BANKS INDEMNITY BILL

Evening Post, Volume CXV, Issue 26, 1 February 1933, Page 13

BANKS INDEMNITY BILL

CONTINUATION OF DEBATE

Varied opinions in the house

Several more contributions to the second reading debate on the Banks Indemnity (Exchange) Bill Were made in the' House of Representatives yesterday, and when the adjournment was taken at 11.30 p.m., it was evident that there are still a large number of Members who are anxious to place their views on record. The feidicatibns now are that the crucial division will not be reached Ti^il Thursday, although the of an .unexpected collapse

_'. s^ays exists. v .'{/vV '•: Mt3;%Fr,V:Jonesi ;■; (Labour,: ' Dune Sin S6utit%"s.aid:-".ttat^;the 'Government Was oppoS^to. guaranteed 'prices, but ;it wa^ iguife prepared to give a guarantee to t^'ifew- ZealandV'banks. ; The fall in p]ni^S had;been; greatly influenced by t£.e4w_age-reductions in the Dominion .arid'in,.te'reit B.ritai,n". It had been statedly-tne Minister of-. Finance that the e'pstof.living-in-Australia had decreasWcfc1 since'; the. iise; there ;.in the exchange'iiate, 'but'he. did .not: show that wag^^Hadbeen'reducedi unemployment increased; ..factories > closed, down, and that,■.'departures:." from the ,Commonweatth A i'ad; exceeded arrivals. The crux?of' th\O:■•-problem." was the purchasing .powet'.of: the mass i of; the people, and -thV-raising- of the exchange rate would not alleviate the position. Wages were'iStill being reduced, and as a,re-sulflfiS-T^orkers Would'not-.be able to buy as ::niilcK as- they-could .previously. Withj decreased sales there • would be leduced reduced staffs, and moreC;'.un.emp] o y.iaent.- ' Many people EeemeS-to^haye learnt beforehand that, therevwould be-'a rise in the- exchange iate,;;ahd.vhad taken advantage of <the situation^ ,iWpuld :thoso importers who had'iot^been. able to take ■ advantage of the'srise,be protected from unfau competition from thosei who had been abla^tp:;purchas.e overseas credits prior to thaiiiseI?;. Mr. .Jones; asked whether, as ar^pnseqnence of the: raising of tho exchange,:'.thei! Government would wjthdraW;;the Central Reserve Bank- Bill. Th6:;slogan : pf the .-. Gov'erninent during the fieneral Election had heen, "Keep youri^ianin his job." ."Your man is still ja^hig: job," said Mr. Jones, "doing relie£|;.wbrks.' Another, slogan of ther Government.Was^ 'Prosperity follows a Bane^Govfernment.*: We have not prosperity^ artd;l.>Will leave; tho.Government to. describe itself. We have evidently yet got to get a sane Government." SOMETHINa NECESSARY. Mr. C. H. ClinkaTd (Government, Eotbrua)-Vsaid it-Was essential , that something should, be done to counter the 'tremendous . drop' which had taken, place' in the value of the Dominion's primary„ pjroduce since 1929. Urgent action was necessary in order to prevent a drop in production^.. The Government would ■have beentfailing';in its duty.if it had not; done something to assist the exporter. Mr. Clinkard said ha.was prepared to accept his full share of the responsibility for what had happened. It had been suggested in some quarters that a pistol had been pointed at the head of the Government, but he gave that an emphatic denial. Mr. Clinkard quoted a letter he had addressed to Mr. Coates earlier in the year in which lie had expressed' his vitiws on. the problems confronting the country. Labour members: Did he take any notice! Mr. Clinkard said he had suggested ihe indemnification of the banks against any -loss. At the same time he had mafle no attempt to coerce the Government. He believed that that was the same