MR. THEODORE'S POLICY.

New Zealand Herald, Volume LXVIII, Issue 20793, 9 February 1931, Page 11

MR. THEODORE'S POLICY.

BANKS AND CREDIT.

STAVING OFF A CRASH.

CONFERENCE BEWILDERED.

By Telegraph—Press Association—Copyright. (Received February 8, 5.5 p.m.) CANBERRA, Feb. 8. The Federal Treasurer, Mr. E. G. Theodore, explained his long awaited financial policy at the Premiers' Conference.

In advocating the restoration of the 1929-currency levels he claimed that the adoption of this plan would increase the national incomo by about £100,000,000. He said he thought this would provide work for between 100,000 and 200,000 persons and cause an additional production of material wealth amounting to £30,000,000.

Mr. Theodore emphasised that a reduction in interest rates, which would be an effect of his policy, was tho logical way of escaping from tho burden which was becoming more onerous every week. There would be no repudiation of obligations, but there would be equality of sacrifice.

" We all realise," continued Mr. Theodore, " that there is a possibility of collapse, a public panic and a final crash, if not a social upheaval of a very serious character."

Mr. McPhee, Premier of Tasmania: The crisis is here now.

Mr. Theodore: I admit that, but the final crash has not yet arrived, and to stavo it off wo have to devise some scheme of readjustment. " Anyone who has studied the capacity of the banking organisations to give credit to industry will admit that they can expand their credit at will," said the Treasurer. " They are limited only by tho effect in carrying out such a policy. The banks raised tho enormous sum of £283,000,000 in Australia for military operations during tho war. I say advisedly that the banks have power to create additional credit.

" My suggestion is merely the restoration of the value of our currency to what it was, say two years ago, which does not mean inflation, bub which would enable us to turn the corner toward rehabilitation."

The Sunday newspapers point out that by his speech Mr. Theodore has enhanced his reputation as a " mystery man," for while hinting at a reduction in interest rates, he failed specifically to state how ho would carry out his policy. He left the Premiers wondering whether it was tantamount to inflation.

The conference was adjourned until Monday.