WRECKING CONFIDENCE

Taranaki Daily News, 29 April 1931, Page 12

WRECKING CONFIDENCE

A BANK’S DOORS CLOSED MR. LANG’S DEFAULT CAMPAIGN. OBJECT LESSON FOR DOMINION. (Special Correspondent.) Wellington, April 26. The doors of the New South Wales Savnigs Bank have shut with a bang that has reverberated throughout the civilised world, and the repercussions will be immediate and disastrous. The bang of the doors of the Savings Bank is the direct result of the studied efforts of Mr. Lang to create no confidence in New South Wales and everything connected with it. Technically the Savings Bank is quite sound, but actually it does not seem to be so. There are about 1,280,000 depositors in the bank, and a year ago their deposits amounted to over £50,000,000, but it is probably somewhat less now. Most of the funds of the institution have been invested in so-called gilt-edged securities, but mainly in New South Wales stocks. Up till about two months ago the operations of the bank were normal; there were deposits and withdrawals, but perhaps the withdrawals were iu excess of the deposits, because of the depression which has forced a good many people in the Australian States and New Zealand to draw upon their savings. These heavy withdrawals could not have been met by the sal of securities held by the Savings Bank, and . o doubt a great deal has been done in this direction. But the Lang policy of repudiation, which was definitely put into operation on April 1, his legislation to fix interest rates, his interference with the Arbitration Court, and other vicious proposals caused capital to take fright, and the flight of capital became real. The chairman of the Standard Waygood Company recently stated that the company had transferred £61,000 of its funds to New York, and added “Frankly I am afraid of what Lang will do next.’’ When large capitalists are thus scared is it any wonder that the small man should become frightened. Neither desires to make losses or have his funds filched by politicians, but while the capitalist can transfer his funds easily, though at some cost, the small man now finds that he cannot g.et possession of the funds entrusted to the Savings Bank, whose safety was guaranteed by the State. It is very hard on the depositors, and it is to be hoped that they have had a surfeit of “Mad Mullah” politics. If the bank could have realised the securities it held it could have easily met the demands for their money, but those securities have depreciated through the action of Mr. Lang in repu-' diating, or rather in defaulting on the payment of interest due to British holders of New South Wales bonds, or if it was able to do so it must have been at a very low discount. No bank can stand up to a run of withdrawals by depositors no matter how strong it may be if its so-called giltedged securities have depreciated by, say, 50 per cent. The Savings Bank had to bang its doors, and no doubt the angry depositors will call Mr. Lang to account.

But the incident and its effects cannot be confined to New South’ Wale j. All the other States are discredited, and the first effect in London and New York is to mark down the prices of Australian securities. Neither the Commonwealth no.’ the States could to-day raise a brass farthing by way of loan either in London or New York. Their credit is at zero, dissipated and ruined by Mr. Lang, Mr. Theodore and the rest of the nabobs of the Labour Party. But this latest development in New South Wales is bound to affect us, for the world’s geographical ignorance regarding Australia and New Zealand is colossal. New Zealand is believed by some to be just a bit of Australia. In any case the credit of New Zealand must suffer for Australia’s faults. Even the venturesome and w’ellinformed finance underwriters must have lost confidence in “Australasia.”

A question that electors must ask themselves and decide for themselves is: Would a Labour Government in New Zealand have acted differently from the Labour Governments in Australia? If w z e wish to have Australia’s conditions reproduced in New Zealand the electors will have an opportunity early next December to vote in a Labour Government. Mr. Lang has made the outlook for Australia ■■and New Zealand degrees worse than it was six weeks ago, for he has wrecked confidence everywhere.