FINANCE CRITICS

Gisborne Herald, Volume LXXIII, Issue 22136, 26 September 1946, Page 3

FINANCE CRITICS

STATE BORROAX/ING RESERVE BANK FUNDS MR. NASH DEFENDS SCHEME (P.R.) WELLINGTON. Sept. 2G. Opposition members in. the House of Representatives yesterday afternoon had a lively, though indecisive argument. with the Minister of Finance, Mr. W. Nash, over the clause in the Finance Bill empowering the Reserve Bank to grant overdraft? t> any State department or statutory marketing organisation. It was contended by Mr. A Hamilton. (Oppos Wallace) that hie proposal looked like a further abuse of the monetary system. The country had more money that it could use, yet the Government kept on issuing mere and, in his judgment, the latest proposal was the biggest of tire inflation curses, creation of money which was not represented by real work. No doubt, he added, this was something the Minister had been forced tr do by left wii g supporters. "No Left-Wing Group" Mr. C. Carr, (Govt. Timaru): There is no such thing. The answer of the Minister was that his critic was simply living in dreamland because the clause represented a rational way of obtaining mo .ey by the Government by way of overdrafts instead of creating additional securities all the time . Instead of issuing Treasury bill?, they would simply write out a cheque and the security for an overdraft at present was £3i,000,000, which included over £10,000.000 worth of Government stock and a number of other securities.

Mr. W. S. Goosman, ((Oppos. -War kato): Where did you get this ;WckV The Minister: Wc paid none.y for it. Future Revenue as Security

If the Government wanted a further overdraft, he explained amid a running comment of Opposition interjections about paper money, they could get up to' the equivalent of a year’s estimated receipts without any trouble whatever. This au uo-ny was already written into the law.

The Minister agreed that past Governments needing money went to banks with private shareholders and borrowed funds which were really based on. the country’s security, and had to pay from 5 to 8 per cent interest. "We were really borrowing our own money," declared Mr. Nash, “and paying private shareholders the interest on it.”