N.Z. FINANCES.

Auckland Star, Volume LXIV, Issue 282, 29 November 1933, Page 11

N.Z. FINANCES.

SEVERE criticism. • y — COUNTRY LIVING ON RESERVES •BANK BILL "CONFISCATION." Tie financial position of'the Now Zeaj land Government was described as "desperate" by the president and chairman of the. Bank of New South Wales, jjj. Thomas Buckland, in his address to shareholders at the annua] meeting yesterday. He also said that "JCew Zealand las been living: on reserves for some years past, and has, in spite of this, shown deficits." Mr. Buckland's -remarks were made in the course of a vigorous criticism of the Reserve Bank of X.:w Zealand Bill, particularly tho clause which provides that the Government shall take over the trading banks' gold at £3 17/10} per standard ounce, and place the profits "socalled from the sale of this gold to the public account." "The banks consider that this proposal amounts to nothing less than confiscation of property," said Mr. Buckland. "The mid is the private property of the banks and the amount held is far in excess of the legal requirements' for note issue reserves, as the banks have not been allowed to export gold coin. The Government, however, is persisting in its attitude to take the gold over at the mint price, and if it carries out these intentions, the step will inevitably be linked with the desperate financial position of the Government. "Must Damage Credit." "Taxation in the form of confiscation is not countenanced cither in Great Britain or Australia," said Mr. Buckland. "In both these countries the central bank purchases gold at market value. The >few Zealand proposal, if carried out, must damage the credit of the Government in London, as there is nothing to guarantee that futuro Governments of that country will not follow the example and confiscate other property at predetermined prices. Investment in New Zealand Government securities under such circumstances will be risky and uninviting. Already the New Zealand credit in the London market has been damaged by the Government permitting local bodies to meet their interest payments in New Zealand currency instead of sterling, and if the New Zealand Government caps this doubtful procedure with the confiscation of gold. New Zealand cannot maintain her position in the eyes of the world. Nor has the Government of the Dominion taken the same steps toward making ends meet in the public accounts as the Australian Governments. The Dominion Government is still showing increasing dcficte, and even these do not show the whole seriousness of the position, since they have been Ugpt down only by allowing some deterioration of the capital position. New Zealand has "been living on reserves for some years past, and has, in spite of this, shown deficits. The deficit "budgeted for this year was £4,500,000, but the -present position Indicates that this may he doubled, and points, to the necessity of New Zealand adopting a plan similar to the Premiere' plan in Australia in order to regain control of its finances." Mr. Buckland made it clear that the Bank of New South Wales strongly supports the principle of central reserve banking. It was to the New Zealand bill that his criticism was directed. Besides the gold clause, thero_ were several objectionable features, '.'including provisions which may lead to undue Government influence." • Mr. Buckland said political management of railways and other industrial undertakings had been disastrous enough, and an extension of political interference to the management of the highly intricate credit system would shatter confidence, and send Australia headlong into unmanageable inflation. He had confidence enough in the common sense of the Australian people to believe that they would never sanction such a step. He was afraid, however, that sucli optimism could not be felt in regard to New Zealand, where political interference with private ' finance was being threatened.