PARLIAMENT IN SESSION

Dominion, Volume 27, Issue 32, 1 November 1933, Page 10

PARLIAMENT IN SESSION

Debate on Reserve Bank of New Zealand Bill URGENCY OBTAINED FOR ALL STAGES Extension of Mortgage Relief Legislation Intended Urgency was obtained for the passage o£ the Reserve Bank of New Zealand Bill when the House of Representatives resumed yesterday a ternoon. Although the effect of this was to requite the House to put the Bill through all the remaining stages before anadiournment of the sitting, the Prime Minister, Rt. Hon. G. W Forbes, indicated that if reasonable progress were made he would not expect members to sit unduly long horns. amendThe House divided at midnight on the Labour Party s amena went Ihltth" Bill be refused a second reading. The grendment was lost by 43 votes to 28. The Minister of Finance, Rt. Hon. J. G Coates, then replied to 'the second reading discussion. More urgent questions than usual were asked at went of the afternoon sitting, but most of them related of local concern. A matter of general interest was raised by i . W. T. Polson (Govt., Stratford), who sought information as to the Government’s intentions in connection with the existin ? gage relief legislation due to expire at the end of }he -present year. To this question the Minister of Justice, Hon. J. G Cobbe, replied that steps would be taken to extend the operation of the Act Mr. Cobbe also announced that further machinery amendments to render the Act more effective consideration Second reading speeches on the Reserve Bank of . New Zealand Bill.were along much the same lines as those made earlier in the debate. Mr. R. A. Wright (Govt., Wellington Suburbs) expressed the view that the Reserve Bank would have to carry the whole burden of exchange manipulation, and suggested that that was the reason behind the proposal to establish it. In challenging tae statement that the bank would be free from political control, he said that in times of stress it would become a party machine.

DAIRY MARKETING Opposition to Proposals INQUIRY BY MINISTER A request that steps be taken to withhold approval of the Dairy Board’s marketing proposals . until such proposals have been submitted to the dairy companies throughout the Dominion was contained, in a question Mr. A. J. Murdoch (Govt., Marsden) asked the Minister of Agriculture, Hon. C. E. Macmillan, in the House of Representatives yesterday afternoon. Mr. Murdoch pointed out that 68 factories representing approximately 30,000 tons of butter and 10,000 tons of cheese, had already expressed opposition to the assumption of arbitrary powers by the board. “ “These marketing proposals,” replied Mr. Macmillan, “are definitely a matter for . the Dairy Board, and I understand that the board intends to. handle them very carefully and not attempt to act with undue haste. In view, however, of the representations which have been made of late regarding them I propose to take an early opportunity of looking into the question further.” CHATHAM ISLANDS Distress Among People REPORT TO MINISTER The fact that the responsibility for the relief of distress on the Chatham Islands rested with the North Canterbury Hospital Board was mentioned yesterday by the Prime Minister, Rt. Hon. G. TV. Forbes, in reply to an urgent question, asked in the House of Representatives by Mrs. E. R. McCombs (Lat>., Lyttelton). Mrs. McCombs asked the Prime Minister what action he proposed to take in view of the representations which she had made a month ago concerning the need for relieving distress among sections of the population on the Chatham Islands. On his arrival from the islands recently, said Mrs. McCombs, the Rev. Mr. Barnett had stated that' a number of people were in a state' of destitution, lacking clothing, blankets, and other similar necessities. Mr. Forbes said he had made inquiries through the Minister of Unemployment, Hon. Adam Hamilton, and had been informed by him that a report dated at the end of September had indicated that conditions on the island were not so desperately bad as had been stated. Since the Chatham Islands came under the jurisdiction of the North Canterbury Hospital Board, ha had asked the Minister of Health. Hon. J. A. Young, to approach the board and see whether it was in a position to give assistance on the lines suggested. TAKING OF TOHEROAS Position on the West Coast Information was desired by Mr, A. ’J. Stallworthy (Ind., Eden), in the House of Representatives yesterday as to whether the public are entitled to take toheroas from the northern west coast beaches. Mr. Stallworthy said that the camping season was just about to open, and people who were going to the west coast for their holdays wanted to know what the position was. The Minister of Marine, Hon. J. G. Cobbe, replied that the position was governed by regulations issued under the Fisheries Act, dated June 29,1932. They pro vided that anybody was entitled to take 50 toheroas for their own consumption except in the months of October and November of each year, during which the toheroa season is closed.

