MR LANG’S PLAN

Hokitika Guardian, 10 February 1931, Page 5

MR LANG’S PLAN

FOR RECOVERY. .1 (Auslmliun Press A ssociation.) CANBERRA, February 9. Mr l.ang, Premier of New South - Wales, outlined his financial policy at ’ to-day's Conference of .Premiers and - j Treasurers as follows: ij “Firstly :--That the Governments of Australia shall decide to pay no lurthiJ er interest to British bondholders tiuj til Britain Inis dealt with the Austraj lian oversea debt in the same manner as she lias settled her own foreign debt with America. | Secondly That, in Australia, the j interest on all Government borrowing he reduced to three per cent. Thirdly:—'flint immediate steps he taken by the Commonwealth Government to abandon gold standard currency, and to set in place thereof a currency based upon the wealth of Australia, to be termed the gold standard. In his explanation, Mr Lang said: “The Government of New South Wales lias decided to adopt this policy where j it applies, regardless of what the decision at this table might he, and I am hopeful that all of the States of the Commonwealth will he able to say truly that at last the depression has lifted, j It means that there will be released for circulation in Australia millions of pounds which are now being sent over-1 seas. A .sympathetic fall of interest ' through the commercial and financial i ; life of the Commonwealth would give . new life to industry, and will do those | things wjiioli the Prime Minister, in \ his opening address, said were so nee- j j essary. This scheme, if adopted, by j < giving now life to the Government, and i reviving industry, will cause a ready i absorption of the unemployed. Confi- ( deuce in Australia will lie restored, he- j cause her dependence on the outside ( world wilßbe reduced lo a minimum.” ( Mr Lang in his address, said :“A ! ] silver ciirremev would suit New South ) Wales. This was the only currency r that could not lie debased. The abolition of the gold standard would not t cause the nation to suffer in our inter- | national relations. Having paid the ,

producers of Australia wit'll our own . currency, we could apply the whole of our revenue from our sale of surplus products overseas to the speedy amortisation of our external debts, save only the amount necessary to establish credit for those goods which Australia was unable to produce. Mr Lang concluded that unless, also, there were some method of the National handling of the woolelip, the great financial houses would continue to grind this industry between its upper mTllsione of usury and the lower millstone of financial speculation. Mr Lang’s speech caused a sensation. Tt is understood that both the Prime Minister and Mr-, Theodore dissociated themselves from Mr Lang’s plan. MR LANG’S PROPOSAL. COULD NOT BE ENTERTAINED. (Received 8.30 a.in.) CANBERRA, Febr.iray 10. The Prime Minister said that Air Lang’s proposals would amount to a deliberate default .and they could not be enteretnined for a moment. Tn- ■ stead of promoting confidence abroad , they would destroy it. Most assuredly , indeed they might lead to panic and chaos. Jt was quite imposible for Mr ! Lang's Government to act in the way suggested as the New South Wales ad- j ministration was a party to the finan-' .t*inl agreement, under which this State must pay its full quota of interest whenever due. Failure to do so would make the Commonwealth liable and in the event of any one State defaulting, additional taxation could be imposed on that State to make up for the deficiency. IP New South Wales was allowed to default in the terms of Air Lang's speech other States might want to do the same thing, and the whole burden of the interest would fall upon the Commonwealth, which was determined whatever happened to meet its just obligations. j The Premiers of all other States, as well as Mr Theodire, supported Mr Scullin’s observations. The conference finally passed a resolution that each Government should balance its Budget within three years and that Treasurer Theodore should confer, with the Commonwealth Bank Boa ref in an endeavour to arrive at an appropriate monetary policy for the Commonwealth.

LONDON DENIAL.

