PARLIAMENT IN SESSION

Dominion, Volume 27, Issue 33, 2 November 1933, Page 12

PARLIAMENT IN SESSION

Continuation of Debate on Reserve Bank Bill START MADE WITH COMMITTEE STAGE Finance Minister’s Reply to Arguments and Criticisms Steady progress was made by the House of Representatives yesterday with the committee stage of the Reserve Bank of New Zealand Bill. Most of the afternoon sitting was occupied in discussion on the short title, which was agreed to on the voices after about two hours’ debate. Members are allowed on the short title to speak four times of ten minutes each, and when later in the afternoon he moved for urgency the Prime Minister did not hesitate to express his satisfaction at the progress that had been made. In asking for urgency, Mr. Forbes made it clear that his object was to obtain a little more latitude in respect to sitting hours. . i • xi Second reading speeches on the Bill came to an end in the early hours of yesterday morning. In replying to arguments and criticisms advanced during the debate the Minister pi Finance, Rt. Hon. J. G. Coates, said the establishment of a Reserve Bank would enable New Zealand to defend itself if necessary against domination or encroachment by overseas financial interests. Reserve banks, he said, had played a very definite part in countries that had established them. The banks in the United States of America had co-operated with the Government of the day in putting into effect monetary policy decided at Washington. The second reading was agreed to by 43 votes to 28. During the afternoon and evening a number of amendments '■’■•to various clauses in the Bill were circulated. Most of these came from the Labour benches.

VIGOROUS REPLY Reserve Bank Bill MR. COATES HITS OUT Critics Taken to Task DEFENCE OF LEGISLATION . . 1 . An outspoken reply to criticism of the Reserve Bank of New Zealand Bill was made by the Minister of Finance, Rt. Hon. J. G. Coates, in the House of Representatives early yesterday morning. Among those he took to task’was Mr. R. A. Wright, whom he accused of making statements previously made by the chairman of the Bank of New Zealand. He asserted it was significant that as soon as Mr. Wright had concluded quoting certain figures, a prominent banker in the visitors’ gallery got up and left. He challenged the member for Wellington Suburbs , to disprove that he was the mouthpiece of tne banks. Mr. Coates said that the majority of the speakers who had taken, part' In thg second reading debate hadi approved of the principle contained in the Bill. The member. for Christchurch South had drawn attention to the fact that a number of Government members had opened their speeches with a declaration that they favoured the Bill, but later appeared , to oppose the principle of the legislation. That, however, anplied equally to the Labour Party. He had found great difficulty in following the argument advanced by the member for Thames, who had opposed the Bill in its entirety but yet had made suggestions for its improvement. Mr. A. M. Samuel (Govt., Thames): What are the suggestions I made? __ Mr. Coates: References to share capital and the directorate —- , Mr. Samuel: I did not .mention the directorate. Mr. Coates: I think the honourable member said that the bank should be controlled entirely by State appointees. Mr. Samuel: I did nothing of the kind. Mr. Coates: Well/ the honourable member left the House with, that impression. * . Mr. Samuel: I never mentioned the directorate. Mr. Coates: I accept the honourable gentleman’s word* but,at air events, he made the' point that this was a last desperate attempt to prop up a system that could not stand. Mr. Samuel: I made no suggestions for its improvement—none whatever. Mr. Coates: ' Can the honourable gentleman tell me whether ■ the State bank in Australia issues currency against goods and services? Mr. Samuel: That is not to say they should not. Untried Experiment. Mr. Coates said that some members would like to attempt an untried experiment by allowing a State bank to issue currency against goods and services. He did not see how that could be done. Pyramids, for instance, might be called goods. The member for Thames came from a race’ that was very shrewd, and respected the world over. Politically, Mr. Samuel had a difficulty in his. own constitu-enf-y which probably accounted for his ‘ attitude toward the Bill. Mr. Sajnuel: I am not in any difficulty. Mr, Coates said that the member for Thames wag in a difficult position and had to advocate quite a number of proposals in the interests of his electors. Mr. Samuel: I have never violated a principle that I have espoused on the platform. Mr. Coates: I did not suggest that for a moment. Mr. Samuel: Well, what is the trouble? Mr. Coates said it was quite clear what Mr. Samuel had in mind. Like the Labour Party, he wanted New Zealand to follow an untried experiment in which the State was to become responsible for the advance of currency in the form of notes issued against goods and services. Mr. Samuel: I stand for that. That course would lead to national bankruptcy, continued the Minister. He would advise the country to look at such a proposal a second time. It looked very nice on the face of it, but he ventured the opinion that those advocating it would not put it into practice if given the reins of office. Mr. W. E. Parry (Lab., Auckland Central): You don’t know. Mr. Coates: It has failed and failed miserably wherever it has been tried. In reply to a further interjection. Mr. Coates said that the bank would not be in. the nature of a savings bank,

