STATE CONTROL

Evening Post, Volume CXVIII, Issue 23, 27 July 1934, Page 10

STATE CONTROL

RESERVE BANK

LABOUR AMENDMENT

A CHANGE OF HEART?

Another attempt to obtain State domination on the directorate of the Reserve Bank of New Zealand was made by the Labour Party in the House of Representatives last night when the Leader of the Opposition (Mr. M. J. Savage) moved an amendment to the Finance Bill that the Governor and Deputy Governor of the Bank should be appointed by the Government. This amendment had been pressed last year by a group of Government members, known as the "study circle," but they were not caught in Mr; Savage's net, and their change of attitude was the subject of sarcastic references from the Opposition benches. The amendment was defeated by 34 votes to 28. Mr. Savago said that the amendment would liavo the effcet of giving tho Government the control of the direc-torate-by five votes .to four. As the position stood at present throe directors were appointed by the Government and four by tho shareholders. The Government had already appointed the Governor and the Deputy Governor, but if either of these officers resigned his position, his successor -would bo appointed by the shareholders, and the Bank would be controlled in tho shareholders' interests. If those members who had previously asked for control of tho Bank by the State were consistent, they would vote for the amendment: Tho Consolidated Fund was already pledged for tho support of the Bank in connection with the exchange transactions, and for tho moment one did not know where that matter was going to end. It was vital to tho interests of the people of tho country that the Bank should bo maintained as a Stato institution. [ SHOULD BE LETT ALONE. Mr. J. Hargost (Government, Invcreargill) said that he was one of tho members who had made the request that tho Governor and Deputy Governor of tho Bank should be appointed by the Governor-General in Council on tho recommendation of tho Minister of Finance, after consultation with the directorate, but now that tho Act was in operation and the machinery of tho Bank had been set, if any change were required, it could bo made in tho nest seven years. "I am one of thoso who aro strongly in favour of it," said Mr. Hargest, "but I believe that the Act as it stands stiould be left aloue." Mr. P. Fraser (Labour, Wellington Central) said that tho amendment involved the question as to whether or nor the Bank should be controlled in the interests of the whole country or the shareholders. No amount of equivocation could sidestep that fact, and it was fallacious to assume that tho posi-, tion would not arise for seven years. Auything might happen to tho Governor or Deputy Governor in the meantime, and if they vacated their positions, the shareholders would have the right to appoint new officers. The Minister of Finance had stated that he had been unablo to havo an amendment made to the Act in the Upper House, but Mr. Fraser said that ho had not been able to grasp the meaning of that statement. The Upper House had tho power to make the amendment, but perhaps there had been difficulties in the way of the Law Draftsman, or the Legislative Council had refused to give its assent to the proposed change. If Mr. Hargcst confessed that he had made a mistake last year, then he was entitled to change his opinion. It was not suggested that he should approach the Minister of Finance and kneel at the penitent stool, but he could admit/ that the "study circle" had studied obliquely and not straight, and plead for forgiveness. The fact that the Bank directors had no security of tenure mado tho position1 exactly the same as it was last year. Did Mr. Hargest or Mr. Lye, who was trying to break into the Cabinet, still believe what they believed last year; If they did, .they should vote for tho amendment. Either that, or they should admit that the "study circle" had resulted in confusion instead of enlightenment. . ME. POISON'S SUPPORT. ' Mr. W. J. Poison (Government, Stratford) said that he intended to vote for the amendment, which had become more necessary in tho last few months. Ho had always held that the Bank should be controlled by the State. Were there any Reserve Banks in the world that were not controlled by the State? Even the Bank of England, when pno came to analyse tho. position, was a Statecontrolled institution. Mr. H. Atnipre .(Independent, Nelson): That is not so. Mr. Poison: Yes it is. The shareholders have a minority of the director? on tho bank. Ho added that under the present legislation the New Zealand Eeserve Bank would ultimately be controlled by the shareholders, and it was necessary, if the Bank was to do the country's business, that it should be controlled by the country and not by private capital. A SHAM TIGHT. Mr. A. J. Stalhyorthy (Independent, Eden) said that the member for Invercargill had held the House up last time in a sham fight, and he had had the matter featured in the Press. The member had admitted that he had not changed his opinion, but that the circumstances had changed. If they had changed they had changed in the direction of making it more imperative than over that the Bank should be a State institution. ■ Mr. F. Langstone (Labour, Waimarino) said that ho hoped \ that all those members who put up such a fight with the Government last time would stick to their guns on this occasion. If tho Minister in charge of the Bill had been sincere, then he had an opportunity to show it on the present occasion. Mr. Hargest asked why tho Labour Party had not supported tho amendment when it was before tho House previously, if they thought it was so important. The member for Wellington Central had said it was. a private quarrel, and he would-act as arbitrator. Mr. H. T. Armstrong (Labour, Christchurch East) said that some, young members had been "well spanked* since last session. Mr. Atmore said the State should see to- it that it controlled the Reserve Bank. - Mr. Fraser said that last year's struggle over the appointment 6f tho Governor and the Deputy Governor had all tho appearance of a sham fight. The Labour Party had always stood for the complete control of tho Bank by tho State. If the Minister of Financo did not have tho opportunity of keeping his