FEDERAL FINANCES

Southland Times, Issue 21331, 27 February 1931, Page 7

FEDERAL FINANCES

MR THEODORE’S PLAN

CREATION OF FIDUCIARY CURRENCY

STATEMENT BY BANKERS (United Press Assn.—By Telegraph—Copyright) (Rec. 12.25 a.m.) Melbourne, February 26. Mr E. G. Theodore, the Federal Treasurer informed the Loan Council that the Federal Government intended to introduce legislation for the creation of a fiduciary currency limited to £18,000,0(10, £6,000,000 of which would be devoted to a bounty on wheat. The Premiers’ Conference had previously listened to Mr Theodore’s explanation for the creation of a fiduciary currency limited to £18,000,000 the purposes of which were to provide £1,000,000 a month on the absorption of unemployed on reproductive works in the various States and a bounty on wheat. Representatives of the Commonwealth, Victoria and South Australia approved of the plan, but the representatives of Queensland, Western Australia and Tasmania dissented. New South Wales was not represented, and thus a deadlock resulted after which Mr Theodore, following a consultation ' with Mr Scullin, made an announcement that the Government intended to go straight ahead with legislation giving effect to the plan. Following a private conference of bankers their letter embodying their conclusions on Mr Theodore’s financial plan and the three-year proposed plan for the rehabilitation of National finances was made available for publication to-night. The bankers begin by endorsing the suggestions for the absorption of the unemployed on reproductive works, the maintenance of national solvency, restoration of the Budget equilibrum, and an equitable spread of losses of national income over all sections of the community and then express regret that they cannot agree with all the methods suggested by the Federal Treasurer. Some of these, they say, are not based on sound economic lines, and should rather accentuate the present difficulties. The banks, however, are prepared to co-operate in any reasonable, practicable scheme likely to afford relief in the present crisis. The first essential is the putting of the finance of the Government in order in accordance with the conditions laid down by the experts’ thre»year plan. If this is done there is little doubt that the banks generally could make some reduction in the present rates of interest.

The bankers stated that the overseas debts 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 in 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. EARLIER REPORT BANKS’ REPLY UNSATISFACTORY. Melbourne, February 26. The Premiers’ Conference adjourned till to-day, having reached no decisions. It is understood the banks’ reply was unsatisfactory to the Federal Government. Mr Scullin indicated that he had anticipated a lead from the banks and was disappointed at not getting it. Mr Lang was not present.

The other State Premiers criticized the New South Wales and Commonwealth Governments for what they termed evasions of economies or attempts to balance their Budgets.

The Premiers were astounded by the receipt of a request from New South Wales for accommodation to the extent of £BOO,000 from the Loan Council. A message from Sydney states that a new party aiming at the organization of exservice men and loyal Australians has been formed there.

MR LANG EXPLAINS

REQUEST TO LOAN COUNCIL.

(Rec. 9.20 p.m.) Sydney, February 26. In the Legislative Assembly the Premier, Mr Lang, replying to a question about accommodation for £BOO,OOO said the only application he had made to the Loan Council was one for some hundreds of thousands of redemption money due to the State, also some money owing for interest. Mr Lang added that there was no danger of New South Wales defaulting, as all its requiri»ments would be met until March 31. MUST ABIDE BY POLICY. (Rec. 10 p.m.) Melbourne, February 26. Unless the Premier of New South Wales, Mr Lang, 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 the Loan Council this afternoon.

The Premiers passed a resolution condemning Mr Lang’s policy of repudiation, and added that until he decided he would abide by the policy of the Loan Council it could not issue to him £733,000 which he required to cover March commitments.

AUSTRALIAN STOCKS REASON FOR FIRMNESS.

(Rec. 10 p.m.) London, February 26. The Financial News attributes the firmness of Australian stocks to news of a cleavage in the Labour ranks in New South Wales and to the fact that talk of a reduction of the exchange rate outside the market has practically dried up.