H.B. TRIBUNE TUESDAY, FEBRUARY 2, 1932 A DEFAULTING STATE.

Hawke's Bay Tribune, Volume XXII, Issue 42, 2 February 1932, Page 6

H.B. TRIBUNE TUESDAY, FEBRUARY 2, 1932 A DEFAULTING STATE.

The actual default which the State of New South Wales has made in payment of interest due yesterday on money borrowed in London is not a matter that can be regarded with complete indifference even here in New Zealand. We have to keep it constantly in mind that such happenings in Australia must inevitably cast some reflection upon our own reputation in the English money market, especially just now when it must by this time be well known there that conditions in the Dominion do not differ so very much from those in the Commonwealth. This may not be of so great moment just at present, when we have been told that there is no prospect, in any event, of effecting any London flotation. At the same time, however, it means that the stigma on what are known generally as colonial issues is not likely to be /very easily or quickly removed. We have not as yet heard of any downward movement in the London quotations of New Zealand Government stocks, but this incident is not at ail likely to have improved, their position.

Despite the early strictures passed by London financial journals, it may perhaps be hoped that it will be generally recognised that just now the Government of New South Wales is not one by which other Australian Governments, or that of New Zealand, are to be judged. The London “Times,” as might be expected of it, has dealt with the position quite coolly from the first. Realising the difficult situation that has been created for the Federal Government, it set to work at once to allay any feelings of alarm that might have been aroused. This sensible lead has now been followed by other critics, and we

even hear notes of approval of any action that may assist towards ousting the Lang Administration from office. Mr. Lang himself is now trying to shift the responsibility for what has happened onto the shoulders of the Federal Government, alleging that the assistance for which he now asks had been specifically promised to him. This the Federal Prime Minister flatly denies, and there need be little doubt as to which word is the more worthy of acceptance.

Mr. Lang’s practice of falling back upon the Federal Government and the Federal Loans Council to help him out of the difficulties he has created for himself can scarcely fail to recall the attitude he adopted towards them when last he was in office. By mutual agreement among the States it had, some good while previously, been arranged that all fresh external loans for both Federal and State requirements should be negotiated through the central Government after authorisation by the Council. One of Mr. Lang’s first actions on coming into power in New South Wales was to mount the high horse and declare his intention to cut adrift from this agreement. He declared that he was not going to have his hands tied in such a way as to leave him dependent for his spending money upon the judgment of any outside body. This intention he duly carried out, and it is quite possible that included in the amount in respect of which he has now made default is interest on loans he then floated in London. It is now intimated that Mr. Lang has somewhat belatedly instructed his Agent-General to see if some arrangement can be made with the bond-holders to postpone payment of this interest instalment for twelve months and it will be interesting to note what sort of success will attend Mr. Willis’s efforts in this direction. On this perhaps may depend some movement to force the Lang Government to submit itself to the judgment of the people. Something of this kind seemed to be foreshadowed when a few days back the leader of the N.S.W. Opposition stated that, “if the Government did not carry out its obligations, the Governor had the right and duty to see that , there was in office a Government that would do so.’’ Though he must know that he has entirely lost the confidence of the great majority of the electors, it is quite evident that Mr. Lang intends to hang on to office as long as possible and that it will only be under something like compulsion that he will relinquish it.