RESERVE BANK ADVANCES

Press, Volume LXXIV, Issue 22466, 29 July 1938, Page 15

RESERVE BANK ADVANCES

TO THE EDITOR Or TIDE PRESS. Sir, —What is the point of the Reserve Bank advances being secured on the Consolidated Fund? For instance, if the dairy produce for overseas realises £4,000,000 sterling, the Government places the sterling in the Reserve Bank and pays the dairymen £N.Z.5,000,000. What case is there for securing the £N.Z.5,000,000? It is only the legal value of the £4,000,000 sterling. Do the directors of the Reserve Bank really think that the Consolidated Fund could secure all the advances that will be necessary from the Reserve Bank? Unless there is something very fishy in the fund's make-up. it would run dry if called upon to pay. Only if a certain proportion of debtfree money were used to build the Consolidated Fund could it liquidate the liability. All advances to primary products go into circulation and cannot disapoear except through excess imports. Taxation is the safety-valve, and there will be no need for that for many years to come.—Yours, etc., ,„„ KAYE HOE. July 27, 1938.