WELLINGTON NEWS

Hokitika Guardian, 29 April 1931, Page 5

WELLINGTON NEWS

LANC AND BANG. (Special Correspondent). WELLINGTON. April 27. The doors of the New South Wales Savings Hank have shut with a bang that has reverberated throughout the civilised world, and the repercussions will l>e immediate and disastrous. The bang of the doors of the Savings Bank its the direct result of the studied efforts of Lang to create no Conlidonee in New South Wales and to everything connected with it. Technically the Savings Bank is quite sound, but actually it does not seem to be so. There are about 1.280,000 depositors *n the Bank and a year ago their deposits amounting to over £50,000.000, but it is probably somewhat less now. .Mint of'the funds of the institution have been invested in so-called giltedged securities, but muddy in New South Wales stocks. Cp till about two months ago the operations of the Bank were normal, there were deposits and withdrawals, but perhaps the withdrawals were in excess of the deposits, because of the depression which has forced a good many people in the Australian States and New Zealand to draw upon their savings. These heavy withdrawal®

could have been met by the sale ot securities held by the Savings Bank, and no doubt a. great deal Has been done in this direction.

But tlie Lang policy of repudiation, which wan definitely put into operation on April 1, his legislation to fix interest rates, his interference with the Arbitration Court, and Other v ; cious proposals caused capital to take flight, and the flight of capital became real. Idle Chairman of the Standard Wnygocd Company recently stated that the company had transferred £61,000 of its funds v-o New York, and added ‘‘Frankly I am afraid of what Lang will no next. When large capitalists are thus scared is it any wonder that the small man should become Frightened. Neither desired to make losses or have his funds filched by politicians, but while the capitalist can transfer his funds easily, though at some cost, the small man now finds that lie cannot get possession of the funds entrusted to the Savings Bank and whose Safety was guaranteed by the State. It is very hard on the depositors and it is to be hoped that they ha’ve had a surfeit of ‘‘Mad Mullah” polities. If the Bank could realise the securities it held it could have easily met the demand for their money, but those securities have depreciated, through tip, action of Lang in repudiating, oi rather in defaulting on the payment of interest due fo British holders oi New South Wales securities. The Bank was most likely unable'to sell New South Wales bonds, or if it was able to do so it must have been at a very low discount. No bank can stand up to a run of withdrawals by depositors no matter how strong it may be if its so-called gilt-edged securities liavn depreciated by say bo per cent. The Savings Bank had to bung its doors, and no doubt the angry depositors will call Lang to account. But the incident and its effects cannot be confined to New South Wales. All the other States are discredited, and the first effect in London and New York is to mark down the prices of Australian securit-

ies. Neither the Commonwealth or the Spates could to-day raise a brn fi s birthing by way of loan either in Lonlon or New York.

Their credit is at zero, dissipated and ruined by Lang. Scull in, Theodore and the rest of the nabobs of the Labour Party. But this latest development in New South Wales is hound to affect us, for the world’s geographical ignorance regarding Australia and New Zealand is colossal. New Zealand is believed l>y some to be just a bit of Australia. In any case the credit of New Zealand must suffer for Australia’s faults. It is a matter of grave doubt whether our Government can raise a loan in London just now even at a high rate of interest. This is about the time for raising a loan.

and it is unfortunate that so serious ft happening as the closing of the doors pt the State Savings Bank should have occurred just now. Even fthe ven tin resume and wellinformed finance underwriters must have lost- confidence in “Australia.” A question that electors must a fi k themselves and decide for themselves is: Would a Labour Government in New Zealand have acted differently to the Labour Governments in Australia?” If we wish to have Australia's conditions reproduced in New

Zealand the electors will have an opportunity early next December to vote in a Labour Government. Lang has made the outlook for Australia and N e w Zealand degrees worse than it was six weeks ago, for be bas wrecked confideuce everywhere.