The Guardian And Evening Star, with which is incorporated the West Coast limes. TUESDAY, NOVEMBER 1, 1927. AUSTRALIAN BORROWING METHODS.

Hokitika Guardian, 1 November 1927, Page 2

The Guardian And Evening Star, with which is incorporated the West Coast limes. TUESDAY, NOVEMBER 1, 1927. AUSTRALIAN BORROWING METHODS.

Mtcji interest has been expressed in the new Australian plan lor a more centralized method of controlling ledciul and State loans. Details of the operation of the new system are now officially available. Borrowings will be under the direction of a Loan Council, representing the Commonwealth and the States. This Council will arrange for all borrowings, including redemptions. conversions or consolidation of the .debt. It is the expectation that the borrowers will submit to the Council each year, or as required, the particulars of their loan programs. Tlia Council in turn will endeavour to determine whether the amounts will be available, or whether some rearrangement or adjustment will be necessary. In case the total requirements are in excess of amounts which in the judgment of the Council call he advantageously placed, provision is made for an allocation of the possible maximum or minimum between the several States and the Commonwealth. It will he seen that this looks like a very common sense arrangement. Heretofore Australian states have acted independently in arranging loans. The Commonwealth has followed much the same course. The result has been that the best and most favorable terms wore not always obtained. And since, in tbo case of foreigners, accurate information as to the relations between the States and the Federal Government is sometimes lacking, confusion lias arisen as to the credit standing of the component units The mistake of a single State in floating a loan was apt. to react on the States as a whole, and on the credit of the Commonwealth itself. The reaction of America, to which country it is anticipated that Australia will turn for a larger percentage of loans in the future, has been very favorable to the new plan as announced. For instance,. the New York Journal of Commerce, in commenting on the matter says: “The Australian plan will not only improve the credit standing of the weaker members but it will protect the more cautious borrowers against the rash ones. Finally, by regulating total amounts and timing applications with regard to money market conditions. all will profit from lower debt charges. Nothing is more extravagant than uneo-ordinatod and inopportune entries of public borrowers into the general money market.” The recent offering of the Australian loan in New York resulted in a most successful flotation. That America is partial to the Commonwealth is a matter of frequent remark. Apparently Australia will experience no difficulty in placing

the maximum of her loan requirements in America, says a financial journal, published in New York. An Australian Commonwealth or State bond holds high rank as a gilt edge investment.