N.Z.

Grey River Argus, 29 June 1945, Page 6

N.Z.

. \ '\ls VIEWS < ■•■<'■ 'j Y;>:;.>" : ’ ■alisation E IN REPLY annual meeting of New Zealand shareChairman of Directors, MMffA. T. Donnelly, stated.'— I now come to deal with the pioposal by the Government to> buy the private shareholders’ interest m the bank. It has been decided that 1 Should take the responsibility for this nart of the address. It has oeen submitted to my colleagues and to the .general manager, and I »iatetu for the help they have me. J will ask Mr. Paterson, one of y representatives, to second the motion, and he, like me, takes the responsibility for what he will say in support of the motion, but he had //Vntlndf enough to show me what he intends t 0 Th embank was founded in 1861_and is 84 years old. It is neither a para venu nor an immigrant. It is a ver eran survivor from the days of pioneers It has always been worked and managed by New Zealanders Its executive heads are not iec from any nionyed aristocracy or any privileged class. They all b ° ‘ bovs 30 or 40 years ago at the bottom of tte ladder, and by merit hav ® co .™; nn the hard democratic way. to the to P p It is impossible to say at any point of time from a numbei oi senior officers who will be the executS’of the bank in 10 or even 5 e The Earn’d of the bank consists normally of six, two elected by shareholders, and four nominated by the Government. Our present Board consists of four members only, ine vacancies caused by the retiiemen o two Government nominees, Mr. D. O. Williams and Mr. H. J. Kelbhei in 1942, have never been filled, ineie is Mr. Paterson, who has wide business experience and interests. Mi. Dowgray, who is a coal miner and has been a member of the al ?our Fartv during the u hole of his long and honourable career, and Mr. Dawson, a former general manager. 1 am the fourth, and I have been a member for ten years and have bee.i appointed by two Governments. I mention these facts also to emphasise that the bank is a New Zealand institution, manned by New Zealanders, directed by New Zealanders, and it has grown in strength and influence with the country. On the whole, it has served the country and its citizens well. It has made profits for shareholders, and there is no shame nor disgrace in that, because no reformer nor anyone else, has ever ' run a successful business at a loss. The Government at present holds one-third of the share capital and has two-thirds of the seats on the Board. Suggestions have been made to former Governments that the bank should be turned into a State Bank. Governments for fifty years past, including nine years of the term of the present Government, have considered that the best interests of the people were served by the practical combination of State and private enterprise in the bank. It has now been decided that there should be a change. The bank is to be rooted up and replanted alongside other State institutions. The bitter winds of class prejudice and political debate will not send it off to a good start. The reasons and explanations given by those who passed the resolution at the Conference of the Labour Party do not seem to those outside the Conference as coherent, persuasive, or indeed understandable as to justify the change. This may partly be accounted for by the fact that, according to one . authority, “The discussion reminded } him of a revivalist meeting.” Such an atmosphere, while appropriate for fervent political exercises, was perhaps too thick for a clear exposition of the reason for a decision of such importance, a decision winch will affect every citizen for good or ill and will touch every corner of our national life. I now refer to the method whereby the business of the bank is carried on by the Board and the Executive. I do this—firstly, because there is a common belief that there is some deep mystery about the banking business, that it is a unit of an international secret society; and secondly, because charges of fraud and dishonesty are ’ often made against banks, their directors and executives. These charges are standard practice and equipment of some apostles of mone- / ;t'ary reform. Since the beginning of time there have been disputes about money, its functions and uses. In the pressure and bustle of modern life, we sometimes forget that we and our affairs are, after all, only a parenthesis in the great book of history, and current theories, believed to be as new as wireless or the aeroplane, were old in the days of the Greeks and Romans. Passages could be cited from the classics on this very issue of the purchase of the bank which might have been taken from the “Standard” account of the Labour Conference, or from a report of a protest meeting called by the Chamber of Commerce, or held by the shareholders of the Bank. These historical considerations raise the probability that no one party, class, or monetary creed has the -whole undiluted truth on the subject. One middle opinion, to which many broadly subscribe, is that while it is the fashion to find fault wth the -- present financial system, on the whole it has served us well. As I said last year, the banking system, like a good motor-car, has been worked and driven at all paces, under all conditions, over all kinds of social roads, and it has generally stood up to its work and only now and then broken down, never beyond repair. Like any other human institution, it will require changes, amendments, , »’•' and drafts of new deas. but it has not proved that the basic principles require violent change. On political and social questions there are many schools of thought. At one extreme, there are the strong Conservatives who grow red in the face at any threat of change, who think that banking or any other business in which they have an interest or a . share has been vaccinated against error, is incalcapable of improvement. At the other' extreme are the reformers, and it does not follow that the reformers are always right. It has perhaps been a good thing for the world that reformers have not always -. had their way. Monetary reformers, like horses, run in all shapes and come from all classes. Their only common denominator is a personal certainty that each is right. There are probably more than fifty-seven varieties of monetary reform. These people say that some undefined, invisible outside overseas power, vaguely called the “Money Power ” tells all banks and this bank what io do. They would almost have you believe that sitting in at our Board meetings there is always some sooty evil dnessenger from the Bank of England &nd its Governor croaking out orders tb us all, orders we must obey and doWobey from inherent vice and malice to the loss and hurt of tfre Dominion. I shall nowXtell you how the business of the ban& has been done m my time Broadly? speaking, it is con-

