MONEY REPORT.

Auckland Star, Volume LXV, Issue 239, 9 October 1934, Page 8

MONEY REPORT.

ALREADY ADOPTED?

COMMITTEE MEMBER'S CLAIM

GOVERNMENT'S ACTION,

(By Telegraph.— Parliamentary Reporter.) WELLINGTON", this day. The assertion that the greater part of the Monetary Committee's recoin mendations had' already been adopted by the Government, or by the Reserve Bank, was made in the House of Representatives by Mr. J. X. Massey (Government, Franklin), this afternoon. He said that the following actions, which followed closely on the committee's recommendations, were taken after the committee reported:— (1) Stabilisation of exchange at 125. (2) National Mortgage Corporation.— This was. the most important proposal in the Budget. (3) Amalgamation of Government lending departments. (4) Amendment of Reserve Bank Act to ensure that a short-term money market can be built up. This was done in the first Finance Act, the wording used being that of the committee's report. (5) Encouragement of trade and agricultural bills. This was evidently the future policy of the Reserve ••■■• ' Bank, ,in that the Act had been ; '; '.widened to ensure it. (6) Export of Gold.—The latest statement of the Reserve Bank showea. -that gold was being sold. That :>. . ifollowed the committee's rejection of the gold standard. (7) The overdraft rate was expected ' ; to fe brought down shortly—so ' the Minister of Finance had announced. Mr. Massey said the remaining suggestions partly concerned the banksbank charges and internal exchanges on cheques—and, partly the Government liamelv, greater control of stock and station ageuts and the setting up of a Development, Commission to dovetail public works. ..-...: ■ . Reply to Mr. Stewart. " Conclusions" implied by the Hon. W. Downie Stewart (Government, Dunedin West) in his memorandum of dissent to the : recommendations of the committee weve vigorously challenged .by Mr. Massey. He charged his colleague with-failing to distinguish between Facism , and Socialism, and with suggesting little that was practical for "the more efficient guidance of the "money.element" in New Zealand's economic life. . , • Mr.. Massey said Mr. Stewart had imputed to the.committee the statement that 'Certain desirable results" could be achieved only. by. "Government control of everything." \ Nowhere did the committee say tliat any such results achieved would be "desirable." Mr. Stewart had failed to distinguish between Fascism—with, its authoritative 'Vntrolrjf economic life—and Socialism. '1 mention this point only because I feel, that fascism would mean tragedy for New 'Zealand," said Mr. Massey, "and I do. not wish the country to accept Mr.. Stewart's incorrect iuference that the committee advocate rigidly controlled economy.. I am not a Socialist, but I do advocate control by the community in- those respects where capitalism is inefficient or is used as an instrument of exploitation." ".'• Minister and the Banks. Mr.-Stewart;had also stated that the directors .of .the Bank of New Zealand had always, consulted with and advised the Government. "Yet," said. Mr. Massey; "the- Government was paying £a 8/9 per. cent on Treasury bills while he was Minister of Finance. Mr. Stewart further eaysy in discussing the '■ relationship between'the banks and a Minister of-Kinanfee, that it might be an 'easy step to ■ suspect that- he was dictating ite (the Bank of New Zealand's) policy in the interests of his friends or of powerful, vested interests.' I am loath to accept the implications of Mr. Stewart's remarks- -..they are mischievous, and I hope self I may add that no member, of the committee hae advocated, interference with the administration of the banking system.

Mr. Stewart had said that "the statement that gold was exported in 1932 to strengthen' the exchange pool, and that the. object was to prevent the exchange rising, is incorrect." Mr. Massey. quoted what the committee did say, and added, "The banks gave as their reason for exporting the gold the fact that it' was necessary to provide sterling as and-.'when- required during the several months of 1932. Are we to understand that the banks gave an incorrect . reason and that what they really .wanted, was .the profit on the gold' exported ? And if the exchange rate does not rise in face of a sudden shortage, of "sterling, what: becomes of Mr. Stewart's theory that the exchange rate depends on the demand and supply of: London* funds ? Mr. Stewart should know—he,was Minister of Finance at the time—jthat several. of the banks feared a" rise'.in the exchange rate if the exchange pool had not been instituted. • This'was corroborated by the banks jn. -their evidence. I have per-, •onal knowledge of transactions at the rate of 118 when the official fixed rate was 110."- ~" /Labour, and Socialism. After, correcting what he said were misstatements in the minority report of the committee, Mr. Massey said, "The statement is made that the main report «ia that of the Government members. I signed the main report because it contained my personal opinions, not because T was a government member. Am I to understand that the members of the Labour party,on the committee signed a dissenting report merely because' they are members of the Opposition, or, may I ask, doe's the report give ' their attitude towards Socialism?; I had expected an exposition' of our : economic "system based on scientific socialist principles, with a final "con-; elusion! that 'tiie crisis deepens,' but I find that ...the ..members, of .the Labour party prefer to wander in the warm • fog' of -social"credit." '