Governorship of The Reserve Bank

Press, Volume LXXVIII, Issue 23714, 12 August 1942, Page 2

Governorship of The Reserve Bank

The announcement last week that Mr \V. F. L. Ward had been appointed Acting-Governor of the Reserve Bank for a further term of three months draws attention to a situation which is as regrettable as it is farcical. Mr Leslie Lefeaux’s term of office as Governor of the Reserve Bank expired in December, 1940. For the next four months the bank was left in charge of Mr Ward, then Deputy-Governor. This long delay would have been excusable if it had meant that the Government was giving full and careful consideration to certain problems connected with the organisation of the Reserve Bank and its relations with the State. Clearly, however, this was not the case; for on May 1, when Mr Ward’s term of office as Deputy-Governor expired and a decision could no longer be delayed, the Government temporised by appointing him Acting-Governor for a term of three months. It has temporised ever since. Mr Ward’s three-monthly term of office has been renewed five times; and as Deputy-Governor and Acting-Gov-ernor he has been the bank s chief officer for a year and eight months. Such a situation ought to be as unsatisfactory for the Government as it is for the bank. An institution charged with the management of the nation’s currency and credit, and therefore the control centre of the whole banking system, ought to be able to look ahead and plan ahead. It cannot do so if its chief officer never has more than a three months’ tenure of power. Nor is the situation made less objectionable by the fact that the Reserve Bank Act gives the Minister of Finance the power to dictate the bank s policy in matters of detail as well as in matters of policy. This power is in the main a reserve power; in practice the Government is influenced by the Reserve Bank as much as the Reserve Bank is influenced by the Government. Moreover, whatever his actual powers may be, the Governor of the Reserve Bank is the only public official competent to advise the Minister of Finance and the Government on the technical problems of currency and credit. It so happens that in Mr Ward the Government has an adviser who is both competent and forthright. But it needs to be said that a Government which keeps its advisers on such a short string is lucky if it is served by men with independence of mind.