BANKING CONTROL

Evening Star, Issue 22308, 7 April 1936, Page 3

BANKING CONTROL

URGENCY FUR LABOUR’S BILL OPPOSITION PROTESTS AGAINST HASTE GOVERNMENT INFLEXIBLE [From Ocn Pakliahextakt Reporter.] WED LI NG TON, April 0. Having refused to adopt the Opposition suggestion that the Deserve Bank Bill be submitted to investigation by the Public Accounts Committee of the House, the Government heard another protest in the House to-day from .Mr Forbes, when the Prime Minister moved that urgency be accorded the measure. This faced members with the task of passing it through its second reading, the general discussion stage of committee when there is detailed examination, and the third reading before the day’s sitting closed. When Mr Savage moved the urgency motion without comment he was asked by Mr Forbes to remember the Standing Order that reasons .must be given. “ I’ll give them,” replied the 'Prime Minister, who reminded members that they were anxious to adjourn on Wednesday over Easter, and the Government only desired two Bills passed beforehand/ Therefore, it was necessary to make substantial progress on this Bill in particular, so that lie proposed to go right through, following the good example shown by their predecessors. (Laughter.) There was no difficulty over adopting the urgency motion, and the Government members assisted to expedite matters by refraining from answering several Opposition speeches. Mr Forbes led off with more comment about haste, though he remarked Parliament was often called a slow institution. Mr 1 Parry: You murdered that. Mr Forbes recalled Labour protests when in Opposition, but suggested that no Bill had been bullocked through the House as this one. All he could do was to make his protest against Parliament being treated with such contempt. Turning to the banking question, lie reminded the House of the beginnings of the Reserve Bank, on which a report was presented by Sir Otto Niemeyer. (Loud laughter from the Government members.)

“ There’s a good deal of laughter when a man is mentioned who is looked upon as one of the outstanding figures in the financial world,” said Air Forbes, in astonished tones. Government members evidently, he continued, were going to disregard all the experience and knowledge of the past, but he would set that against all the laughter. He warned the country against the dangerous nature of the over-riding powers given the Government to control currency and credit, though he admitted that it might not follow that there would be anything revolutionary. As for the Prime Alinister saying he was not a banker, but he had made a lifelong study of banking, it seemed that Air Savage must be a super-banker, because it was he who would give the order to the governor of the Reserve Bank. His own opinion was that the Prime Minister redd one side, and was more concerned with politics. ” Nothing new in that,” interjected Air Richards, when the Opposition leader mentioned the Government’s new powers to borrow from the Reserve Bank. Air Forbes retorted that there was no limit except the sky. and it would be more reassuring if the Government would mention a sum, though the Finance Minister would have some difficulty in counting up all his colleagues had promised as they toured the country. He had read the newspapers closely to find how much was required of him. Not only were there promises, but the sales tax was to be abolished, and gold duty abandoned. Those who were thinking of establishing new industries or developing a business were becoming alarmed at the possibility of the already high taxation’ being doubled or trebled. He was extremely dubious over the nature of the political control to be exercised by the Government over the Reserve Bank, because his experience of those members as Oppositionists was that they were quite without a sense of financial responsibility, while no party was so much under the domination of outside organisations as Labour. He suggested that the coming Easter conference of the Labour Party would really determine what the Labour Government was to do. It decided the policy and platform. Air Parry: What clause of the Bill? Mr Forbes added that the responsibility should be taken by Parliament. If the matter were left to the Alinister of Finance he would have a greater feeling of assurance. As the debate continued in a most one-sided manner the Oppositionists became ironical over ihe ” dumb dogs ” on the Government benches. Mr Broadfoot tried to provoke them, hut unsuccessfully, with the jibe, ‘‘ Success in life is the hardest thing to bear, and from the way they are pushing this through'it looks as if they are drunk with power. (Laughter.) It suggests that the Government has no more measures ready.” Mr Armstrong; Yon wait awhile. A half-hour from Mr Smith (New Plymouth) was punctuated with Government interruption. In a caustic review of the Government’s promises he declared that the situation reminded him of a strike incident on the West Coast, when a public meeting was held to raise money for the strikers’ families to go to the pictures. The Government was going to distribute extra largesse, and the relief workers and their children could go to the pictures. It would brighten the lives of the womenfolk. They were going to get guaranted prices, and good farmers would spend the extra money to still further increase their output, which would cause a glut in the market. AVhen the Oppositionist moved for an extension of Mr Smith’s half hour Air M'Dougall prevented the adoption of the motion with a loud “ No.” Mr Smith retorted that he did not mind the objector from Mataura, as everybody knew him, but lie saw the courtesies of the House being whittled away, for the usual practice of a Alinister following the leader of the Opposition had not been adopted. Mr M'Dougall: We have had enough of this tripe already. “ This Bill will not realise the aspirations of the Prime Minister,” was the prediction of Mr Atm ore (Independent, Nelson). There were defects in it, but he went on to show his enthusiastic approval of the Bill as a challenge to the power which dominated the whole world—the unseen power of finance, which, as older members knew, had for four years directed the policy of New Zealand’s Parliament.

As tlie debate wore on there was a steady objection to any extension ol time, even All' Atniore. favourable to the Hill, failing to secure this (privilege, which was negatived on the voice of a Government member. .

