AUSTRALIA’S OUTLOOK.

Hawera Star, Volume XLVIII, 23 June 1924, Page 10

AUSTRALIA’S OUTLOOK.

VIEWS OF BANKERS. “RUTNOUS EXCHANGE RATES.' 1 The following, taken from the directors’ report submitted to the halfyearly general meeting of the Bank of New, South Wales at Sydney on May 30, will be read with interest:—■ Pretty generally throughout Australia reports are coming into us which speak in optimistic terms of the prospects of production for the ensuing season. In the majority of districts live stock are reported to be in excellent condition, with grass in abundance, and the forecast for increased returns from wool, meat, butter, cheese, etc... are practically universal. Also the reports and forecasts in regard to a splendid outlook for wheat and other cereals are equally encouraging. Therefore, as far as human eye can see or human brain can penetrate, it would appear that we are ‘justified in anticipating a time of plenty in the immediate future. So far, so good, and very good indeed, but it is not the whole question. This great producing continent of ours, being so limited in the matter of population, and consequently in the matter of local consumption and local markets, we have fo seek buyers of our produce in other parts of the world, and whether our goods are shipped- to America, Japan, or any other part of the globe, they have to be paid for in London just- the same as if they were all shipped there direct, consequently our funds accumulate in London, to the detriment of our available cash resources in Australia, and necessarily to the restriction of Australian trade. This restriction would net- obtain if the finances governing this commerce with outside countries were left unmolested; our exports and imports would more or less balance themselves, but the natural commerce of the country is not left unmolested; it is interfered with in a most serious manner. There is evidence that some of our Governments, municipalities, and public bodies are borrowing money in London, aparp from conversion requirements, which might- or might not he excusable if the English investor were to forward them the gold or other commodities of value for the loans but nothing of the kind happens. The' said investor simply provides the credit in London, and the borrowers themselves have to transfer the money out to Australia, which they have been doing at rumously high exchange rates, and thereby not only disorganising exchange rates, and theLondonere ? change values, but absorbing and diverting from natural commercial channels the funds which, in the ordinary business course, would be available to finance the exports of the country. Another injurious result of the public bodies mentioned creating these ruinous exchange rates for getting money out of London is forcing the banks, in self-protection, to put up the cost of negotiating drafts against produce, and thus imposing a heavy tax upon Australia’s most useful citizen, viz., the man on the land. If imports over exports very largely piedominated, the borrowing abroad however harmful it might otherwise he! nould not prejudicially affect the position, but 1 ust . now it does most adve sely affect it, and if the practice is allowed to continue it is difficult to see how it will he possible in the ordinary nay, and without extraneous methods, to finance the large exports which we hope r°r from our next harvests, and which are so essential to our prosperity.