MORTGAGE RELIEF Extension of Legislation STATEMENT BY MINISTER An announcement that the Government intended to extend the operation of the mortgagors’ relief legislation was made by the Minister of Justice, Hon. J. G. Cobbe, when replying to a question asked by Mr. W. J. Polson (Govt., Stratford) in the House of Representatives yesterday afternoon. Mr. Polson had asked the Minister whether he would at the earliest possible moment relieve the apprehension of the farming community by some definite statement of the intention of the Government in regard to extension or amendment of this legislation. Mr. Cobbe stated that the existing mortgagors’ relief legislation expired on December 31, 1933, and it was the intention of the Government to bring down provisions to extend the period of the operation of the Act. Further machinery amendments to render the Act more effective were at present under''consideration. SCHOOL TEACHERS Absence at Examinations EFFECT ON THEIR PUPILS The absence of primary school teachers from schools during the present month due to their attendance at University examinations was referred to by Mr. R. A. Wright (Govt., Wellington Suburbs) in a question he asked in the House of Representatives yesterday afternoon. Mr. Wright pointed out that this was a critical month for the children owing to their annual examinations being in progress, and he asked whether steps could be taken to appoint temporarily as substitutes some of the unemployed school teachers. * The Prime Minister, Rt. lion. G. W. Forbes, who replied on behalf of the Minister of Education. Hon. R. Masters, stated that absence due to examination requirements was not essentially different from absence due to ill-health. “When teachers are absent for only a day or two,” said Mr. Forbes, “the headmaster can usually make arrangements for carrying on temporally without extra assistance. If, however, so many of. the staff are absent at one time, if only for a few days, then the senior inspector may approve of relief provided he is satisfied that the school cannot otherwise be conducted with reasonable efficiency.” TOWN PLANNING Preparation of Schemes The fact that while town-planning is compulsory under New Zealand legislation. regional planning is optional, appears in an answer that has been given by the Minister of Internal Affairs, Hon. J. A. Young, to Mr. W. J. Jordan (Lab., Manukau). Mr. Jordan asked last week whether the TownPlanning Act was still operating, or whether each local body made its own arrangements in these matters. Points in the Minister’s answer are of wide interest to local bodies. He states that the regional planning legislation as contained in the TownPlanning Act, 192(1, and Town-Planning Amendment Act, 1929, is still in force, and it is competent for local authorities to act thereunder. As far as townplanning schemes are concerned, the provisions of the Town-Planning Act, 1926, as aineiulpd, are also still in force. Under these provisions an obligation has been imposed on all city and borough councils -whose districts have a population of not less than 1000. and certain other local authorities to prepare town-planning schemes before January 1, 1937. He understood that several borough councils had these schemes in preparation, and a scheme from one borough council at least was recently submitted for the consideration of the Town-Planning Board. “The fact that the Government does not intend to appoint a director of townplanniug at the present time.” said rhe Minister, “does not in any way affect the operation of the statutory provisions governing the preparation of regional planning schemes and townplanning schemes.”

