The Guardian And Evening Star, with which is in corporated the West Coast Times. SATURDAY, MAY 23, 1931. SECURITY REQUIRED.

Hokitika Guardian, 23 May 1931, Page 4

The Guardian And Evening Star, with which is in corporated the West Coast Times. SATURDAY, MAY 23, 1931. SECURITY REQUIRED.

lx Australia at present there is considerable alarm felt bocauso cu the proposal to despatch gold in bulk to pay The nation’s debts accruing in London, with the intention subsequently to issue notes which will not have any gold backing. This is being calico the fiduciary issue, or actually an issue of notes on trust. It is the lack oi backing to the issue which is causing the alarm in Australia. As to the golfl export to London, it is probably the only thing that can be done now to save the credit of the country in respect to debts falling due. It is proposed to settle some filteen million of debts by this means, and in the process to save soae live million h exchange. That is qirte a business stroke on the face of it. but what is to follow! Other debts will accrue and will require to be met. What is the proposal for the future. The 'State Government of New South M ales prefers to default, and the Federal Government has been stepping in and meeting the obligations. But this can. not go on indefinitely without some steps to provide for the future. And neither the State nor the Federal Government is making any attempt to balance the budgets, or prepare ' to carry on along lines of solvency. There is of course the notable-proposal or Air Theodore to meet the condition of affairs in the Commonwealth by a-.pro-digal issue of notes. Those “trust-to-luck” notes-a s they have boon styled by a Sydney paper—will be without any tangible backing, and with a Government in power which mokes no attempt to stem the financial drift, it can be recognised surely what the face value of such notes will be in a short time after issue. Commonwealth notes already even with a proportion of gold hacking, are at a heavy discount. With the export of gold, the value of such notes will decline further, The fidicuary issue will be of less value still, for presumably they will he ft Government issue, and not an issue by any established bank. The chief difficulty about this special issue is that the Government according to its needs may go ou taking power to issue these depreciated notes, and causing an accumulation of debt which would re-

quire to be met subsequently at fare value. By this transaction any profit to bo made on the export of gold would be lost over and over again, so that it will be seen what desperate plights Australia has reached through the inability of the Labour leaders in the Government finding any way out of the financial morass. There can be no confidence in a Government which ignores the first principles of national financial safety. The Labour Party all the world over is bent on carrying on at a rate beyond the resources of the country. Here in New Zealand. the Labour lenders are equally prodigal in their promises, but the state of the finances i.n New 'Zealand will not permit the lavish programme proposed to be carried out. If Australia wishes to succeed with Its note Issue, it requires confidence to be restored, and Labour leadership appears to be the last medium to instill that confidence. The plight of Australia is a striking example of this. The united political movement in the country under the leadership of Mr Lyons opens the way to a return of the necessary confidence, which will give the security for the financial backing Austral 1 ft needs. Mr Lyons is receiving a wonderful welcome, and hi s plain statements of fact show that he realises I how the situation is to be overcome, it will not ho achieved quickly nor readily. hut once confidence begins to return the country will soon fool the advantage of parting with the disastrous Lfabour leadership of recent times.