Australian Credit

The largest piece of foreign financing in immediate prospect is another Australian Government loan, for a sum not yet announced by J. P. Morgan & Co., Australia's bankers, but reported to be between $50,000,000 and $75,000,000. The bonds, which will be the eleventh Australian issue brought out in the U. S. market, will bear 5% interest and will be sold in the neighborhood of 98.

Distance does not lend enchantment to bonds, for Canadian and Newfoundland issues of comparable intrinsic merit sell higher. U. S. bankers, it is true, have come to look upon their northern neighbors as a part of the financial fatherland, whereas Australia, with her vulnerable position in case of a great Pacific conflict, and her slightly rosy tint of political radicalism, is distinctly foreign. As a matter of history, Australia first came to Wall Street because London fell out with the legislators of Queensland* over a certain Land Amendment Act which taxed British pastoral investments despite agreements previously consummated which exempted the British security holders from Commonwealth levies. Although 1926 saw this dispute ironed out to London's satisfaction, the successful Queensland issue of 1922 at New York established a precedent. Now there are on the New York trading list two Commonwealth of Australia bonds, two Queensland issues, three City of Brisbane/- obligations, two New South Wales securities and one public utility investment, bonds of the electric light corporation which serves the city of Melbourne.

Australia's borrowing policy works out admirably to the advantage of all three parties, Wall Street, London, the Australian Government.

First, for Wall Street: Australia is a first class investment field, a rich, new, underpopulated continent with the stability and wisdom of the greatest world empire behind its expansion.

Second, for London: U. S. loans to Australia help sterling to maintain itself at par, for when dollars flow outward towards the Antipodes gold sovereigns may hold the fort in London City.

Third, for the Australian Government: Australia has the advantage of competition for her issues between the two great money markets of the world, which mean better terms of loan and the goodwill of two great nations of investors.

Fourth, and of paramount importance to Wall Street, London, and Australia alike: U. S. loans to the British Continent of the South Pacific, now at. a total of over $200,000,000, give the three parties a community of political interest in case of war on the Pacific; doubtless, in case of emergency, this tie would play its diplomatic role in preventing a conflict. It is by such co-operation between the Bank of England and the Federal Reserve Bank that great political ends are achieved.

*0ne of the federation of six States composing the Commonwealth of Australia, created Jan. 1, 1901. It occupies the north-east quarter of the continent. Captain Cook discovered it in 1770. Forests cover half its surface. Its chief source of wealth is in minerals; gold, silver, copper, tin, lead, tungsten, and coal are mined.

/-Capital of Queensland, founded in 1825 as a penal colony by Sir Thomas Makdougall Brisbane, Scottish soldier and astronomer who was then Governor of Australia.