BEYOND PROPHECY

Taranaki Daily News, 30 January 1934, Page 5

BEYOND PROPHECY

ECONOMIC PROSPECT SMALL COUNTRIES’ DEPENDENCE. COMMENTS BY BANKER. How the backwash of world affairs may rock small countries, discounting the efforts of those countries themselves, was emphasised in Sydney on December 18 by Mr. A. C. Davidson, general manager of the Bank of New South Wales, in an address to the Constitutional Association. He said that Australia’s economic troubles were not yet over, and that her prospects were beyond human prophecy. Mr. Davidson, referring to outside influence, said that while the issue of' the experiment in the United States was in doubt they could not go into the New Year with any surer footsteps than when they went into the preparation :of the Premiers’ Plan two and a half years ago. Such tremendous issues were in doubt that they could not be blamed if - they regarded the future, as being “very, slippery ground.” Whether the experiment succeeded or failed, Australia would feel the effect. BRITISH AGRICULTURE. :• Economic recovery was also bound>up with the policy of other countries. - If the Government of France decided to give back to the Bank of France' the right to hold foreign balances, it would, for instance, have a great effect. What was occurring in Great Britain wdiild also influence recovery. If Great Britain pursued her new agricultural and industrial policy with greater and greater restrictions, it would seriously react on Australia. Neither Australia nor Great Britain would be able to sell its surplus produce. That might result in debtor countries, like Australia, being unable to meet their obligations. “Political interference has caused most of the troubles,” Mr. Davidson remarked. “In many countries well-designed plans of financial authorities and business men have been foiled and brought to nought by political interference. Political interference has been largely responsible for the world crisis and ■ its continuance.” Australia could not. be considered “out of the wood” until every efficient unit in it was working rjt’ profit. Under the machinery set in motion by the Premiers’ Plan, Australia was in a position to take full advantage, of world recovery once it came; she might even initiate recovery in a small way. They might even , say the Premiers’ Plan had been successful, but the greatest influence would come from what occurred in other countries. “WE CANNOT EASE UP.” “We find that f>ur only important product to show a material improvement, is wool,” he added. “Meat prices are still low; butter, after some recovery, seems' to show a tendency to fall; international trade is still falling off, and as long-as that downward tendency prevails it must exert a downward pressure on prices. Then, unfortunately, there is no prospect of the many restrictions on trade being lifted. . . . : . “We must not imagine that the time has come when we can ease up, or reduce our efforts. Many of us , would like to see further reduction of interest rates to provide a greater stimulus io industrial recovery, but at the moment this is blocked largely by burdens of taxation, by deposit rates, and the , reduction of Treasury bills. Then prices of our exports are still too low to take the risk of reducing the exchange rate, “If it was possible to reduce the interest rates still further, maintain the liquid resources of the banks by the maintenance of the volume of Treasury bills, so as to provide investment for the cash resources of the trading banks, and at the same time maintain the exchange rate, the banks would be able to continue to play their part in bringing about industrial recovery.”