because there was no provision in the Bill for interest on deposits.

Mr. Samuel: There is provision for current accounts. Mr. Coates: Yes, for State departments and local bodies. The member for Wanganui had suggested, Mr. Coates continued, that if parity with sterling was restored most of the Dominion’s ills would be overcome. The Minister said he did not know that trade balances were the only factor in the country’s welfare. One of the objects of the Bill was to promote the economic position of the country. The reserve bank would play a definite part in that direction. The Labour Party had complained that the reserve bank so far had not been able to bring about stability in co-opera-tion. Mr. E. J. Howard (Lab.. Christchurch South) : Neither have, they been able to bring about stability in their respective countries. Very Definite Part. Reserve banks, said Mr. Coates, Wad played a very definite part in the countries that had established them. The banks in the United States had cooperated with the Government of the day in putting into effect monetary policy decided at Washington. He did not know why the member for Wanganui should be so critical of the Government’s action. Everything the Government did seemed to be attributed to currency depreciation. There were two schools of thought. The more hesitant and nervous section of the community behind the Government contended that the wrong thing had been done, but facts did not substantiate that claim. The Government believed it was doing the right thing by giving the Dominion an opportunity to recover through a proper utilisation of the monetary system to assist the principal industries. He failed to appreciate the sudden opposition. Mr. W. E. Parry (Lab., Auckland Central): Does the scheme find more money ? “Yes, definitely,” replied. Mr. Coates, who went on to say that the member for Wellington Suburbs (Mr. R. A. Wright) had made a very critical, and indeed a personal attack on himself. It was becoming a habit now with Mr. Wright to criticise him whenever possible. “I have been associated with Mr. Wright for many years,” said Mr. Coates. “I can’t understand why he should suddenly become bitterly hostile. It is something new to me. He seems to have made up his mind and set a course. Whether or not he is disappointed, I am unable to say, but I noticed that he quoted certain figures in connection with banking, and that as soon as he got them off, a very prominent banker who was sitting on the floor of the House got up and went out. Now I would like to ask the honourable gentleman who is in the hands of the banks now? Mr. Wright (emphatically) : I am not. "Who is the Echo?” Mr. Coates: Who is the spokesman and the echo of the banks? Mr. Wright: I am not. Mr. Coates: The honourable gentleman must clear himself, because he left that definite impression on the minds of members that he is being worked by the banks. Mr. Wright: I have no overdraft with any bank, and never had one. Mr. Coates: I envy the honourable gentleman very much. However, his speech was utterly personal from beginning to end. He said several things, the most' important of which was: “I do not know—the Minister does not know —you don’t know.” Mr. Wright: And you don’t know. (Laughter.) Mr. Coates: The honourable member will know if he will only listen. He doesn’t know now. He says so himself. I would suggest to him that before he discusses a Bill of this kind he should thoroughly understand it. Mr. Wright: The bon. gentleman does not understand it. Mr. Coates: I understand it pretty well. I have made it my business to do so. The lion, gentleman said he does not know that the Bill will result in any saving to the country. He said that my statement could not be borne out in fact. I challenge him on that point. Mr. Wright: It is your business to put it right. Mr. Coates said that statements bad been made by the chairman of the Bank of New Zealand regarding the South African Reserve Bank; these only went to prove that that gentleman was entirely ignorant on the subject. The chairman of the Bank of New Zealand was not acquainted with the administration of the Reserve Bank of South Africa.