attitude as had been adopted -ity ; other members who had- approached the Government; they had done so in a consnltational and advisory capacity. It was highly desirable that New Zealand should be on a parity ■with its competitors, and he believed the fixation of the exchange at a higher T3.te : was the best method of making the : adjustment. He agreed with the leader of the Opposition that it was credit more than currency that was required. If they had all the credit they: wanted then there would be •no need for them to vrorry sbout currency. At 'the same time, he . characterised Labour's general policy as one of nationalisation. V WHERE IS THE MONEY?" Mr. E. J. Howard (Labour, Christchurch. South) said that the Minister of Lands had contended that the raising of the, exchange rate, would mean the brining:.-.:%:fvi-^lp,oooj6oo' more money ii»j@>-the Dominion. • Mr. Ransonu Put it'into circulation. Mr. Howard: Well f I : will, take the hon. gentleman at his word —put £.10,000,00(> into circulation. What. I want to ..know is- where is; the. money, at the present time f He'^added that the farmers would : beiefit .at .the : . eipense of: the rest oi. the, comniunity; He had I6ng"beensa-Socialist,:and:"Was more convinced than' ever that-Social-ism would have to come, as the present system. Was,breaking down under its own weight. It.was said that Socialism was i:a/: dream, but Capitalism was a nightmare,,-and the three-qaijd trick. was a respectable: trick" compared With the financial "trick that Was now "being put into.i«peration. Credit was based on confidence^ and the • Government was destroying. the confidence of the community.' There were : people will-, ing to star,t enterprises, but they werff frightened.:- ;,'.. -.■■ ■-: '- The H^n.^4. ■D. "MeLeod (Government, Wajjafapa): Frightened- of whatl Mr. Howard: Frightened because-the hon. gentleman' has ' been returned ;to the Housir'and is running the Government. He wrecked the^last • -G'oTern-' ment, and will wreck this one.;' .:-;:' MR,, STEWART'S POLICY.:^ J Mr. W;-Nash, (Labour/ Hutt)i Who f ollowea th« Hon: -W. DoWnie Stewart whose speech." is .icported ■"..'.;-.elsewKete;. said thatit was difficulty-'-to nnderstaiia why Mr. Stewart; was, voting With' the Government.:. ,- _::■'.■;"'.;. ? Mr. Stewart:" "I am', opposed to the Labour Party's policy..,. Mr. Nash said that the amendment did not propose the Labour' 'Party's policy, but-clearly and definitely stated what would happen as the" result of the lifting of : ;rthe;.exchange., Mr. Stewart's, policy wasjeven worse; than that ..which the Government was advocating. 'In doles to the: unerijloyed- and 'assistance to the faim;6ts;'her6:and there;he:wbuld make th&--^hoje..'jcountry suffer.1 ■- The report of the economists which advo: cated the high exchange gave too reasons for the policy—(l) the maintenance of security values, and (2) the disparity between farmers' costs and prices. They did not have any doubts as to what the effect would be. Professor Copland had stated that a high exchange would mean that it would be paid by one section of the community to anothnr section of the community. The mail tenance of security values would met: : that the stock and station agents and other financial institutions would be reimbursed for the amounts they had lent to the farmers. Mr. McLeod, who was one of the most farseeing . members o£ : the House, had seen that the Government had lost the city vote and that the only way it could retain the Treasury Benches was to set country against town. He had been strong enough to make the Government

