EARLIER NEGOTIATIONS.

New Zealand Herald, Volume LXVIII, Issue 20981, 18 September 1931, Page 9

EARLIER NEGOTIATIONS.

LIMITATION OF FINANCE. FURTHER £5,000,000 REFUSED. [FROM OUR OWN CORTJESPONnKNT.] SYDNEY, Sept.. 10. With the definite, refusal of the Commonwealth Bank Board to make an advance of a further £5.000.000 to the various Governments of Australia a new financial and political crisis developed with dramatic suddenness at the latest Premiers' conference which is being held in Melbourne this week. Actually the Premiers discussed the possibility of raising £18,000,000 —the amount recommended by the unemployment secretariat in its special report. The secretariat proposed an expenditure of from £3,000,000 to £6.000,000 to assist wheat farmers, £8.000.000 for public works, £500,000 to assist gold mining and varying sums for other industries. It blandly suggested that the resources of the various banks should bo "strained to tho limit," but the danger of doing that has already been illustrated. It. is clear that the Premiers saw the impossibility of getting anything like £18.000,000 from the banks and it must have been with a certain amount of misgiving that they approached the Commonwealth Bank Board for the advance of £5,000,000 over and above the amount already promised for the purpose of meeting the various deficits —£14,650,000, plus £1,000,000 on account of delayed interest savings, and £1,000,000 for loan works. However, following on the submission of a scheme by the Premier of South Australia, Mr. Hill, it was decided to ask for another £3.000,000 for ihe wheat farmers and £2,000,000 for works. The idea was to minimise unemployment. Every other scheme which the Premiers had before them seemed to lead to nowhere. Unexpected Flat Refusal. None of the Premiers was optimistic enough to think that the banks would advance the whole of the £5,000.000, but none was prepared for the flat refusal by the chairman of the Commonwealth Bank, Sir Robert Gibson, to make available a single penny of it. Sir Robert said that the banks had done all they could. If further advances were made it might result in a position being reached where there would be a danger of the Commonwealth Bank exceeding the limit in the note issue placed upon it by legislation. If tho Government thought that special legislation was necessary in view of the emergency, it was a matter for the Commonwealth Government to take action. While the legislation stood as it was at present it was useless to ask the banks to make further advances to the Government. Tho nature of this communication had a profound effect on the Prime Minister, Mr. Scullin, who has all along stood against inflation, and ho addressed the Premiers at some length. It was at his suggestion that Sir Robert Gibson was invited to attend the conference and personally explain the position. Sir James Mitchell, Premier of Western Australia, warned the conference against making it appear that the Premiers were coercing the banks. Nothing should bo done to lessen the confidence of the public in tho banks. Complaint Against Banks. Ono of Sir Robert Gibson's greatest antagonists is the Premier of New South Wales and it was not. surprising that Mr. Lang should have launched a bitter attack on the head of the Commonwealth Bank, lie said that the pcoplo still remembered what Sir Robert had said on tho wireless when he made his special appeal to stop the run on the savings department of his institution. If he was prepared to use the note issue to tho limit, to save tho bank, how much moro justifiable would it bo to uso it to save tho nation ?

Members of the board were, after all, said Mr. Lang, Government officials and the duty of Government officials at nil time was to uphold the country. As far back as February the banks had informed tho Premiers that, subject, to the Governments doing certain things, the banks would assist to revive industry and restore employment. The Governments had done their part, but the banks apparently did not intend to carry out their promise. The Victorian Promicr, Mr. Hogan, said that his Government had done what it had done because of the definite promise of tho banks to assist not only the Governments to restore employment, but private industry as well. Mr. Scullin said that he, too, had used the promise of the banks to induce his party to agree to the Premiers' plan. He had fought the matter out for three days with his party and he had actually received a confirmation of the promise from Sir Robert Gibson.