Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-08-24
Australian Finances :
In an Alarming State

LONDON, August 23.--Austraiia d
much on the mind Of the British pub
Lie ct the moment. While the whole
country 10 waiting breathlsssly for thu
outcome Of the final test match which
promises TO transfer the cricket cham-
pionship once more to Australia, the
city circles are Gil agog with the dos
perate financial situation In that eoun.
try, and with the result Of the financial
conference now On ct Melbourne.
The recent catastrophe collapse ln
commodity prices has hit no part Of
the world more severely than the Aus
tralian, where high tariffs and OK.
travagant wages have brought ths
country TO the brink Of bankruptcy.
For o long time, the city has been dis
quieted by the Developments IN the
commonwealth where . shortage OF
cash hiss resulted In extraordinary ak
from this country e. well as elsewhere.
y Il y y
Fears concerning the ability Of Aus
tralia to meet her commitments ere
ated alarm, IN view Of the enormous
lending by the London financial In
situations to both federal and state
governments. Such lendings have been
regarded as gift-edged and included IN
trustee securities. with the result that
all financial houses carry great blocks
Of these stocks.
The question OF whether Australia
can honor these liabilities has now
come 70 Q crisis over the comparatively
small sum Of $26 ,000,0 900. which IL due
from Australia TO London on September
/. In view OF the situation, Sir Otto
Niemeyer, director Of the Bank Of Eng
land, was sent to Melbourne to confer
with and advise the government Of the
commonwealth oIi~measureS necessary
to establish soivency and restore such
confidence Is to justify London In
agreeing to future loans.
The task of Nierneyer has been most
difacult, for he has had 70 explain TO
the Australians that they have been
living In fools' paradise, maintaining.
by external borrowings. standards OF
conditions. Vicious circles Of high
tariffs and high wages have been
chasing one another In an ascending
scale at the same time that world conn
modify prices were falling and internal
costs of production rising. The result
had brought the country to the break.
ing point and proposed panic measures
of increased tariffs only threaten to
make the inevitable crash more over
whelming.
Il Is with difaculty that J. H. Scullin,
the Labor premier Of the commonwealth,
has been induced TO repudiate election
pledges not to reduce the salaries and
wages Of public servants. At hastily
summoned conference both state and
federal authorities agreed unanimously
ON Thursday to take energetic, con-
certed steps 10 meet the exigencies Of
the present crisis.
The proposals include immediate bal
ancing of the state and federal budgets
by drastic cutting down Of expenditure,
severe curtailment Of DEVELOPMENT pro-
grams and poStponement Of all external
borrowings until existing short-term In
debtedness has been dealt with. A
Financial Advisory Committee, repre-
senting the principal states, has been
set up to secure and stimulate enforce.
ment Of the plan.
II remains TO be seen whether Q On.
tastrophe can be STAYED on. One hope
fil fact Il that several states already
are seriously alarmed and have taken
steps 70 put their houses In order, and
II Il agreed that this lead. coupled with
Nleineyeris impressive analysis Of the
gravity Of the situation, has forced the
federal government into line.
##%
The hy In the ointment Of the sculiin
government Is the fact that the new
policy threatens to bring him into COLL.
sion with tlaey Labor party which put him
In power and win not willingly submit