WORLD CONDITIONS

Poverty Bay Herald, Volume LIX, Issue 17952, 2 December 1932, Page 5

WORLD CONDITIONS

REACTIONARY CULT DENOUNCED THE DANGER OF QUOTAS Dealing with, world conditions in his speech at the annual meeting of the l ank of New South Wales in Sydney, Mr Thomas Backland, president of the lank, said:—"One is impressed at the cutset with the imperative need, at the present phase o' the crisis, of an immerkate improvement in international trade. \\ hen this has been accomplished _ and prices have been held at a comparatively constant level, steady rates of exchange v ill reappear. “It would De dangerous to pursue a policy based on the assumption that.the Empire could economically be made com, pletely self-sufficient. The present cult ox •Autarchy,’ or economic self-suffi-ciency, both on the Continent and in Britain, is fatally reactinbary. A world ot ‘Autarchies’ would l leave Austfalia stranded.

“Nor should it be overlooked that it is strangely inconsistent for the party opposing collectivism to adopt, the quota principle. Any such policy must lead i<> the restriction of production. Butter and lamb are potentially the most expansive of our primary exports. Action trlren to keep such production within the quota agreed upon must inflict loss on those now engaged in expanding it. Middlemen, buying cheaply because of the local glut, and selling, dearer in Britain through the limitation of supplies in that market, might for a time draw profit from such a plan. Out of their temporary gains, however, would anse demands for ■compulsory pools. The necessity of financing these pools would bo the next problem. The volume of li i nee required would introduce a new menace and one backed by political pressure- for guaranteed prices. Such?,pressure would probably endanger the national finances, and the guaranteed prices by encouraging exseess production ,»Ould ‘go far to rum the industries affected. We have seen examples of this in Canada, Malaya, Brazil, and the United States of America.

ATTACK ON DEPRESSION % “Turning to a more hopeful line of attack on the depression,' the British authorities throughout the year have steadily moved toward the monetary objectives outlined at Ottawa. They have taken steps to reduce rates of interest and to create a plentiful supply of short-term credit with the aims . f’ forcing down long-term interest rates ciiu of helping to bring about a revival ,n investment, industry, and trade. To date, their policy has been strikingly successful in the former aim, as is shown by the great achievement of convei ting some £2,000,000,000 of tho 5 per cent War Loan to a loan at 3£ per cent-

“Australia, too, has made considerable progress during tire last 18 months in the same direction. The trading banks have reduced the rates of interest both fixed deposits and on advances. During the last ‘7 months the rate of inteiest on two-year deposits has fallen 2 pp cent., so far as new contracts are corcerned. Yet it must not be overlooked that the last of the fixed deposits lodged during the pei’iod of high interest rates will not mature until the end of J. ne, 1933. “I referred last year to the first effect of Britain’s departure from the gold standard in bringing about some loss in London’s financial prestige. The world soon realised, however, that this break bad restored to Great Britain a freedom which she had lost on returning to the "old standard in 1925. The remarkable manner in which the British people faced tho situation regained for them the world’s confidence in their capacity successfully to face crises. It was hot long Imfore foreign funds began to return to the London market. Interest rates there for short-term lending began to fall, until now London has a bank rate "f ? ner cent. n a r annum, while the British Treasury bills are discounted at rates vowing slightly above one-half of I per cent

“The greatest need at the present is for intrepid, well-informed leadership in mrnetary policy. The world still looks mainly to London for that, and there is abundant evidence that the world is not '.coking to London in vain.”