THE BANKS’ DECISION

Poverty Bay Herald, Volume LV, Issue 17503, 27 February 1931, Page 7

THE BANKS’ DECISION

AUSTRALIAN CRISIS DEMAND FOR ECONOMY V . , BUDGETS MUST BE BALANCED (Elec. Tel. Copyright—United Press Assn.} MELBOURNE, Feb. 26. After a private conference of bankers « their letter embodying their conclusions on the Theodore financial plan and the three-year proposal plan for the rehabilitation of the national finance was made available for publication to-night. The bankers begin by endorsing suggestions for the absorption of unemployed on reproductive works, the maintenance of national solvency, the restoration of budget equilibrium, and an-equit-able spread of losses in national income over all sections of the community, and then express regret that they cannot agree with all the methods suggested by * the Federal Treasury. Some of these, they say, are not based on sound economic lines and would rather accentuate the present difficulties. . The- banks, however, are prepared to co-operate in any * reasonable and piacticablc scheme likely to afford relief in the present crisis. The first essential was the putting of ", the finance of the Government in order * with the conditions laid down bv experts in the three-vear plan. If this were done there was little doubt that the banks generally could make some reduction in the present rates of interest. They pointed but that the overseas debt of the various governments must ultimately be funded, but this could not be done until a definite effort was made towards budget stability, The proposed special tax on government securities must eventually lead to difficulty in converting maturing loans or in funding floating debts or raising new loans. Finally, the bankers said that interest on Government overseas ' obligations would continue to be provided through the exchange pool as long as it was in the power of the banks to do so.

FIDUCIARY CURRENCY Mr. Theodore informed the Loan Cduncil the the Federal Govenment intended to introduce legislation for the creation of fiduciary currency limited to £18,000,000, one-third whereof Would be devoted to a bounty on wheat. The Premiers’ Conference iiad previously listened to Mr. Theodore s explanation for the creation of fiduciary enrreney limited to £18,000,000, the purposes for which were to provide £1,000,000 a month for the absorption of the unemployed on reproductive works in various States and a bounty on wheat. The representatives of the Commonwealth, Victoria, and South Australia approved the plan, but Queensland, Western Australia, and Tasmania dissented. New South Wales was unrepresented. Thus a deadlock resulted, whereafter Mr. Theodore, following a corisi&lta- - tion with Mr Scullin, made an announcement that the Government intended to go straight ahead with legislation giving effect to the plan. Addressing a conference of :citrus growers, Mr. N. Underwood, of Mildura, said that he had received information from the bankers that the exchange rate might fall any time, and that it would certainly fall before the end of March, the reduction was expected to be at least 60 per cent. * t Unless the Premier of New South Wales agrees to conform to the conditions of the Loan Council, he will not receive further financial accommodation, this vital decision, which applies to Mr. Lang’s latest application for £BOO,OOO, was reached at a meeting of the Premiers’ Conference, which resolved itself into a Loan Council this afternoon. The Premiers passed a resolution condemning Mr. Lang’s policy of repudiation 1 and ad-, ded that until he decided that he would abide by the policy of the Loan Council, it could not issue to him the ,£733.000 which be required to cover his March commitments.

N.S.W. WILL NOT DEFAULT

STATEMENT BY MR. LANG

SYDNEY, Feb. 26.

In the Legislative Assembly, the Premier, Mr. Lang, replying to a question about the £BOO,COO, said the only application he had made to the Loan. Council was one fof some hundreds of thousands of, redemption money due to the State, also some money due for interest. Mr. Lang added: “There is no danger of New South Wales defaulting, as all requirements will be met until Mai?ch

REACTION AT HOME

STOCK VALUES ADVANCE LONDON, Feb. 26. The Financial News attributes the firmness of Australian stocks to news of the cleavage in Labor ranks in New South Wales and to the talk bf a reduction of the exchange rate. The outside market is practically dried up. There was a further good recovery of most stocks. Dealings were recorded in Commonwealth 6 per cent, ranging from £7O to £72 10s; 6 per cents,, £77 to £od ss; New South Wales 4 per cents., £77 to £80; 5 per cents, £62 10s to £B4; 31 per cent:?., £SO to £55; per cents., £7l to £7B; Queensland 5 per cents., £63 to £6B; 3 per* cents., £SO; 6 per cents., £79; South Australian 6$ per cents., £72 to £74; West Australian 3£ per cents., £74. New Zealand stocks all recovered from two to five points.