Farmers and Banking.

Press, Volume LXIX, Issue 20919, 28 July 1933, Page 10

Farmers and Banking.

Mr W. W. Mulholland, in a speech reported in " The Press " yesterday, was at some pains to define the attitude taken by the recent Dominion conference of the Farmers' Union to the Government's Central Reserve Bank Bill and to currency problems generally. It is pleasant to learn that the conference was not stampeded by the followers of Captain Rushworth and that it objected, not to the establishment of a central bank, but to the Government's idea of the form the central bank should take. It must be regretted, in view of the fantastic resolutions on the subject passed by provincial branches of the Farmers' Union, that the conference did not trouble to define its position more clearly. Moreover, if the conference's objections to the Government's bill were as stated by Mr Mulholland, it is obvious that its members had not taken the trouble to read the bill carefully. There is no clause ,in the bill which means "putting New Zealand money prac"tically on a par with sterling"; nor is there any clause laying down an arbitrary rate of exchange between British and New Zealand currency. The conference has possibly been deceived by the clause fixing the margin in exchange transactions. Less seriously misleading is the statement that after five years the directors of the bank are to be appointed by the shareholders, thus leaving the Government without adequate powers to control the country's monetary policy. The actual position is that the governor and the deputy-governor, to whom the day-to-day management of the bank will be entrusted, will in the first instance be appointed by the Government and after that by the shareholders. The first directors will also be appointed by the Government, one retiring in each year and vacancies being filled by election. The conference, it appears, thought that the Government should at ail times be able to control in detail the policy of the central bank. That is an extreme and an unwise view. It is most necessary that the Government should be in.close touch with the central bank and have some say in its decisions; but it would surely be disastrous to allow politicians to become, in effect, the managers of the blink. The whole history of the depression bears witness to the folly

of allowing financial policy to be subordinated to political expediency.