WHO OWNS AND WHO PAYS?

Evening Post, Volume CXVIII, Issue 13, 16 July 1934, Page 8

WHO OWNS AND WHO PAYS?

The House of Representatives gave [an evening last week to discussing currency yV^reform.' ' Previously the Farmers'; Union .Conference had debated the subject. Yet it appears there |Is no finality; Therg are still some (points in doubt—riot major'points, of [course, such as-the wisdom or propriety of .a, .note issue treble that of the present day, which Labour and the farmers; agree■• is desirable, but the quite minor' point of who owns the surplus credits in London, some £20,000,000 more or less. : Captain Colbeck told the I Farmers' , Unioii" that the credits j belonged to the banks, and the president of the Farmers' Union was ready to stake his reputation that Captain Colbeck misunderstood the position. After all, why worry about the ownership? The real issue is who is to get [the money. The farmer has sold £100 worth of produce in London and the banks, under • agreement with the Government, have paid him £125 in New Zealand. To equalise die transaction the banks have offered to sell £100 in London for '£125 in New Zealand to anyone desiring to make payments in London. Though some people have had to accept this offer, others have declined. There have not been enough buyers. Confronted with this in ordinary banking practice the banks would have reduced their payments and charges for London credits. But the Government said they must not dp so, so the credits have accumulated ancl (by agreement) have been fcought fey the Government which has paid for them with Treasury bills (short-dated loans). Now the Government pfpppses. to transfer its London assets^to the Reserve Bank and to receive in exchange Reserve Bank notes wtK which: (so^Mr.Coates says) it j will redeem1 its; Treasury bills from the; banks.. -What will the banks do with ; all these notes? The farmers think they will tumble over each other to lend them, or that they will refuse other'deposits, and so will come in a new 'era of 'cheaper \money. The Reserve^Bank will have £20,000,000 6f,£oridon assets earning somewhere about 1 per cent., and it will have issued notes for 25 per cent, more than this total, earning nothing because ihe Government is counting on paying no interest in New Zealand after.August 1, The farmers are not agreed who owns the assets. Possibly if they were asked who is to pay for them—or shall we say who is not to pay for them—they could reach an agreement. Labour bothers little about such questions. The Rev. Clyde Carr told the House of Representatives: "Under a Labour Government the financial experts would do as they were told to do and not what they thought should be done." We do not suggest this is a.threat to dictate to | the farmers.