"SOMEWHAT CONFUSING"

Evening Post, Volume CXVI, Issue 96, 20 October 1933, Page 10

"SOMEWHAT CONFUSING"

(By Telegraph.)

(Special to the "Evening Post.") DUNEDIN, This Day. "The objection that the banking facilities that are already provided in the Dominion are sufficient for tho requirements of the people will be strengthened by reference to one of the respects in which the Bill now before Parliament differs from that introduced last year," says the "Otago Daily Times." "Whether it be that the Government is not prepared to relinquish at present the revenue it collects from the trading banks on account of their note issue, the proposal that the Beserve Bank shall possess merely a right —not the sole right—of note- issue must weaken the argument in favour of the establishment of such a bank. Moreover, the abandonment of the provision that the Beserve Bank shall have.the sole right of not.c issue must affect the proposal for the transference of the gold coin and bullion held by the trading banks. The original proposal was that the trading banks should transfer their gold to the Beserve Bank in exchange for an equivalent value of the notes of that bank, but the trading banks, retaining thair . right of noto issue, will not only be- under no compulsion to acquire Kescrve Bank notes for the transaction of their ordinary business, but will also be under the necessity of preserving a gold backing for their own issue. Yet the Bill still contemplates that there- will be a transference of gold from them to the Beserve Bank,.for it contains a new provision that the profits from the sale of this gold shall be paid by the Keserve Bank into tho . public account. This is all somewhat confusing.

"The Government adheres in its new Bill to tho principle that a majority- of the directors of the bank shall represent the shareholders, and thus provides a' desirable safeguard against the possibility of dictation by the Government itself of the policy of the bank. It is declared to be the primary duty of the bank to exercise control, within the limits of its powers, over the monetary circulation and credit in New Zealand, and though, these powers are more circumscribed than ' those of a Beserve Bank would ordinarily be expected to be, it is important that the danger of political control should be avoided."