ON AUSTRALIAN EXCHANGE

Daily Telegraph (Napier), Volume 59, Issue 54, 4 April 1930, Page 6

ON AUSTRALIAN EXCHANGE

A year or so ago a discussion on the exchange question would haye been of interest only to bankers or financinl agents, but to-day the Australian exchange position has beeome so acute that even "tbe man in the street" takes an interest in it and airs his views on the subject. Exchange — or foreign exehange as it is usually called — is merely the buying or selling of money, or the substitutes for money. It follows the same laws of supply and demand as any other commodity, and has all its attendant surpiuSes and shortages. At the present time there is an acute shcrtage of ilustralian funds in London (so acute that the Commonwealth Bank has reeently taken the unprecedented' step of refusing to cash Australian notes in London).' As a result of this shortage the Commonwealth Government is finding it increasingly difficult \ to

meet its financial obligations overseas, and the various Australian trading banks admit, quite candidly, that they are so short of London funds as to be unable to finance any but the most urgent and ne'cessitous shipments to Australia. As an indication of the position, it may be mentioned that at the end of January, 1929, the Commonwealth Bank of Australia had over £17,000,000 at 'call" and "short notice" in London, while at the end of January, 1930, the funds available were less than £5,000,000. This shortage, serious as it is, is accentuated by tbe fact that the Commomvealth has to meet shortdated bills of approximately £10,000,000 maturing within the next month or so.

In the ordinary course of events this shortage of funds could be rectified either bv the export of gold, or by the simple expedient of raising an Australian loan on the London market. Unfortunately, however, the gold available for export from Australia at the present time is altogether inadequate to alleviate the position, while. the bad impression caused by continual Australian borrowing in London, coupled with a steadily inereasing adverse financial position, has made London bankers somewhat chary of Australian finance ; and indeed it has been made quiie clear that any request for further accommod'ation at the present time would meet with a definite refusal. This financial stringencyAas been further aggravated by the drop in values of Australia's main exports. Wool alone sliows a drop of 35 per cent. in price, as compared with last year — accounting for a deficit of some £30,000,000 — while wheat is also diminished both in quantity and price. The sum total of Australia's troubles has now result ed in the restriction of credit in Australia, a la-ck of Australian funds in London, and • inabilitv to obtain loans at the present time either in London or New York. While we sympathise with Australia in her diffieulties and in the depreciated values of her principal exports (a depression in wliich we ourselves also share) we cannot help thinking that, to a certain extent, she has brought these troubles upon herself. Her Government borrowings overseas have, of late, beeome increasingly heavy, while the open-handed spendings of her people has earned for Anstralians an unenviable reputation for extravagance. As a result, in times of financial 'stringencv like the present, she has no reserves to fall back upon. But Australia is a voung and virile countrv, and if she takes this lesson to heart there is no reason why, in' a few years, she should not put her house in order. But to do this she must have assured immunity from labour troubles, and above all her people must be prepared — as one of her politicians has boldly asserted — to "work harder, longer, and for lower wages."