BANKS AND FARMERS

Wanganui Chronicle, Volume 74, Issue 228, 26 September 1931, Page 20 (Supplement)

BANKS AND FARMERS

PROCESS OF RECONSTRUCTION

AN AVERAGE REDUCTION OF INTEREST RATES *•

Mr A. C. Davidson, general manas addressing a conference of farmers ; noteworthy remarks on the economic equally to New Zealand. A declara' the farmers in their present grueli >

5 er of the Bank of New South Wales, it Sydney last week, made some situation in Australia, which apply 'on that the banks would stand by circumstances was warmly cheered.

Mr Davidson went on:—• ‘ ‘ Farmers have cut costs inside their fences to the bone, but outside costs, such as interest, transport, distribution, and taxation have been inflated by extravagant W'ages and working hours, established in boom times. Owing to the slowness of the Governments these conditions, which mean the very existence of the primary producing industries, are lagging far behind the time at which they should have been altered, to meet the present situation.

“The banks in Australia are determined to stand by the exporting industries, which have felt the full brunt of falling prices,” said Mr. Davidson. “The banks will stand by the customers who are doing their best to maintain the national outlook. We have reached a state of siege, and we must stand together and stand by our producing customers as long as they stand by us. Their duty is to spend no more than they must.”

There could be no reduction in costs or interest rates until Government finance was placed on a sound basis, added Mr. Davidson. This position had been forced on the British Government to such an extent that it had resigned to make way for the formation of a. coalition Government to meet the posit?< n The illness in England was the same as the illness here, and the cure wculd probably be almost identical with the plan adopted in Australia.

The Macmillan Committee’s report had emphasised the importance of avoiding stabilisation of prices and present levels, and recommended international action by the central reserve banks to raise the wholesale price level. He supported that recommendation, but action had to be taken internationally

—by the Bank of England, the Federal Reserve Bank Board of U.S.A., and the Bank of France. Unfortunately, the Bank of France was not playing the game, was running on selfish lines, and w r as one of the greatest handicaps to recovery.

Reduction of expenditure was the negative side of reconstruction, pro-

ceeded Mr. Davidson. This was not sufficient. He believed the positive phase of reconstruction was approaching, and with this Governments could not cope. The country would go down ii it was left to Governments. At this stage private enterprise must come In.--(“Hear, hear,” and “Time it did.”).

‘‘ We must increase the total value of our exports,” he said. “We cannot change world prices,-* but we can send away our exports in greater volume, better quality, and wider range. The limited range of our exports is one reason why we have been hit so hard. This is where the planning of free enterprise must come in. I know men who are at work trying to degrease wool in the bale, to coa cent rate milk for export, and many other things. I hope that in the next few months these things will be commercially practicable.” In reply to a question, Mr. Davidson said he favoured an average cut in interest rates, and not a flat rate cut The banks should have discretion to give the greatest cut to those industries which would give the greatest impetus to recovery.—(“Hear, hear.”) They would be able to give the pro-, during industries more than 1 per cent., while the industries that could better carry the burden would receive less than 1 per cent.