A CENTRAL BANK.

Auckland Star, Volume LXIV, Issue 114, 17 May 1933, Page 6

A CENTRAL BANK.

There is one point on which I am in th-e dark, and perhaps one of your correspondents can enlighten me. That is dn what way are our imports to be regulated so as not to exceed tho amount of credit available, from the sale of our exports, after paying Government and jlocal bodies' commitments abroad? With the country off tho gold standard and the foreign exchangee, pegged, at gold standard rates, there must be someone to regulate the importations. With exchange rates at par the demand for credit in Britain to purchase imports will greatly exceed the supply. Is it proposed that a private bank shall decide who shall import and who shall not? This is a vital question, as much of our present troubles is due to the fact that private institutions control overseas trading. The private trading banks can make considerable profit by financing importers aW aro under no obligation to conserve New Zealand credit in England, so as to enable the Government to meet its commitments there. There is thus the. temptation to consider tho importers before the Government. A position may arise, whereby the banks have, a large debit in England through the importers' ■purchases there, and they will have a Jarge credit in New Zealand through the sale of the goods in New Zealand. It will be seen how convenient it is, in these circumstances, for the Government to pledge New Zealand taxpayers to borrow credit to balance the banks' debit dn England and to take over and spend, the surplus credit in New Zealand. Tho toanks aro in a position to force the Government to borrow. When the Government has a payment falling duo the (banks have simply to say they have no credit available in Emriand, and the Government is then forced to WStow to avoid default. This will explain the- crazy Government borrowing abroad aod the frantic efforts of the Government to spend money dn New Zealand. The hand, that holds the purse strings is the hand that rules, and this is just as true in national as in private affairs. If Parliament as to rule, it can onlyi do eo by controlling the national credit and currency. If the banks are to rule, then they must foe compelled to conserve the national credit and must control Government borrowing. We. have now a Government with power to borrow unlimited millions, and private banks, not answerable to the people in any way, manipulate theso borrowed millions. There cannot bo two heatts- to one .State, and the .people; must decide who is to rule, Parliament or the banks. Some people eay democracy las failed. Democracy can never rule -while the national .puree strings are (held by private banks and the peopled representatives have to go to these institutions, in servile mien, cap in hand, for the means to carry on the government of the country. PLAIN BILL.