“WOULD LEAD TO CHAOS”

Hawera Star, Volume L, 10 February 1931, Page 9

“WOULD LEAD TO CHAOS”

MR. LANG’S PLAN CRITICISED

UNANIMOUS CONDEMNATION MONETARY POLICY SOUGHT. (United Press Association —By Electric Telegraph Copyright.) Received 12.30 p.m., to-day. CANBERRA, Feb. 10. Following Mr. Lang’s speech at the conference of State Premiers and Treasurers the Prime Minister said that Mr. Lang’s proposals would amount to deliberate default and that they could not be entertained for a moment. Instead of promoting confidences abroad they would destroy it most aissurely; indeed, they might lead to panic and chaos. It was quite impossible for Mr. Lang’s Government to act in the way suggested a.s the Now South Wales administration was a- party to the financial agreement under which that State must pay its full quota of interest whenever due. Failure to do would- make the Commonwealth liable, and in the event of any one State defaulting additional taxation could be imposed on that State to make up the deficiency. If New South Wales were allowed to default in the terms of Mr. Lang’s snecc-h other States might want to do the same thing and the whole burden of interest would fall upon the Commonwealth, whic-h was determined, whatever happened, to meet its just obligations.

The Premiers of all the other States, as well a«. Mr. Theodore, supported Mr Scullin’s observations.

The conference finally passed a resolution that each Government should balance its Budget within three years and that the Treasurer (Mr. Theodore) should confer with the Commonwealth Bank board in an endeavour to arrive at an appropriate monetary policy for the Commonwealth. Mr. Theodore will confer with the Commonwealth: Rank hoard during the week andl report hack to the conference on Friday.

The resolution agreed to by the conference yesterday included that if during a. financial year Budget indications shoulicl fail to be realised, immediate steps should be taken t-o adjust the position and that every effort be made to prevent any further fall in wholesale prices. Mr. Theodore’s scheme is inflation and therefore, it does, not appeal to me or Australians,” said the chairman of the Associated Banks (Mr. Tranter) sneaking at Melbourne. “I feeli t-ure it. is not a sincere scheme and I shall not he surprised if it proved to be a screen for something else.”

HOME Of RULE'S PERTURBED. I A.I UR Y TO AUSTRALIAN CREDI T. LONDON, Fob. 9. The market was greatly shocked by the news from Australia and business in Australian securities is at a standstill. Prices are nominally down two to iivc points, New South .Wales showing the heaviest fall, which might have boon greater but for a conviction that Mr Lang will be unable to do what he threatens because the responsibility rests on the Commonwealth. .Furthermore, if Mr Lang succeeded in passing the necessary legislation violating the Trustee Security Act it is hardly thinkable that. Royai Assent, would be given. Mr Theodore’s plan and Mr Lang’s doctrines are given prominence in the early editions of the evening papers and have created a most unfavourable atmosphere. Financiers are puzzled how, in the face of trade restrictions and the natural individual tendency not to spend, the Commonwealth can iitt up price levels.

One critic informed the Australian Press Association that the scheme was merely a muddle-floundering refusal to face stern facts.

“‘ln view of the situation in Australia, Australia’s friends cannot be blamed if they are m a condition or almost despair,” says the “Irisi Times” in a leader. ‘ 1 Only'ii man ol immense energy and ruthless determination can save the country from financial ruin, and at the moment no such man is forthcoming.”

The ‘‘Evening News” says: ‘‘if Air l.ang's repudiation proposal wore adopted it would end all hopes of Australia weathering the crisis. Over £500,000,000 of her stocks are held by 300,000 British investors, including a large proportion of trustees, and if this large mass of direct investors are deprived of income by Australian repudiation, where would Australian credit stand throughout the world? Who would lend Australia money for necessary developments m the Commonwealth? Repudiation would be a disaster from which Australia might take a generation to recover.”