Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-04-02
AUSTRALIAN STATE
CREDIT IS HELPED
Payment of Loan Interest by
Federal Government AvertS
Financial Crisis.
BY JOHN F. SINCLAIR

OpeClal OlSpdtCn 70 Ing Quar-
NEW YORK, April I'm spite OF
John Thomas Lang, fiery premier OF
New South Wales, the Federal Govern
ment of Australia paid the interest on
the New South Wales loan in London
yesterday thus preventing the immense
Australian foreign debt from being
thrown into chaos
Recently, Premier Lang announced
that the interest on the S3,645, 900, pay
able in London on April /, would be re-
pudiated. At the same time, however,
he allayed the fears of American in
vestors, by saying that the amount of
interest due in New York would be paid.
Then j. H. Scullin, prime minister OF
Australia, announced that the common
wealth government of Australia would
pay the interest on the New South Wales
obligation due in London, and would
sue the state of New South Wales i'm
mediately in the Federal Courts OF Aus
tralia, to recoved the money paid. Now,
Premier Scullin has paid this interest
in London-and raised q very compli-
Gated legal question.
States Have Borrowed.
Premier Lang has not only struck a
blow at the prestige of Australia" said
Premier Scullin, following the an
ncuncement of his decision to pay the
London interest, but he has raised
questions of magnitude concerning the
financial relations between the COM
monwealth and the states"
How large this question looms can be
seen by the fact that the various states
composing the commonwealth of Aus
tralia, have borrowed large amounts of
money outside Australia, in fact much
more than the commonwealth OF Aus
tralia itself.
AS of September 80, 1880, the amount
Of state debts was given as follows:
External debts Oondon) $378, 1854, $50
External 6ebts New York;. 30,686,983
internal DEBTS. 33l OH 1858
So the decision Of one of the most
important states Of the commonwealth
to repudiate part of its obligations went
far toward affecting the credit standard
of all of the state debts, as well as the
national. That is why the reinsurance
of Premier Scullin was such important
news to the world.
And it was so important that when
the Right Hon. j. H. Thomas British
secretary for the dominions, announced
the Scullin decision in the House of
Commons the announcement was
greeted with wild cheering and Aus
tralian securities moved up rapidly from
their low point next day.
The Australian federal government
VOWED and far-reaching legal question.
Has the federal government, under the
Australian constitution, legal right to
pay the debt? Does such an act, on
the part of the federal government,
ALLEVIATE sovereign power from the indie
pendent state of New South Wales?
These and other legal questions will
be up for decision as soon as the case
is filed, which is expected to be shortly.
Civil War Debts Recalled.
Such a decision on the part Of the
Australian government recalls the fact
that the British Council of Foreign
Bondholders still claims total from
the United States of 1886 800, 000-the
amount of bonds repudiated by the
various State governments OF the
United States contracted before and
during the Civil War. This amount
includes the principal OF SIS 100000
and interest for So years at per CENT
amounting to $261, 500, 900.
The British government has tried TO
bring this matter before the United
states Government at Washington, but
it has never been able to do so. Tor
the reason that the Federal Govern
nent at Washington has rejected these
claims as spurious.
Lang's Career.
But to return to the present credit
crisis in Australia. who is John
Thomas Lang, the premier OF new
south Wales, who has precipitated
sucf. bitterness into the situation, by
openly demanding reputation OF the
state debt?
Mr.. Lang was born in Sydney, Aus
traIia, SIS years ago. He worked on
a farm for the first part OF his lie
and to this he attributes MS gTeas
physical strength and vitality. He mas
always been a labor man, interested
in labor problems, but never before
becoming premier was he considered
more than a moderate. belonging more
to the Center than either to Right or
Left wing Of the party.
But when the people OF ms state
elected him to power in 1928 ne pc
came. instead CT more conservative,
more ruthless and reckless, especially
in the field of public expenditure. he
had a dispute with Sir Dudley oe
chair. the English governor general,
on the question of abolishlng the
Upper House of Parliament when II
disagreed with him.
Last year, when the business sltua-
ton became very bad, Mr.. Lang cham
pioned most extreme program OF pen
sions. shorter hours Of labor, increased
taxes and vast public improvements.
The people were hungry and oisap-
pointed. They elected him again 10
power. Since that conditions nave
been going from bad TO worse ana WIN
it Premier Lang has grown more rad
ical in his views.
Mr. Long, row Left Soclallst, mas
made a comfortable fortune IN the m
crease of land values. But now ne pc
lieves that the only salvation 1or MS
state. as we'll as for all Australia, Is 10
repudiate their crushing debt.
For the moment he has been cnecK-
mated by Federal Premier Scullin, but
the fight has only started. Mr.. Lang
has plenty of courage, resourcetu!neSs
and ambition. He insists he Is right
and further, that Premier Scullin ana
Federal Treasurer Theodore have no
power TO pay debt, Wnlch is repuol-
ated by his state.
1t is a dramatic battle, and one fraught
with immense Importance, in the inter
national field.
Managua. the capital city Of Mica
ragua, largely destroyed by earthquake
in the last two days, is the largest city
in that country and has a population
OF about $4,000.
The city will have to be entirely re-
built, and the funds for it must be
raised outside Of the country.
The Republic of Nicaragua, which
has a population OF about 700 600 living
in an area about as large as Iowa, had,
on March 81, 1880, very small public
debt, about s25, 100000 OF this amount
the sum of $l8,000,000 represents claims
against the government for damages
arising out of various revolutions, and
they may be scaled down.
The country itself has valuable forest
lands, some gold, but it is largely an
AGRICULTURAL and stock country. Its
chief exports are coffee, sugar, bananas,
timber and hides, while It's chief i'm
ports are textiles, machinery, chemicals
and -four