THE BANKERS’ REPLY

Greymouth Evening Star, 27 February 1931, Page 7

THE BANKERS’ REPLY

ESSENTIALS OUTLINED THEODORE SCHEME UNSOUND [BY CABLE —PBESS ASSN. —COPYRIGHT.] (Recd. Feb. 27, 8 am..) MELBOURNE, February 26. Following a private conference of the bankers, their letter embodying their conclusions on Mr Theodore s financial plan, and the three-year pro posed plan for rehabilitation of national finance, was made available for publication to-night. The bankers begin by endorsing the suggestions for the absorption of the unemployed by reproductive works, the maintenance of national solvency, the restoration of the budget equilibrium, and an equitable spread of the losses in national income over all sections of the community, but then express regret that they cannot agree with all the methods suggested by the Federal Treasurer. '■

Some of these, they say, are t not based on sound economic lines, 'and would rather accentuate the present difficulties. The banks, however, are prepared to co-operate in any reasonable practicable scheme likely to afford relief in the present crisis. The first essential was the putting of the finance of the Government in order, in accordance with the Conditions laid down by the experts’ threeyear plan. If this were done, there was little doubt, thatethe banks, generally, could make some reduction in the present rates of, interest. They pointed out that ihe overseas debt of the various Governments must ultimately be funded, but this could not be done until a definite effort was made towards budget stability. rphe proposed special fax on Government securities must eventually lead to difficulty in converting, maturing loans, or in funding floating debts, or raising new loans. < Finally, the bankers said that in terest on Government overseas obli gations would continue to be provided through the exchange pool, as long as it was in the power of the banks to do so. • ' !. ■

EIGHTEEN MILLIONS INFLATION.

FEDERAL GOVT.’S DECISION.

MELBOURNE, February 26.

Mr Theodore informed the Loan Council that the Federal Government intended to introduce legislation for the creation of fiduciary currency limited to eighteen millions sterling, six millions of which would be devoted to a bounty on wheat. The Premiers’ Conference had previously listened -to Mr Theodore’s explanation for the creation of fiduciary currency limited to eighteen millions, the purposes of which were to provide a million a month for the absorption of the unemployed on reproduc tive works in various States, and a bounty for wheat. Representatives of the Commonwealth, Victoria, and South Australia approved the plan, but Queensland. Western Australia and Tasmania dissented. New South Wales was not represented, thus a deadlock resulted, after which Mr Theodore, following a consultation with Mr Scullin, made the announcement that "the Government intended to go straight aheatd with the legislation giving effect to the plan. , PREMIERS’ CONFERENCE. .ULTIMATUM TO MR LANG. . MELBOURNE, February 26. Unless Mr Lang agrees to conform to the conditions of the Loan Council, he 'will not receive any further financial accommodation. This vital decision which applies to Mr Lang’s latest application for £BOO,OOO was reached at the meeting of the Premiers’ Conference, which resolved itself into a Loan Council this afternoon.

The Premiers passed a resolution condemning Mr Lang’s policy of repudiation, and it was added that until Mr Lang decided that he would abide by the policy of ths Loan Council, it could not issue to him the £733,000, which he required to cover the March commitments of New South Wales.

MR LANG’S ASSERTION.

SYDNEY, February 26.

In t|ie Legislative Assembly, Mr Lang, replying to a question, said that the only application which he had made to the Loan Council was one for some hundreds of thousands of redemption money due to the State and also some money owing for interest. Mr Lang added that there, was no danger of New. South Wales defauliing, as all of the requirements would be met until March 31.

MR LYONS “CENSURED.”

HOBART, February 27.

The Tasmanian branch of the Australian Labour Party Conference passed a resolution censuring Messrs Lyons, Guy, and Fenton for their recent. attitude in Federal politics.

FAVOURABLE TRADE BALANCE.

CANBERRA, February 27.

Australian exports for the seven .months ended January 31 were valued at £55,595,000, and imports at £48,421.000, leaving a favourable trade balance of £7,000,000, compared with an adverse balance of over £30,000,000 during the previous corresponding period. ANOTHER NEW TAX. SYDNEY, February 27. Mr Lang has given notice of a Bill being introduced next week to amend, the Income Tax Act in the direction of imposing an unearned- increment tax upon profits arising from the sale of real property and marketable securities. AN EXPERT’S OPINION LONDON, February 26. J. Taylor Peddie, the well known economist, money reformer, and author of the book entitled “Dual System of Stabilisation,” has made an important discovery in the science of money. Particulars have been forwarded to the Australian Government. He claims that the system permits expansion of currency to take place without inflation. It also eliminates deflation

from the currency system, in other worlds stabilises all implications of quantity theory of money. It is an improvement on the Federal reserve system, eliminating all defects therein, disclosed during the last Stock Exchange boom in America.

Interviewed, regarding the Australian Loan Council’s decision to inflate the fiduciary issue. Mr. Peddie said he greatly regretted such action, which was quite unnecessary. He was in sympathy with the objectives of the money reformers in Australia, but strongly disapproved , the . proposals, considering that the suggested cure would lead to irreparable disaster, and considerable loss, of credit. The Government di Australia’s first aim shbuld be to restore the currency parity, then set about to reform its central banking practice. The Loan Councils proposals should be deferred for four months, when the , British Government committee’s report on finance and industry will be available.

S. AFRICAN ATTITUDE

CAPE TOWN, February 26.

Australian silver coins are no longer negotiable here, post office, banks and municipal treasury refusing to accept them. The Government, however, has not taken action, nor changed its policy. ! , It Is pointed out that Australian silver has never been legal currency in the Union, though it has freely circulated, for many years at face value. The quantity now in circulation is not large. * • BANKS AND EXCHANGE ’.'l LOWER RATES PREDICTED. MELBOURNE, February 26. - Addressing the conference of citrus growers, Mr N. Underwood, of Mildura, sdid he had received information from. the bankers that the exchange rate might fall at any time, and that it certainly would fall before the end of March. The reduction was expected to be at least fifty per cent.

SAFEGUARDING N.Z. PRODUCE.

[FEB PBESS ASSOCIATION.]

WELLINGTON, February 26.

The Government has had under consideration the difficulty which - has arisen through, the Exchange position between Australia and INew Zealand. It is recognised that. if transactions could be arranged on the basis of a deduction of (say) an per cent, exchange premium from the • invoice value of goods'shipped from Australia to New Zealand, the results might be serious for the primary and secondary industries;' in the Dominion. It has, therefore, been decided by the Customs Department, where it is considered that any New Zealand industry might be prejudicially affected through, the depreciation of the Australian “currency, as compared with the New Zealand currency, appropriate action be taken to meet - the position. Each case will be treated on its merits, and it is desired that the importers generally should render all possible assistance to the Customs Department in dealing with the difficult problem.