a debtor-democracy is incapable of moderating ita borrowing, is a creditor.country capable of undertaking its lending so as to check the debtor before the lattor's. position becomes too involved 1 Ten years ago this .question might have been answered quickly iv the affirmative, but to-day the answer is not so certain. . An external creditor may control borrowing (other than internal borrowing) but has no authority over internal costs, wages, spending programmes, etc. ~. "Federal Ministers (writes the Ar gus>) appear to think that they can toy with repudiation if they call the ugly thing by some other name. . • • All loans have a currency Hy determined, rj.d both parties, borrow ci and lender are compelled in l>°n. oUl to observe their terms. The Sculhn Ministry cannot, without besmirching ttie honour and injuring the credit Of Australia, plead for any alteration of those terms! The feasibility of any such arrangement need not be considered, _ m view of ita immorality and of the damaging effect which any such representations as those proposed to Mr. Scullin would have upon the Commonwealth as a whole. FROM ONE DEBTOR TO ANOTHER. "Great Britain Has her own stupendous war debt. She is suffering from grievous depression of trade. She has within her borders 2,000,000 unemployed men and women, and she maintains a costly navy for the defence of the Empire. It is to the Government of Great Britain thus sorely strained that the representatives of this new country, sparsely populated and with untold resources, turn with a mixture of winning supplication and injured truculence. The representatives of the Labour Party who look in that direction ±or relief from their obligations aro the people -who'frown upon the importation of goods from Great Britain and heavily tax them, and who have turned the cold shoulder upon British immigrants. The leaders of the party from which such despicable actions emanato turn, their eyes to Great Britain because they are afraid to look their own. constituents in the face and to.tell them .that upon the people' of Australia rests iiie duty of paying the debts of Australia. Nothing politically inexpedient is even to be hinted'at to the well-con-ditioned workers of Australia until the hat has gone round to ascertain how much.- the, grievously overburdened people of Great Britain will contribute. "These "appeals to ignorance and to avarico suggest that those .who;;father them have a contemptuous- estimate of the intelligence of tho Australian .electors as a whole-. A certain sum. is, due directly to. tho .British Government for expenses incurred, abroad on account' of Australian'soldiers at.the war. If the amount due under this heading is in question, the claim will exhibit Australia in a light -which overy self-respect-ing person can rogard only as humiliating. ■ If, however, Mr. Scullin approaches the British Government in London with the request that its influence should be used and its resources employed to' enable Australia to evade her general financial responsibilities, the proposal will be the more disgraceful only because of its greater audacity. In the first place, it is an abdication of tho functions. of self-government in that it ask 9 Great Britain to do something to relieve Australia of tho consequences of the policies of our own blundering Governments. 'In the second place, it invites the Government of Great Britain to become a third party in matters which are the concern solely of Australia and of the creditors of Australia. The holder of Australian bonds in Great Britain has no relation, financial or otherwise, to the British Government in respect of Australian obligations. Ho has made ..his investment, relying upon the honour, the integrity, and the solvency of tho country with which he was dealing. A representative of the Commonwealth who docs or says anything to lower the standard in any way of these respects deserves the contempt of all self-re-specting people, and he will surely incur.their punishment." TRUST—RUST—BUST. ; The dangerous inflationary tendency jof abundant cheap" money was the subject of an address in Melbourne by Dr. Cr. L. "Wood, who said: "Cheap loan money has inevitably led to over-expen-sive schemes of national development —to that national state of mind which can be described only as an abandonment of the principles of thrift, to the depression,-of the stimulus of private enterprise, to ■the acceleration of the spurious form of- enterprise known as ■ speculation, and to dependence on Government initiative in development." In the political sphere, ho said, the economic evils of borrowing were again manifest. Under the party system _of government, unrestricted borrowing facilities tended to be translated into nxperimental legislation which, however praiseworthy in a social sense, was economically unjustifiable. The capital for the indulgence of political whims was too fatally accessible. There was-, "\n effect, an apparently unrestricted supply of cloth for cutting coats of many unserviceable patterns. One of these coats of unserviceable pattern had certainly been tho non-paying railway. Tho primary evil, however, was to "be detect/.! in the possibility that ivas held out to political parties of bargaining for power with borrowed money. This was just as familiar an experience in Canadian and Argentine politics as in. Australian. That other immunities had done likewise and that tho condition was inseparable from a free loan market were facts, however, beside the question. The universal castigatipn of Governments for their share in stimulating loans and.developing expansionist tendencies was described by Dr. Wood as unjust and hypocritical. "That a more scientific control of borrowing in the past has not been ensured," he said, "is due to the fact that all branches of business in the borrowing country, and more particularly importing and contracting enterprises, are vitally in : tcrested in promoting and maintaining the flow of foreign capital. Large annual loans mean an enlarged purchasing power, which is radiated to the remotest settlement in the country. They mean expanding Customs revenue —and that means easy conditions for Government finance. "They mean a largo volume of merchandise passing through tho importing warehouses; they menu corresponding stimulation of exports—and that spells satisfaction to the exporting agencies. They; mean profits fa the

banks and "to the. smallest traders. Even in the presont desperate situation, ho said,.there. was a furtive hope that somehow or other the money markets of tho world-would again be thrown open as freely as in tho past. In conclusion, Dr. Wood suggested aremedy in terjjs of pathology. Just as tho germs of disease could be used to stimulate resistance in a patient so tho development of economic antibodies was necessary in the community, aud the main task to-day was to develop conditions favourable to tho antibodies. The paramount necessity was for n more efficient iwo of capital,