THE RESERVE BANK

Press, Volume LXX, Issue 21319, 12 November 1934, Page 9

THE RESERVE BANK

TO TBS BDITOB OF THE rB*S3. Sir,—When the Reserve Bank commenced operations the Government had £20,000,000 in London and Treasury notes were held by the banks, representing a debt by the people of New Zealand for a similar amount. The banks transferred the Government debt to the Reserve Bank and accepted notes and credit from the Reserve Bank in exchange, and the Government transferred £20,000,000 to the Reserve Bank, so that the Reserve Bank has assets to the extent of £4o,ooo,ooo—the money in London and the Treasury notes, and a debt to the banks of £20,000,000. The Reserve Bank is a separate concern, with a capital of £500,000, subscribed by investors and a guarantee of £1,000,000 by the Government. The Government has thus, apparently, lost control of the £20,000,000, and it is the property of the Reserve Bank. It would thus appear that the Reserve Bank is a State department; if not, why should it have the Government's £20,000,000, which belongs to the people Unless it is recognised as a State department how can we ne protected in the event of anything happening to the Reserve Bank, so seriously under-capitalised and yet a concern separate from the State? Based on the State, as it is, it must belong to the State, surely.—Yours, etc EQUITY. Wellington, November 10, 1934.