“His personal abuse of me I ignore,” said Mr. Coates. "He quoted figures which showed that he had not kept abreast of the position.” Several Labour members had asked where the Government got its constitutional authority to bring down the Bill. His reply was that the matter rested entirely with Parliament. There was no doubt that the pooling of reserves would place at the disposal of New Zealand a greater volume of credit than would otherwise be the case.

Mr. Parry: There is no shortage of money in New Zealand. The whole object of the Bill, said Mr. Coates, was not to restrain, but to facilitate, business activity. In times of depression, the bank would expand credit, and in boom periods it would assist to prevent speculation. Looking all round the world to-day, it appeared that the United Kingdom had made a big step toward economic recovery, which, it was believed, was now in sight. Mr. F. Jones (Lab., Dunedin South): Round the corner! An emphatic denial was given by Mr. Coates to an assertion that the Government was under domination by financial interests. The Government, lie said, had asked advice of the Bank of England, and it had given very sound advice. Gospel of Suspicion. "Now, I would like to say a word or two to the member for Bay of Islands,” continued Mr. Coates. "Out in the country, he seems to make it a practice to go among the people preaching the gospel of suspicion and giving the impression that no man’s word can be relied upon except his own. This propaganda Is followed up by other members. They are unworthy suspicions, and I always feel sorry for a man who suspects his fellow beings. One Is bound to complain bitterly when one finds the organ which the member for Bay of Islands represents a mass of misleading part-truths built on nothing but suspicion. ...” Mr. Parry: What are you going to do with,him? Mr. Coates: We will let him go this time. (Laughter.) The public men of this country are trying to be perfectly honest with the people. They have no intention of being otherwise. This is the first time I have come across this sort of thing, this attempt to create a horrible suspicion against every tnau who is trying to do his level best for his country It is very easy t.o mystify people. What I object to is the member for Bay of Islands adopting the attitude that everybody who speaks other than himself is a suspect. Mr. H. M. Rushworth (Ind., Bay of Islands) : Not everyone. Greater Power of Defence. Mr. Coates: The bon. gentleman regards with suspicion all those whose views do not fall into line with his own. He has. time and Mme again drawn attention to what he 1 believes to be a danger, and that is that we are to be dominated by oversea interests. I say such a suspicion Is without foundation'ln fact as matters stand at present. It will be more wrong when this Bill becomes law. The enactment of the Bill, said Mr. Coates, would give New Zealand greatter power to defend herself, if necessary, against encroachment or domination. In other words, It would' strengthen the present structure and play a vital part in the economic welfare of the country. It was an exaggeration to saj- that the Dominion was being led to the slaughter, unsuspectingly. Because Sir Otto Niemeyer had made a report to the Government this had been seized upon by opponents of the Bill as an argument in favour of the contention that the country was under domination. He. had received sheaves of telegrams from organisations throughout the Dominion demanding that he should drop the Bill. Mr. Rushworth: Are you suggesting I had anything to do with those telegrams? Mr. Coates: I am suggesting the hon. gentleman’s “buster” had a good deal to do with it. A Labour Member: His what? Mr. Coates: The hon. gentleman’s paper, “Farming First.” Mr. Rushworth: It is not my paper. Mr. Coates: Well .then Mr. Rushworth: Doesn’t the hon. gentleman think we really need a lot more information about the Bill? The hon. gentleman gives the impression he needs more information too. Action, Not Talk. ■ Mr. Coates: The hon. gentleman has been saying that all along. He can go on saying it. This constant...flow of talk, talk, talk gets,us absolutely nowhere at all. The Government is taking action Mr. J. A. Lee (Lab., Grey Lynn) : Reaction! '-‘No/ the reactionaries sit over there. There they are,” said Mr. Coates pointing at the benches occupied by Messrs. Wright, Stallworthy, Atmore, and Veitch. Mr. Rushworth: Aren’t you sorry to lose them? Mr. Coates said he was always sorry to lose colleagues. Some of those on the cross-benches once held positions in the Ministry, but the trouble was that they had been unable to make the pace. ’ ... Mr. A. J. Stallworthy (Ind., Eden) : Reaction against humbug. (Laughter.) ' . Mr. Coates: The hon. gentleman was a member of the Ministry that made the first cut in salaries and now he stands up in self-righteous indignation and says “Oh! pensions.” (Loud laugh-, ter.) As long as he is in the Ministry it is all right. Mr. H. S. S. Kyle (Govt., Riccarton) : Who will lead the revolution! ' A Point of Order. At the conclusion of Mr. Coates's speech Mr. Samuel rose to a point of order. “The right hon. gentleman who has just resumed his seat,” he said, “stated that first of all I condemned the Bill and then suggested improvements. I wish tb give that statement an emphatic denial. Certainly I condemned the Bill, but I made no suggestions for its improvement.” A division was called for on tbo motion that the Bill be read a second time. The second reading was agreed to by 43 votes to 28. The House then went into committee, but no speeches were taken on the short title. Progress was reported and an adjournment taken until yesterday afternoon. Before Mr. Speaker left the chair at the end of the second reading, Mr. Rushworth endeavoured to move that it be an instruction to the committee of the House that it have power to appoint a special committee of all groups in the House to hold a full and open inquiry into the existing monetary and banking system. Mr. Rushworth said the committee of the whole had not that power unless it were vested in a special committee. Mr. Speaker said he had no hesitation in ruling the instruction out of order. Series of Amendments. On resuming yesterday afternoon, the House went into Committee to discuss the clauses in the Bill. Speeches on the short title were similar to those made during the second-reading debate. An amendment to clause 3, which proposes that “there shall be established In New Zealand in accordance with this Act, a bank, to be called the Reserve Bank of New Zealand, which shall be a body corporate limited by shares in accordance with this Act,” was submitted by Mr. J. A, Lee (Lab., Grey Lynn), who moved to omit the words “limited by shares In accordance with this Act." The Leader of the Opposition, Mr. M. J. Savage, explained that the amendgxent was ope of yie qteps cSflsidercd