■ Friday, June 29, 1945. ducted just as a business of any other organisation. Everything is discussed around this table. All matters for decision come before us on a file. The file has on it the signature or initials of evejy officer who has handled it from, the branch where it began. If it is a policy Head Office matter, it bears the signature or .initials of every officer who has seen it or built it up. There generally are on it the recommendations of officers, including Head Office Executives, which recommendations are not always the same. The file is fully discussed by the Board and, if we are agreed, , we all initial the file, so that the responsibility of each Director is there for all time. A Director can and sometimes does put a memorandum of his own views on the file. Each file is seen and initialled by the Chief Auditor as well. The decision of the Board is then made, and that decision is put in the Minutes which are in this book and are confirmed at every meeting. There is the resolution of the Board and the signature of all directors for everything done by the Board. Nothing is hidden, left out, or suppressed. We are subject to no outside influence or control, political, foreign,” or financial. At no time in my time has the bank had instructions, or even advice, from the Bank of England or any overseas bank. At no time in my time has the bank received .any communications about policy from anyone anywhere. There is strong competition between this bank and the other trading banks, although there are joint arrangements on matters of general interest. In practice in my time, all decisions of the Board except one or two. have been unanamous. Opposing views are resolved and reconciled, or there is a compromise. The accounts are prepared at intervals and then examined and approved by the whole Board. Our business is under a continuous audit by the Chief Auditor and his staff. The Chief Auditor is appointed by the Government. He has wide and exceptional powers; he is beyond the control of the Board; he is responsible only to the Minister of Finance. The chief auditors I have know are the late Mr. A. L. Hempton, and Mr. D. r. Reid. I should here like to say that Mr Hempton had as high and as keen a sense of honour and duty, as any man I have ever known. The present Chief Auditor is Mr. D. F. Reid, a man of international reputation, best known in London where during his term as London manager he was a great ambassador of this country. Recently the Board resolved, that, to avoid a levy on shareholders the bank should pay the cost of “Bank Notes,” the paper prepared by the shareholders’ committee. Mr. Reid vetoed the resolution unless the approval of the Minister of Finance was obtained. The Minister refused his approval, and the payment was stopped, although I still think it might well have been made.. Both the Chief Auditor and the Minister of Finance acted within their rights ana powers and in accordance with past practice in the bank. I should also say that it is a matter of regret that a circular sent out to shareholders by my colleague, Mr. Paterson, was so framed as to be unfair to the Minister of Finance, because the language used implied that the Minister had intervened of his own motion; whereas he merely gave a ruling on a matter reported to him by the Chief Auditor. Mr. Kelliher is a strong monetary reformer and has always been a hard critic of the banks. He was a member of the Board for over five years, from August, 1936, to March, 1942, and was a pleasant and capable colleague, with igreat business knowledge and ability. Mr. Kelliher’s opinions are the same now as when he was with us and before he joined us. In Mr. Kelliher’s time all decisions of the Board were unanimous. He never dissented, as far as I remember. All our accounts were approved by him and the whole Board. He madel no practical suggestions for any changes in our policy or administration during the five years he was a member of the Board. I shall now tell you what has happened between the General Manager, myself, and the Government since the resolution of the Labour Conference was published urging the Government to consider the promotion of a State trading bank by the immediate acquisition of the shares in the Bank of New Zealand at present held by private persons. This resolution was passed on November 8, 1944. It is fair to say that the proposal to buy the private shares in the bank has not come about because of any delinquency on the part of the bank, or by its failure to do its national or community duty, or by any selfish, stubborn opposition to the peace or wartime policy of the Government, Returning to the recommendation of the Labour Conference, we first knew of it when we read it in the newspapers. I at once took the matter up with the Minister of Finance, and the General Manager and I had several interviews with the Minister. On November 21, 1944, I wrote the following letter to the Minister of Finance, which set out the position as I saw it then and see it now:— “Dear Mr. Nash, Since the talk Mr. Chalmers and I had with you on Monday, I have considered further the matters we discussed. I should like first of all to refer to the past relationship between the bank and the Government since the present Government came into office. It has been the duty of the Government to manage the affairs of the country according to its policy l . It has been the duty of the bank —which it has fully performed—to heln the Government wherever it could and as much as it could. It has been admitted by the Government, by individual Ministers and yourself, that the bank and all the trading banks as a unit, particularly since the war began, have done all that could be done to maintain the public, private, and war finances of the Dominion. The Government is a shareholder in the bank and has by law the right to appoint the majority of the directors on the Board. Since 1936 there have been discussions from time • to time between the executive officers of the bank, the directors, yourself, and the Prime Minister.. Any discussions ; have always been in general terms, ; and there has not been, nor could there ever be, any discussion or disclosure of the business of any customer of the bank unless express prior ; authority had been given to the bank by the customer. The secrecy and sacredness of the relation between banker and customer are protected by the tradition of centuries and the law of the land. I can say that in all respects the present Government, and you as Minister of Finance, have kept the high standard ; of propriety and honour which has always marked the relationship between the bank and the Government of the day since 1894, and the business of the bank is now conducted as it always has been in the past. I told you that I am disturbed at the present stage of the proposal that the Gov- : ernment should buy the privately- ■ owned shares in the bank. I point out to you again, as I did at our . meeting? that it is a matter of regret ; that there were no preliminary discussions with the executive officers of the bank, the Board of the bank, j or your nominees on the Board, • before the recommendation of the . Labour Conference was published in ■ the newspapers. My association with r the Government and with yourself, ’ entitled me—l submit for your conj sideration—to expect that in the pub- ; lie interest the Government would have given me its confidence, wholly or in part, before such aTecommenr dation was published. As I see the . present position, the Government

