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Evening Post, Volume CIX, Issue 117, 20 May 1930, Page 12

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TWENTY MILLION LOAN

AUSTRALIAN FINANCES

SYDNEY, 19lli May.

The Federal Treasurer, Mr. E. G. Theodore, states that overtures have teen made to him by a group of New York financiers to loan-the Commonwealth twenty millions sLerling. The term*,'* however, are not attractive, and the negotiations are off.

■ It is not- improbable that sonic "eon- ', neetion will, ljie l'ouiiil between the offer ■ ot twenty million- above referred^ to ami ■ the recent return to Sydney of Sir '-Mark .Sheldon, chairman o£ the .Australian bj"ilv of Commerce, from London and New . York. Such. a loan could be "handled -by ,a London-New York group, providing the • terras'were'made attractive, and it would have, done much towards temporarily easing the exchange position until Australia : could have struck. .1 healthy overseas trade balance. , : It was recently reported in London ■financial and business circles that a strong Anglo-Australian financial group had -offered to provide a £20,000,000 Joan to .Australia to restore the exchange position. ■ The terms offered were better than • have" been obtained by Australia for some time." But it was understood that the new Commonwealth tariff would have- to l>r modified for. the easier admission of import's from' the source or sources from ■which the loan was to be derived. Australian opinion, however, was to the effect that it would-be inadvisable to place easy methods of borrowing in reach of Australia at present. In the past the Commonwealth was able to get its mone.tary. requirements without slightest difficulty. .Borrowing had been greatly _'in excess ■of sound business practice. "Through"-these'large borrowings the econo-mic-position of.Australia got where it im, and high interest commitments and adverse irade balance became very serious. •It was now the accepted practice ot the I'ederal Government to bring imports into .line with exports, and, although borrdwingsto. relieve the difficulties of exchange would greatly benefit the import 'trade, it; would'defeat the policy now in- * The* Commonwealth Government is presently again entering the local .market ior "loin; itis believed, of £10,000,000. It has to be remembered that the Commonwealth Treasurer, Mr. Theodore, has stated- definitely that Australia would not be looking to London for loan money for a-considerable "time. That market is not - accessible at a reasonable interest rate, .and even if the Government did go to London to borrow new.money they would only, be putting off the inevitable day ot reckoning. . The Government would have to go on the London market as soon as an available opening occurred, Mr. Theodore added but the entire proceeds of such loans would-be required to reduce overdrafts 'in London and to redeem Treasury bills. • "Australia, would be compelled to depend in the- future .more and more upon its own financial resources; whatever they .might wove to be. Part of the policy of -he present Government would be not to approach the' money market in London, New York, 'or any other centre overseas . for n,ew\ money for a long time.