necessary to make the bank a State institution. The proposal was defeated by 43 votes to 23. , Mr. R. McKeen (Lab., Wellington South) moved an amendment to obviate the necessity for the concurrence of the shareholders with the board in any alteration to the rules of the bank. The Prime Minister, Rt. Hon. G. W. Forbes, said that shareholder capital would inspire public confidence. Labour members contended that with a State bank every member of the community would be a virtual shareholder. The amendment was rejected by 41 votes to 27. • Nationality of Shareholders. A further amendment was moved by Mr. R. A. Wright (Govt., Wellington Suburbs) to restrict the issue of shares to British subjects ordinarily resident in New Zealand. / Mr. Coates said that several members had discussed this proposal very closely with him, and he knew it was desirable that the shareholding should be kept as strictly as possible to New Zealanders. Several other points had been raised about the transfer of shares, and he would endeavour to see if a clause could be drafted covering the position generally. As far as he could he would give effect to what appeared to be tlie general wish of the House. He had noted the points raised by various members, not to “keep them jSteadily in view,” but to come back to them later on.

The amendment was defeated on the voices.

Clause 12, which sets out that “the primary duty of the Reserve Bank is to exercise control over monetary circulation and credit in New Zealand," was under discussion at midnight.

The House Rejourned at 0.25 a.m. The Rt. Hon. G. W. Forbes, Prime Minister, expects to leave Wellington this evening on a visit to Christchurch. He will visit his farm at Cheviot, and will probably make arrangements for the rebuilding of his house which was burned to the ground a fortnight ago. Mr. Forbes will transact some official business in Christchurch, and will return to Wellington by tpe ferry steadier MMday. aisbt.