RESERVE BANK

Gisborne Times, Volume LXXIII, Issue 12090, 1 November 1933, Page 5

RESERVE BANK

SECOND READING DEBATE

SEIZURE OE GOLD FROM trading banks. MR. WRIGHT’S EMPHATIC CONDEMNATION. TWICE CHECKED BY MR. ' SPEAKER. (Press Associationj WELLINGTON, Oct, 31 Urgency was accorded the Reserve Bank Bill in the House of Representatives to-day. Replying to Mr. Savage, Leader of the Opposition, Mr. Forbes sa id the Government was not so optimistic as to expect that the Bill would he passed during the current sitting, hut it was endeavoring to ensure that reasonable progress would he marie.

Continuing the. debate on the second reading. Air. Murdoch (C), said that if the New Zealand banking system w as linked up with the Bank of England,' there would be nothing to fear for the Dominion’s monetary system. The Bank of England had stood the test of time, and was standing up to the present crisis in a unique 'manner. tie said the Bill gave Parliament definite control over the monetary system, and this would be found to be most satisfactory. New Zealand was niff rushing blindly into the institution of a reserve bank. Reserve banks haj been successful wherever they had been tried-

COURT DECISION ON GOLD TRA NSFERS SU G GESTED.

Mr. Parry (L.) said that Labor believed that public credit should be controlled by the State, and employed for the country’s development. The Bill wuold not help the country out of its difficulties.

Mr. Endean (C. ) approving the Bill, said that the appointment of shareholders’ directors was a great safeguard. They could be trusted to select men of great knowledge and integrity. Regarding the governor, the Government should even go outsi tie New Zealand if necessary to get a man with . the widest knowledge. The transfer of the gold question should be dealt with bv a tribunal composed of Supreme Court judges. The banks could put up a case with justice, and tjie Government had to give attention. The gold was owned by tlie banks—earned by their trading negotiations. Mr. McKeeii (L.) asked how the Reserve Bank would prevent a slump. It would have no control over the six proprietary banks. It appeared that Parliament was going to tax the people by £1.000,000 to secure £500,000 worth of private capital. Why should the credit of tlie nation be pledged for the sake of a few. “NO ONE WANTS RESERVE BANK.” Opposing the Bill, -Mr. McDougall likened the establishment of the Central Bank to the construction of main highways parallel to railways. No one wanted a Reserve Bank, an institution which would only accentuate the present difficulties. If the people could pull through the slump of the ’eighties without a Central Bank they could do the same to-day. Mr. Howard (L.) said that most of the Government speakers had started by praising tlie Bill and concluded bv condemning it. If they were all asked to delete the clauses to which they objected, there would be very little of the Bill left.

Mr. Wrighl ((-). said reserve banks l,ncl not been successful every\vbere. He contended that the reserve bank in the United States had been largely responsible for the world-wide slump. Ho declared that if the Government had wished to impose its currency policy on the country, the trad ins; banks would not have hindered it. but would have given eveiJ assistance It appealed- to him that the Reserve Bank would have to carry the whole burden of the exchange manipulation, and he suggested that was the reason tor the proposal to establish it. It "as being created so that the Government could “stand from underneath when the crash comes.’’ It had been claimed that the Reserve Bank would assist in the rehabilitation of tl'c countryHe said the Reserve Bank could not increase the prices of commodities, but would have to act just as other banks had acted. The Minister of Finance had stated that lie was going to take gold cut of the coffers o* the banks at its book value. and sell it at its market value- “If T voted for that sort of thing,” sa >d Mr. Wright, “1 would feel that I ' va s in the company of Dick Turpin, Fed Kelly and other brigands.” Mr. Speaker: “I think I must check the hoii. member. He is reflecting on other members-' ’ Mr, Wright; “Well, I will say that if I voted .for the proposal I would be admitting, I do not understand the rudiments of common honesty.” Mr. Speaker again called MrWright to order. Mr. Wright; “J am expressing my own opinion. Perhaps I will be permitted to say that this proposal amounts to confiscation. The Minister of Finance says that Uie gold is the property of tho people, but it "'ill take'" a. lot to convince me of that.”

PARLIAMENT WILL HAVE NO SAY FOR SEVEN YEARS. M.r. Armstrong (L) alleged that tho main purpose of the Bill was to make it more difficult for currency re,form to be brought about. That wa s the purpose of those people who had instructed tile Government in the matter. He asked whether the Bill proposed to do anything to stabilise tlie value of money or whether the value of money would be fixed by the more, powerful institutions with which the country would be associated as the result of passing the Bill. He was' afraid that the Bill would not only load to co-operation with other financial institutions, but would also lead to domination. “As far a-s Parliament is concerned wo will have no say for seven years,'” he added.