RESERVE BANK

Second Reading Debate FURTHER ARGUMENTS Mr. Wright’s Attack on Bill Further arguments for and against the establishment of a Reserve Bank for New Zealand were advanced in the House of Representatives yesterday, when the debate on the second reading of the Bill, which gives effect to the proposal, was resumed. A lively contribution was made by Mr. R. A. W right (Ind., Wellington Suburbs)," who in the course of a vigorous criticism of the measure declared that New Zealand was too small for such fc a bank. He contended that the real object of the legislation was to create a “scapegoat to bear the sin committed by the Government in its exchange manipulation." “Does the Minister of Finance not know that the Central Bank in the United States was largely responsible for the world-wide slump?” asked Mr. Wright. “Does be not know that when President Hoover was considering the question of standing for re-election as President of the United States the Reserve Bank was at the same time watching the economic storm coming, and when the Reserve Bank desired to take action to meet the position the party wire-pullers said ‘No, that will jeopadise President Hoover’s chances of reelection,’ and therefore nothing was done until after the election, when it was too late?” “A Party Machine.” Mr. Wright said it could be seen from Mr. Coates's remarks that the Reserve Bank proposed for New Zealand would occupy theF same position as that of the American Reserve Bank. It would become, in times of stress, a party machine. Without in any way casting reflections on the present Government, he would ask what Government would hesitate to influence banking policy on the eve of an election? If the Reserve Bank stated shortly before an election that it was necessary to restrict credits, the Government would immediately say that no change must be made until after the election, otherwise the changes might jeopardise the chances of the Government. candidates. • “We see, therefore, exactly what, the policy of our Government means, and it is just as well that we should know it,” said Mr. Wright. “I would ask, when has the New Zealand Government been unable to give effect to its currency policy? When did it ever have a currency policy? We have never heard of. one. The Reserve Bank of New Zealand will have to live by attracting business which in the past has been done by the other banks. It will simply take away business from the commercial banks. It cannot create more business. New Zealand is too small for such a bank as is indicated in this Bill.” ; Co-ordination Not Wanted. Mr. Wright said that the Minister of Finance had declared that the opposition to the exchange manipulation was dying out, or that there were only a few people, mostly “shell-backs,” who said much about it. “Well, I want-to say in answer to that that I would rather be a shell-back than a jellyback,” said Mr. Wright, amid laughter. “A shell-back is able to carry its load and a jelly-fish is not.” The House had been told that the Reserve Bank would strengthen and co-ordin-ate the present banking system. What did that mean—this blessed word “coordinate?” The other banks , would be quite independent of the Reserve Bank. They did not want any co-ordinating, and would not be co-ordinated as far as he could gather. ‘ • The House had also been' told, said Mr. Wright, that the Reserve Bank would be free from political control. He ouite agreed with the principle, but unfortunately that was not going to be the case. For the first seven years there were to be three directors, the governor and the deputy-governor —five out of what was practically a directorate of nine to be appointed by the Government. ' Then there would be the treasury official. He was not going to east any reflection on any treasury official, but the treasury, official would be there as the servant of the Government, and. as a loyal officer to the 'department and his Minister, he would carry out the wishes of the Government. It. was quite true that he would have no vote, but it was also equally true that he would be there to put his side of the case and the Government’s side of the case to the others. High Priest With a Scapegoat. Mr. H. T. Armstrong (Lab., Christchurch East) : Is that wrong in principle? Mr. Wright: No. I do not say that it is wrong in principle. Still, , it strengthens the hands of the Government —that is the point I wish to make. Again, I am not going to say anything against farmers being on the board, but I do say that in regard to finance the farmers are the most innocent people in the world. If farmers are appointed as directors, they simply will not know what is being done. How often have farmers gone to the Old Country and been taken down by confidence tricksters? (Loud laughter.) The real object of the Bill, said Mr. Wright, was to place on the shoulders of the Reserve Bank the blame and the cost of the blunder the Government, made in manipulating exchange. It reminded him of the curious action the High Priest took in the religion of the Israelites. Once every year the High Priest took a scanegoat, laid on it the sins of the people, and drove it out into the wilderness. ' The Minister of Finance was the High Priest, the Reserve Bank to be set up under the Bill was the scapegoat, and the Minister was going' to lay upon it the financial sins of the Government, not the sins of the people. But. unfortunately. he was not going to drive it out into the wilderness. “It is a nity he is not going to do so. and a pity, too. that he could not go out into the wilderness with it and lie lost.” said Mr. Wright. “Tn the Company of Brigands." Tn referring to the clause in the Bill dealing with gold reserves. Mr. Wright said that the Minister of Finance had stated that it was proposed to take the gold in the coffers of the trading banks and sei] it at market value; and the difference between that value and the book value, which apparently was considerable, was to go to the credit of the Consolidated Fund. “If I voted for this clause,” he said, “I would fee! I was in the company of Dick Turpin, Ned Kelly, and other brigands. . . Mr. Speaker: Order! I think I had better check the lion, gentleman. The hon. gentleman, I think, is reflecting on hon. members. Mr. Wright: Well, I will say that If '

