Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-04-24
AUSTRALIAN CRISIS
LAID TO EXPANSION
Production Profits INSULT
cient to Meet Govern
ment's Obligations
BY JOHN F. SINCLAIR.

DA JOAAAN oAANSA@EAAASs
NEW YORK, April "a (N.A.N.A).-
What has happened in Australia, where
the New South Wales Savings Bank
the largest in Australia-has folded up?
Australia was apparently making splen-
did economic progress. The living
standard was very high. Now it is in
the throes of a great crisis. American
business men will hope it pulls through
safely. The United States provides one
fourth of Australia's imports, but takes
only per cent of its exports. 1t Is one
of Americas best customers.
Probably the greatest cause of Aus
tralia's spectacular collapse is overex-
panSion. Its wage earners in industry
have mounted to 80 per cent. Out OF
a population of 6,427,O00 one-third are
concentrated in the cities.
Australia has used much foreign
money to finance this growth. The
roads, telegraphs, telephones, docks and
irrigation works, has gone deeply in
debt. Its production profits are not
sufficient to meet them. The country
expanded too fast
BY 1880 Australia's consolidated pub
lie debt was over $5,500,0 100000 per
capita debt of about S850-against an
income of $2,710. While the boom
lasted 1t survived When the depres-
sion came its foreign trade, on which
its economic life is Staked, caved in.
At present prices its production of a
fourth of the worlds wool Is reed in
the wind!
After the former prosperity the peo-
pie will chafe under the yoke of de-
flation. John Thomas Lang, the fiery
premier of New South Wales, who re-
repudiated that states debt, is SYM
Dol of the discomfort to come. Aus
tralia has had its day in the sun, but
now it is facing the long shadows of
a foreboding twilight.
There is a murmur beginning to be
heard on both sides of the Atlantic
on Montagu Norman'S proposed Inter
national Mortgage Bank and the man
Ter in which he has conducted his
negotiations in this country.
The plan itself was recently attacked
by DR.. Herbert Feis CT the Council on
Foreign Relations. DR.. Feis maintains
that such an institution has no ap-
parent usefulness. Business nrms
could, If they are financially SOUND,
obtain the same long-term credit from
existing private banking institutions as
they could from such an international
one
But there has been another interest
ing development in criticism CT this
project of the governor OF the BANK
of England Why, some people are
asking, should Mr.. Norman organize
himself into a one-man-know-notn
party? Why are all the Norman ne
gotiations being kept SO secret? ,ss
Such critics, and they INCLUDE IeaoeIs
in both the United States and Great
Britain, are among those who are
troubled at the growing international
control of world affairs by bankers.
They suspect a new scheme Tor sewing
I'D the economic resources OF people an
over the world. If there is no deep
plotting going on, they insist, why not
ohserve the principle of open cove
nants, openly arrived at?" There may
be no justification for this view, but 1t
is worth some reflection, at least.
American newsprint mills are under
going a painful process OF price re-
auctions and reorganization.
Following the lead of the Canadian
news print manufacturers in cutting the
price per ton from $62 to $57, the Great
Northern Paper Co. is the FIRST Amer
lean concern TO make a cut. Thougn
the officers of this company have not
stated exactly the size Of the reduction,
they do say: Our company viii MAIN
tain its competitive position" TINS at
least implies an equal cut.
The news print industry has productive
capacity greatly in excess Of present de-
mand. Still the manufacturers have
heavy support in their light and power
operations. Many OF the mills are
hydro-electric plants and the production
of current is usually far in excess OF
the amount needed for their pulping
and processing operations This surplus
is sold to private and State utilities for
light and power purposes and furnishes
the paper manufacturers with good
profit. Furthermore, it is stable
profit. seldom fiuctuating, and moving
slowly upward.
Despite this fact, the industry stands
in need of considerable overhauling. The
cut in news print price should, ana
probably will, be followed by substan-
tial write offs. When they have rebuilt
their financial structure they should
continue to earn fair income.
Should the United States initiate the
Austro-German Union with a Pam
American Economic Union? DR..
OresteS Ferrara, until recently Cuban
Ambassador to this country, says it
should.
Cuba alone pays more total duties
to the United States than any other
country. The total is greater than the
totals Of France, Germany and Eng
land combined. and amounts to one
ceipts! Although the United States has
a reciprocal trade treaty with the little
island, there is a large section of the
Cuban public which feels that it has
been q one-way affair in favor of the
United States.
Probably the best solution, so long
as tariffs continue TO distort the eco
nomic face of the world, is the abolition
of the antique moSt-favored nation
principle from international trade
agreements. This would enable nations
to make the natural special arrange
ments with countries that geographical
proximity and economic resources die
tate. In this way such countries as
Cuba would be able to obtain from the
United States trade concessions which
the United States could not possibly
extend TO the world in general
copyright. 1881, by the North American
Newspaper AlianceJ