must go on with the purchase of shares. At the present moment no preparation or plan of any kind whatever has been considered. All that exists is the naked recommendation of the Labour Conference and the suggestion you made to Mr. Chalmers and myself that a clause would be included in the Finance Bill giving the Reserve Bank power to buy shares in the bank.

I have thought over your explanation of this new clause and your reasons for proposing to submit it to Parliament, .and I am sorry to say that I am still unable to understand the explanation or the reasons ypu gave me. I feel sure that the result must be to destroy the structure and stability, of the bank and the confidence of the customers and the general public in its administration and control. “There are other important matters which have apparently hot been considered at all: —Cl) Shareholders must be paid out in one of three ways:—(i) By cash from revenue; (ii) By a loan raised for the purpose; (iii) By drawing on the Government’s account at the Reserve Bank, thus increasing its overdraft, with an inflationary result to the damage of the stabilisation scheme. (2) It has not been decided whether the bank is to be controlled by a Board of Directors as at present, or whether it is to become a State Department under the present executive officers. There is a risk that the personnel of a new Board of Directors might consist of persons of the same way of thinking as the majority at the Labour Conference which forced through the resolution. “I again remind you that the future of the bank as a State bank depends upon public confidence in its policy and administration. Reports from our managers show that, Respite the great goodwill which the bank has built up ■during the last 80 years, many of its good customers are contemplating transferring their business elsewhere when the bank passes under complete Government control. Some customers are leaving their accounts with us at present but have already opened accounts with other banks. This surge of discontent among the bank’s customers is disheartening to its officers and is a threat to the usefulness of the bank as a State bank when the shares are taken over. It is of front-rank importance, therefore, I urge upon ypu and Cabinet, that the Government should at once take steps to reduce the present and future damage to an important Dominion asset. I am convinced that a full statement should be made by Cabinet stating what the Government intends to do, and what the future policy and administration of the bank will be. Such a statement is essential to reassure the staff, the depositors, and borrowing customers, particularly in regard to the maintenance of past traditions of secrecy and confidence. Without such a statement, the inevitable discussion in Parliament during the current session may easily result in the loss of a substantial part of the business of the bank. During the war I have personally co-operated with the Government at all times and in every way. You will recognise that I am at present carrying on as a Director of the Bank under humiliating and difficult conditions. These conditions have been brought about, as I told you at our interview, without any consultation with the executive officers of the bank, or with Mr. Dowgray and myself who are the Government’s nominees on the Board. I repeat, we should have been consulted before a public statement such as the Conference recommendation was made, and if we had been consulted, the executive officers and the Board would have helped, the Government to bring about' the transfer with as little friction, disturbance, loss of public confidence, and political acrimony as possible. I regret to say that if the proposed clause is inserted in the Finance Bill and brought before Parliament during the current session, I shall feel inclined to tendei’ my resignation and make a public statement about the matter. I hope and feel sure that you will inform me when a decision has been reached by the Cabinet, one way or the other, in regard to this clause. In any event, I will be prepared to stay for a sufficient period of time to enable the Government to make other arrangements, and whether I am on the Board or off it, I will help the Government and the bank in any way I can. I am troubled by the fact that any statement I may make will probably be used for political purposes by opponents of the Government, but I cannot see how that can be helped. I will state the position as I see it fairly—as I think I have always done —and I will submit the statement to you and the Prime Minister before its publication. If I had received the same consideration from the Government in this respect, the present unhappy position would not have arisen. (Sgd.) A. T. Donnelly.” On November 25, I received the following letter from the Minister of Finance > —“Dear Mr. Donnelly, This letter is sent to acknowledge the one which you wrote to me under date of 21st inst., the main points of which were discussed in the interview between the Prime Minister, yourself and myself earlier in the present week. The subject is under continuous examination and after discussion with the “Prime Minister I will get into touch with you 'again. (Sgd.) W. Nash.”

