RESERVE BANK

Gisborne Times, Volume LXXIII, Issue 12092, 3 November 1933, Page 5

RESERVE BANK

COMMITTEE STAGE OF BILL. i ’■ ’ ;• v . > . / ' •' . <*s*■ . ' '■ SHARES IN INTERNATIONAL SETTLEMENTS 1 BANK. HON. W. DOWNIE STEWART SEES NO DANGER. LABOR AJMENDMENT TO ALTER CLAUSE REJECTED. (Press Association). WELLINGTON, Nov. 2. Urgency was accorded . the passage of the Reserve Bank of New Zealand IV'll in its committee stage in the House of Representatives.'' : Speaking on the clause restricting iniio 'bank from purchasing shares ’ oi ' tanks other than the Bank of International Settlements, the :Le a der of the Opposition said, that the Labor Party felt that Ne\y' Zealand should base her ‘monetary system on internal conditions. She should not he tied to any monetary system overseas. He suggested* that New Zealand should put Her own banking house in order before* connecting herself with international conditions. He moved an amendment with the object of debarring the Reserve Bank from purchasing shares in the Bank of.lnternational Settlements. Mr. Forbes said the Bank of International Settlements had been set up to enable effect to be given to the financial arrangements of the League of Nations. This, bajik’s. purpose was to provide finance in instances where the League of Nations was satisfied that financial assist an re should be; given to any nation having the support of the League in any difficulty, or any war that might arise. It was also an institution for the purpose of collecting information which was

made available to banks which became shareholders. It would* be for Vftke directors of the Reserve Bank to decide whether th e advantages were such as to make, it advisable for the bank- to take shares in the Bank of International Settlements. The decision was left entirely in.the directors’ hands, as to whether they should accept any liability that would be incurred in shares in the international institution. Mr. Forbes continuing, pointed out that the Bank of International Settlements was not concerned with any question of currency. The internal monetary policy of the Dominion or of the Reserve Bank would not be affected in any way. The Hon. AY. Downie Stewart, said he thought that too much importance was being attached to. possible dangers arising under the clause. The country would be taking shares in IHo Bank of International Settlements*. and would require a voice in its policy-. ; If questions of international policy were to be opened up, snmhj It would be much wiser to have a 'face t-han not. He had always understood that those who held that tho depression was partly caused "by the international monetary policy, 1 suggested: that it could remove those causes. The country could not get out of its difficulties unless there was co-operation with other countries. He thought the directors of the Bank would be wise enough to see whether or not it was in New' Zealand’s interests to have shares in the Bank of International Settlements. The amendment was defeated by 4.3 votes to 26, and clause 1 was passedPROPOSED TRIBUNAL ON PURCHASE OF BANKS’ GOLD. Speaking on the clause relating to the taking over of the gold beld by trading banks, Mr. AVn’ght moved that in the event of any dispute over tho price of the gold between the. banks and the Government, the price should bn fixed by arbitration. He said that this provision had; been in the original Bill, and it deemed to be one of common justice." 'E® know that banks were unpopular, but they had just as much right fid, justice as anyone else. •

V LABOR LEADER SUPPORTS X GOVERNMENT. Mr. Savage, Leader of the Opposition. said this was one of the clauses in the Bill in which it was possible to find justice. Lnder the war legislation, the hanks had had their gold reserves protected, and had been enabled to carry out trading operations based on public credit, making huge profits They had abs o ' lately no moral claim to advantages of the fluctuations in the price of gold which they had been allowed to retain b>- Act of Parliament SERIOUS STATEMENT. Mr- An sell (C) expressed surprise at Mr. Wright's amendment. Jt asked for an impartial tribunal, but ho would like to ask if the Chief Justice was a shareholder in the Bank of New Zealand. Mr. Stallworthy: You are making. » very serious statement. Mr. Ansell said h e considered the Government’s decision was morally and legally correct. SHOULD NOT FEAR 1 tribunal. The Hon. Downie Stewart said, when he had introduced the Reserve Bank Bill last year; he had made provision for a tribunal,' arid if t m banks wore dissatisfied with the Preseiit provisions of the Bill it. V as very much their own fault,, because they had delayed the Bill which .be had introduced. M.r Stewart that Messrs Savage, Ansell and ot era, had based their - arguments : on the assumption' that the : decision the tribunal 'would '' go' against the Government. Surely if their case was so he considered the Mi ll -. aster mCFinanee had made out a very strong oase—there should he no ground for anticipating, that tlje> decision of an impartial tribunal would be in favour of the hanks.

r '- Mr. Lee (L) Who is- to iiament or the -Supreme Court? Mr. Stewart said that if some ar- ; rangement could be made whereby- it would b© possible to ensure the friendly co-operation of the banks ho believed that steps should be taken to make such an arrangement. WELL MERITED REBUKE. ■ ", - v- ; v • .... ,•x :■ - ... Replying to Mr. Ansell’s remark as to 'the. possibility of a judge having 'shares in the Bank' of New Zealand, Mr. Stewart said fhat surely Mr. Ansel! must know that .uridei- such circumstances a r ju|jge would refuse to act on the tribunal, ' AAIENDMENT DEFEATED BY ' 56 VOTES' TO 5. ' Afr. Coates s<v*d he* was sorry that he could not accept Air. Wright’s amendment, and he did not think he would be right -in suggesting that tbe House should adopt it. The clause indicated the considered opinion of the Government. There were s.ome who believed 'that the clause dealt unfairly with the banking institutions of New Zealand, and so far as he was concerned he was prepared to keen the. matter open. If the banks could shoiv they had a case — J’f between now and the time the Reservo Bank came into existence they could show that. Parliament had been treating them unfairly in. respect °*" the gold they hold—the matter could come before Parliament again. K e had not so far been convinced by the representations which had been made, but he recognised that the Government must be impartial in its judgment. So far, he had not seen anything which would justify an alteration in the clause. The amendment was defeated by 56 votes to 5. Those supporting Air. Wright were the Hon. W Downie Stewart, Alessrs Atmore, Hargest and Wilkinson.

