A PUNGENT CRITIC.

Evening Star, Issue 21581, 29 November 1933, Page 8

A PUNGENT CRITIC.

According to Mr Buckland (its chairman), tho Bank of New South Wales was not one of those which opposed the establishment of a central reserve bank in New Zealand. It does, however, oppose the legislation empowering the New Zealand Government to take over the banks’ gold reserves at the old fixed mint price of £3 17s IQJd per oz. The chairman’s speech at the bank’s annual meeting in Sydney yesterday will have wide publicity in Australia, and the criticism of the action of the New Zealand Parliament contained in it will certainly not improve New Zealand’s credit or standing in the eyes oE Australians. Mr Buckland put the position very clearly. The banks in Now Zealand hold gold far in excess of legal requirements for note issue reserves. The Government will acquire the whole of it and place “ any profits, so called, which would arise from the sale of this gold in the open market to the public account.” Profits is a common word in commercial transactions, and Mr Buckland queries its use here because he distinguishes this transaction by tho name confiscation. “ Taxation in the form of confiscation is not countenanced either in Great Britain or Australia,” he remarks. It happens that wo used the same word in connection with this transaction when tho Bill was reintroduced this session, and in opposing the proposal asked where this sort of thing was going to stop, such a precedent having been once established. Mr Buckland has expressed similar concern: “There is nothing to guarantee that future Governments of that country will not follow the example and confiscate other property at predetermined prices.” lie makes no secret ol the risk which New Zealand runs by resort to such measures. Our credit is impaired thereby, and Mr Buckland is frank to a degree on New Zealand’s peculiar need at the present moment for abstaining from anything prejudicial to her standing in the eyes of the world; He speaks of “ the despex--ate financial position ” of the New Zealand Government, whose increasing deficits “ do not show the whole seriousness of tho position.” He states that New Zealand has been living on her reserves for some years past, and evidently lie disregards the supplementing of revenue by throwing in reserves in predicting a deficit for the current year alarmingly in excess of our own Treasury’s estimate. This, then, is a possible explanation of the fact that the New Zealand Government has to pay the banks double the rate for discounting its Treasury bills that Australian Governments pay. Never before, in our memory, has a Now Zealand Government received similar castigation from outside our shores, and coining from such a source this cannot be brushed aside as irresponsible or uninformed criticism. That our Government proposes to liquidate part of its liabilities to the banks by legalising the confiscation of some of tho banks’ property may be one reason why the banks are refraining from contesting the Government’s action in the courts. The Government’s expedition in the establishment of the reserve bank daily becomes more understandable.