WORLD CONDITIONS.

Waikato Times, Volume 112, Issue 18808, 2 December 1932, Page 3

WORLD CONDITIONS.

INTERNATIONAL TRADE. ‘'AUTARCHY” CULT CONDEMNED. BRITAIN’S RECOVERY. One Is impressed with the imperative need, at the present phase of the crisis, of an immediate improvement In, international trade said Mr 1 - Buckland, at the annual meeting of the Bank of New South Wales in Sydney. The Ottawa declaration-) pointed the way to this in the stress they laid upon the necessity of a policy dlreoted toward the raising of price levels. When this has been accomplished and prloes have been held at a comparatively oonstant level steady rates of exohange will reappear. No sound objection can be raised to the adoption by the Empire of treaties such as those fashioned at Ottawa if the costs are clearly recognised. The countries of the Empire are entitled to declare that the loss such policies may lnlllct upon the Empire and the component parts thereof are well worth incurring .for the sake of developing a family of nations, separated more or less in their .economic policy from the rest of the world. It ■would be dangerous, however, to pursue a policy based on the assumption that the Empire could economically be made completely self-sufficient. The present cult of "Autarchy,” or economic self-sufliciency, both on the Continent and in Britain, is fatally re-, aotionary. A world of “Autarchies would leave Australia stranded. Nor should it be overlooked that it is strangely inconsistent for tne party opposing collectivism to adopt the quota principle. Any such policy must lead to the restriction of production. Butter and lamb are potentially the most expansive of our primary exports. Aotlon taken to keep such production within the quota agreed upon must Inflict loss on those now engaged in expanding it. Middlemen, buying oheaply 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 arise demands for compulsory pools. The necessity of financing these pools •would be the next problem. The volume of finance 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 enoouraging excess production, would go far to ruin Ihe 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 aulhorities 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 'of forcing down long-term interest rates and of helping to bring about a revival in investment, industry and trade. To date their policy has been strikingly successful in the former aim, as is shown by the great achievement of converting some £2,000,000,000 of the 5 per cent. War Loan to a loan at 3i per cent. Australia. too, has made considerable progress during ihe last 18 months in the same direction. The trading banks have reduced the rates of interest both on fixed deposits and on advances. During the last 17 months the rate of interest on two-year deposits has fallen 2 per cent., so far as new contracts are concerned. Yet it must not be overlooked that the last of the fixed deposits lodged during the period of high interest rates will not mature until the end of June, 1933. 1 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, howeve-, that this break had restored to Great Britain a freedom which she had lost on returning to the gold standard in 1925. The remarkable manner In which the British people faced the situation regained for them the world’s confidence in their capacity successfully to face crises. It was not long before 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 of 2 per cent, per annum, while the British Treasury bills are discounted at rates varying slightly above one-half of one per cent.