MINISTER'S REPLY

Evening Post, Volume CXXI, Issue 83, 7 April 1936, Page 16

MINISTER'S REPLY

THE COUNTRY'S CREDIT

EXCHANGE FOR GOODS

The Minister of Finance (the Hon. W. Nash), in replying to the debate, said that so far as the Savings Bank was concerned, in spite of the propaganda that had been issued by the Nationalist Party during the election, depositors would continue to receive the current rates .of interest. In February last the deposits had shown a marked increase and were £310,000 in excess of withdrawals. He went on to say that everybody producing commodities in New Zealand would receive his price for those commodities in New Zealand. Mr. Dickie: He won't be allowed to get goods in return. The Minister: It is not a case of that. The producer will be paid for his product and will be able to use the money in New Zealand. The sterling exchange built up from the sale of these products will be in control of the Reserve Bank. If any ■ person produces legitimate claims to those credits in London, he will be able to obtain the sterling exchange that he legitimately requires. Mr. Nash said that the question had been raised regarding British deposits in New Zealand. He did not know that there were any. If there Avere any credits in New Zealand that were re-

quired by British people in London, they could obtain the credits. /,' The Hon. A. Hamilton (Nationalist, Wallace): Today? The Minister: Tomorrow, next month, and next year. ... , . ~ A Government member: What does the Minister mean by legitimate? The Minister: If it lias been paid for in New Zealand and' the commodity is sold in New Zealand, the Reserve Bank will have a monopoly'of' exchange. Anybody requiring credits for importing goods into New Zealand will be able to obtain those credits. A CORRUPT GOVERNMENT. There had been suggestions, said Mr, Nash, that a corrupt Government could use the powers contained in the Bill for its own ends. Of course, that was so. A corrupt Government could do anything whether there was a State bank or not. The Government was not legislating for corruption. -.It was legislating for Governments of integrity. There was a lot of humbug talked about corruption. If Governments wanted to be corrupt they could be corrupt without special legislation. FORMS OF CONTROL. The member for Stratford (Mr, Poison) had stated that he was in favour of State control but objected to political control. What was the. difference. When a Government was in control it was political control. There was no difference whatever. The State could only be controlled by a political party. - The Minister said that there would be reciprocal trade agreements with Great Britain for the purpose of importing goods.into New Zealand. Mr. Poison: How can you build up your secondary industries in New Zealand? Mr. Nash: There is no way we can get paid for exports other than.by importing commodities. I admit that. But the Government, as far as it is humanly possible, will see to it that the goods that can be manufactured in NewZealand will be manufactured here, and those that cannot be will be paid for with the credits we have in London. DIRECTORS' POSITION. The Minister said that the present directors of the Reserve Bank would remain in their present positions fpr the term specified in the Act. The Government would inform the directors, or the Governor, of .what it'^desired to do, and if sound reasons were advanced why it should not be done, then it would not be done. . . • If, on the other hand, the Government felt that what it asked could b» done, then the directors; would b« asked to give their co-operation. There would be no coercion. ; So far as the advances by the.Reserve Bank were concerned, the Government would ask the House to authorise certain advances, whether the advances were for public works, housing, or some other activity; ■". A Government member: Will that apply to the East Coast railway or tha South Island Main Trunk? Mr. Nash: I am doubtful whether it will apply. The Government has already decided on the completion'of the East Coast railway. The whole thing will be subject to the will- of Cabinet,, which is responsible to this House and can be" turned out at any time. ' ■ ".' The Minister said that it was claime'S that public ownership had- always failed, but it was significant ' that whenever private ownership failed Government ownership had always haa to step in. During the last:.decade the Government had had to come-in. more and more. ...... THE INTEREST BATE. • Objection had been taken by Mr, Goates to the payment of 4 per cent, interest on Government securities. Mr. Coates was himseif responsible for that, for it was he who had prescribed; 5 per cent, on Reserve Bank shares. - Mr. Hamilton: That was the ruling rate at the time. ": Mr. Nash: Oh, no. At the tim« there were objections from every corner of the House. I affirm that the 5 per cent, was more than was being paid on Government 'securities at the time. The Minister said that the Bill meant that the credit and currency of New Zealand would be controlled by tha Reserve Bank and the Reserve Bank was controlled by the Government. It was not a coercive control. Another question asked was what the Govern* ment intended to do about the London exchange held by the trading banks. The fact was that the Government was not worrying in the meantime about the London balances held other than in the Reserve Bank. In the flltt* mate it would be wise for the Govern* ment to control in its entirety »B sterling exchange that came from lha sale of New Zealand produce overseas. When the Government was in control of that exchange it would be madft available to the trading banks and *• others for legitimate purposes. With regard to guaranteed prices, it was hoped to be able to go to th* Reserve Bank and obtain the necessary advances, and the bank would b« recouped by the sale of the produce i« London. Mr. Hamilton: Perhaps. Mr. Nash: Oh, yes, you.can say "pe*» haps" in the same way as the membe* might not be able to meet his ove# draft at a given point. ACCESS TO STERLING. Dealing with the question _..of th« suspension of access to sterling, th| Minister said that the power- contained in the Bill was not likely to--=b.# exercised unless an emergency arose* It was very necessary to have til* power to prevent anyone having acces* to sterling until the Government knew? that all its requirements were covered in London. It was necessary that th« Government should have complete control of the credits that had been built up by the export of goods from New Zealand. There was not a word in the Bill that had not been sap during the election campaign. ;. Referring to the position of th« Governor of the Reserve Bank, the Minister said that, he had consulted with him on several occasions, V***? was not in agreement in general with, the principles set out in the Bill. Supsequent to making his protest in general terms, the Governor had done his best to make the Bill workable. There was no question about co-opera-tion; and there was no question that the Governor of the Bank did not support the Bill. ,;,-.- Mr. Hamilton: That is disturbing, v The Minister: There.is nothing dis» "Replying to points raised regarding, control of the Labour Party, Mr. Nash said that the election manifesto issued at the time of the General Election was signed by Mr. Savage, by himself as president of the party, arid by Mr. J. Thorn, as secretary. The candidates who went to the country on that manifesto were pledged to the electors and would put that policy into operation. The policy would not be altered until tins next General Election came round. ■ .\ Mr. Nasli declared that there wm no justification for the statcmentl

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