Another development was Mr Speaker's ruling that constant references to the Government's failure to take part m the debate constituted tedious repetition, and must cease. Mr Poison (Stratford) broke new ground lale in the evening with the announcement that he was one of the members of the Opposition who favoured the principle of the Bill. He believed in Stale control of the Reserve Hank, a principle recognised not only tlnougbout Australasia, but in most parts of the world where the central bank system prevailed. But the speech of the Minister of Finance made him uneasy, for there was a great deal of difference between State control and political control, and the Bill provided absolutely for putting into the hands of the Minister of Finance and his colleagues the control of the whole banking system of the Dominion, to do what they liked with it. Mr Poison added that he was not afraid of managed currency, and would not object to inflation along proper lines, because the deflation of the last few years was worse; but inflation should be controlled by men not subject to political influences, and if the Bill had not contained this feature he would have had nothing to, say against it. “ What is going to happen to the hundreds of thousands of thrifty people who have put their money into the Post Office Savings Bank?” asked Mr Dickie (Opposition. Patea). “Is the Government going to pay them 3 per cent, when it can get money for nothing?” The Prime Minister: What happens to them now ? Air Dickie retorted that this was no answer, and it was a matter of great urgency, lor these people wanted to know. Guaranteed prices would not operate until August or September, so what was the reason for the hurry over the Bill? He suggested that the reason was that the Government wished to grab the credit of the exporters of the Dominion. The Minister knew that if the sterling assets in London became depleted depreciation would be the result. The House was told he was going to mobilise credit. What it meant was that he was going to grab private credit. The Dominion lived on the goodwill of its best customer, who played the game by us. Now we were departing from a hanking system which had stood the test of time in Britain and New Zealand the, banks had stood by the people in times of depression. A Labour Member; By closing your overdraft. Mr Dickie; Not on your life! If you were a reliable customer they played the game, and did not interfere with you. though they could not grant you further accommodation. The Minister of Finance opened his reply by dealing with tlio question of savings bank interest. He quoted the present scale, declaring that the answer to Mr Dickie’s question was that the interest would continue despite the malicious propaganda issued by the party to which the member for Patea belonged, and in spite of the malicious and vicious advertisements it sent out prior to the election. “ Despite that the Post Office Savings Bank depositors to get their money, and they are inclined to thipk so, because the deposits are reaching record figures, and there was an excess of deposits over withdrawals last month of £310,000.” The Minister of Finance accused Mr Dickie of trying to create the unjust inference that the Government was grabbing private credits. “ There is not a man who has produced for export who will not,” he said, “ get the full price of his product here in New Zealand for everything lie exports.” Mr Dickie: That’s not the point. It's an evasion. The Minister: Everyone who exports will be paid his price in sound New Zealand currency. Mr Dickie; He will not be allowed to get goods in return. You cannot get away from that.

Mr Nash; The procedure to be followed is that the man who produces the products null be paid in New Zealand currency in New Zealand. The sterling exchange built up from the sale of those products in Loudon will be under the control of the Reserve Bank, and if any person in New Zealand shows that he has a legitimate claim to sterling exchange, ho will be able to get it. Mr Dickie: Who is the judge? The Minister; “They have been talking five or six hours, and don’t like the answer.” As for any British deposits in New Zealand, he assured the House that if the holders required credits in London they would get them. Mr Hamilton: To-day? The Minister; Yes, and to-morrow, or next year.

Answering another question, whether credits would bo available for all imports, Mr Nash declared that there had been a lot of humbug talked about the possibility of corrupt government, though it was not suggested that the present administration was corrupt, and that there was a difference between State and political control. State control could only be exercised by Parliament, controlled by a political party. Mr Poison: Not necessarily. There could be a board. .

Mr Nash, reverting io control ot credit, said. “ We wilj use the London credit first to pay interest on debt and some proportion of redemption; then the 'remainder will he .automatically made available for imports by carrying out reciprocal trade agreements for the purchase of British goods. Mr Poison: How are you going to encourage industries here? The Minister: There’s no way in which we can get paid for our exports except by commodities. We will endeavour as las as is humanly possible to see that those goods which can be made economically here are manufactured, and, if not, we will purchase from the Old Country, with the credits obtained from the sale of our exports. Another important point raised during the debate was that of how the assets against which the Reserve Bank will be asked to make advances would be valued. The Minister's answer lo this question was that every project lor wnich money was required would have to be ratified by Parliament, through the procedure connected with the Estimates, for specific purposes such as the construction ol raihvays, the building of houses, and, if circumstances warranted and there were idle hands and raw material, the construction of schools. ‘‘ And" also to remove the frightful disgrace in this Dominion affecting our mental hospitals, with their overcrowded and horrible conditions, which have been lasting for years, and ought to be avoided.” Mr Smith: Will that apply to the Gisborne and South Island railways? The Minister replied that he was doubtful because the Government had already said the Gisborne line would be constructed, and this could be debated on the Railway Bill. But before railways were constructed there would be an investigation. Parliament would give the authorisation and the necessary credit, and it would he clone. It had been asked whether the Reserve Bank would be subject to the political machine. It will be subject to tbe Government of this country,” declared Mr Nash. “ and the Cabinet is subject to this House.”