During the short session of Parliament at the end of the year no legislation was brought down, and no important reference was made to the recommendation of the Labour Conference. On November 29, a special meeting of shareholders was called and a committee was set up to look after the interests of shareholders. About the middle of December I was told that Minister of Finance had told Mr. Dawson, the then Chairman of the shareholder’s committee, that the Government intended to go on with the pui'chase of the shares and that Mr. Dawson could tell the committee of the Government’s decision. In a letter to me of December 23, 1944, the Minister said: “I hope you will agree that whilst availing myself of your advice and assistance which is always so readily given, I must ultimately decide which course to follow.” x You will see that the Minister, while acknowledging the help he had always had from the Bank and from me, fairly and properly reminded me that it was his responsibility to decide what should or must be done. The General Manager and I therefore thought that we had pressed our view's upon the Minister as far as we could, and there was nothing more to be done by us. Towards the end of March, Mr. Nash told me that Cabinet had now decided to go on with the purchase, and that the Bill would come before the next session of Parliament. He also said he would make a public statement, and agreed to my request that the General Manager and I should discuss the proposed statement with him. We had several interviews with the Minister, and his statement was published on March 31. The statement gives an unqualified assurance that all rights and immunities now enjoyed by customers in the Bank of New Zealand will remain exactly as at present. This means, needless to say,, that clients’ accounts and records in the bank’s books will remain inviolable and secret. Deposits in the Bank of New Zealand will thus continue to be governed by the same terms as govern the deposits in the other trading banks. In all administrative matters the bank will remain under its pres-' ent management and day-to-day conduct of its business v/ill, as hitherto, be governed by the principles of

sound banking practice. While the general policy of the bank will be determinated by the Minister of Finance on behalf of the Government in accord with like powers provided in the Reserve Bank of New Zealand and State Advances Corporation Acts, the existing directors will remain in office in accord with the Bank of New Zealand Act and will be responsible for the general administration of the bank.”

Recently I have seen the Minister on more than one occasion, and I have asked him whether he could let me know the details of the legislation, in particular the price of the shares, or the method or principle whereby the price would be fixed. Up to the present,, the Minister has not been- able to add to his statement of March 31, nor has he given me any information about the legislation, and there is therefore nothing more which I can pass on to you He said plainly and definitely, that legislation will be submitted to Parliament and' that it will go through. As the Government has a majority in Parliament, it is certain that the legislation in whatever form it is settled by Cabinet, must finally become the law of the land, subject to any modification made during its passage through Parliament. We must assume, therefore, that this will be the last annual meeting of the private shareholders in the bank and that by next year the bank will have become the property of the State. I now refer to the subject of most importance to shareholders, which is, of course, the price which will be paid for the shares, and I am sorry, that I- cannot tell you what the intentions of the Government are on this point. You may rely upon it that the Board as a whole, and your representatives upon the Board, will, when the time comes, do all that can be done in your interests to see that the price is a fair and proper price and that all relevant facts and arguments are submitted for the consideration of the Government.

