FINANCIAL POLICIES

Manawatu Standard, Volume LVII, Issue 202, 27 July 1937, Page 2

FINANCIAL POLICIES

HON. R. G. CASEY’S VIEWS. RESULT OF VISIT HOME. Per Press Association. AUCKLAND, July 26. The state of Australian and New Zealand credit in London, together with matters of policy in central banking, were the subject of comment by the Hon. R. G. Casey, Treasurer of the Commonwealth of Australia, who is passing through Auckland on his way home from the Imperial Conference, which he attended as a member of the Australian delegation.

Mr Casey said ho was in London when the sudden crisis developed regarding the sale of gold. Just previously the first announcement of the proposed profits tax as a national defence contribution had exercised the most disquietening effect in the City, and the general financial outlook became very depressed. Then movements in gold caused increasing alnrm, with the result that all gilt-edged stocks fell in value, while there was a disastrous slump in metals." However, the market for primary products suffered no great setback. “It was naturally a matter of interest to study the reaction of the markets,” Mr Casey said, “but unfortunately these difficulties occurred just at a time when Australian loan conversion operations were in progress in London. The result was that about 50 per cent. was left on the hands of the underwriters, but under the circumstances that was not surprising. “In comparison with other countries, Australia’s credit in London is still sound and I think the same can be said for New Zealand.”

Discussing matters of internal financial policy in Australia, Mr Casey said he had just received the report of the Royal Commission on banking and monetary affairs and had only had time to peruse it hurriedly. “It is a thorough and painstaking report which mil he of interest to New Zealand as well as to Australia,’’ Mr Casey continued. “The Commonwealth Bank comes in for some mild degree of criticism arising out of the exercise of its functions as a central bank in the years of the depression As one who has been in close touch with the bank for a good many years, niv impression is that the criticism, which is direct but not harsh, represents wisdom after the event. As Napoleon said, we would all be firstclass generals if we could' forecast the result of a battle. The Commonwealth Bank started its central bank functions during the depression at a time of great anxiety and unprecedented conditions.

“The board had to gain its experience as it went as ordinary banking experience was of no avail.' Central banking practice has frequently to take a line which is contrary to the instincts and interests of ordinary commercial banking. A more clearcut- policy of greater boldness in certain directions on the part of the Commonwealth Bank is easy enough to advise in retrospect when one knows what has actually taken place. It is'a very different thing to be bold when none could see through the mist of the future and when such boldness might easily have meant disaster.” Regarding the future outlook for both Australia and New Zealand, Mr. Casey said the most hopeful sign was the apparent willingness of the United States to take a more liberal view of world trade. The American Government had expressed its desire to bring about a greater measure of reciprocity in trade with both the United Kingdom and the countries of the Empire, and prospects in this direction were more encouraging than they had been for many years.