AUSTRALIAN LOANS

Otago Daily Times, Issue 21985, 21 June 1933, Page 8

AUSTRALIAN LOANS

“STRONG CASE FOR RELIEF” Discussing the possibility of an Australian conversion of loans outstanding in London with optional dates of maturity, the Economist of May 6 states that an annual saving of interest on £84,093,'580 of Australian loans bearing interest at 5 to 6J per cent.,, on a 4} per cent, conversion basis, is £1,007,853. If the loans could be converted to 4 per cent, the annual saving to Australia would be £1,428,321 sterling. The journal points out that a conversion of these loans would aid the Australian Governmept to deal with £134,732,586 of loans maturing in London and £210,591,664 maturing in Australia in the next 10 years. “ A strong case can be made out, on equitable grounds,” the Economist continues, “for a measure of relief to Australia in the matter of her ‘callable overseas obligations. Her own people have submitted to the sacrifices involved in the conversion of her entire internal debt to a 4 per cent, basis by a reduction of 22} per cent, in interest rates. They have overthrown statesmen who openly stood for default and repudiation, and have elected governors whose present position as four-square protagonists of a policy of honourable fulfilment would be greatly strengthened by a gesture of appreciation on the part of external bondholders. “ The sacrifices of the Australian nation have not been confined to reductions in income Jrom investments. Wages and salaries have fallen from 20 to 30 per cent. All social services have suffered reduction, including old age, invalid, and even soldiers’ pensions. In fact, practically every form of expenditure, .with the exception of interest and sinking fund on external debt, has been curtailed under the operation of the financial rehabilitation plan, which has also involved a significant increase in the burden of taxation. The aim of the plan, which was put into operation in 1931, was to balance the Budgets of the Commonwealth and State Governments in three years. Under its operations an estimated Budget deficit for the Commonwealth and State Governments of £40,000,000 for 1931-32 was reduced to £20,000,000. Taking the Commonwealth alone, a prospective deficit of £20,000,000 was converted into a surplus of £1,300,000. For the financia year closing on June 30 next the total deficits of all Governments will be no more than £9,000,000. •At a time when practically every South American republic, except Argentina, and numerous European States are wholly or partially in default on their external indebtedness, Australia may urge that British holders can afford to make a tangible recognition of the tact that every penny of Australia s loan service is being punctually met, although imposition as the most heavily indebted, proportionately, of the dominions is aggravated by the 20 per cent, discount ot the Australian pound in terras of ster-