Melbourne, May 12.
Borrowing by the Australian Commonwealth and Slate Governments is controlled by a body known' ae the Loan Council... This organization, which was inspired by the Bruce-[Page Government about nine years go, has proved very effective in stabilizing national Anance, and cer~ faimly does not-merit the criticism that is periodically directed at It by Premiers whose grandiose schemes of public expenditure have been cur-{alled.
Nevertheless, its sessions have become increasingly stormy, and its future usefulness Is now seriously threatened by a policy of evasions, which certain States have ingeniously employed in recent years.
The Loan Council derives its authority from a "Gentlemen's Agreement," {o which all the Australian Governments are parties, It has no Tegal powers of compulsion. AMI its decisions must be unanimous to be binding, and, falling unanimity, an accepted formula is automatically 'When the Council was established all the Governments, Commonwealth fend State, had been' indulging in an orgy of public expenditure financed Internal and external borrowing. Competition between the various Governments has forced up interest rates, and the inflationary effect of this was @ serious contribution to the severity of the depression which followed.
1929, external borrowing, apart from conversion operations, virtually cepsed. Internal loans have been drastically curtalled, and Governments, which were indi lal straits five years ago, are now in a very sound position.
Text read from the printed page and cleaned; old type leaves the occasional error.