INFLUENCE OF BANKS

Gisborne Times, Volume LXXX, Issue 12199, 10 March 1934, Page 7

INFLUENCE OF BANKS

MUTUAL WITH THOSE OF ' COMMUNITY. STOOD UP WELL TO DEPRESSION MONETARY INQUIRY. (Press Association) | WELLNGTON, March 0. The examination of representatives of the Associated Banks by members of the Parliamentary Monetary Committee was continued yesterday aiternoon. Mr, H M. Eushworth asked Mr E. C: Fussell whether he admitted that during a. world-wide depression the power of sovereignty had passed from the Governments to the banks. Mr Fussell :.I do. not .admit that. « Air Rushworth:, Has any propertyincreased in value during the depression?: Mr x'ussell: The general trend has been downward.! ‘ , Mr Rushworth asked Mr .;Fussell if lie knew. Major Douglas had had to leave New Zealand because of fixed engagements in the United States imd in Canada; -•; -T Mr Fussell said he did not know that* . • Mr Rushworth: And that one of , the most piessing reasons was that he had been urged to call on President Roosevelt at Washington as soon as possible? Mr Fussell : I note the information. The Hon. W. Downie Stewart pointed oiit that the Government had recently taken the banks’ gold at parity, and not at the price asked by the hanks, and asked whether this 9 was not further evidence that sovereignty did not rest with banks. Mr Fussell: That indjeates that the banks have neither the sovereignty nor the sovereigns. OPPOSED TO HIGH EXCHANGE. Mr Stewart: Is not the fact that the Government put up the exchange rate against the advice of the hanks r. further indication that sovereigntyrests with the Government? Mr Fussel: Yes, that is a further indication. Mr Stewart: You consider that the banks in Njew Zealand have stood up to the depression as well as any banks in the world? Mr Fussell: That is so. •Mr Stewart; You agree that experience has shown that one of the greatest evils a country can have is weak banks ? Air Fussell: It is a calamity if the banks fail. Air Stewart asked whether the banks hud considered that there was need for safeguards to 'be placed over institutions outside the trading banks which were doing hanking business. Ala; Fussell replied that he c>o sidefed it necessary that there should be safeguards when they accepted deposit money* He added that he would like to see a cheaper credit policy-, but they could not- initiate such, a policy unless other financial institutions did likewise.

WEAKNESS OF DOUGLAS. . ' SCHEME. Mr ,Stewart; If the banks’ .reserves ■were monetised in the way suggested byMajor Douglas, would that, not reduce the capacity of the banks to make advances ? ' Mr Fussell: Yes. > Mr Stewart: It would also 'mean that there would be no reserves to tide.you. over ; in times; of storm? Mr Fussell: - That is so. You cannot have .your cake and eat it, too. '‘ln a . physical sense, New Zealand to-day is better than “ever it was ?” -Mr F. Langstone asked. • Mr .Fussell: Yes • Air-Langstone : Then there seems to be something; wrong iwith the fiananeial side of it; doesn’t there ? Mr Fussell: Oh'no! I wouldn’t agree‘there.

Mr Langs tone asked whether the influence of the hanks was not detiimental to the community-as a whole. Mr Fussell replied that the shareholders came from all sections of the community, and their interests as a body were mutual with those of the communitj. Mr Langstone inquired whether .the hanks exerted any influence on the Government. Mr .Fussell said they, advised - the Government from time to time when they wore acting as the - Governj merit's financial advisers. . The examination of the bankers’ representatives was adjourned, no date being fixed-foiva resumption.