(“Times” Cable). LONDON, February 8. “The Times” City Editor says:— Although the full details of Mr Theodore’s plan have not been revealed, a general description gives an impression that it is the result of a confusion of ideas. The allegation that the bondholders are getting 164 shillings instead of one hundred shillings interest on Australian’s five per cent, stock is a. misrepresentation of the i'acts. Any manipulation of the price level in Australia, by monetary policy or otherwise. would not help the country. The Australian pound is depreciated because it has been inflated. Australia has. in effect, deflated the currency. Depreciation can only be cured by drastic deflation, helped by foreign borrowing. Meanwhile, depreciation, by reducing- the gold value of wages, and other costs, will slowly help to establish a fresh equilibrium of economic affairs in Australia.

ANTI-LABOUR PRESS COMMENTS. SYDNEY. February 9. Financiers in Sydney say that Mr Theodore’s financial scheme is unconvincing. and that it ignores fundamental facts, one of which is that Australia’s price level is higher than the general level of prices throughout the ,world, and that the gap is growing h wider. Another is that Australia can tfc not act. independently of world juoveid incuts in any attempt to correct her j position. Tlie daily press uiireserveilly condemns Mr Theodore’s policy. The i-l “Herald,” of Sydney, likens Mr Theoi- do re to a master magician. The! i- “Evening News” describes it as in-j r flation naked and unashamed. Jtj n I points out that the floating debts of the Australian Governments in 3929 e | were five and a-lialf millions, while g now they are fifty-five millions. e EFFECT OF REPUDIATION'. THE FINANCIAL CRISIS. f (Received this dav at 3d a.m.) LONDON, February 9. Tlie Stock market was greatly shock- : ed by the news from Australia, and s business in Australian securities is at • ! a standstill, prices are nominally 1 - down two to five points, New South * i Wales stocks showing the heaviest fall, i which might have been greater hut for ■ the conviction that Mr Lang will be | unable to do what he threatens, because j the responsibility rests on the Com. ] I monwealth. Furthermore if Mr Lang 1 | succeeded in passing the necessary legislation violating the Trustee Secur- * i ity Act, ifc is hardly thinkable the 4 Royal assent would he given, ' I Mr Theodore's plan mu! Mr Lang's ' repudiatary doctrines are given pro- | mineißO in tlie early editions of the j evening papers and have created a ' most unfavourable atmosphere. Financiers are puzzled how in the face ! of trade restrictions and the natural * individual tendency not to spend, the * Commonwealth can lift up price levels. (hie critic informed the Australian j Press Association the scheme was . merely muddle and floundering and a 1 refusal to face the stern facts. “In view of the situation in A ustralia, Anstfralia’s friends cannot be *' blamed il they are in a condition almost of despair,” says the Irish 5 ‘"limes” in a leader. “Only a man of immense energy and ruthless determination can save the country from financial ruin. At the moment no such man is forthcoming.” The “Evening News” says:— ®

“II Mr Lang’s repudiation proposals wore adopted, it would end all hopes of Australia weathering the crisis. | Over live hundred million sterling of j her stocks are held b,v three hundred I thousand British investors,- including ja large proportion of trustees. ]f this large mass of direct investors are deprived of their income by Australian repudiation, where would Australian credit stand throughout the world.? Who would lend Australia money for necessary developirtents in Commonwealth? Repudiation would he disaster from which Australia might take a generation to recover,” AN IMPORTANT INTERVIEW. (Received this day at 10 a.nO CANBERRA, 'February 10, Mr Theodore will confer with the Commonwealth Bank Board during the week, and report back to the Conferenee on Friday, A resolution agreed to by the Con-ferene-e yestierd'ay, included that if during a financial year the budget indications should fail to bo realised, immediate steps he taken to adjust the position, and that every effort be made to prevent any further fall in wholesale prices, CA UST IC COMM ENT. MELBOURNE, February 10, “Mr Theodore’s scheme is inflation, and therefore it does not appeal to me or Australians,” said the Chairman” of the Associated Banks, Air Tranter. “I feel sure it is not- a serious scheme, and I will not be surprised if it- proved to be a screen for something else.”