You and the staff will wish to know what the future position of the staff will be. As you know, there is a staff pension fund which is more generous in its scope and amount than most provident schemes. I discussed the staff position with both the Prime Minister and the Minister of Finance, and I have their assurance that the staff will be fully protected and that the position will be the same under State ownership as at present.

MR. LANGSTONE’S REPLY TO MR. DONNELLY AND MR PATTERSON.

Mr. F. Langstone, member for Waimarino, makes the following statement: —As my name has been mentioned during the annual meeting of shareholders of the Bank of New Zealand as “the man who apparently decides the financial policy; of the Labour Party . ...” I feel sure that in view of the wide publicity given to this statement, a press noted for its fairness will afford a similar opportunity for the other side of a vitally important subject to be placed before the reading public. In perusing the very comprehensive statement made by Mr. A. T. Donnelly, chairman of the Bank of New Zealand, at the annual meeting of shareholders, the first thought that must occur to the average reader is that Mr. Donnelly was mainly concerned with the interest of the people as a whole. From the shareholders’ point of view he made out an excellent case against the Government’s proposal to purchase the ordinary shares of the Bank of New Zealand. At the same time, tve should remember that .when Mr. Donnelly says “there is no national need, necessity or benefit, so far as I can see, for the proposed change” he speaks more as a representative of private shareholders than as a director appointed by the Government. 'Looking at the whole proposition from a national viewpoint, and more particularly in the light of our post-war economy, there is not onlv definite need for such a change but, coupled with a sound and progressive financial policy, our internal economy will be greatly strengthened by converting our foremost trading bank into a State institution. In the tremendous expansion of credit and currency necessitated by the war, private banks assumed the major role of creating and issuing into circulation the bulk of the additional credit or cheque money required to finance war expenditure. This creation of new credit money, practically costless to the banks but interest-bearing to the borrower —in this particular instance the State — is highly profitable and is gradually becoming the major revenue-produc-ing factor with trading banks. It must have been an important factor in enabling the Bank of New Zealand to show a profit of £1,138,886 —less provision made for taxation —for the financial year ended March 31, 1945, and it may be presumed that the other New Zealand trading banks have benefited proportionately. In actual fact, according to the official Reserve Bank statistics, during the five years of war the trading banks operating in New Zealand have created and issued into circulation over £30,000,000 interest-bearing credit money in addition to money already in circulation, as well as in addition to £55,000,000 current bank advances. Though the cost to the banks of creating this money was nothing more than the cost of administration, the taxpayers of New Zealand will have to find over £1,000,000 a year by way of interest for the rest of their lives. By making the Bank of New Zealand a State institution the saving of this interest is a benefit that will profit the people of New Zealand generally, rather than a handful of shareholders, and as the post-war period is almost certain to necessitate further considerable expansion of credit money for rehabilitation and general reconstruction, this benefit should be quite a substantial one.

In case doubts should be expressed as to trading banks creating such credit money—and I notice that neither Mr Donnelly nor Mr Patterson made mention of this important part of the bank’s functions —I need only quote the Rt. Hon. Reginald McKenna, chairman of the Midland Bank: “I am afraid that the ordinary citizen will not like to be told that the hanks, can, and do, create money. The amount of money in existence varies only with the action of the banks in increasing and decreasing deposits and bank purchases. Every loan, overdraft or bank purchase creates a deposit, and every repayment of' a loan, overdraft or bank sale destroys the deposit. And they who control the credit of a nation direct the policy of governments and hold in the hollows of their hands the destiny of the people.” This unqualified statement—with which I am in wholehearted agreement—by a qualified banker and a former English Chancellor of the Exchequer can leave no doubt as to the creation of credit by trading banks. What is perhaps even more important is that banks are in a position to destroy this credit as readily as they created it, and these functions of creating and destroying credit money at will are in the main responsible for the cyclical periods of booms and depressions. Mr Donnelly, in what is presumably his last address to shareholders could not resist the temptation of bringing out the hoary bugbear: “The Printing Press.” “If such reformers are ever in control,” he said, “Then indeed banknotes will fall like snow-

