DEBTS ABROAD

Evening Post, Volume CXIV, Issue 91, 14 October 1932, Page 3

DEBTS ABROAD

CONVERSION PROSPECTS

AUSTRALIA'S. GREAT

BURDEN

(From "The Post's" Representative.) SYDNEY, 15th September.

The statement made by the Commonwealth .Treasury'this week, that if is hoped to renew, st a reduced rate of interest,the. £4,250,000 worth of 4J per, cent, of ' Treasury bills owing to the Westminster Bank, London, by the Commonwealth, • together ;vith the • announcement ■ last; week • of! the ■■ renewal of New South : Wales ' Treasury bills totalling £10,50t),000, at 'greatly reduced' rates has again focused 'attention onthe amount of Australia's over-sea-debt burden, the -'millstone', of annual payments; and'tho'benefit to Australian finance :which will accrue from a successful issue of Mr. Bruce's' efforts in.London to arrange conversions at: reduced interest' rates.

The £4,250;000 worth "of Treasury bills, willprobably; be reduced, by a'redemption' of a!portion.of the capital amount—already three ■ a.mounts, each of £250,000, have, been repaid on each maturity, date-rbut. the short-term indebtedness/of the. Commonwealth.is. a comparatively small , portion of the oversea debt. In fact, the amount owing to the Westminster Bank 13 the only outstanding '..short-term1 Commonwealth loan. The other debts, however, are. staggering. At Ist July the total of Commonwealth, and State debts to be redeemed in. London was £.554,528,414,. and in New York £47,079,523. 'From the London figure has to be deducted- £2,950,000,: which has been: trarisf erfed ■to -Australia. The Commonwealth. owes in London £158,775,929: sand in •■: New ' York £ 17,115,997, and the States owe in L0nd0n'£392,802,485 and in New York £29,963,526, : •.

Of the'enormous States debt New. South Wales ' owes £163,000,000, in-cluded-in -which is short-term indebtedness of £27,104,000, while nearly half of the debt redeemable' in New York is also owed by 'New South Wales. Within the'next four years New South Wales will be faded witH'the problem of meeting or converting loans totalling.neariy £29,000,000. This does not include. the shortHerin debt of £27,104,000. The. first large conversion with which Australia will have to'deal is the-. New South. Wales £12,000,000 loan which-falls .'due.on-Ist November. Upon the,, success 1 of rMr. Bruce's effort to: effect a' satisfaetQry conversion of this.will depend largely the future of Australia's interest payments. Australia has .'^optional' conversion, rights" over £96,000,000 of loans in-London which bear interest 'from' 5 per cent, to 6$ per cent. It is .believed in Ministenar circles that if Mr. Bruce is able to B'how that Australia has so'managed her internal affairs that by sacrifices on all classes 'her1 financial house is thoroughly in"order; conversion'to rates at least 1 per~cent. less than'those now ruling is possible and will mean a benefit to the people- of * Australia of more than £1,000,000 a year. The principal amounts' owing overseas by the -Commonwealth and the States impose, a crushing interest load on-Australian,Governments. A reduction of ■•' one, or only - one£half of. one per _ cent, would "mean a saving of millions of pounds a year. Excluding the interest payable on the war debt (£4,570,782 annually without the operation of the Hoover moratorium and the suspension arrangement made by the. British Government),, the Commonwealth has>to pay a yearly, oversea interest bill of £4,121,501 and. the States have to pay £19,974,348. The greater portion of Australia's oversea debt-(ex-cluding war debt) bears interest at rates of o per cent, to GJ per cent., and there are current, optional conversion rights over. £96,000,000 of. these high rates loans. It, is this debt of £96,000,000 which : will: engage most- of. the attention •of Jlr. Bruce. . "Current optional- conversion , right". means that the Commonwealth in respect of. any; of the loans comprisingthe amount; may,at any time offer to convert or in ths event of.the.creditors declining this, to pay oft . the whole of the principal. The., latter alternative is . unlikely, but if Mr. Bruce is able to show the creditors that Australia, by making great sacrifices—reducing her internal interest and cutting Governmental expenditure in works, salaries, and social services— has succeeded in approaching a position where her solvency is again unassailable, then it is thought in Ministerial circles that he will have little difficulty in persuading them that the Commonwealth and' the States are entitled to lower interest -rates.

. A_ reduction of only 1 per cent, in tho interest rate on the £96,000,000 of loans would benefit Australia to the amount of nearly £1,000,000 a year, excluding , the additional. burden of exchange,, the successful renewalof tho New South. Wales loans at rates in some cases 2J per cent, below what they were originally leads Ministers to hope that Mr. Bruce will ;be able to arrange conversions with an advantage to Australia of more than 1 per cent. The effect of this on Australian internal finance would, be of immense benefit, and it is pointed out that to a great extent it would be possible to lighten the very sacrifices which made the better' condition possible. The total annual. interest bill, of the .Commonwealth . and. the States .in London is more than £26,000,000, to.which must be added exchange of £'6,674,000. A reduction in the rate'on the £96,000,000 debt would .'probably be followed by reductions, of >at least 1 per cent, eventually on the other Joans, with , a saving of more than £5,000,000 a year to the people of Australia: - •'. .. ■

.The proportion of young.men in Greater London is exceptionally high, which seems to imply, that the idea-that "London streets are paved with. gold" still, takes the. ambitious there in search of fortune.

Tests of 23,000 school children in various European countries prove that 8G.06 per cent, of them reacted in favour, of war films, only 13.94 per cent! being opposed. Of the teachers concerned, only one was opposed to war films.

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