RESERVE BANKING POLICY

Evening Post, Volume CXXXI, Issue 101, 1 May 1941, Page 8

RESERVE BANKING POLICY

It is announced by the Minister of Finance that the Deputy Governor of the Reserve Bank has been appointed Acting Governor for three months as from May 1. The term of Mr. Lefeaux as Governor expired at the end of last year and the Government did not extend it. Instead it authorised the Deputy Governor to exercise certain of the Governor's powers. Obviously this was a temporary arrangement. Now, after four months, a further temporary arrangement has been made. This is, to say the least, highly unsatisfactory. The importance of continuity in the direction of the Reserve Bank was recognised in the provision for seven-year terms of appointment for the Governor and Deputy Governor. Temporary appointments are quite inconsistent with this provision and are excusable only in an unforeseen emergency. Here there was no emergency. The dates of expiry of existing appointments were well known, and the Government could surely have made its decisions, either for extension of the terms or for the appointment of successors so as to avoid acting appointments. , The matter is of more than passing moment. It is essential at this critical stage that reserve banking policy should have the strength that comes from consistency and continuity. That cannot be built up on a series of temporary appointments. We have never approved of the changes in the statute by which the Labour Government substituted political for the non-political control insisted upon by Sir Otto Niemeyer. But with a system of continuous administration the political control was subject to some check. The Bank was able to advise, even though the Government might disregard the advice. Advice was disregarded when the Bank warned of the danger of loss of sterling. Subsequent events proved the Bank to be wholly right. Before relinquishing his office Mr. Lefeaux gave the Government other advice, the nature of which has not been disclosed apparently because it did not agree with Government plans. Is it this that has led to the present resort to temporary appointments? Short-term direction must hinder the promotion of a longterm banking policy. Such a policy may be unwelcome to a Government which wants full political control, but the people have a right to know what the non-political experts advise and why the Government rejects that advice.