LABOUR CRITICISM

Auckland Star, Volume LXIV, Issue 252, 25 October 1933, Page 9

LABOUR CRITICISM

PRIVATE CONTROL. FAULT OF MONETARY SYSTEM THE GOLD CONTROVERSY. (By Telegraph.—Parliamentary Reporter.) WELLINGTON, this day. "This bill is to be made the excuse for perpetuating private control of our monetary system." was the declaration of Mr. M. J. Savage, Leader of the Opposition, in opening bis criticism of the Reserve Bank measure. The Minister of Finance, said Mr. Savage, had said Parliament could alter anything. "I will make him the promise that some day the Opposition may be where he is, and when it gets there it will alter anything it tilings wrong. (Laughter.) I have heard those empty laughs before, but—don't forget— democracy is moving, and I guarantee the Government would be moving, too, if they had an election next week." In the general laughter which followed someone suggested i'l would be bad for the Opposition, too, but Mr. Savage retorted: "I'll take the risk." He did not know, he said, that there was much wrong with the present banking system, except the control of it, and that was what mattered in tiie finish. Political Control. If the Reserve Bank was going to do one-quarter of the things the Minister said it could do he wondered whether the commercial banks would not regard it as a competitor. Personally, he would rather see the State do tlie job itself. There was something contradictory about the Minister's statement that the Reserve Bank would give effect to Government policy, and his other statement that it would be free from political control. He could not imagine a banking system running to Government policy unless there were some sort of political influence or control.

"I believe," Mr„ Savage added, "that Parliament can be trusted, and that the mess the world is in is not the fault of Parliament. He could not see anything in the bill which would provide cheaper credit, unless the bank was a competitive institution. Although the powers in the bill had been in the Government's possession since 1914 they were only used during the war period, when the Government paid an extortionate price for the use of iU machinery. It was correct to say that what was wrong with the monetary system was that there was not sufficient of it finding its way into the pockets of the great mass of the people. If credit were issued and wages reduced they would be in the same mess aft at present, or even worse. Was it correct to say that the Reserve Bank would provide disinterested control of currency, when NewZealand already had a banking institution which tho Government had controlled since the early, 'nineties in some form or another? It had the right to appoint four directors out of six. How much use had been made of that privilege? The Bank of New Zealand could set the pace for the rest, as it did 50 per cent of the total banking business of the Dominion. He did not think the bill was intended to supplant the present financial dictatorship, but the great body of public opinion was asking for this, and he assured the Government that communications on these lines were coming to him from people who had to be reckoned with.

Banks' Rights to Gold. On what he described as "the knotty problem of gold," Mr. Savage expressed the opinion that the Minister had made a reasonable statement. The gold was to be handed over for bank notes, or for credit with the Reserve Bank. However, they had legal opinion which seemed to indicate that the gold was the property of the banks. They might have had a legal opinion that in effect workers' wages were of a certain amount prior to 1931, but after that session the legal opinion woulu not hav* been of much value, because Parliament altered the law, and the people who did that did not worry about breaking agreements with public servants and others. The Minister had explained that the gold reserves of the banks had been protected by law, by making paper legal tender, and preventing people from demanding gold. That seemed to be a substantial reply to the legal opinion, for it gave the moral ownership of the gold to the people. The banks had enjoyed their privilege for 19 years, and had been able to accumulate fairly substantial amounts of gold.