flakes from the heavens and rivers of credit of some kind will flow up and down the land . . . .” As the Bank of New Zealand has been one of the > worst offenders in this very direction ’ —so much so that at one time its policy of indiscriminate credit expansion brought it next door ’.;o bankruptcy—the chairman’s quotation was not a particularly happy one. Actually, the last thing monetary reformers advocate is the indiscriminate and haphazard creation of credit money. Apart from being chairman of the Bank of New Zealand, Mr. Donnelly was also a member of the Government’s Stabilisation Board and I would like to ask him how it is possible for the Government to stabilise wages and the prices of commodities, ana’ the cost of living generally, so long as the private trading banks are permitted to create and issue huge sums of credit money which function as purchasing power? The Government has endeavoured to reduce the surplus money in circulation by inducing people to invest in war loans, but as fast as this surplus money is absorbed, the banks forced new money into circulation and created new bank deposits by purchasing war loans and other securities on the open market. The money ' thus created and invested by trading banks during the last five years amounttd to over £30,000,000. The prime essentials of a sound money system, as envisaged by moentary reformers, are economic security, and ..financial stability. In other words, the avoidance of inflation and deflation; no depression, no unemployment,. no avoidable hardship and privation. No private banking system has ever succeeded in bringing about this economic security and financial stability. Indeed, the so-called “trade cycles —that is, periodical booms and slumps—appear to be inherent in the present banking and money system. Monetary reformers claim that all new credit money' should be so created and issued as to keep the internal price level constant at a point that is fair and just to producer and consumer, and that creates a stable internal economy and a decent stand-* ard of living with 1 fulltime employment for everyone willing to work. On the other hand, it must be obvious that a system which permits private trading banks to create and destroy money at will must of necessity produce a constantly fluctuating standard of values. It must also be obvious that if a stable economy; is to be attained, both credit and currency must be controlled by the State and all new credit money must be inter-est-free at its source. These broad fundamentals should be regarded as the cardinal principles of the new monetary system. They, should become part of our statutory laws for the guidance of the Minister of Finance or a statutory monetary authority; specially set up for this purpose. It is my firm belief that the acquisition of the Bank of New Zealand willbecome a vital factor in a sound and adequate money system. As an important adjunct to the New Zealand Reserve Bank it will greatly strengthen our entire banking system, a banking system which first and always should be administered in the interest of. the country and the people as a whole. As to the effects of the change on the administrative functioning of the bank, the Minister of Finance has already given unqualified assurance that all rights and amenities now enjoyed by the bank’s customers will remain sacred and inviolable. It would appear from his public statement that Mr. Donnelly fully accepts this assurance. I feel confident that within a short period the Bank of New Zealand, as a State institution, will greatly extend its scope and play an even greater and more important part in the national life and welfare of New' Zealand than it has ever done before. Backed by the entire credit and resources of the State, it will be in an immeasurably stronger position to supply, the needs of the nation than it has been in the past. , ~ It must be evident that all new money required to meet the national need and the needs of increasing numbers of people advancing towards higher living standards must be created and issued into circulation on a proper principle of control, i.e., to maintain the price level constant. (This principle has been fully expounded by that brilliant English economist, Professor Frederick Soddy, M.A., etc.). Otherwise the additional money must have the effect of debasing and falsifying the value of the money already circulating, the result being that no man, woman or child knows the purchasing value of their money from month to month oi' from year to year. Obviously Mr. Donnelly did not look at the Government’s proposal from this angle. Yet, regarded from a national point of view it is the only angle that matters. We are taught to believe that “the land is the Lord’s and the fulness thereof.” It seems incongruous, therefore, that we should restrict the fulness of the banking system based, first and foremost, on interest at so much per cent, and not conducted, as it should be, in the interest of human welfare and common good. Summing up the position very briefly, there are three definite reasons why the Bank of New Zealand should be converted into a State bank;

fl) It is unquestionably in the public interest; and for the reasons outlined the necessary legislation should be passed to give effect to the proposal. (2) The issue of credit money, the same as the issue of legal tender money (notes and coins) should become a State prerogative and a State responsibility. (3) All credit money required for national undertakings, national reconstruction and development, should be free of interest at its source and its issue should be compatible with a stable internal price level.