FURTHER REJECTIONS Air. Jones (L) moved an amendment to the clause dealing with th e constitution of the board of directors, to the effect that the whole directorate should be appointed by tbe Got-ernor-General-in-Counoil. He said th e object was to make tbe bank a State institution. The amendment was defeated by 43 votes to 24. Air. Jordan moved an amendment designed to give vo-tino- power to the Secretary tc the Treasury (who is a member of the board under the provision of the Bill). Mr. Coates sal a the Secretary °f the Treasury would be in a stronger position if be was not compelled to vote. APPOINTMENT'S OF GOVERNOR AND DEPUTY-GOVERNOR. The amendment was defeated by 43 votes to 24. Bv another amendment Air. Savage, sought to provide that t-h® Governor and doputy-Governor of the bank should be appointed by the Government on each occasion. Air. Coates said the adoption of this amendment wcul'cl mean that shareholders would, have no say in the appointment of these officials. He pointed out that the report on the operations of the bank would he submitted to a mectinr; of shareholders, who, if they were satisfied with the administration, would recommend the reappointment of the officials. Whatever appointment was recommended by th e shareholders would have to be approved bv th© Government. The Alinister expressed the opinion that there was a definite advantage in the banks’ report being open to examination and approval by two distinct sections of the public—the shareholders and Parliament-

Mr. Poison (C.) said that he agreed that the governor of the bank should at all times be appointed by the State, but he was not satisfied with the wording of !Mr. Savage’s amendment. He himself would subsequently move an amendment which he considered would meet the position more satisfactorily. -•■Mr. Savage’s amendment was defeated by 39 to 2-5. ' Air. Coates then suggested tho postponeriient of-consideration of the clause. He said he had in mind an amendment wliich would set out that the borircl of directors should recommend the appointment of the governor and deputy-governor. • It would then be for the Governor-General-in-Coun-•cil to say whether these appointments were acceptable or not. The clause was postponed. Mr. Coleman (L.) moved to extend to members of Parliament and. to servants of the Crown the right to hold office as members of the Board. This was defeated by 40 to 24. The remaining clauses of the Bill were then passed.

MINISTER MOVES AMENDMENT, At the instance of the Minister for Finance, an amendment was made to the clause relating to shares in the bank. A proviso was inserted restricting t]ie issue of shares to British subjects who are ordinarily resident in New Zealand or who, having been so resident, may, at the time of allotment, temporarily be out of New Zealand for the purposes of their business or other sufficient reason. Mr. Fraser (L.) asked whethey it would be illegal, in the event of shares being listed on t]ie Stock Exchange, for them to be sold to any person other than a British subject. Mr. Coates ireplied in the affirmative/ The Minister explained that the amendment covered the point raised by Mr.; Wright yesterday. It was more satisfactory, because it did not debar a person who might temporarily he absent from the Dominion for some good reason from holding ; shares. Consideration of the clause relating to the appointment of the governor and: deputy-governor was then re- • shined.

Mr. Lye (L.) said that he and other Government members had given a great' deal' of thought to this matter. He had two suggestions to

-make (I) that the governor and the deputy-governor should be appointed by the Governor-General-in-Council on the recommendation of the Alinister after consultation .with the board; (2) that the governor he appointed by the State and the deputy-governor by the board. In the event of the latter suggestion being put into effect, he suggested that the governor should have a deliberative and a casting vote and the deputy-governor should he without a vote. If the former suggestion be adopted, he suggested that the voting should be in the usual manner, the governor having a deliberative and a casting vote.. Air L*ye mentioned that he had studied the machinery of tlie seventeen Reserve Banks in other countries and, in fifteen instances, the governor was appointed by a State head and not by the shareholders, “NOT POLITICAL.” Mr. Poison (C.) said that lie was satisfied the community would definitely prefer that the State should have control of its own machine.

Mr. Coates said that his suggestion that the appointments should be recommended by the board of directors and approved by tbe Governor-Gen-eral-in-Qouricil would maintain that element by removing any . suspicion that politics were participating in the running of tlio bank. Many people would say that, because the appointment was made by tbe Governor-General-in-Council, it was a political appointment and attention should be paid to this aspect, because tbe success of the bank so greatly depended on the public being satisfied that politics were not unduly entering into tho management of the bank. Air. Savage: “Unless it suits tlie board, no man will get -its recommendation.” Mr. Coates: “If he is not suitable to the Government or, if a deadlock arises, the matter will be dealt with by the Governor-General-in-Couricil. ’ ’ Air. Savage: “Why not make it a straight-out State appointment?” Mr. Jull (O.) said that he believed that there should be co-ordination between the board and the Government, but he thought the Alinister should make the recommendation. Air Coleman asked iwhat was the difference between th proposed amendment and the original clause. Air Coates said the meeting osbareholders would make its recommendation and go home. It iwomd not be possible to negotiate with the shareholders as it would with the directors.

APPOINTMENTS OF GO ATM! NOR AND DEPUTY-GOVERNOR.

On Air. Coates’s motion the clause was amended on the lines he bad* indicated, namely that the appointment of the Governor and deputy-Governoi (other than on the first occasion, when the appointment will bo made by the Governor-G-eTieral-in-Counc.il, on the recommendation of the board of directors.

The committee* stage was then completed. Air. Coates being applauded. The Bill was reported to the House at 12.45 and tbe third rending speeches wore commenced.