AUSTRALIA'S FINANCIAL CHAOS

Horowhenua Chronicle, 8 January 1931, Page 3

AUSTRALIA'S FINANCIAL CHAOS

HEAVY SLUMP IN SECURITIES WILL SCULLIN MEET CHALLENGE ? Received Wednesday, 9.50 p.m. LONDON, Jan. 7. Considerable mystification exists in Australian circles over the persistent marking down of Australian securities, some of which have fallen fifteen points during the last year. Even when all other gilt-edgeds advanced on the year-end following the reduction of the New York discount rate Australians further slumped and are still described as weak or heavv. r

It had been hoped that Sir Otto Niemeyer’s return would have been followed by some reassuring words to dispell the nervousness ,but in strict accordance with the traditions of the Dank of England Sir Otto has so far maintained absolute silence.

Comment is heard that Australia seems to be shirking genuine economies in favour of increased taxation, while nervousness exists lest the demand for inflation succeeds, incidentally depreciating the value of savings bank deposits .life insurances, mortgages and similar irfvestments and thus weakening Australia’s ability to face the next two years’ London obligations. Another fear is that “Lang’s extravagances’’ in addition to jeopardising the solvency of his own State may embarrass the Loan Council through its partial responsibility for interest on State loans. There is also disapproval of bounties or guaranteed prices which it is thought will only further adversely affect the Australian exchange. The hope is expressed that Mr Seullin will meet any challenge by the caucus courageously and steer Australia on a sound course in the interval before the large loan commitments fall duo in London in 1932 when no conversion ifr new issue could be attempted if stocks remain at their present low level. After the banks’ announcement that a chaotic condition prevailed on the Australian exchange market most of the Australian banks pending a clearing up of the position refused to deal except in small amounts. Large, transactions are being held over wherever possible.

The Financial News says it is generally admitted that the Bank of the other banks when it was most important the banks should co-operate on New South Wales forced the hands of an agreed policy. Moreover the heavy decline in the value of the pound can only be taken as a measure of the failure to make effective adjustments between prices and wages costs upon which the restoration of the currency to gold parity must depend.