THE RESERVE BANK REPORT

Press, Volume LXXIV, Issue 22467, 30 July 1938, Page 20

THE RESERVE BANK REPORT

TO THB EDITOR OF THB PRESS. Sir.—Mr J. Hislop is probably right in contending that our monetary position did not at any time justify the present rate of exchange. From this Mr Hislop proceeds to argue that those in control of the Reserve Bank should be invested with power but not responsibility—responsibility, that is, In a national sense as distinct from sectional responsibility, as for example, to shareholders. European politics have demonstrated the many advantages that autocratic rule undoubtedly has over democratic rule, but they have also demonstrated the tremendous value—indeed the completely overshadowing value —that democracy has over autocracy. This advantage is the power which people living under democratic rules have to demand satisfactory results from those in charge of affairs, and, if these results are not forthcoming, to have them removed from office. It is true that in practice this democratic principle does not work as effectively as it should and could, but that is another matter. It is there like a life line to liberty, ready for vse

Sir Otto Niemeyer’s plea for freedom from political interference is essentially a plea for power without responsibility. Let us suppose that Sir Otto Nicmeyer had said something like this: “The financial policy of a central bank is the nerve system of a country. It should be implemented by a highly ’trained personnel and be free from political interference. As. however, the operation of financial policy is a matter of paramount importance to all, the following rules are suggested. Financial policy must be made-to-reflect physical results. Physical progress must be reflected in easier finaricia* -access -to the wealth produced. This may be brought about by reduced taxation, reduced debt, or by direct payment or a combination of all three, or by any other means desired by the people as expressed through their elected representatives. If this is not done, those in control of finance will be punished through fines or imprisonment or both." Under these conditions most of us would readily agree to leaving the Reserve Bank free from the fear and fact of political control. I feel sure that the present governor of the Reserve Bank is a very nice man indeed, and I am sura the Grand Hotel dinner in Auckland was also very nice. I should lika to point out to Mr Hislop, however, that notwithstanding all this, any suggestion seriously made that places the people in the hands of one man or institution, without any possibility of redress, is in reality a very impudent suggestion.—Yours^etc.^ July 29, 1938.

TO THB EDITOR OF TH* PRESS. f Sir,—Two items of much importance t to the people of New Zealand have recently been published in your paper - No. 1. of grave moment, is the com- J munication from the Reserve Bank to the Government and was published m *- yesterday’s issue. This is in relation to the request (really a veiled command) * from the bank, that certain financial ' operations of the Government should be “secured” to the bank by a mortgage, on the Consolidated Fund. The operations of the Government (of e which the Reserve Bank is supposed to be one department) are similar to those of a co-operative concern. Imagine a transfer of credit from the seed department to the grocery department being “secured” by a mortgage deed. Why the idea is simply preposterous. Of course, if international finance is the real controller of our Reserve Bank . then the command becomes intelligible. . If Mr Savage obeys this command then he, in effect, puts the resources of the people of New Zealand into pawn to ‘ international finance, and the Labour 1 cause is “gone a million." We await c the result with much concern and no I doubt ere long iXull learn who the real I controllers of the policy of our Re- t serve Bank are. I No. 2 relates to a letter in “The t Press” this morning and is signed J. f Hislop. It deals with past operations l of our Reserve Bank and incidentally i displays colossal ignorance on the sci- £ ence of money. Before credence can j be given Mr Hislop’s ideas he must j explain how the Reserve Bank bought t the £25,000,000 (approx.) gold and ( credits he writes about. At the time this bank had a total of but £1,500,000 of money in its possession, yet it ; “bought” these credits and gold out- 1 right without touching a penny of its J money and without leaving any debts ‘ behind. How this piece of financial jugglery was managed is for Mr Hislop to explain. Until he has accurately explained this incredibly wonderful con- 1 juring trick, it is useless to give cred- ’ ence to his writings.—Yours, etc., I NATIONAL CREDIT. 1 July 29, 1938. 1 ■ I I