MR NASH AND BANKING

Press, Volume LXXIII, Issue 21988, 12 January 1937, Page 6

MR NASH AND BANKING

TO THB KDITOS Ot THE PttEßS,'

Sir,—Whether Mr Nash realises it or not, hia statement that -banking should be controlled •by xepresentatives of the people means that the bankers’ system for keeping the people perpetually in'debt is now to have the full approval of the people’s represenVou state ■ that- in - all democratic countriesit is now axiomatic that control of currency, credit, and foreign exchanges—the normal function of central banks—-should, be closely related to the economic and financial policy of the Government. “Closely related to the economic and financial policy of the Government," sounds extremely well, and means, precisely nothing at aIL . ■ , .. ... T On my part, I must admit that I have been quite ignorant of the fight put up by Mr Coates and the Coalition Government to secure some control over financial policy. I thought that Mr Coates was determined to establish the Reserve Bank “free from the fear and fact of political control,’ and that he had the full support of the New Zealand press and the Chambers of Commerce in so doing. It is,' of course, quite true that the monetary policy of a " government must be framed in consultation with the experts who will be charged with its administration. What is wanted to round the matter off is a clear expression of the will di the people as regards the results, to be obtained. It seems to me that the people of New Zealand might reasonably inform Mr Nash somewhat as follows: “We do not care two hoots whether our representatives control banking or not, so long as it is controlled in our interests. We note, however, that any increase in our production is at present immediately reflected in an increase in our debt. Year after year as production increases, debts increase, and#witfa the increase in debt comes an increase in taxation—mostly borne by the poorer classes. In view of the fact that, collectively we own New Zealand, we are unable to agree to increasing taxation as our asset increases In- value. We direct you therefore to frame a monetary policy—in consultation with the bankers—that will reflect our physical progress. This means that we naust go progressively out of debt and our taxes must be progressively reduced until our asset not only ceases to impose burdens on us. but actually returns us a dividend, as our production increases.”—Yours, etc., D.-C. DAVIE. January 11, 1937.

TO THE EDITOE Of THE fUSI. Sir, —Kindly permit me to query a statement appearing in one of your leading articles. You quote the Hon. W. Nash as saying: “Banking should be controlled by representatives of the people,” and comment, “This is merely to repeat an election phrase which may mean much or nothing. In all democratic countries it is now axiomatic that control of currency, credit, and foreign exchanges—the normal function of central banks—should be exercised in the interests 'of the community as a whole and that this control ’ should be closely related to the economic and financial policy of the Government” Now that is a declaration from “The Press” that.is.welcome and highly commendable; the next, however, is not acceptable, to me, at any rate. You say; “The battle for the acceptance of these principles was fought

and won in New Zealand by the Coalition Government long before Mr Nash and his friends thought of incorporating them in the Labour party’s election programme.”' The Labour party in New Zealand has - been advocating “a State Bank with the sole right of note issue” since its advent into the political arena, and before ever -a Labour candidate was nominated, as a Labour candidate, this plank was formulated and advocated frbm ; the platform'before the advent of the Ballance Government. Other staunch adherents of the. State Bank issue ■were the late H. G. Ell and J. Miles Verrall. Honour to whom honour is due. I' know that - the word “reserve” was not adopted, but the Labour proposal envisaged one bank only and that a State institution. I desire to hint that the Coalition Government was stimulated by the visit of Sir Otto Niemeyer to the Dominion and that the object of the latter was not altogether unconnected with the desires of the British bankers. The policies of bankers and the Labour party differ; the banks are in business for profit, the Labour party for service. Banking institutions are like fire and water, good servants, but bad masters. " What you term Mr Nash’s . lapse—his statement about Mr Lefeaux: “Though opposed to the Government’s banking reforms before the legislation was passed, is now loyally carrying out our policy”—was merely a statement of fact and, far from being a reflection upon the Governor of the Reserve Bank, it was really essential that Mr Nash should make it in fairness to Mr Lefeaux. It is a well known fact that our banking institutions did levy *an undue toll on industry and commerce.’ You must admit that when the banks were paying 15 per cent, per annum to shareholders and •stowing away another 15 per cent, more or less, to reserve, it was just a little bit “over the odds.” Had it not been for the advent of a Labour Governmtent the producers might have had cause to bitterly regret the establishment of a Central .Reserve Bank in this country. Dick Seddon used to term it “God’s Own Country,” but that is a misnomer: it should have been called “the Banker’s Paradise, or the “Land of the Mortgagee.’ Thirty per cent, per annum, no wonder the cocky had to work his soul ease out-Yours, January 11, 1937-