RESERVE BANK’S FUTURE

Dominion, Volume 29, Issue 151, 21 March 1936, Page 12

RESERVE BANK’S FUTURE

A State Institution CABINET’S INTENTIONS OUTLINED Justice to Shareholders Confirming the report in “The Dominion” yesterday that it was the intention of the Government to make the Reserve Bank of New Zealand a * straight-out State institution, the Prime Minister, Hon. M. J. Savage, said yesterday that he had told the people of New Zealand during the election campaign that the Government was going to take control of the currency aud credit of New Zealand, but that the administration of the money system would remain as it was to-day. In other words, the people who understood the administration of banking would still be at the helm. The Government’s job was to lay down the policy that would be followed. “The Government has sense enough to know,” said Mr. Savage, “that the mere turning of the hands of the printing press is not* the way to get rich. We will use the public credit to create further wealth.” The Prime Minister said that the Reserve Bank would be made a State institution, and recalled that when the original legislation was going througn the House there were a number of members opposed to Labour who did their best to bring that about at the time. The private capital of £500,000 did not play the slightest part in the business of th© bank. It was like dropping a pebble in the ocean to try and influence the tide.

Mr. Savage declared that the private shareholders would be bought out, and they would lose nothing. The shareholders could rest assured that they would not suffer any injustice. They had nothing whatever to worry about. He added that there would be a definite alteration in the amount of interest paid on Treasury bills. The Government would certainly not go on paying something over 5 per cent, for its financial accommodation.