THE BANK BILL

Evening Post, Volume CXL, Issue 118, 15 November 1945, Page 9

THE BANK BILL

ATTACK

DANGER OF INFLATION

"Urgency was again taken by the Prime Minister for the second "reading debate of the Bank of New Zealand Bill in the House of Representatives last night, but in moving the motion Mr. Fraser explained that it was not his intention to sit beyond midnight. The was challenged by the Opposition, a division taking place in which the Government was successful by 37 votes to 33. The House rose at 12.3 a.m. There was a lack of sparkle in last night's discussion, those who spoke following for the most part points made by 'those who took part in the debate last week. Mr. Fraser indicated that today he intended to go on until the second reading debate was finished and that would mean a fairly late sitting.

The taking over of the Bank of (New Zealand was entirely unnecessary and was being done, in the bpinion of many people, to appease She member for Waimarino and his followers, said Mr. W. J. Broadfoot (National, Waitomo). In his opinion :the circus world, in not securing the .Minister of Finance, lost the services ,of the ablest somersaulter and the "finest flip-thrower that the world had Sever known. Mr. Broadfoot quoted which he stated had been tattered by the Minister in 1943 as to jiwhy it was unnecesary to take over "the bank.

, Theoretically, continued Mr. Broadifoot. there was a strong case for the IGovernment to have control of the (banking system, but experience had iproved that the temptation of Governments to debauch a reserve bank ■were irresistible, and that had been (amply proved in the abuse of the Reserve Bank of this Dominion. It had ibeen suggested that directors of the ißank of New Zealand when under State control would be strong enough to resist the blandishments of the ;Minister and that they would have :Some say in policy matters, but it was •perfectly clear that the Minister was :once again all-powerful. The governor <and directors of the Central Reserve [Bank had not been able to prevent the Government resorting to inflation •of the currency and there seemed to the no limit to the powers of the Minister. The Government had persisted ■in inflating and inflating and the directors did not, or could not, stop :it. How, then, could the manager and directors of the Bank of New .Zealand stop the policy of the Government when the bank was taken over by the Government? Inflation of the currency was the ■.cruellest method of despoiling the [people, and the worst sufferers were .the working men and women. The [richer people had more pounds to jmeet the increasing costs. In his '.opinion, said Mr. Broadfoot, the wages •of everybody in the country had been cut 50 per cent, by the iniquitous business of inflation, and by the same method everybody's savings had been cut in half. One wondered where ■the Minister would stop in his inflationary policy. He had offered cash fto the shareholders of the Bank of New Zealand.

It was considered inflation to pay a ?hard-earned gratuity in one lump sum to returning soldiers, but it was apparently not considered inflation to pour out nine millions of money to buy out the shareholders of the Bank of New Zealand.

CONTROL BY "BITS OF PAPER."

The Minister of Works (Mr. Semple) •said that the last depression should never have happened. It was an evilly-designed scheme perpetrated against men and women by the monopolists and money gangsters of the world. No one could justify the cruelty that was imposed "upon innocent and suffering humanity after the last war. Why should money—bits of silver, or bits of gold, or bits of paper control' the destiny of the human race? It had been done for centuries, and it was time it was stopped. Mr. R. M. Algie (National, Eerau,era) said that however the position ■was looked at the Government decision to take over the bank was a compulsory acquisition of private property. As far as he knew there were two grounds only on which that could be done. The first was that the persons who had the property had misused it or abused it and that charge could not be laid at the feet ot the shareholders of the Bank of New ■Zealand. The second ground for taking private property was, if it could be proved that it was m the public interest, that there was no other alternative, and that compensation would be paid assessed by a fair method. The price that should be paid Should be assessed by an independent tribunal, and not by the body that took the property. When the transfer was compulsory and to political control it should be more fair than ever. There was already a State bank m New Zealand-—the Reserve Bank, said Mr Algie, who added that in 1938, when the Dominion's financial position had become critical, there was an obligation on the Bank to -produce the sterling needed, but the Minister of Finance had not been able to get a Bill through relieving the Bank of its obligations. The former Governor of the Reserve Bank, Mr. Lefeaux, had stated that but for that action the (bank would have been on the verge of bankruptcy. There was no great outcry over that, but much had been said about the future of the Bank of New Zealand in 1894 and the fact that the Government had had to come to its assistance. It was political control that had brought the Reserve Bank to the verge of bankruptcy.

