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Thursday, 29 October 1931

Mr SCULLIN - There is no truth in that statement, although it has been frequently made. In a statement issued by the Commissioners of the Savings Bank, they do not say that the Commonwealth owes the bank this sum, but they say that the bank holds £30,000,000 of Commonwealth securities. That statement, without explanation, is misleading to the public, because it suggests that the Commonwealth Government is under obligation to the bank to pay it this sum. The Commonwealth Government is under no such obligation.; its only obligation is in respect of a sum of £3,800,000 representing Commonwealth bonds purchased by the Commissioners of the Government Savings Bank of New South Wales as an investment. These bonds have not yet matured, and the Commonwealth Government is under no obligation to cash them until they do. It is true that under the conversion plan all State debts are now Commonwealth securities, but' the obligation to pay both principal and interest with respect to securities representing State debts still rests upon the State governments concerned; the responsibility of the Commonwealth begins only when a State defaults.

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