CREATED MONEY

Taranaki Daily News, 27 February 1931, Page 7

CREATED MONEY

MR. THEODORE’S SCHEME

LIMITED CURRENCY IDEA

SIX MILLIONS FOR WHEAT

employment PROPOSAL

COMMENTS OF BANKERS

By Telegraph—Press As?n.— Copyright;

Rec. 12.25 a.m. Melbourne, Feb. 26. Mr. E. G. Theodore, federal Treasurer, informed the Loan Council that the Federal Government intended to introdufie legislation for the creation of a fiduciary currency limited to £18,000,000, £6,000,000 of which would be de-ydttd-to the bounty on wheat. The Premiers’ Conference had previously listened to Mr. Theodore’s explanation of the creation of a fiduciary currency limited to £18,000,000, the purposes of which, were to provide a million a month for, the absorption of unemployed on reproductive work in the' various States, and the bounty on wheat.

Representatives of the Commonwealth, Victoria and South Australia approved the plan, but Queensland, Western Australia and Tasmania . dissented. New South Wales was not represented. Thus a deadlock restilted, after which Mr. Theodore, following consultation with Mr. Sculiin, 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 bn Mr. Theodore’s financial plan and three-year proposed plaii for rehabilitation of the national finance was made available for publication tonight. The bankers begin by endorsing the suggestions for the absorption of unemployed in reproductive works, maintenance of the national solvency, restoration of the Budget equilibrium, and an equitable spread of the losses of national i/leome over all sections of the community. They 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 would rather accentuate the present difficulties. The banks, however, are prepared to co-operate in any reasonable and practicable scheme likely to afford relief in the present crisis. The first essential is putting the finance of the Government in order in accordance with the conditions laid down by experts in the three-year plan. If this is done there is little doubt the banks generally could make some reduction in the present rates of interest. The bankers point out that the overseas debt of the various Governments must ultimately be funded, but this, can not be done until a definite effort is 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 say that interest on the Government’s overseas obligations will continue to be provided through the exchange pool as long as it is in the power of the banks to do so.

EFFECT OF GOLD STANDARD.

London, February 25. Though declaring it absurd for British newspapers, as people living in glasshouses, to lecture Australia on how to put her house in order, the National Review says editorially: “Mr. Scullin, by his vacillation, has made the confusion worse. The reinstatement of Mr. Theodore was a sop to the extremists which weakened his regime in the eyes of self-respecting Australians.” The Review supports Mr. Theodore’s contention that much of the trouble is due to the restoration of the gold standard, adding ' that there has been no audible protest in that connection from Canada or Australia, which proves that those countries are governed in the same heedless fashion as Britain. The Financial News attributes the firmness of Australian stocks to news of the cleavage in the Labour ranks in New South Wales and talk of reduction of the. exchange rate. The outside market has practically dried up.

AN ULTIMATUM TO MR. LANG

Rec. 10 p.m. Melbourne, Feb. 26. » 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. Land’s latest application for £BOO,OOO, wris reached at a meeting of the Premiers’ Conference, which resolved itself into the Loan Council this afteniobn. • , ■

The Premiers parsed 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 the £733,000 which he required to cover March commitments.

The Premiers’ Conference had adjourned till to-day, having reached no decisions. It is understood that the reply of the banks 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 criticised the New South Wales and Commonwealth Governments for what they termed evasions of economies or attempts to balance Budgets. The Premiers were astounded by the receipt of the request from New South Wales for accommodation to the extent -jpf £BOO,OOO from the Loan Council. MB?.’LANG’S EXPLANATION. , Sydney, Feb. 20. In the Legislative Assembly the Premier, Mr. J. T. Lang, replying to a question about the loan of £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 requirements would be met until March 31.