THE H.B. TRIBUNE FRIDAY, OCTOBER 7, 1932 AUSTRALIA REINSTATED.

Hawke's Bay Tribune, Volume XXII, Issue 252, 7 October 1932, Page 4

THE H.B. TRIBUNE FRIDAY, OCTOBER 7, 1932 AUSTRALIA REINSTATED.

What with the opening of Parliament, the publication of the Expenditure Commission’s report and presentation of the Budget and the Public Works estimates all falling upon us at once, there has been but scant room for paying any attention to Australian affairs. At the same time, as having a very appreciable influence on our own position, it is quite worth while taking some notice of recent developments among our nearest neighbours. The first thing to note is, of course, the marked change that has taken place in the regard in which the Commonwealth and its component States have of late years been held on the London money market. For years now, up till within the last few months, Australian Government stocks have there been saleable only at a heavy discount, while the chance of effecting any conversion, let alone of raising new money, upon anything like favourable terms seemed remote indeed. Even a couple of months ago, with prospects then brightening, the .best hope that was entertained was that maturing loans might be renewed at a face interest of 4f per cent, on issues at 3 or 4 per cent, of capital discount. This week has seen the first of the conversions then in contemplation, a New South Wales loan of £l2| million, carried out upon terms at least one per cent, better than this.

What this means to the Commonwealth as a whole may be understood when it is stated that there are other loans aggregating some £27 million awaiting like treatment before the end of the current financial year, which in Australia closes with the month of June. Not only this, but there are yet further issues totalling some £4B million in respect of which, though not due, there are options to redeem that are now exercisable at any time on giving a few months’ notice. It may, of course, well be doubted as to whether, the London market, easy and all as it is just now, would

continue to respond as cordially to Australian conversions to such an extent. Still, it has to be observed that the idea of a mass operation covering the lot is being at least entertained and discussed in Australia without apparently arousing any adverse comment in London. Some little time back it seemed to be a matter for self-congratulation that we in New Zealand had no longterm London loans of any magnitude falling due within the next six or seven years. With conditions altered as they have been, it would now appear as if we were unlucky in not being in a position to launch conversion proposals on something like the same relative scale as Australia. From what the Prime Minister has said in his Budget it would seem that, of the £l6O million outstanding in London, there is in all only some £s.j million in respect of which the right of redemption may be exercised.

Of course, of the altered conditions that have worked thus favourably for Australia in the way of reducing her interest bill, the chief is the wonderful success that has attended Mr. Neville Chamberlain’s bold scheme for the conversion to a 3j per cent, footing of the £2085 million British war loan. It is this that has set the downward course for interest rates on all acceptable conversion and loan issues. The standard thus provided can now, with customary loeal modifica tions, be applied throughout the Empire so far as the London market is concerned, and it is quite impossible as yet to realise what this may mean in the way of setting the wheels of industry and commerce to run freely again But, so far as Australia in particular is concerned, there are other factors in the case, and chief among them is the fact that the Federal and State Governments are now all acting in perfect unison in carrying out the Premiers’ Plan for financial reconstruction. This, in turn, is manifestly the outcome of the deposition only a few months ago of the Lang Administration from power in the Mother State. So long as that sat like the Old Man of the Sea, upon the shoulders of the Commonwealth there could be no hope of admittance to the London market, however flush of funds it may have been and however favourably disposed to the Australian people. With the forcible removal of that so heavy and tenacious incubus Australia at once finds herself reinstated in the good graces not only of London financiers, but also of the whole body of British investors.