RESERVE BANK BILL

Dominion, Volume 27, Issue 35, 4 November 1933, Page 6

RESERVE BANK BILL

As finally passed by the House of Representatives, the Reserve Bank Bill departs further from the idea of'a shareholders’ institution independent of political influence and comes nearer to being a State bank. Undoubtedly this trend from Right to Left had the approval of a large majority in the House, but it may be seriously doubted whether the effect on the bank’s policy and management will be fortunate. An interesting study would be to trace the successive amendments in the Bill from the provisional draft offered by Sir Otto Niemeyer. Mr. Downie Stewart’s Bill introduced last December leaned a little more toward the State; in Mr. Coates’s Bill the inclination was more marked; and although the Minister was remarkably successful in guiding his Bill through a critical House, he conceded at least one important amendment which certainly lessens the voice of shareholders and increases the Government’s influence. The amendment in question provides that the governor and deputygovernor of the bank shall not be elected by the shareholders, but shall be appointed by the Government on the recommendation of the board of directors. Mr. Coates frankly admitted that he did not like the change himself but had offered it as a compromise between shareholder election and direct appointment by the Government. Of course, as in the case of the directorate of the Bank of New Zealand, the dominant influence of the State may not involve the introduction of politics into central banking but the risk of it, especially in critical times, will be a real one. On one point Mr. Coates has yielded to strong representations made in these columns and in other quarters, that ownership of the bank’s shares should be limited to British citizens. Indeed he has gone further by requiring that shareholders shall be British subjects ordinarily resident in New Zealand. The limitation is a wise one for, even if shareholders’ control has been curtailed, it is prudent to see that it does not get into alien hands.