NEW LEGISLATION

Hawke's Bay Tribune, Volume XXVI, Issue 152, 12 June 1936, Page 13

NEW LEGISLATION

Comment by Bank of New Zealand Chairman EFFECT ON BANKS Sir George Elliot, chairman of directors. presiding at the annual meeting ot proprietors ot the Bank of New Zealand at Wellington to-day, commented on numerous matters of public interest and importance. After referring to the Labour Party’s victory at the General Elections last November, he went on to say: “The Government has already taken steps to implement by legislation its election platform, and the Reserve Bank of New Zealand Amendment Act has been passed, giving to that institution now made a State bank) full control over the credit and currency of New Zealand. A Primary Products Alarketing Act has also been passed, giving the Government control over the Dominion s exports, though its guaranteed prices and marketing proposals are to be applied at present only to Dairy Produce.

“Some of the legislation directly affects tho trading banks,” Sir George Elliot continued. “For instance, they arc to lose from August 1 next the handling of the exports of dairy produce, and should wool and meat come under the Government’s guaranteed price and marketing scheme, the effect would be that the banks would be entirely deprived of tho normal means of i replenishment of their London funds and would have to purchase all their exchange requirements from the Reserve Bank of New Zealand. 1 need hardly say that the Government’s proposals in this direction will seriously affect an important branch of the trading banks’ business, a business they have developed and carried on since the earliest days of banking in New Zealand.

CREDIT AND CURRENCY. “Power is given to the Reserve Bank to regulate and control credit and currency in New Zealand, the transfer of moneys to- or from New Zealand, and the disposal of moneys that are derived from the sale ot any New Zealand products. The accommodation that tho bank may grant to the Treasury has been increased from one-half of tho revenue, or estimated revenue tor tho year, to the lull amount of tho revenue lor the year. “Under tho original Act, trading banks were required to maintain balances with the Reserve Bank amounting to not less than 7 per cent, of their demand liabilities and 3 per cent, of their time liabilities. Hie Act us amended gives power to the Governor of the Bank, acting with the authority of tho Alinister ot Finance, to vary these percentages but so that the balances required to be maintained shall not at any time be less than those now existing.” PRODUCE MARKETING Alter outlining the main provisions of the Primary Products rilarketing Act, Sir George Elliot said, “The Hou. W. Nash, Alinister of Finance, who is also Alinister of Alarketing, is hopeful of securing a market for all New Zealand’s surplus dairy produce i by reciprocal agreements with Britain and other countries. ll e is shortly to proceed to London with this object in view, aud his efforts to expand New Zealand markets will most certainly have the sympathetic support and goodwill of tho public. “One effect of tho measure will bo that, as from August 1 next, the, financing of all dairy produce exported from New Zealand will bo undertaken by tho Reserve Bank of New Zealand on behalf of tho New Zealand Government instead of by the trading banks bn account ot tho dairy companies as in tho past. Tho trading banks have played an important part in financing and developing the dairy industry from the inception of tho cooperative scheme in New Zealand, and it is not too much to say that but for tho assistance given by the banks, the dairy factories as a whole would not be in the flourishing position they are to-day.

"in view of the services rendered to the dairy industry, it is to be regretted that the Government, in framing its proposals, has decided to take away from tho trading banks an important portion of dairy produce finance which in the past has been handled by them with the utmost satisfaction to all parties. The loss of the Loudon exchange in. connection with exports of this produce will make unprofitable tho working of some of our branches, the existence of which has only been justified beca-use of dairy factory connections.”