TOO MUCH VAGUE TALK

Evening Post, Volume CXXIV, Issue 87, 9 October 1937, Page 8

TOO MUCH VAGUE TALK

It is to be hoped .that the Prime Minister or the Minister of Finance will take an early opportunity to reply to the three questions put by the Hon. J. G. Cobbe yesterday: What was meant by the use of publie credit?— Did it mean issue of paper money? Why did the Prime Minister threaten the banks and what was the Government's intention regarding the banks? What was the Government's policy regarding the payment of interest? There has been much vague talk on all these points and it is necessary now that the Government should define its policy clearly. At present there is anything but clarity. The Prime Minister has said: "It seems to me that we are pot getting 100 per cent, service from the private banks," but he has not stated wherein the banks are considered to be at fault. He has added to this expression of dissatisfaction the statement that "the Government had not considered the desirability of taking any immediate action, but if the necessity arose at any time it would not hesitate to step in with legislation which would charge the State with the duty of giving the requisite degree of service to the community." Some of the members of the Government Party have gone further than this. Mr. Langstone, who is Minister of Lands, said on Thursday: "I hope to see the day when the nation will have full possession of the public credit of the country." This hope evidently refers to some possession or power which is not at present vested in the State—some power greater than that which can now be exercised by the Government through its control of the Reserve Bank. As Mr. Langstone was previously speaking of the profits which, he declared, accrued to the banks through "writing" credit, and as he said "there was no reason why the* State should not function in the same way," his remarks will be generally interpreted as a desire for further Government action in banking. Other members of the party have also spoken on this question in a way that indicates their desire that the Government should go further. Mr. McCombs said yesterday: "If the banking system were State-controlled, it would bring the greatest good to the greatest number." The Rev. Clyde Carr said that if overseas prices ! fell they would need guaranteed prices for meat, wool, and every: thing else that the Dominion sent overseas. "That would mean further demands lipon the Reserve Bank and, in turn, he trusted, fur- ! ther use of the public credit." On the subject of interest, Mr. Cobbe yesterday quoted the Labour mem-, ber for Rangitikei as having stated that it was the desire of his party that interest should go altogether. And when Mr. Cobbe made this quotation Government members said: "Hear, hear!" At Wanganm last year Mr. A. S. Richards said the policy of the Minister of Finance would be found in a few months time to be the soundest and safest. It will abolish interest usury, and the Government is definitely working for the abolition of interest. Later Mr. Richards added that he could assure the meeting that Labour would not use the orthodox broom of the past, but it had to move carefully. It would go 95 per cent of the way towards the goal of no interest. Such statements as these are disquieting. The Government should recognise that it cannpt have an indefinite and vaguely threatening policy without diminishing confidence. If, behind this talk, there is an intention to go further in banking control, that fact and the form of control should be made known at once. A sword cannot be kept dangling over the banks or any other vital institution without much harm being done. The banks are not, as the Minister of Lands so easily assumed, credit money factories, producing credit as a boot factory produces boots. The banks have shareholders who supply capital and customers who make deposits. Any suggestion of radical changes in the

system must create uneasiness among depositors. It is the depositors who very largely constitute the bank and provide its power to grant credit. It is their welfare, more even than the interests of shareholders, that every bank must study. A bank, therefore, is not an aggregation of .shareholding capital with a board of directors and staff. It is a section of the industrious and thrifty people of the country —workers, shopkeepers, producers, capitalists, and investors. Any action against the bank is action against these people/

Yesterday .the Minister of Finance wished to intervene in the debate to contradict Mr. Bodkin's suggestion that capital was being exported. He was anxious that tlie statements should not go uncontradicted over the weekend arid hastened to reassure members of the House and the people of the country that not a single .pound of New Zekland capital had gone out of the country which could not be explained. Mr. Nash was quite right to make the contradiction at once, though it may be pointed out that figures-similar to those cited by Mr. Bodkjn were the basis of a question asked by the Leader of the Opposition in his Budget speech and the only' reply made by the Prime Minister was a joking assurance that the Government was not burning money. Biit surely the Government can see that the other questions raised are equally disturbing and also call for a prompt reply. A Government member yesterday accused Mr. Wilkinson , of scaremongering" when he asked the Government's intentions regarding banking. Yet this was the feame Government member who two months ago made a forecast that a further step towards complete control of banking would be taken by the Government this session, and, at Wanganui, said the Government was definitely working to abolish interest. The scaremongers are not those who draw attention to these and similar statements and ask for an explicit and authoritative elucidation. Such requests are necessary and legitimate in the public interest, and the Government, for its own good and the welfare of the country, should reply to them frankly and promptly.