ECONOMIC CRISIS

Evening Post, Volume CXI, Issue 82, 8 April 1931, Page 10

ECONOMIC CRISIS

"THE ONLY SOLUTION"

WORLD-WIDE CO-OPERA-TION

.Mr. E. W. S. Mackay, of Sydney, who has been staying at the Eoyal dais: Hotel, leaves to-day by the Makura on the return trip. Mr. Mackay is a member of the firm of Sly and Bussell, solicitors, of Sydney, and a director of E.K.O. Pictures (Australasia), Ltd. Mr. Mackay, who is also a. lecturer of tha Tutorial Department of Sydney University, referred shortly to the economic crisis in Australia. It was due, he said, to both external and internal factors. The external factors were tha drop in world prices, due, firstly, to the shortage of gold and the maldistribution of gold, France and America having more than half the world's total supply. . , :Over-production, the loss of purchasing power in India and China, due to the drop in the value of silver, tariff barriers, Wall Street speculation, and the attempt by Governments all over the world to artificially fix prices and regulate exports, were secondary, though very important, causes of the world slump. The internal causes of the crisis in Australia he attributed to heavy borrowing over the last ten years, the tariff, artificial regulation of industrial conditions, and the lack of financial control by Governments, due .to the distribution of powers between the State and Federal authorities., .The borrowing policy of the Australian Governments had led to a false sense .of prosperity, and the interest payments had increased at a rate out of all proportion to the increase in the value of the export products. The tariff had made it difficult for Australian exporters to compete in the world's markets, as the margin between the cost of production and the world prices had almost disappeared, owing to the duties.on imports for primary industries. After all, a tariff was only a form of inflation, as it depreciated the value of the pound without increasing the real value of production. The dual powers of the State . and Federal authorities and their laoh of unanimity had made it impossible for the necessary drastic steps to be taken, by the governments to meet the situation. Comparing the position in Australia with that of New Zealand, Mr. Mackay said that this country had not suffered so greatly as Australia by the drop in world prices, as Australia's wheat and wool, which were 70 per cent, of her export trade, had dropped 50 per cent, in value, whereas New Zealand butter", meat, and cheese, which were 50 per cent, of her export trade, had dropped only 30 per cent, in value. The world slump, however, had hit at primary producing countries, and. the only solution to the world crisis was some form of world co-operation, both over primary and secondary production and currency. The recently; established Bank of International Settlements was a step in this direction*