NOTES OF THE DAY

Dominion, Volume 26, Issue 88, 7 January 1933, Page 10

NOTES OF THE DAY

"Before a reform is instituted, there are usually some grounds for reform,” remarks an Australian banking journal in discussing the New Zealand Government’s intention to establish a reserve bank. The comment is a just one and a reminder that the Dominion has yet to hear from the Government its reasons for proceeding with the establishment of a reserve bank in present uncertain conditions. Certain anomalies in our banking and currency system, legacies, from the War period, await correction, but they have waited a long time and no reason has yet been offered why they should not wait a little longer. The existing system works and has stood up to severe tests and strains. Why then take the risk of disturbing it, a step involving heavy expense at a time when money is scarce.? A complete justification of its intentions, and a statement of its motives in making a change, are overdue from the Government. Neither Parliament nor people should be asked to accept complete reorganisation of the banking and currency system without full justification being given.

Prices for wool realised at yesterday’s sale in Wellington showed some improvement although townspeople should remember values arc still far from a payable basis. Nevertheless it is something that the rot has been stopped. The appreciation recorded between June and September of last year has since been fairly well maintained with some improvement for finer sorts. Crossbred values remain very depressed but the New Year has opened with a firmer tone in this department, one so important to New, Zealand. One of the best signs is the generally healthy tone reported from the manufacturing centres. There is no large surplus, consumption keeping pace with clips. It is true there is a “hold-over” of crossbreds in New Zealand which appears to have prejudiced this section of the market but the quantity is small relative to world production. Altogether the outlook is much better than in January of last year when prices commenced a slip which did not end until six months later. *a* * *

Some reasons why confidence is growing in Great Britain were given by the Financial News, London, in a recent article which we publish to-day. Readers will be impressed by the evidence of improving conditions in many important directions. The journal uses its favourable review to sound a warning that applies equally in New Zealand at the present moment. "There has never been a time.” it says, “when so many in extremis remedies —exchange clearing, quotas, public works, inflation, and so forth—have been on the political carpet and. as few sane people would tolerate any of them if they thought that trade revival lay around any corner along the road, spotting the corner is of paramount importance.” Having brought much evidence to show a more favourable trend, the Financial News warns the public not to burn boats in too great a burry. That may be good counsel. The tide may be on the turn and, if we wait a little longer, we may be saved from committing ourselves too far.

No further developments appear to have taken place in (lie latest Far Eastern incident. British. Press opinion, however, takes a very serious view of the situation. "The League.” declares the Manchcslet Guardian, “cannot longer delay. It must act and face the consequences.” How must it act? Already through procrastination and timidity, it has allowed Japan to assume control and take the initiative in the Far East. Having in a somewhat roundabout fashion endorsed the Lytton Report, which puts Japan in the wrong, the League’s plain duty is to demand that that country will withdraw from her present, position in Manchuria and China. For highly practical reasons Japan cannot now afford to do this. She may be brought to the bar of international opinion and adjudged guilty. She may be subjected to economic pressure under sanctions made and provided. But will the League act?