I voted for the seizure of this gold, I would be voting that I'did not understand the rudiments of common honesty. 1 say that the Bill proposes to take away from those people that which belongs to them by right. I believe, if I voted for the clause, that I would be cancelling the commandment which says, “’Thou shalt not steal.” Mr. Speaker: Order! I take it the hon. gentleman is expressing his own opinion in regard to these matters. He must not reflect on other hon. members. Mr. Wright: Quite so, sir. I am only expressing my own opinions. Mr. Speaker: I am afraid the hon. member is inferring that those who do not agree with him have not common honesty. Mr. Wright: Very well, sir. May I be allowed to say it is confiscation? If not, I will say it is annexing. Support for Bill. The claim that the central banking system offered the soundest and most effective method of dealing with New Zealand’s finance was advanced by Mr. A. J. Murdoch (Govt., Marsden), who spoke in support of the Bill “The system,” said Mr. Murdoch, “will make for confidence and stability on the part of investors, the shareholders, and the general public. Without that confidence and stability, a banking system cannot stand up to its work. Under the method proposed we will have financial stability, we will make a big saving, and we will have far greater ease in the transfer of our exchanges. We need not, and will not, I think, be linked up with or tied to the Bank of England or to any other bank, but each and every other reserve bank will act as an intermediary. It will be in the nature of an agent, but we will not be tied to it.” The Bill, said Mr. Murdoch, provided a definite control of the whole banking system, and a control that should be very satisfactory. To the country he would say that the Coalition was not rushing blindly into the position. The scheme had been well thought out, and there was no reason, why the reserve bank in New Zealand should not prove successful, as it had, in other countries. The Government was satisfied that the institution would effect a saving that would lie worth while to New Zealand. ■' The Gold Standard. Mr. W. A. Veitch (Ind., Wanganui) said that although the gold standard was never a perfect system, it was nevertheless a standard. The loss of that standard had brought the international trade of the world down to 40 per cent, of its original volume. That emphasised the importance of getting hold of an international, standard of some sort. Having lost the only standard that ever existed, it was necessary to get a new one, which, it was hoped, would be better. If the management of the Reserve Bank was to be given a free hand to. fix rates of exchange according to the balance of trade and with no other considerations, then its establishment would be of great benefit. Unless there were an assurance that the Reserve Bank would not be used to maintain the present high and false rate of exchange, he was prepared to fight the Bill all the way. If the Minister of Finance would give that assurance it would relieve much of the misgiving that at present existed in respect to the Bill. The great weakness of the Government to-day was that it possessed, an exclusively-eon-scious agrarian outlook, and could not conceive the difficulties that confronted the wage-earners and trading community. Debasement of the currency had given all the disadvantages of inflation and none of its benefits. Ownership of Gold. , A suggestion that, for -the sake of national honour, ~ the Government should agree to appoint an independent tribunal composed of Supreme. Court judges to settle the controversy over the ownership of the gold in the banks was made by Mr. W. P. Endean (Govt., Parnell). He said that at present Parliament was the final court of appeal. It was both judge and jury. Justice would be done if the Government set up an independent tribunal to decide the issue. “I have been sitting here for some weeks,” he said, “and I have not learned the facts .yet. The Government should take sound advice and not be the judge and jury in their own cause. Who owns the gold? The ownership of tile gold, in my opinion, is absolutely beyond question. The gold is owned by the banks in New Zealand ; they have earned the gold by their trading. I. admit the Government have many arguments in their favour. I believe also that they have behind them some people who wish ro grab some of this gold which the banks in their wisdom have accumulated.” Mr. Endean said it seemed to him that. New Zealand had lost its national soul. The sooner the people, realised the necessity to play an active part in the economic war, the better it would be for the country as a whole. “Look at all the currency cranks we have, here.” he declared. “Take the Douglas credit—a silly, senseless proposition, dead as the dodo in Great Britain. We have no national soul in New Zealand. We are almost on the very brink of a world war. Nations are arming, but nobody in New Zealand thinks of getting behind the Government in an effort to solve our problems. Before the people know it bombs will be dropping in Lyttelton and in Wellington and the Central Reserve Bank will be no use at nil.” Mr. E. J. Howard (Lab.. Christchurch South): Hold on! Hold on! Control by International Financiers. Mr. R. McKcen (Lab., Wellington South) said the people of New Zealand bad been slaves ,o the banking institutions long enough. The whole monetary system had broken down, and tlie Government was uow attempting to patch up institutions that had gone and belonged to another age. The capacity of this country was only a quarter of what it should be. By a sane, nationally-controlled, nationallyowned system of finance those people who were in want could be provided for. The central banks throughout the world, said Mr. McKeon, were controlled, not by the people, but by international financiers. The great need was to increase purchasing power, and until that had been done it was futile to talk about cheap credit. To achieve complete success and control over tlie financial system certain features In the Bill required elimination, notably the principle of shareholder capital. Change Not Far Distant An indication that he would vote against the Bill was given by Mr A. M Samuel (Govt., Thames), who said lie believed it was a last desperate endeavour to prop up the present financial system. He believed it was an eu deavour to preserve a monetary system the domination of which had enslaved a great percentage of the population of the world for the benefit of a few. The present system had not only outlived Its usefulness, but bad made such an Impression upon the collective psychological mind of the people, that they were determined to have a change, and that

