Manawatu Evening Standard. FRIDAY, AUGUST 15, 1930. EFFECTS OF FINANCIAL STRINGENCY.

Manawatu Standard, Volume L, Issue 222, 15 August 1930, Page 6

Manawatu Evening Standard. FRIDAY, AUGUST 15, 1930. EFFECTS OF FINANCIAL STRINGENCY.

The Australian Commonwealth and State Governments—as a result of the economic condition of Australia—are faced with the possibility of being forced to reduce the salaries and wages of nonpaying services. Amongst these are the railways and some of the State Treasurers have already given an undertaking to the Loan Council—which is sitting in Canberra to consider ways and means of relieving the respective Governments of their financial troubles—that they will advise their respective Cabinets to take the necessary steps to secure a reduction in wages of railway employees. It is realised that unless the revenue is increased there is no possible chance of carrying on unless wages are reduced. Judging from the arrangement made with the banks it appears that a substantial proportion of the trouble in Australia is due to the extent of overseas borrowing. Recent cables inform us the Government is required to transfer to London credits at a rate of ajJproximately three millions sterling per month to satisfy external debts. This will give an aggregate of somewhere about thirtysix millions sterling per annum, which has to be sent out of Australia to meet their financial obligations. The position is aggravated by the slump in wool and other primary products. If wool growers were receiving a fair return for their wool the various Governments would not find it anything like so difficult to pay their interest to overseas lenders; it is the exports of primary produce (almost exclusively) that provide the credits in London from which national obligations are met. The establishment of credits in London releases equivalent credits in the exporting _ country. The principles, in this respect, applying to Australia apply to New Zealand. We can only meet ourj overseas obligations with the

credits derived from our exports; substantial reductions in the value of our exports are not only a loss to individual producers but ultimately become a loss to other sections of the community. To some extent the shrinkage in incomes derived by the man on the land may be made good by a corresponding reduction in imports; but reductions in imports result in lesser business for traders and those engaged in transport (employers and employed) and lesser work means more unemployment.