BANK'S WARNING

Evening Post, Volume CXXXVI, Issue 70, 20 September 1943, Page 3

BANK'S WARNING

"THREAT OF INFLATION"

"The field of secondary production is dominated by the necessity of providing various types of. war, equipment,?' states ther annual report: of the Commercial Bank of "Australia. "Australia has made considerable technical advances and will emerge from the war with greatly increased resources of industrial skill and equipment." Dealing with the rise in the community's purchasing power and to controis over prices and costs, the report states: "As more purchasing power accumulates in the hands of the public the strength and efficiency of the controls become a' matter of increasing concern. Unless they are 'comprehensive, firmly administered, and rigorously maintained, the war effort is impaired and the threat of inflation becomes serious." 5

It is also observed: "The pressure of war requirements forces a reduction in civilian supplies at the same time as Government expenditure increases the purchasing power. This increased purchasing power should, of , course, >be drained away as far as possible by the heaviest practicable: taxation and the maximum encouragement of individual savings. In wartime, however, the means of reducing the harmful use of increasing accumulations of purchasing power are found to be inadequate, and have to be supplemented by direct controls."

The report suggests that the future issue of Treasury bills could be reduced by an > increase in some forms of taxation, by an increase in the volume of loan subscriptions, as well as by the reduction of Government expenditure through exercising the closest possible supervision over costs and eliminating all unnecessary items of expenditure.