ATTACK ON CITADEL OF FINANCE

Mr H. Atmore (Independent, Nelson) said the Bill was one of the greatest measures that had been introduced and had its parallel in Britain by the decision of the United Kingdom Government to take over the Bank of England. The Bill was one of the landmarks of Now Zealand legislation—it was an attack on the citadel of finance. He urged the Government not to falter in bringing in a policy that would make the taking over of the bank something more than an empty gesture. The success of the scheme depended on whether the bank would function for the people, not on the .mere change of ownership. He

predicted that in 10 years' time there would not be a private bank in the world. If the Opposition became the Government he suggested it would not be "game" to repeal the measure, but would carry on with the legislation as passed. If the bank operated in the interests of the people as a whole it would be a torch for the whole world as far as finance was concerned.

"Here we are on the seventy-first sitting day of this session dealing with a measure which has no real relationship to the real economic problems that are facing the country at the present time, and I say that during the 20 weeks we have sat we, the responsible representatives of the people, have failed, and failed completely, to face up to any of the major economic problems," said Mr. W. A. Sheat (National, Patea). In wasting time on legislation which was not vital to a solution of any of the problems members were falling down on their jobs. The Minister of Finance, said Mr. Sheat, already controlled the whole of the export and import trade, and he controlled the Reserve Bank, the State Advances Corporation, and every financial institution of the Government; and now, through the operation of the present legislation, he was going to establish control over the major financial institution of the country. The Bill was not a measure that affected only tlie directors or the shareholders of the bank —it would give the Minister ultimate control over the financial resources of the customers of the bank.

"LUST FOR POWER."

"The Minister has agreed to go ahead with the proposal because his lust for power has overcome his objections on ethical grounds to the taking over of the bank," said Mr. Sheat. "He sees in this measure a means of further tightening the grip over the economic life of this country, and through the control it will give him over the resources of all those who deal with the Bank of New Zealand there is no doubt that his power for good or evil will be immeasurably increased. I think it is wrong that this House should pass a measure that invests further power in a Minister who already exercises power so vast that he is virtually the dictator of New Zealand."

The function of a Minister of Finance was to look after the money necessary to run the fundamental services of the country, but in the last 10 years his control had increased to the whole of the economic life of the Dominion, which, because of that control, was no longer self-governing. Mr. C. R. Petrie (Government, Otahuhu) said that the control of the present directors of the bank had actually been nominal, because their decisions had always been guided by the general manager and the executive officers. However, the unfortunate thing about that system was that the bank manager had two loyalties, one being to his shareholders and the other to his customers. He had none to his country, for, he had a definite duty to secure for the private shareholders the maximum profit with the least risk of the bank's capital and deposits. The intention of the Bill was that without violating the principles of banking, the general manager of the bank could easily change his policy and outlook, and use the resources of the bank for the development of the country. Mr. H. M. Oram (National, Manawatu): Without additional risk?

Mr. Petrie: "What is risk? I don't wish to waste time over that." He contended that the capacity of the Dominion to expand depended largely on the credit policy of the country. Money would be required for development, and there was always danger in allowing credit to get into the wrong hands. Much spurious sympathy with the bank's shareholders had been expressed by the Opposition, but they would find that they could not interfere with democracy on the march. The Opposition had become a suicide squad for vested interest. Mr. F. Langstone (Government, Waimarino): We are passing a Coroner's Bill for that purpose too.

A POLITICAL MOTIVE

Mr. C. G. E. Harker (National, Waipawa) said the Opposition agreed that the banking system could be made more useful to the country, but the aim of the Bill was to make it more useful to the politicians. The whole principle of taking over the bank compulsorily by a Govex-nment which constituted itself the fixer and payer of the price was bad in principle and essence. There was no cure for the banking question by the mere acquisition of a bank if it was to be run on existing principles as suggested.by the Minister of Finance. There was still less cure if it was to be run for party political purposes as had been suggested by other Government members, whose sole idea, as they themselves had expressed it, was that the matter, especially, the matter of conditions of purchase and the purchase, should be decided on moral principles; and not on sound economics but on a pure policy of the expediency of the moment.

Mr. A. E. Armstrong (Government, Napier) submitted that the public interest was in danger by the ownership and operation of the credit and currency by private enterprise. That was the reason for the decision by the Government, which represented the people, tQ take over the ownership and control of the Bank of New Zealand.