FINANCE PROBLEMS

Hokitika Guardian, 16 August 1930, Page 3

FINANCE PROBLEMS

SIR 0. NIEMEYER’S VIEW'S,

FEDERAL LOAN COUNCIL WARNED.

CANBERRA, August 5. /Grave warnings were issued to memij|ers of the Federal Loan Council at fjlie meeting of council at Canberra vto-day by Sir Otto Niemeyer, an officinal of the Bank of England, who is /visiting Australia to advise the Scullin Ministry upon the financial situation. The meeting, vwhich will be continued to-morrow, is the most momentous yet held by the Loan Council since it was formed in 1924. Upon the result of its deliberations and the acceptance or rejection by its members oh> behalf of the Commonwealth and the States of the advice given by Sir Otto will depend the time which will be occupied in extricating Australia from its present position. All the l *States were represented at the meeting by Ministers and officials. The Prime Minister and Federal Treasurer (Mr 'Scullin) presided. Close secrecy was observed about the proceedings, and no statement was made by any of the representatives, but it As expected that an official announcement reviewing the meeting will be issued to-morrow. Mr Scullin would make no statement to-night, neither Would he give any indication of the nature of the advice given to the council ”b'y Sir Otto Niemeyer.

It is known, however, that close attention was paid to a long statement by hint at the opening of the meeting this morning, ami that tlie manner in which he stated the position made a. great impression upon the members of the council. He spoke for more than an hour and then left the council to •its -deliberations while lie returned to his task of examining the position with Ti is-'colleagues, Professor Gregory and Mr Kershaw, who, with the chairman, of the Commonwealth Bank Board (Sir Robert Gibson) and the governor of the bank (Mr E. C. Riddle), also attended the meeting.

It is nnderstbq'd’that the main points upon which : Sir Otto Niemeyer exoounded his ) impressions ;of the position, as far’as he has-.examined it. were:

That : Australia ‘must help . itself. |£ { That .trade balances, .must be iiriProved. .- • ;■ p;. ; ; ; • ■ . The present find .'future Budgets must lie. balanced. . ‘ . v

Costs of production, must be ’ reduced. ' \

Outside financial assistance will be no-solution of the difficulty unless a. .firm effort is made within Australia to arrest the financial drift which has taken place.' -

-Speaking quietly hut forcefully, Sir Qtto, Niemeyer reviewed the economic situation in the Commonwealth as hi* lias found it since he arrived.

made no suggestions about the methods by which the advice he gave should be carried, into effect, and it is said tnav he made no comment upon the political. aspects of the position, nor upon tile methods by which the Scullin Ministry is proposing to improve the trade ualance and to balance its Budget. It is, apparent that after a few weeks of observation and examination he still relieves: in the main idea underlying his first, statement upon his, arrival at ’Fremantle (Western Australia), tha, Australia must help itself. . From the statement made to-day by Sir Otto Niemeyer, it cannot he- ascertained. whether he will make a definite report, was detailed recommendations, :o, the Scullin Ministry before he leaves ny liis return to England. There is no obligation upon him to do so. It is possible that he will reserve his final report for the directors of the Bank of England, and that this will be communicated to Mr Scullin while

he is in England attending the Imperial Conference towards the end of this year. His attendance at the Loan Council, however, has a specially significance, as the council provides a means by which he. is readily able to obtain an accurate survey of the position of Australia, not only. from the point of View,, of the Commonwealth, but also from the individual points of view of tile various States. Although he has spent all his.time in Sydney since he arrived in Australia, he has already acquired a close- knowledge of the position! iii most of the States, notwithstanding that he has interested himself mostly in the position of the- Commonwealth as a whole. State problems 'do-mot enter particularly into bis investigation, but a knowledge of them has helped him in a general understanding of general facts relating to overseas - loans obtained by the Commonwealth. MUST LIVE WITHIN INCOME

After outlining under the general .headings already indicated the way in which- Australia must proceed to recover its position, Sir Otto Niemeyer urged the necessity for the Commonwealth making sacrifices to live within -the national income. The difficulty of the overseas money market was one reason which, made it neces-sary for Australia, to make a valiant effort, not only to restrict its borrowings abroad, but also to recover the drift and reestablish its credit. Between now and the end of the present year., several commitments- in London have to bo met. The first of these will be the : meeting of £5,000,000 of Treasury bills, which fall due in London, next month. The total amount required to clear liabilities in London in the near future is more than £30,000,000. Failure to meet any portion of these obligations as it becomes due would seriously embarrass Australia, and would brand her in the sight of the world as a defaulter.

Sir Otto Niemeyer did not spare the Loan Council from a real understanding of the consequences ©f such an event. He made no promises of help. Neither did he say to what extent help would be available if the worst did happen. The impressions gathered by the members of the council were that, irrespective of how willing the Bank of England or other financial institutions might be to give assistance, the real position was dictated by economic circumstances, and that any financial aid would he only temporary, and would only stave off the day offreckoning. Although members of the council would say nothing to-day, it was apparent that they took a serious view of the position so frantlv placed before them by Sir Otto Niemeyer.