TOO MUCH GOVERNMENT

Evening Post, Volume CXVI, Issue 111, 7 November 1933, Page 6

TOO MUCH GOVERNMENT

Strong protests were made at yesterday's public meeting against certain aspects of the Reserve Bank legislation. ■There was, little, if any, criticism of the decision to establish a Reserve Bank. The methods and detailsl only were disapproved. Summed up the objections were on one broad ground: there was too much Government in the Bill. The Government hand was too prominent in: (1) the appointment of the. board of directors on which, if the Government has the final decision in the choice of Governor and Deputy Governor, the nominated members will be in a majority; (2) the transfer of the trading banks' gold on the Government terms, (when the Government stands to make the profit) without reference to an independent tribunal; (3) the proposed transfer of surplus London high exchange credits from the Government to the Reserve Bank on undisclosed terms; (4) the provision that accommodation may be granted to the Government up to half the 'estimated annual revenue. '■"'■■

We have previously emphasised our view, that there must be adequate safeguards against political influence and that these safeguards are not present, when the Government has so much to, say in the constitution of the directorate. It is all the more necessary that there should be independence when it is evident that the Government anticipates such great relief froni its own financial troubles by passing them on to the bank. A Reserve Bank must serve not only the Government but the community; [and its initial obligations and liabilities must not be such as to lessen public That confidence cannot be given freely when the proposed terms for. the transfer of London credits are not revealed. Moreover, the refusal.to grant arbitration on the ownership of gold profits gives an uneasy feeling that a similar dictatorial attitude'may be taken up in future transactions. The Government says in effect: "The law is right, and I make the law to suit myself." The further statement made today by the Minister of Finance does not settle the issue. We have always admitted that the Government case for ownership of the; gold profits was strong; but we cannot see that it is so strong that arbitration by an independent tribunal is wholly uncalled for. Further, Mr. Coates's arguments do not give any satisfactory answer to the question we raised: If the profits do not belong to the trading' banks because the banks are to be relieved of their note issue obligations should not these profits be held, not by the Treasury, but by the Reserve Bank which will assume those obligations and all the contingent liabilities? It is late now for public protests. The public have been slow to realise the . position, though the dangers have been stressed in the Press throughout New Zealand. But it is not too late for the Government to correct some of its errors and allow the Reserve Bank to start as an institution with capacity and independence to serve the whole community, not weighed down with the load of Government liabilities.