CONDITIONS IN AUSTRALIA

Waikato Times, Volume 112, Issue 18807, 1 December 1932, Page 12

CONDITIONS IN AUSTRALIA

ADVICE OF A BANKER. STEP OtJT—BUT NOT TOO FAR. “ We in Australia have been In hard training lately and the facts of our recovery to date are very eloquent of the results. We are getting sounder in wind and limb all the time, and we can afford to take a little more vigor- • ous activity," said the general manager of the Bank of New South Wales (Mr A. €. Davidson) in an address at the Legacy 'Club luncheon at Sydney. The Commonwealth Bank, he said, had done for Australia what a central bank would be called upon to do if the credit to set enterprise going were to be provided, but at the same time was not to be extended t-oo far. " When, as now,” lie went on, "Ihe time to move forward has come, it is necessary to prevent that forward movement developing into another boom. We must not be afraid to get out of this depression for fear of falling into another; hut, in the absence of restraint, an extension of credit is 'likely to go too fast and too far." To Preserve Purchasing Power. There existed, said Mr Davidson, a very real contest between two types of currency—those managed so as to maintain stability in terms of gold, and those managed so as to keep them steady in purchasing power over commodities. There were more countries off Hie gold standard than were faithful to it. In non-gold countries prices were being kepi stable. “Any who are not engaged in foreign’ trade,” lie said, “ask mainly •Limit, .their bank balances shall represent much the same claim on Iheir fellow-citizens this month or this year as they did last month or last year.’’ Mr Davidson then gave details of Hie Swedish scheme to keep Ihe kroners (Is I id) “steady in ils purchasing power in the hands of the consumer." The object was to stabilise the crown internally, irre- | spective of ‘ils internalionai partly, and the Riksbank had not hesitated to buy foreign exchange In the process, having bought h5.000,(JOO kroner during duly and August. “ Such a policy would have scandalised our fathers,’’ lie said, "but the policy has not in any way miltaH'd against Ihe international emit! | of Sweden. Both at ho-nic-and abroad (here is increasing confidence in the wisdom of tli? policy. Australia, lie said, could have confidence that the Commonwealth Bank, in bringing down rates of interest and in managing the exchanges, would know where to stop.

•• | urn convinced," he added, "Ilia* central bank action to hold the average prices steady at levels admitting of a revival of enterprise is the most hopeful expedient of relief from the torment of depression In the midst or abundance."