Evening Post. MONDAY, MARCH 2, 1931. WILD CAT OR MAD DOG ?

Evening Post, Issue 51, 2 March 1931, Page 8

Evening Post. MONDAY, MARCH 2, 1931. WILD CAT OR MAD DOG ?

There is again an astonishing profusion of- painful interest in the latest changes of "the Australian kaleidoscope. Such is the perplexity produced in London by these rapid changes that, according to a message which we publish to-day, the task of interpretation had been abandoned in despair even by those in the best position ,to know. There is, it tells us, a relative lull in the discussion of Australia's financial maze' AVoll-informed circles confess that this is duo to bewilderment in trying to follow tho political convulsions. ... On tho same ground the fiduciary • issue proposed hns, passed almost without comment. This was on Saturday, and there is certainly nothing in the news which London is receiving to-day to abate this bewilderment. Nor is there any reason for hoping that those who arc waiting'"more, or less resigned" for Cabinet to disclose^ its hand in the Federal Parliament on Thursday will be able to extract any comfort from the disclosure. . Mr. Scullin's hand, as he disclosed it to the Parkes electors, included "neither deflation, nor inflation, but restoration and stabilisation." But the measure of his success in stabilisation is indicated by the adverse exchange rate of 30 per cent, and the drop of the Australian pound in London to 12s 6d in a restricted market. By "restoration," Mr. Scullin was understood to mean the restoration of confidence, but the restoration of Mr. Theodore lias, as, everybody else expected, had exactly the opposite effect. It is really not Mr. Scullin's hand ■ but v Mr. Theodore's that has mattered since then. The voice was occasionally the Prime Minister's, but the hand was • unmistakably that of his Treasurer. Till a few days ago Mr. Theodore had been flying from one private conference to another in the endeavour to find some scheme acceptable to the banks, while,-publicly he confined himself to those ambiguous phrases about releasing, increasing, or creating credits which are the delight of his party. Through what "strange varieties of untried being" the proposals' of a Treasurer who is as versatile as he is enterprising have passed during-this process we have not been told, but in the final form on which' the Premiers' Conference was evenly divided they had been attenuated to a "fiduciary currency," which, of course, proves to be a fiduciary note issue, of £18,000,000. Unsupported.by assets, it is accurately described by. a leading banker in a statement cabled from Sydney on Saturday as, inflation. The '"result would be, he said, to force-prices upward. •It .would be necessary for, the fiduciary portion of the note issuo to bo backed by securities of some' kind, but the Government securities at,the present moment were at a considerable discount in the market. It was ■ pointed out by the , same authority that owing to the exigencies of Australia's credit in London her banks had only 34 per cent, of gold behind their present note issues, instead, of the 52' per cent, that, they held in June, 1929. No sane financier, he added, would lecommend the process of .'inflation to bo carried further. That there will be no pretence of a gold backing for the new currency or any part of it was shown by the statement in another of Saturday's messages that tho Federal Government intends the fiduciary note issue to be of distinctive design, and that the promise to pay in gold on demand which appears on all Commonwealth notes shall be omitted. What device the new notes will bear is not mentioned. A wild cat rampant, or plungant, or whatever the correct heraldic term may be, would be. eminently suitable. If before the notes appear Mr. Lang's candidate has won the East Sydney election, the wild cat might be replaced by a mad dog. Compared \indeed with the Premier of New South Wales, the Federal Treasurer might appear to be almost as harmless as the lion which, Bottom feared might alarm the ladies, but was really "a very gentle beast "and of a good conscience." But essentially the difference between Mr. Theodore and Mr. Lang from the standpoint of Australia's creditors is not so great as the contrast between their respective tones and methods suggests. One reason for thinking that the intelligence of London has not been so completely baffled by the tangles and turns of Australian politics as the message we have quoted might seem to imply is the fact that, though the proposed fiduciary issue has excited little comment, it ia generally agreed that it has sounded the death-knell of any early alleviation of the exchange position. And in Manchester at any rate it has been pointed out with perfect candour thai the piecemeal inflation of

Mr. Theodore is just as dangerous as the naked and unashamed repudiation preferred by Mr. Lang. Mr. Theodore is a much wilier person than Mr. Lang, ' says the "Manchester Guardian." While denouncing Mr. Lang's debt repudiation he has produoed fine-sounding schomes, the adoption of which would ruin creditors' security. If the currency issue plan is | carried out we expect to see tho exchango rate on Australian pounds nearer two. hundred than one hundred in a few months, for tho Federal Government will bo in tho sharpest conflict •with the Australian and British banks and fliree States. Plain talk like this presents a pleasing contrast to the feeble | and almost meaningless statement in which the "Financial Times" discounts Mr. Theodore's proposal as "a political gesture," but almost anything would be better, "and it is difficult to imagine anything worse, than the contribution which Lord Rothermerc has made to the further embarrassment of a complicated and perilous position. The very foolish statement had been made in Melbourne that the '-whole of the British Press, witih the exception of "The Times," is engaged in insidious propaganda against Australian prestige. If such a statement from an irresponsible person deserved any attention at all, Lord Rotliermere was right in repjying that" British newspapers without exception throughout the crisis had taken up a most helpful and sympathetic attitude towards the Commonwealth. It was one for Britain and ten for himself and the "Daily Mail" when lie added, as one in charge of the greatest engine of publicity in Great .Britain, that thcro is throughout this country a desire to stand shoulder to shoulder with Australia in all'her.difficulties. Except for the inevitable self-adver-tisement there is nothing wrong here, but the message concluded: I am entirely in favour1 of the cancellation of all war debts between the constituent members of the British Commonwealth. I believe by this a great step will have been taken toward the- extinction,of all war debts between the Allies and other associates who fought together in tho Great War. i . The world has long since ceased,to' be surprised by a foolish j'and mischievous utterance from Lord Rothermere, but on this occasion he seems to have beaten his own record. Australia is engaged in a desperate struggle in which the payment of her debts is the principal issue, and the ablest and most unscrupulous of her demagogues has declared for repudiation. With the issue still in grave doubt, Lord Rothermere comes forward to help him by declaring that Britain should cancel the whole of Australia's war d^bt, and this at a time when Britain is the most dangerously debt-ridden country, and expects to be faced at the end of the month with a deficit of £40,000,000 or £50,000,000! Has Lord Rothermere himself ever done worse than this? '' -