POST-WAR PROBLEMS

Otago Daily Times, Issue 25457, 11 February 1944, Page 2

POST-WAR PROBLEMS

EXPANSION OF CREDIT VIEWS OF AUSTRALIAN BANKER One of the best-known bankers in Australia, Sir Alfred Davidson, general manager of the Bank of New South Wales, with headquarters in Sydney, is on a visit to the Dominion, accompanied by Lady Davidson. Sir Alfred, in the course of an interview with a Daily Times reporter yesterday referred to the war achievements of the Commonwealth and also touched on some of the immediate problems which will face Australia and New Zealand when the war is over. He explained that the object of his visit was to see as many as possible of the 71 branenes of the bank in New Zealand and also to gain a first-hand knowledge of conditions in the Dominion. Sir Alfred said that official information showed that the Commonwealth’s mobilised man-power in the fighting forces and the production of munitions would compare favourably with that of any other belligerent. “The munitions programme,” he said, “ has reached its psak output in most items, and efforts are now being directed to the urgent demands for agricultural and food-processing machinery, refrigerating equipment, and spare motor parts. A programme for the construction of strategic engineering works had been carried out, designed to convert the continent into the major Allied striking base in the South-west Pacific theatre of the war. Financing the War “Practically half the national income,” he continued, “is now being devoted to winning the war. Direct taxation has virtually reached its limit. The public loans and national savings scheme have raised £425,000,000 since Japan came into the war, and it is estimated that by the end of the current financial year in June the war will have cost Australia the enormous sum of £1,677,000,000, the expenditure for the current year alone being £570,000,000. To meet this huge cost it has been necessary to mobilise in a drastic manner the nation’s financial resources. “ Finance to meet the cost of 'the war,” Sir Alfred said, “ can be raised in one or more of three ways—by loan, by taxation, or by the expansion of central bank credit. Although the first two methods are severe and painful, they are the safest and the best ways for raising money for conducting a war. In * total war,’ such as we are engaged in to-day, it is inescapable that there should be a considerable expansion of central bank credit. This item is the concern of Treasuries, of bankers, and of business men. It will be one of our chief post-war problems to handle this volume of credit in such a way as to convert it into long-term loans, or even, if we are fortunate, to reduce it without causing severe distress among the people generally. As some contribution to limiting this expansion during the war period, an effort is being made to stabilise wages, to limit profits by taxation, to restrict investments and dealings in shares, and to hold within bounds the increasing cost of living. Indeed, civilian living conditions have been drastically reduced. Clothing and footwear have been rationed, and so are some of the major items of food, such as meat, butter, tea, and sugar. In addition, the production of luxuries has been banned during the past 18 months.” Preparations for Future Sir Alfred said that on the whole these measures had proved successful, and he thought the achievement could well be described as a great one. “This point of view,” he went on, “is rcciving confirmation now, in that in limited directions the Australian effort can be directed towards some measure of providing for civilian demands. Steps are being taken to prepare plans to deal with the period of demobilisation, the change-over of industry from war work to peace-time-requirements, and for a general and widespread effort at reconstruction directed first of all to wiping out the necessary losses imposed on us by the war. and to commence 'ncc again to build up a better and more prosperous economy.” Sir Alfred said it was recognised j both in the Dominion and in the Commonwealth that one of the most difficult problems to be handled immediately after the war wouldb e the reinstatement of plant and equipment in all directions. “This has had to be put off during the war,” he explained, “ and will in itself involve enormous effort and expenditure even before we can resume our former progress to better conditions.”