change its policy in the last two months. :In advocating the high exchange rate, the Piime Minister had stated that the arrears due to the State lending Departments was £,2,862,617, and it was proposed to increase the buiden on the Budget by £4,500,000.: Tho farmers would collect the premium on the exchange in 'New' Zealand, and it would be paid by the remainder of the community. Thus it could not be seen how the national income would be increased. It uns stfited by the Minister of Finance that one reason why-the exchange 'was increased was to maintain pioduction, but for the last two years therfe^had teen a continued increase in production. It had gone up by leaps and bounds. 'Thus the Minister's policy meant that tho Government wished to maintain the pioductio" of produce at the expense of the whole of 'the people for the purpose of sending it to markets whero it could not ba sold. Eighty per cent, oj! the money obtained by the hifth' exchange -would not benefit the faimer one iota. A voice- Who will get it? Mr. Nash: The mortggpe, the stock and station agents, and the State Advances Dfpartmont-. He said that it was most unfair to tax the unemployed worker in the city in ordor to pay interost to mortgagees. The high exchange would increase the cost of Government purchases abroad, and also add to the interest charges on local bodies' oveiseas loans/ Business nrms which had imported on bills maturing in sKty days had been unfail ly-penalised by the exchange inflation, as they had to pay the exchange rate maturing at the maturity of thp bill. It was to be hoped that the Government would make,some; arrangement with the banks to obviate this unfairness. There was no doubt that the Prime Minister had adopted the policy of the Minister of Finance. He had previously stated that tho exchange rate was a mattes for thejbariks, andinview of the fact that Mr. Coates was"xesponsiblo for the major policy matters of the Government, the Trime Minister should adopt tje course of the ex-Min-ister of Finance and resign. It was anomalous that he should allow a subordinate member of Cabinet to take charge and say -what should be done whether Mr. Forbes liked-it or not. "SAPER AND SO"UNDER." The urgency of doing something to help the gTeat foundation industry of New Zealand was stressed by the lion. A. D. McLeod (Government, WairaTapa), who said that it was impossible for the farmer to carry on against tho scale of charges and tho results from the sale of his produce. !By no means was he enamoured of an. inflated exchange, and if it could have been avoided and the industry still been enabled to carry on, nobody would have been ' more pleased than himself; -tint-he 'was satisfied that some, method had to be adopted, and of those suggested, he had come to the conclusion that exchange inflation was the safer and the sounder. Mr. McLeod said that the member for Chrjstchureh South had said the usual thing that had'been said by : the Labour Party for years; " and i the ■member for Hutt • (Mr. W. Nash), When he spoke of my being one of the most far-sighted members on these.-benches, and of, my 'having threatened and coerced the Government—it almost makes mo. blush." (Laughter.) Throughout the whole of ; his" political life, he said, he had pointed out to his city friends that the growth of the antagonistic feeling between city interests and country interests would inevitably place the Labour Party on the Treasury Benches; and it'"w;as working that way to-day largely as a result of "High exchange," interjected Mr. A. J. Stallworthy (Government, Eden). Last November, continued Mr. McLeod, the member, for Wellington Central (Mr. P. Eraser), approached him as probably thesupposed.Jeader^.of the renegades ; or- reprpbates^(iaughter)— and asked- how far, he• ancUthose associ-. at'ed with him were, prepared'lto; go; in connection with the exchange controversy.. The member for." -Wellington Central said hi personally' didtnot believe in'a high exchange as a:means of removing the: difficulties, neither ..!■• did the Labour Party,'.but it. was 'better than doing nothing. ' .'■">. . •'-.'*,' ;' jJ • ■■ 'Mri Praser: 'The member^ for \ Hutt ■said the same-thing to-day. :-v- \ ' T,her alternative to inflation, said Mr. McLeodi was further deflation, ff ,it was only a question o£. the individual farmer going out as a result of foolish over-mortgaging it would be only a passing "phase, but* when the whol^ industry was at stake- it Was a' grave: matter. There had already been rises in meat and wool as a, result of Otta-wa, and the exchange was assisting, in addition. . " , POLICY OF RUINATION. '; / Mr.' F. Langstone (Latiour, Waima;rino).vsaid;.that the Government was adopting a policy .of ruiaation. The Dominion's, problem had been created in London, ; "but it could be- solved within,:; NeTC<Zealand. The-raising of the exchange.Was.: a .pernicious policy of deflation;;??; jai-as vthe.workers' wages, were concerned, /Part of the blame for :the Government'apposition -was due to Mt.. Stewaftj-.. ; wh.ose;:'\ financial policy -had iresulteiiifl.;;th.e ? pledging--of millions ;of f es.ef.vcs'Y fc hewas: paow ■leaving:'.the'sinkings ship^ijPtitii Government 's :policy: would? .^ead'-tpidisaster andr:chaos,;.and; result in .a";runon: the ■banks, which Would aiot be able to meet the demands. The only solution was a stable price which would ensure that all who gave service would be ensured of. an adequate return for their labours. ;' Mr. H. M. Campbell- (Government, Hawkes Bay) said that the inflation would be stopped when prices came to the normal level. If twelve months ago exchange had gone up to, 20 or 25 per cent, the position would" havebeen ibetter for the farmer than putting up^the exchange now. Would the .Leader of the Opposition explain ~ what' an. adequate priee'wasy and-jvhere.it was to come from? ■•■-,.■.'-'• -;. .'.., PROBLEMATICAL' BENEFIT.* The Rev. Clyde Carr-(Labour, Timaru) said it.-had, been suggested that the apparent^' objection of the banks was only apparent':'-they/, had been purchasing surpluses ati.£llo, and now would bo able >to'dispose of thenj fit £125. At present.a financial war,was in progress in .Great Britain, where German-American Jews were endeavouring to get! a stranglehold. He was not prepared^td help the primary producer at the expense of the rest of the community for, a benefit which was | very problematical. 'The economists and nnanciers"iknew of a better way out of the difficulties, but they were i not allowed to. put it into practice. The Minister .of .Finance said that; the.j

Bill did 1 not affect Ottawa, but he'(the speaker): said that it was a sabotage^of the Ottawa agreement.

The debate was adjourned on the motion .of Mr. H." G. Dickig (Government, Patea).