Two Wrongs into Right?

Down to banquet at the same board in Sydney last week sat Premier John Thomas Lang of New South Wales, which had just repudiated $3,645,000 of its debt to British bondholders (TIME, April 6), and Prime Minister James Henry Scullin of Australia, who last week made good out of the Commonwealth Treasury this shocking State default.

While eating the same salt Mr. Scullin and Mr. Lang did not bury their bitter quarrel. Sydney was opening her Agricultural Fair and neither statesman could afford to miss the banquet. When speech-time came Defaulter Lang defended himself in red hot language. He told the farmers that New South Wales needs every penny in her state treasury to help them! Instead of sending this money to the plutocrats of London in the form of interest on a loan, boasted Mr. Lang, he had kept it at home where it will do immediate good, relieve dire distress.

Amid cheering for Sydney's Lang, Australia's Scullin got to his feet. Against the immediate argument of dire need, he could only report that "deplorable moral and material results have always followed the dishonoring of governmental obligations." That statement, unpleasantly true, did not take well. It was decidedly Lang's banquet.

Vexed, Mr. Scullin went back to Melbourne. Said he:

"I found among the thinking men of every section of New South Wales general condemnation of repudiation."

Possibly the delegates to the Eastern Conference of the State Labor Party of New South Wales (Mr. Scullin is a Laborite and so is Mr. Lang) which met two days later in Sydney are not thinking men. With only one dissenting ballot they voted in a landslide for Lang & Repudiation. Not content with this they whooped through a motion endorsing expulsion from the Labor Party of Hon. Edward Granville Theodore, Australian Federal Treasurer, the man who had sent to the London plutocrats money covering the default.

This resolution riled Mr. Theodore. He retorted by releasing a sheaf of figures that made everyone gasp. Not only has New South Wales defaulted $3,645,000, revealed the angry Federal Treasurer, but it is also in arrears the following sums past due to the Commonwealth:

$1,100,000 interest on loans advanced for public works.

$1,070,000 for advances to ex-soldiers settling on the land.

Moreover, although it is now April, New South Wales had paid up only $120,000 of $5,950,000 she is due to pay the Commonwealth in 1931 as interest on yet other loans.

To bring Mr. Lang to his senses, Treasurer Theodore pointed out that under an agreement made in 1927 the federal treasury has been paying New South Wales $1,215,000 per month derived from general taxes and is due to go on paying. If the state can default, so can the Commonwealth cease payment to the state, both acts being about equally wrong. Although Treasurer Theodore did not state that two such wrongs would help to make a right, although he did not state that the Commonwealth proposed to stop payment, no one missed the hinted threat.

In London venerable bankers twinged at a most painful discovery. It was said in the City: "The last time any government under British Crown defaulted was in 1672." In that year Profligate Charles II stopped repayment by his Exchequer of all moneys borrowed from the goldsmiths' company, thereby throwing half the goldsmiths of London into bankruptcy. Quick was the City to point out last week that U. S. southern States defaulted before the Civil War and have never paid debts to Britons, which, with interest, now total some $336,896,000--approaching 100 times the default of New South Wales. It is almost ten years since the first Australian loan was floated in Wall Street. That loan took so well that U. S. citizens have loaned Australia within the decade about $280,000,000.

This file is automatically generated by a robot program, so reader's discretion is required.