DEFAULTING PROVINCE.

Manawatu Standard, Volume LVI, Issue 109, 8 April 1936, Page 8

DEFAULTING PROVINCE.

Alberta’s financial position appears to have reached a crisis with the announcement that the Provincial Government has_ defaulted in the payment of principal due on bonds which matured last week, and plans to compulsorily convert its 160,090,1)00 dollar debt into perpetual bonds bearing interest at tlie rate of' per cent. At the same time no principal payment is to be provided for, and the Government intends to assert its power by proclamation instead., of by legislative enactment, Mr Aberliart’s plans savour of barefaced confiscation, and suggest a reason why last week interest was paid on the bonds in default and no principal. So long as his Government remains in power principal on loans apparently will be absolutely vested in the Provincial authorities. Such a financial shock cannot be received with equanimity by the Federal Administration. Realising that several provinces were financially embarrassed it formed the Dominion Loan Council, but Mr Aberhart refused to submit Alberta to its control. A Social Credit member of the Canadian House of Commons explains that were he to do so Mr Aberhart coulil not launch his Social Credit experiment. • The consequence now is that Alberta’s plans to ensure finance must take another form, one which the Federal Government must surely have wished it to avoid. AVithin two years nearly a quarter of' its own loan obligations, amounting to about £150,000,000, matures, and in the refunding process it is essential that Canada’s credit should in no wise be impaired by instability of finance in the provinces. The Government, while refusing to join in any refunding scheme, offered to guarantee new stock issued by the provincial n-overnments, such voluntary conversions to be at a lower rate of interest. As an important safeguard it proposed to hold certain provincial reveimes against its guarantee, and through the Council it would have certain rights in regard to a province’s debt policy, including the right to veto borrowing regarded as unwise. These, conditions did not appeal to Mr Aberhart, and he has taken the easy road of default in principal which must have serious consequences upon his Province’s future financial requirements.