change, he believed, was not very far distant. There, had been a. general outcry against the Bill from one end of New Zealand to the other, said Mr. Samuel. It had been denounced by farmers’ organisations; it had, been denounced by business organisations; and it had been denounced through the medium of leading articles in many of the papers which supported the Coalition Government, He had yet to hear of any section of the community which was clam ouring for the Bill. “Why is the Government so anxious to have this. Bill placed on the Statute B_ook?” asked Mr,. Samuel. “I have read the Bill. I have studied it from cover to cover, and I can find no good and sufficient reason for its enactment. I cannot find in any part of it that it ■will make the currency of this country sufficiently elastic to meet the needs of the people. I cannot find any trace of it being able to keep pace with progress. The present. monetary system is not giving the people the Wherewithal to purchase that part of the world’s production which they have helped to produce. It seems to me that the present, financial system has brought about suffering unprecedented in the history of the world.” The faillire of the international economic conference to agree upon a stabilised form of international currency proved very conclusively to him that each country should set. about putting Its own house in order by setting up a system of currency which would meet the needs of tlie people. If that was not done, there was a danger, be believed, of civilisation crashing. Instead of making available cheaper credit, the Bill would tighten up credit. It would prevent other banks from supplying the credit which was necessary to feed the people of this country and to enable them to feed themselves. Labour Amendment Lost. The Labour Party’s amendment that the Bill lie refused a'second reading was defeated by 43 votes to 28. The division list was as follows:— For the amendment (28) : Armstrong. Atmore. Barnard, Carr. Chapman. Coleman. Fraser, Howard, Jones, Jordan, Lee. McCombs. MeKeen. Mason. Munro IV. Nash. O’Brien, Parry. Richards. Rushworth. Samuel. Savage. Schramm Stallworthy, Tirakatene. Veitch. Wilkinson. Wright. Against the amendment (43) : Ansell, Bitchener, Bodkin, Broadfoot, Campbell, Clinkard, Coates, Cobbe, Connolly, de la Perrelle. Dickie. Endean. Field. Forbes, Hamilton, Hargest. Harris, Hawke, Healy, Hcnare. Holland, Holyoake, .lull. Kyle, J inklater. McLeod. McSkimining. Macmillan, Macpherson, J. N. Massey. W. W. Massey, Murdoch, J. A. Nash, Ngata, Polson, Ransom, Reid. Smith, Stewart, Stuart, Te Tomo. Williams. Young. The debate was in progress when “The Dominion” wen* to press.