MONEY FOR AUSTRALIA

Rotorua Morning Post, Volume 2, Issue 237, 27 May 1932, Page 8

MONEY FOR AUSTRALIA

PROSPECTS IN LONDON ENDORSEMENT OF MR. LANG'S DISMISSAL BY ELECTORS WJILL OPEN PURSES. BRITISH OFFICIAL'S VTEWS. LONDON, Saturday. ■ Borne back on the tide of returning confidence in Australia, which has been stimulated by the dismissal of Mr. Lang, will come renewal of loans and lower rates of interest, according to city business men. "Australia need not wait till November if she wants a conversion loan," /leclared a lfeading financial authority to a Sunday Sun representative. "She could raise a loan in England within a month, provided the electors endorsed Mr. Lang's dismissal." The Financial Secretary to the Treasury (Major Elliott), who has made recently several notablg financial statements reviewed in a speccial interview with a Sunday Sun representative the world's monetary position and Australia's overseas conversion requirements to meet the position caused by reduced prices. Clearly in all parts of the world the desire for security of capital entirely transcends the desire for a high rate of interest, he said. Therefore any country showing security for capital will soon be able to command low rates of interest and re-borrow at lower than present rates. 3 This wjll certainly apply in Britain, unless the situation radically changes.

It is evident in India's case that reeent loans were fioated at far below the interest rate demanded last autumn. Vital to Future. On the other hand the position of certain European countries is such that it is almost impossible to borrow on any terms beeause they cannot guarantee to meet the next service. Major Elliott elaborated the effect of restoration of confidence in Britain on other countries quoting, for example, the striking improvement in Australia's and India's credit. This improvement, he said, was vitally important to the future, especially towards creating groups of great trading communities which shall work with Britain, and exchange not merely goods, but also goodwill, upon which the whole thing is founded. Unless we exchange goodwill, he continued, exchange ',of goods certainly will eollapse in the near future. Britain has embarked upon two great policies, one commercial, and the other exchange and eurrency. Britain desires wholesale prices to rise, but does not desire a rise in the value of the pound. The exchange equalisation account is not for inflating or deflating the currency, or for economic war with other countries, but will be deliberately used to check fluctuations and the peril around us. Even the peril of the crash of Western civilisations is not yet averted. Unlcnown dangers still await us. We must remove the conception that the war was more than an episode in the 20th oentury, and responsible for to-day's difliculties. New conditions exist, new machines, new fertilisers, new self-con-tained nations, which are not the outcome of the war. We are dealing with a new experiment. Compulsion Dangerous. City business men agree with Major Elliott that capital will be readily available at low rates wherever adequate security is offered. Mr. Lang's dismissal, therefore, has made certain a favourable reception of any Australian conversion loancontemplated. The basis of conversion, said the leading financial authority quoted above, is confidence. Although Sir Robert Horne and others eloquently pleaded that debtor countries would be unable to maintain their debt services if prices continued to fall, this argument would not (be pressed by Australia. The slightest talk of compulsory conversion would wipe out the goodwill that Australia has been so rapidly earning. There is every sympathy for the burdens of primary producing countries, but the most important fact in Australia's favour is the confidence that she is rapidly giving investors prepared to accept low rates of interest in return for security.