The Guardian And Evening Star, with which is incorporated the West Coast Times. FRIDAY, JUNE 5,1931. THE LONDON VIEW.

Hokitika Guardian, 5 June 1931, Page 4

The Guardian And Evening Star, with which is incorporated the West Coast Times. FRIDAY, JUNE 5,1931. THE LONDON VIEW.

Tun London view of matters colonial is certainly important to the Dominions at this juncture; The public indebtedness of the colonies is centreu largely in England, whence it hn s ueun the custom .for so long to apply tor loans. In a review of the Australian situation, a writer in a London Imr.ncjnl. journal says rather pointedly of tine position: The Federal Labour Government has been in office for over a year and a half, but has done nothing to stem the disastrous drift of national finance to realize Stlid /profound changes in international price levels for all basic products which have occurred during the past two years—changes which have vitally affected the source of Australia’s income. To October. 1929, the Nationalist Government under the Premiership of Mr Bruce, was forced to appeal to the electorate with a sane realization of impending financial and industrial trouble facing. Australia. The majority of electors preferred to believe grossly extravagant promises by labour politicians obviously, impossible of fulfilment. The Commonwealth has continued to -drift in command of the left wing element which lias forced it s will on the Government, through ''the Parll.unrealtary caucus. The financial and industrial position is rapidly becoming worse. Lack of public confidence is. depressing business,, and unemployment is increasing , to an alarming extent. The policy of the Government has been [‘hands off wages,” notwithstanding that they were arbitrarily fixed on artificial conditions of prosperity, and maintained by excessive Government expenditure of loan money. The economic outlook is that half the people will have no wage’s, and tlic.otliel’ half will ,bc working to keep them on the dole .or. t in pro fit a blu relief works.” On top of this in the some issue, is some reference to the New South situation; following the Lang repudiation proposals:—“An unpleasant impression was created by the declaration of the Premier of Now South Wales, ATr Lang, that the interest on one of that Government’s loans, due on April 1 in London.- would not he paid. Happily, (he Commonwealth Government shouldered the obligation and paid, the interest. the amount involved being a little over £729.000. Of this the bulk related to an issue made through the Westminster Bank, and the balance was payable at the Bank of England. There was no excuse at all for this unprecednted action by the Premier of Now South Wales, and as an offer of the necessary funds was made by the Commonwealth Bank the matter was a political rather than a financial one. For a time the threat of default had a very wekening effect upon all Australian Government securities, prices on which had previously fallen to a ridiculously low level. The market became quite nominal, for the dealers would only quote very wide prices, making, a difference of 15 points between the supposed buying and selling figure. Various stocks were quoted at 50 to 65, including that upon winch default in the interest payment was threatened. This meant that a seller had to accept £SO for £IOO nominal of stock, but a buyer had to pay £65, a difference which did not make for active business. One redeeming aspect of this episode is that the declaration by Mr Lang was generally condemned in the Commonwealth, and naturally the community did not relish the possibility that the notion of the Premier would he interpreted as a representation of the views of the people.” Referring to the economic difficulties of Australia the paper says:—“The responsibility of the Commonwealth Government for the debts of the various States was made clear in the prosueetus of the last New South Wales Government loan offered in this country. Moreover, counsel's opinion was obtained urnn the point, and this confirmed tlie intcrp , 'otation placed upon the wording of the prospectus. The,, acceptance of responsibility by the Commonwealth is a reassuring circumstance for investors in Australian Government securities, and it may tend to restore confidence. It does not alter the economic position, of course, in which connection it may he noted that the difficulty experienced by Australia in meeting financial obligations in this country is accentuated hv the seriously adverse exchange. At present it requires 131 Vnstra.lian pounds to my a debt of £IOO due in London. The cost of the debt service expressed in Australian pounds, therefore, is greatly increased. Fortunately, there is some hope that the future will witness an amelioration of the present trying conditions. Of late a fair re-

coven’ lias taken place in the price of one of the country's staple- products, wool, and in recent months the balance of trade has been favourable to Australia;, partly because economic conditions bare compelled the country to restrict it s impoits. The figures, however, show a big shrinkage compared with those of last year, the exports having been affected by the difficulty of disposing of products at sat i.vfactory prices.” From this it will lie seen the position is being closely watched, and no doubt the position el New Zealand is observed as closely. The Dominion therefore has its responsibilities in keeping faith with its London clients.