PRODUCE & MARKET REPORTS FROM DAY TO DAY

Evening Post, Volume CXII, Issue 91, 14 October 1931, Page 12

PRODUCE & MARKET REPORTS FROM DAY TO DAY

BLAMING THE BANKS

POLITICAL CRITICISM

PROBLEM OF .MAKING ENDS

MEET

Evening Post," 14th October

Simultaneously in England and in Australia persons conspicuous in the political arena laid on the bunks of both countries responsibility for the financial dillicuUies m which each country finds itself to-day. The official Labour Opposition in the British Parliament issued its manifesto on 9th October, when it attributed the fall of 'the Labour Government to the clamour of bankers and financiers, and it insisted that "the tyrannical,^ disastrous rule of bankers must be ended." Also on Friday last; Mr. E. G. Theodore, Treasurer of the Commonwealth of Australia', speaking at Balmain, Sydney, alleged that the organised banks were dictating the Federal Government's economic, financial, and industrial policy; and he added that the Government would insist on a radical change being made in the mode Of controlling the monetary system as well-as' the credit resources .of • Australia. Incidentally, Mr. Theodore described the group of politicians led by -Mr. Lang, the Premier of Nov.' South Wales, as "si crowd of leather-hn^cd lowInows," and he paid them and thenlenders some other compliments. ■Six days before Mr. Theodores speech at Balmain, Mr. Lang himself, in the .New ,'jouth Wales Legislative Council, whose opinions of the banks in general he has at times more forcibly than elegantly expressed, singled out one banker, Sir Robert Oibson, chairman of the Commonwealth "Bank, for attack, charging him with "personal antipathy-to me" (Mr. Lang), and with standing behind the trading bank's. Messrs. A. -Henderson, J. E. Clynes, and W. Graham, who signed the British Labour Opposition manifesto, were members'of the'MacDonald Labour Ministry, Mr. Theodore is Minister.for Finance for Australia, Mr.., Lang is Premier of. the! State of New South Wales. ■ ! But, it may be objected, everyone'knows j this. Yes;.but does everyone fully Tea-! Kse the importance, that may be attached to such public utterances by such prominent political' speakers and the possible consequences attendant on such utterances? ■■•'■. ;

It is recalled that when the Sausage Seller in "the ■ Knights" of Aristophanes naked Demosthenes how one could learn to rule a stall the reply was: "It is as easy as lying! ' Do aa you do now. Turn all material to a public stew; hash things and cook things. Win the common herd by' strong sweet sauces in your every ■w-ord." ■

So it would seem with these highlyplaced critics oi the banks in England and in Australia. They are using "strong s.ree.t sauces in their, every word to hold up the..banks- to the execration of the masses of the people. Why? Because the. banks in-. England and in Australia— ai»S in. New Zealand—had foreseen as .others who observed the growth of public expenditure could not help foreseeing, that the day or reckoning was swiftly approaching, and had said so aiid prepared tor its coming.

"THE SLIPPERY PATH."

Over ten years ago the International Financi. I Conference held in Brussels adopted,'a "resolution in. which the?e significant words appeared: "Tlie country which accepts the policy of budget .deficits is Iveading the slippery path which leads'to general ruin; -to escape from that path no sacrifice is too great." Mr. Sno'wden, Chancellor of the Exchequer, recognised the danger'when •he said .1 week or so.back "a country is like an individual. It cannot keep jti a solvent position for ever if expenditure exceeds income." He clearly realised that the day of reckoning had fully arrived. When it arrived the banks took such measures as seemed to them not only necessary but inevitable to meet it. Therein have they offended.'thereby have they aroused the anger of the British Labour' Opposition and of; Mr. .Theodore and Mr. Lang, and many offers'.fn positions of authority in Australia. iiut it 'was not only those who applied- tlie methods commended to the sausage seller to politics ■ who sought to impress upon the public the eflicacy of ''strong sweet sauces" in meeting the conditions, so. tersely described by Mr. Snqwden. Acknowledged experts in economics occupying no place on any political stage have also helped to confuse the public mind by. proffering theoretical and some untried solutions of urgent economic and financial problems.' When these doctors differ, what can the public believe and what can it-dp? But back of the whole troubles of the present, and certainly at the back of the crisis in England, Australia, and, to some extent in New Zealand, is ever the Budget deficit. It is over the existence of that grim. fact, .'that incubus overshadowing the Mother .Country and these southern Dominions and liow to dispel it, that a certain type of politician and the bankers in general are at variance. Undoubtedly many of the banks'in general in the past had been over-generous «nd under-cautious in supplying credit at low rates to sustain the prices of superabundant stocks of primary products and manufactured goods,' and this in a marked degree in the United States. Then came the Wall-Street crash almost exactly two years ago, and financial troubles ever since the world over. Prices came down like an avalanche. Fear possessed the financial world, and, indeed, is far from dispelled to-day. . '

UNWORKABLE MIRACLES,

But in the; task- of rehabilitation the banks are endeavouring to take their full share. The Macmillan Committee recognised this when it reported . no financial system, however devised, can work miracles, nor can it cope with all the problems which must be presented to ifc by an unsound national pol;<y, whether internal or external. The financier is not to blame if the politician sets him problems which no financial-expedients can solve. If our budgetary position is -unsound, '■ and if our industries, owing to the level of their^costs or for other1 reasons, are unable successfully to compete as they used to; dpini the markets of the world, no management of the terms and quantity of'credit'will be able to maintain our natjonaj prosperity.

FuV.thfir,< the Committee definitely stated that: "fip.ane.ial.policy can only.be carried in^o effect by those whoso business it is." and. it.directed attention to the British and..'.Dominions' ' banking organisation with ..its,"great experience and great tradition's" as the only organisation with the necessary skill .and • knowledge and equipment that are requisite in the restoration of confidence—for. as .Professor Honn, in a recent address to bankers in London, made perfectly clear, "Fear, not real scarcity of capital, is at the bottom of the world's desperate credit situation to-day. That fear is partly due to political causes; whether right- fir wronj, it cannot bo disTicllcd by monetary tricks." nor. it might be added, by abusing the banks.