MONETARY POLICY.

Auckland Star, Volume LXIII, Issue 260, 2 November 1932, Page 11

MONETARY POLICY.

NEW ZEALAND LOANS. LABOUR PARTY'S PROPOSALS. "ONLY WIND," SAYS MR. FORBES. (By Telegraph.—Parliamentary Reporter.) WELLINGTON, this day. "Nothing but wind" was the description given by the Prime Minister of the Labour policy when he was defending the redemption of outstanding Treasury bills out of the last London loan. Mr. Forbes said the claim had been made that the Labour party's programme had occupied the central place in the financial debate. For conceit that was the absolute record. He had tried to see if the Opposition's proposals would lead to anything, but they had consisted of high-sounding phrases, and when they came to details they were most vague. The Labour .party saw no hope in the economy proposals of the Government or in the report of the National Expenditure Commission, but offered as an alternative only credit control and other vague schemes. "They might have contained some glimmer of light," said Mr. Forbes, "but I found nothing but wind.' 5

Mr. Forbes said that lie would like to find some of the money the Labour party talked about, but all their propositions were confined to generalities, which led to nowhere. It had been stated that the Government exceeded its authority in the issue of Treasury bills, but members could be assured that the AuditorGeneral kept a close watch on the transactions of the Treasury Department. By what legal authority did the Government redeem outstanding Treasury bills by loan? The law stated definitely that Treasury bills must be redeemed out of revenue. Mr. Forbe3 said the reason £4,000,000 worth of Treasury bills appeared to be outstanding overseas was that £4,000,000 of public debt had been retired in New Zealand. There had been no addition to the national debt, and there was absolutely no question of Treasury bills being converted into long-term loans. It had been contended that the Government should convert its internal debt, but it had to be remembered that the average rate of interest on internal debt was 45 per cent. Furthermore, instead _of making conversion the Government imposed a stamp duty, which had the same result, without the expense of a conversion loan. The Central Bank. The Prime Minister said members of the Opposition had argued that New Zealand should adopt a managed currency, but in experiments of that nature one could not act irrespective of conditions overseas. In New Zealand they were endeavouring to stabilise the banking position by the co-ordination of the various banks under a central bank. It had been stated that thi6_ bank would be under the domination of money-lenders, but in fact it would be a New Zealand institution, governed by New Zealanders. The central bank would also be free from political control, and that policy would be in line with that laid down by such men as Lord Snowden, who contended that there should be no State interference in banking matters.