TRADING BANKS.

Auckland Star, Volume LXVII, Issue 138, 12 June 1936, Page 8

TRADING BANKS.

NEW LEGISLATION. MAY DO HARM TO BUSINESS.

SIB, GEORGE ELLIOT'S VIEWS. (By Telegraph.—Own Correspondent.) WELLINGTON, this day. Comment on two of the Government's most widely discussed measures, the Reserve Bank Amendment Act, and the Primary Produce Marketing Act, was made by the chairman of directors, Sir George Elliot, at the annual meeting of the Bank of New Zealand in Wellington to-day. Sir George regretted that in framing its proposals, the Government had decided to take from the banks an important portion of the dairy produce finance which had, in the past, been handled by them with satisfaction to all parties. The business of the trading banks, he added, might be seriously affected. "At the general elections in November last, the Coalition Government was overwhelmingly defeated," Sir George said, "a large majority of the constituencies returning Labour members; and for the first time in the history of New Zealand, a Labour Government is in office. The Government has already taken steps to implement by legislation its election platform, and the Reserve Bank of New Zealand Amendment Act has been passed giving to that institution (now made a State Bank) full control over the credit and currency of New Zealand. A Primary Products Marketing Act has also been passed* giving the Government control over the Dominion's exports, though its guaranteed prices and marketing proposals are to be applied at present only to dairy produce.

Dairy Marketing Scheme. Some of the legislation, he said, directly affected the trading banks. For instance, they were to lose from August 1 next, the handling of the exports of dairy produce, and should wool and meat come under the Government's guaranteed price and marketing scheme, the effect would be that the banks would be entirely deprived of the normal means of replenishment of their London funds and would have to purchase all their exchange requirements from the Reserve Bank of New Zealand. "I need hardly say that the Government's proposals in this direction will seriously affect an important branch of the trading bank's business, a business they have developed and carried on since the earliest days of banking in New Zealand." The chairman then gave a resume of the provisions of the two Acts mentioned, stating that in regard to. the former, it would be seen that the Government had taken very full powers indeed to regulate and control credit and currency in New Zealand. Commenting further on the latter, he said that the Hon. W. Nash, Minister of Finance, who was also Minister of Marketing, was hopeful of securing a market for all New Zealand's surplus dairy produce by reciprocal agreements with Britain and other countries. He was shortly to proceed to London with this object in view, and his efforts to expand New Zealand's markets would certainly have the symapthetic support and good will of the public.

New Way of Dairy Produce Financing. "One effect of the measure will be that, as from August 1 next, the financing of all dairy produce exported from New Zealand will be undertaken by the Reserve Bank of New Zealand on behalf of the New Zealand Government instead of by the trading banks on account of the dairy companies as in the past," Sir George added. "The trading banks have played an important part in financing and developing the dairy industry from the inception of the co-operative scheme in New Zealand, and it is not too much to say that but for the assistance given by the banks the dairy factories as a whole would not be in the flourishing position they are to-day. "In view of the services rendered to the dairy industry, it is to be regretted that the Government, in framing its proposals, has decided to take away from the trading banks an important portion of dairy produce finance which in the past has been handled by them with the utmost satisfaction to all parties. The loss of the London exchange in connection with exports of this produce will make unprofitable the working of some of our branches, the existence of which has only been justified because of dairy factory connections."