CENTRAL BANKS SUPPORTED BY INTEKN ATION AL CON FERENCES.

Mr Budkin (C) -said ho did u ot know of one international conference since 1920 that had not affirmed the principle of central reserve banking. World prosperity could only be achieved by international co-operation in an endeavor to raise the price level. He suggested there was a weakness in. the Bill, in that it did not provide for the representation of stock firms. Mr. Lee (L) said that increased production and reduced wages had failed to get rid of the depression, and now they were going to try a central bank. He contended that the Reserve Bank Bill did not P r °- pose to bring about the relorni of the banking system in the interests of the People. Deflationary legislation bad driven out of existence about £40,00,000 worth of purchasing power, hut the Bill would not restore this ■money. Both inflation and deflation should be rejected, and money should be placed on a commodity basis.

PREVENTION OF PRICE FLUCTUATIONS.

Mr. Veitcli said he believed the central banking system would eventually be established throughout the world for the purpose of preventing price fluctuations, it was vitally important that there should he an international monetary standard, and to make this possible world control was necessary. Tiie one great barrier against the freedom of trade between New Zealand and the United Kingdom was not lack of a central bank, but debasement of the Dominion’s currency. If the management of the central hank was to he given a free hand to fix the rate of exchange, great benelit would he conferred.

Mr Veitch said that if the Minister for Finance would give' an assurance that the bank directorate would be allowed to fix the exchange rate in accordance with the balance of trade and without political interference lie would support the Bill, but, if that assurance was not forthcofing. he would oppose it.

Mr. Samuel (C) intimated that he would vote against the Bill on the ground that it was a last desperate endeavor to prop up the present financial system—to preserve the monetary system, the domination of which had enslaved the great percentage of the population of the world for the benefit of a few. Mr. Broadfoot (C) expressed the opinion that the capital of the bank should not be increased without the consent of Parliament. LABOR AMENDMENT DEFEATEDOn the division being taken at midnight. tile Labor amendment on the second reading was defeated by 43 votes to 28 . Messrs Atrnore (I.). Rushworth (C.P.), Samuel (C.). Stallworthy (I.) Tir'katene (I.), Veitch (C.) Wilkinson (I.) and Wright joined Labor members in voting for the amendment. MR COATES ANGRY WITH MR WRIGHT “VERY PERSONAL IN HIS ATTITUDE” Replying to the debate on the second reading, Air Coates said it was difficult to understand Air Veitch's point of' view. The Alinister said that one of the principal purposes o.f the bank would be to consider the economic position of the country. It would play a very ’important part in maintaining the trade balance of our own country. Air Coates said that Air Wright had been very personal in his comments on the Bill. “He and I were once closely associated’’, the Alinister added, “but now lie seems to adopt a personal attitude in criticism of anything with which I am concerned. 1 ’ The Alinister said it was noticeable that., when Air AVright had finished quoting certain figures, a very prominent banker bad left the House. “Now I ask him who is in the hands of the banks?” Air AVright: “I am not.” Air Coates said that Air AVright had left the impression that he was being “worked’’ by the banks.

Mr Wright: “I am not. I haven’t an overdraft and never liad one.” Mr Coates said that Mr Wright 'had left a very definite impression on members and it avqs for him to clear himself. . Replying to Mr Rusliworth. Mr Coates said that Parliament would have the right, at any time to amend the Bill- Mr Rusliworth had cicated the impression that the whole Bill was characterised by suspicion. “I. have never known anyone who can preach suspicion as ho does”, the Minister said. “They l are unworthy suspicions. It should be accepted that most men in this country are honest men and want to do their best for New Zealand ” Tlie Bill was read a second time by -13 to 28. AMENDMENT RULED OUT Mr Rusliworth then moved: “That it be an instructioji to the committee on the Bill that it lias, power to set up a special committee composed ;of representatives of all groups in the, House to conduct full and open enquiries into the existing monetary and banking system of the Dominion and possible alternatives and that ‘the report of this enquiry be included when the Bill is reported back to the House.” Mr Speaker ruled the amendment out of order. He said that it sought to give a most unusual power winch was quite outskle the function of the committee on the Bill. The House rose at l-3o a.m.