HELP REFUSED

Manawatu Standard, Volume LII, Issue 52, 1 February 1932, Page 7

HELP REFUSED

REBUFF FOR MR LANG. FEDERAL GOVERNMENT’S DECISION. DRASTIC ACTION TO BE TAKEN. (United Press Association.—By Electrio Telegraph.—Copyright.) MELBOURNE, Jan. '3l. When the Premiers met today, the Prime Minister of the Commonwealth, Mr J. A. Lyons, announced that the Federal Government had “been forced to the conclusion that Mr J. T. Lang will ignore any undertaking that he has given whenever it suits him, so long as the Commonwealth is prepared to shoulder the responsibilities of the Government of New South Wales. In these circumstances it is for the Government of that State itself to face the difficulties which by its own .action it has created.” Thus the Commonwealth Government will not provide the £500,000 required by New South Wales to meet its oversea interest, and Mr Lang must take the full responsibility if the State defaults on Monday, when £958,000 is due in London. Mr Lyons’s announcement, followed a meeting of the Federal Cabinet this morning, when the View taken was that the position created' by Mr Lang’s demand yesterday for an advance was bound to recur, and' the only way to meet it was by immediate drastic action. The Commonwealth Government was not prepared to support any proposal in the Loan Council to render further assistance to New South Wales. It was considered that Mr Lang had made no serious attempt to honour his obligations under the Premiers’ plan, and. had broken his undertakings to meet his own commitments or reduce the State expenditure, Mr Lyons said that the action taken was in the interest of the credit of the Commonwealth and States, and he did not fear any wrong construction being placed upon it abroad.

EXCITEMENT IN SYDNEY. CRITICISM OF MR LANG. SYDNEY, Jan. 31. The news from Melbourne that the Federal Government had refused to assist New South Wales caused excited comment and speculation as to the outcome. The Sun newspaper remarks:—The crisis now appears so acute that the Governor must exercise hi 9 constitutional right to dismiss the Premier and dissolve Parliament. At present the Administration is out of harmony with the people. ! Mr Stevens, deputy Leader of the Opposition, in an interview said that obviously Mr Lang’s methods and policy had broken down. He was unable to continue to govern. Mr Stevens said that a close study of the figures showed that the drift of Treasury funds except the loan fund from now to the end of the financial year in June would be at the rate of £200,000 a month. Mr Buttenshaw, Leader of the State Country Party, said that the people should be given an opportunity to express their opinion on the position which had now arisen. Mr Bavin stated that if the Government did not carry out its obligations the Governor had the right and duty to see that there was in office a Government that would do so.

The Sydney Morning Herald says that it is believed that one of the conditions discussed at the Loan Council for granting Mr Lang money was the placing of a receiver in the New South Wales Treasury. WHAT DEFAULT WOULD MEAN.

A leading financier says that default by the State Government would destroy its credit in all departments. The defaulting State Government would be unable to borrow and could not raise internal loans Unless it resorted to Compulsion. The present crisis, it is pointed out, affects only Government finance. It is not expected that private credit will be adversely affected. The Stock Exchange closed before the news arrived and. overnight reports of a possible crisis had little effect. Four per cent, bonds, 1941 are 2s 6d up at £93 12s 6d: 1947, 2s 6d up at £93 15s: 1953, 7s 6d. down at £93. Ten pound bonds, 1955, are 6d up at £9 6d. Other bonds are unchanged.

POSITION OF BONDHOLDERS. UNCERTAINTY IN LONDON. LONDON, Jan. 30. Exactly what are the Commonwealth’s intentions regarding Mr Lang’s default can scarcely be deduced from the cabled messages, but the city gravely interprets a passage in a Central News Agency message from Sydney which-credits to Mr Lyons the statement: “If the State Government defaults in the payments due next week, bondholders will have to await the result of legal action for the recovery of their money.” Though important instructions have reached Australia House, nothing has been divulged to clarify the position, so some measure of default is expected on Monday, with deplorable effects on Australian securities. Even this morning some brokers were quoting New South Wales 53 per cents, at £9O-£94, but this is scarcely a test of values. Mr A. C. Willis, the New South Wales Agent-General,-says that though there will probably be some delay • in fulfilling London and New York loan obligations in. February, he has no doubt interest will be paid up. >

At a meeting of the Loan Council on Saturday an announcement was made by Mr Lang that unless his Government received immediately an advance of £500,000, it must default in its overseas payments.