FEDERAL FINANCE

Hokitika Guardian, 18 April 1931, Page 5

FEDERAL FINANCE

THEODORE’S STATEMENT

Australian Press Association.)

CANBERRA, April 17

In the Federal House of Representatives, iloii. E. G. Thei.dore, t'-e T<eas. urer, disclosed the correspondence of his .Department with the Commonwealth Bank Board in consequence oi its ultimatum of Tieasury Bills. Mr Theodore said that the bank had advised the Government on April 2nd that it would he unable to extend any financial accommodation to the Commonwealth Government beyond the total of l‘2u.obl).UoU that was r- pres nted by Treasury Iblls for the overdra t within Australia and the present total adwuiced London upon Treasury Rills and debentures amounting to twentyfive millions. The Bank - had point'd out that, owing to the action of the New South Wales Government and the inability of the Victorian Government to obtain further assistance from the Associated Banks, it had been made necessary for the Commonwealth Bank to consider its capacity to continue to finance the Governments of Australia.

Mr Theodore said that his reply to the Bank Board, sent on April loth, emphasised that the Government could not lie deflected by the unwarranted action of the Bank Board, whose attitude could only he regarded as an attempt by the Bank to arrogate to itself supremacy over the Government in the determinpition of the fin tidal policy of the Commonwealth, He pointed out that persistence by the Bank in this attitude would force all of the Governments to dishonour their contractual and other obligations. The Government, therefore, seriously diallonged the right of the Bank Board to out: off the money supplies without either consultation or prior discussion.

Mr Latham, the Leader of the Opposition, said that Air Theodore’s statement was one of the most important that had been made in the history of the Commonwealth. It went to the very root of Australia’s present day problems. The Prime Alinister promised that members would have the opoprtunity of debating the matter at a later stage. An authoritative assurance was given at Canberra to-day that the Government would, whatever happened in hanking circles, he able to meet its commitments until the end of the present financial year. BANKERS’ TOLL. FROM THE NATION. CANBERRA. April 17. Declaring that the Banks thems' Ives were not above reproach. Air Theodore’s long letter concluded by saving that the banks had drained vast sums from the industry since the war by their high charges, hy which they have doubled their profits. They have also built up colossal inner reserves. They have expended millions of pounds on their palatial new premises. The Commonwealth Bank had allowed itself to be dominated by the trading banks, which had become the final arbiters oi the interest and exchange rates, exacting a heavy toll from tne community.

SPOILED AUSTRALIAN TRADE. CANBERRA, April 17. In another part of his letter to tlie Commonwealth Bank, Hon. Air Theodore blames the .Banks for the proesnt crisis. He declares that they have blindly followed the overseas banks in pursuing a policy which has lorccd down Australian prices into a consonance with tlie slumped prices overseas. There lias thus been a too-rapid deflation and a consequent collapse of trade profits, with thousands of bankruptcies, and unemployment on an unprecedented scale; whereas, if the Banks had continued to sustain industry mitt! it had adjusted itself. Australia could easily have weathered the storm. A noteworthy fact, lie stated, was that during tlie past twelve months, the Australian workers, through too varition of their awards and the reduction of their wages, had lost forty millions sterling, but the people with fixed money claims against the Government or against industry amountill" to seventy millions still continued to enjoy their full income.