AUSTRALIAN NOTES

Sun (Auckland), Volume III, Issue 919, 12 March 1930, Page 11

AUSTRALIAN NOTES

REASON FOR UNPOPULARITY TREASURY ISSUE The story of the Queenslander who, with £7OO in Australian notes in his pocket, was walking the streets of London unable to buy a meal might appear to many to be somewhat exaggerated, but to an Auckland economist the present situation in Australia lends cotour to the suggestion that Australian money at present is not very popular in England. To a Sun representative he pointed out that at the present time there was only one note issue in Australia, that controlled by the Commonwealth Bank of Australia. In December, 1920, the note issue was handed over to the Commonwealth Bank, the notes, however, still remaining Treasury notes, which fact had a big bearing on the question. The fact that they were treasury notes and closely affected by the reverses that the country suffered would no doubt prejudice many overseas people against them. To the average Australian and New Zealand business man they would no doubt appear quite safe business, at a discount, but the English banks always took a very conservative view. Illustrating the conservative instincts of the English bankers he mentioned that except by way of collateral they would not accept land as security. It was quite easy to understand their present attitude toward Australia, particularly in view of the country’s balance-sheet over the last few years and the industrial troubles that had been experienced .lately. For the year ended June 30, 1929, the revenue of the Commonwealth was £79,000,000 and the disbursements £81,300,000. There was also a deficit of £6,000,000 in the previous year. In fact, the year 1927 was the only one out .of the last four when a surplus was shown. This, he said, did not tend to increase confidence in the treasury notes of the Commonwealth. In regard to the note issue he said that at December 30, 1929, the note issue amounted to £45,300,000, of which £18,200,000 was held by the banks and £2,100,000 by the public. As against this there was a gold reserve of £18,000,000, or roughly, about 40 per cent, of the note issue. This, he said, was considered fairly safe in New Zealand. On the face of things he thought the banks were being rather pessimistic in declining to change notes at discount, the % pessimism being, no doubt, due to the rather alarming reports current concerning the country’s condition and which, sooner or later, it would, no doubt, live down.