Bankers' Views as a Whole
IN commenting a fortnight ago upon the speeches at the earlier meetings of bank shareholders, I suggested that while much value attached to the views of banker's concerning the financial and business outlook by reason of their daily contact with the financial and commercial activities of the country, any possible bias exhibited might reasonably be expected to be in the direction of optimism rather than pessimism.
In the first place, it is certainly not the duty of the banker to give public utterance—unless absolutely necessary—to views calculated by disturbing confidence, to injure the business of his customers. In the second place, and notwithstanding the low money rates, bankers themselves have enjoyed a more prosperous year than for some time past, even though some portion of the profits may not have been secured along the old orthodox banking lines. On the whole, therefore, it is not sur- prising that optimism should have been the prevailing note at the recent bank meetings.
MORE EXPORTS NEEDED.
On the other hand, with complete unanimity every bank chairman emphasised the need for a revival in international as distinct from domestic trade. On this point there was evidently a clear recognition of the fact that there must be a limit to purely domestic trade activity, especially remembering that some part at least of the activity has to be attributed to such temporary stimulus as that represented by the Government's expenditure in connexion with the rearma- ment programme. Most bank chairmen reminded leaders of industry that there was danger lest the extreme activity of home trade should divert attention from the necessity for keeping our hold over foreign markets. I must confess, however, that I would have liked to discern rather more concern on the part of the bank chairmen with regard to the expansion in the national expenditure. It is quite true that with regard to the main increase, namely, that connected with the regrettable but none the less inevitable outlays on national defence, no word of criticism or of discouragement should be uttered, but it is not only special defence expenditure which is = responsible for prospective deficits and still higher taxation, and outlays on social services which, however desirable, in certain circumstances would seem to call for rigid control at a moment when arrears have to be made up in the expenditure for maintaining the national defences.
But while in some respects bankers may be said to have taken an ultra-optimistic view of the future, I think that they were quite justified in emphasising two points in the situation concerning which there are needless apprehensions. The rapid rise in the price of commodities has, not unnaturally, caused some appre- hensions both as to the effect upon costs of production and also upon the cost of living. More than one banker, however, pointed out that the rise is from an abnormally low level, and that it was generally conceded during the period of depression that no world recovery of prosperity could take place without a material rise in prices of leading commodities. Even now prices are by no means above what might be termed the average over a long period. Not only so, but the rise in prices of such commodities, for example, as wheat and wool has done much to restore- economic piosperity` to countries WhiCh had suffered greatly from the prolonged fall, and it is probable that we have yet to feel the good effect
(Continued on page 250.) Finance
(Continued from page 248.) of the recovery upon the purchasing power of the pro- ducing countries. And finally, I think that bankers on the whole have been justified in declaring that as regards both the higher prices of commodities and the greater activity in trade there is.nothing at present to apprehend in either movement going beyond the power of the banks to easily meet all loan requirements.
ARTHUR W. KIDDY.
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