BANK OF NEW ZEALAND

Press, Volume LXXXI, Issue 24610, 5 July 1945, Page 4

BANK OF NEW ZEALAND

STATE ACQUISITION OF SHARES PROPOSAL DEFENDED IN HOUSE (P.A.) WELLINGTON. July 4. The Government’s proposal to take over the private shares In the Bank of New Zealand was warmly supported by Mr H. E. Combs (Government, Wellington Suburbs) when ‘be seconded the Address-in-Reply motion in the House of Representatives this evening. He said the State had to have a trading bank, and the most efficient way, as well as the way which would be fairest to the shareholders, was that proposed by the Government. Mr Combs said the Government was going to do things which he believed would be in the interest of ; all the people of New Zealand. For instance, taking over the internal airways. Mr M. H. Oram (Opposition, Manawatu); Why? Mr Combs; In the interests of the people of New Zealand. Mr . Combs said • another measure which would benefit the whole country would be the taking over of the private shares in the Bank of New Zealand. An Opposition voice: How will that help the war against Japan? Mr Combs said it was the prerogative -of the State to issue legal tender money and to create credit. It was high time the people of New Zealand had a trading bank to implement that prerogative. Mr Oram: Why not establish one ox your own? Mr Combs said the advantage of buying out the privately-owned shares was that it would call a halt to the watering of the shares. It would stop the compounding of the ownership of those shares. A further advantage was that it would take the bank out of politics. (Opposition laughter and cries of: “It will put it into politics. ’) National Development Mr Combs said taking over the bank would facilitate the Government’s rehabilitation and reconstruction policy. It would help in rehabilitating returning men and women going into their own businesses. It would assist national development, A State trading bank would help; to weather bad times. It would cushion the blow of a depression. An Opposition interjector. So you are going to have one. Mr Combs said that with the return of large numbers of servicemen, • and with a gradual tapering off of munitions and associated production, there would be a need to find many jobs. We did not want a repetition of past history, when orthodox finance had said capable workers should not be employed on a necessary and sound development project. Members on the Government side of the House believed that the decision to take over the private shares of the Bank of New Zealand was a practical step towards safeguarding against that repetition. Supporting his statement that the bank should be taken out of politics, Mr Combs said the bank’s _ history showed that its association with politics had been mischievous in part, evil in part, and downright bad in other parts. There had been an occasion in 1865 when the bank brought about a change in the Government. In 1867 its intervention caused a Government to change its mind. In the seventies the Bank of New Zealand had set up a dummy land company, the operations of which were called by a South Island editor "another fraud and swindle. That editor was called to the Bar of the House to justify his use of the words, and the Premier of the day said the editor should go to gaol or he would go out of the House. But the editor did not go to gaol, and the Premier remained in the House. Events in 1932 Mr Combs recalled the time when the bank got the Parliament of the day to cover its losses, and said that was another reason for taking it out of politics. In spite of what the Government had done for the bank, when the Government was in difficulties m 1932 the bank had held a pistol to its head by insisting on 5i per cent interest. That had resulted in the standard of living being lowered, and the wage tax being increased from 8d to Is in the £. It had been said that business firms would take their accounts from the bank if the State acquired the private shards, but the businessmen of New Zealand had a Very high respect for Government departments. That was shown by the big business estates which had been put in the care of the Public Trustee. The suggestion that accounts would be withdrawn was all “moonshine.” On the contrary accounts not now in the bank would flow to it when the State took over. That the Government would be fair to shareholders was proved by the treatment given shareholders in the Reserve Bank when they received more than that to which , they were justly entitled. The Government must have a State trading bank, and if instead of' taking over the Bank of New Zealand it set up a bank of its own it would be competing against a bank in which it owned half the shares, and against shareholders who held the other half. On the other hand, if the Government took away its shares from the Bank of New Zealand it would prejudice other shareholders, and remove the stabilising factor which had been supporting the bank for 50 years. There had to be a bank to operate .in the interests of the people, instead of private shareholders. The taking over of the bank would be one step further towards the goal of nationalisation of production, distribution, and exchange. MR LANGSTONE ASKS FOR RETURN AMOUNTS PLACED TO VARIOUS ACCOUNTS (From Our Parliamentary Reporter.) WELLINGTON, July 4. Banking matters were brought before the House of Representatives today by Mr F. Langstone (Government, Waimarino), who gave notice of motion to ask for a return of various figures relating to the Bank of New Zealand's business. He also asked a question about a reduction in the holding of Government securities by the trading banks. Mr Langstone asked for a return showing for the period March 31, 1931, to March 31, 1945, inclusive, the annual amounts placed to the following reserve accounts in the books of the Bank of New Zealand; provision for bad and doubtful debts not required; recoveries; surplus on the realisation, etc., of investments; further provision for bad and doubtful debts; transfer to and from contingencies; balance held in bad and doubtful debts; balance held in contingencies: balance held in exchange fluctuation; and the value of land and premises account as recorded for rating purposes. The Leader of the Opposition (Mr S. G. Holland) commented that the Bank of New Zealand was still a private business. Later, in an urgent question to the Minister of Finance (the Hon. W. Nash). Mr Langstone said that Government securities held fay the trading banks amounted to £36,000,000 in February. but in March had been reduced to £29,000,000. He asked if the Government had redeemed this stock, or il the banks had sold the securities on the open market. If the latter was the case, would he inform the House who were the purchasers. Mr Nash in reply said £7,000,000 worth of Treasury bills had fallen due in March and had been redeemed at maturity.