RESERVE BANK BILL

Evening Star, Issue 21571, 17 November 1933, Page 2

RESERVE BANK BILL

SIR FRANCIS BELL'S ATTACK MEASURE BEFORE COUNCIL [Per United Press Association.] WELLINGTON, November 16. In the Legislative Council, the Speaker (Sir Walter Carncross) ruled that Sir Francis Bell, having given advice to the banks on the Government’s method of taking over the gold reserve of the banks, could not speak on that particular question during consideration of the Reserve Bank of New' Zealand Bill, but was not debarred from discussing other aspects of the measure. Continuing the debate on the second reading of the Bill, the Hon. C. J. Carrington said that when the British Government required gold for the payment of the American debt it had bought the gold from the Bank of England at the book value. He hoped the bank would be free from political control. Hon. M. Fagan said he was opposed to the Bill, not because of what it proposed to do, but because of what it left undone. There would he no cure for unemployment until there was monetary reform. It was a thousand pities the Seddon Government had not made the Bank of New Zealand a straightout State institution. Even to-day it was not too late. Hon. D. Buddo said a central bank would facilitate the dominion’s international transactions. Sir Francis Bell said the institution proposed by the Bill was not the institution which the Government had been advised by experts to create, but it was dangerous machinery for the Government’s successors. The Minister of Finance (Mr Coates), in a pamphlet which he had issued on the subject, had quoted authorities on central banking, but all of these were strenuously opposed to the principle of political interference or control. The suggestion that a central bank was urgent was proved manifestly incorrect by the banking facilities which were at present provided by the trading banks; in fact, it was regarded by many as a mischievous interference with banking in the dominion at the suggestion of English experts. The bank might be justified, however, on the ground of convenience, and as he was not an expert he was not prepared to dispute that point. But it could not he argued that the position in .New Zealand was similar to. that in Australia or Canada, which were federal dominions. If, however, the bank was justified on the ground of convenience as stipulated by the experts the same experts also contended that it was essential there should be no political control. The Bank of England was governed by the .shareholders, and the English experts would not recommend the hybrid proposed.by the Bill; in fact, they had warned the Government that it there was any suspicion of political control the position would be worse than it was at present. The Bill introduced last session proposed that the bank should stabilise the currency, but this proposal was dropped from the present measure as it was not consistent with the policy of a high exchange. The bank had been given tho right of note issue, but no sole right, and if a satisfactory explanation was not given of this he would move an amendment giving the bank that sole right. The debate was adjourned on the motion of Sir James Allen, and the Council rose at 4.45 p.m. until to-morrow.