LOWER BANK RATE

Horowhenua Chronicle, 21 May 1928, Page 8

LOWER BANK RATE

BUSINESS MEN’S BEQUEST

EXPLANATION BY MINISTER,

While it was proper lor the Government to make representations to the banks with regard to lowering the overdraft rate, the Hon. W. Bownic Stewart, Minister of Finance, made it clear in addressing the Auckland Charager of Commerce that he did not deem it the duty of the Government to force its views by political pressure in order to secure the desired change. The Minister referred to a newspaper report to the effect that the president of the Chamber, Mr 31. T, Merritt, had read into a recent remark by the speaker that political influence had been used in regulating the bank rate. If that inference had been drawn, Mr Stew-art said he must have expressed himself clumsily. He had made the position plain in the Representatives. The Government had four representatives on the directorate of the Bank of New Zealand, and was, he claimed, entitled to make repreaentations to them. Placing Position Before Bank. The Government took the view that if the banks, having heard the Government’s views, still thought a rise in the rate was necessary on the general economic situation, it was not right for the Government to replace its representatives on the Bank of New Zealand directorate, or to take any political steps to enforce its views on the banks. It -was the duty of the Government not to interfere beyond the point stated with the discretion of the business men managing the Bank of New Zealand, whether the Institution was a State one or a semi-State one; otherwise, grave uneasiness would arise in the public mind as to how far political influence might go. The Parliamentary Opposition had said the GovoVnment should have forced its views. All the loading banking journals in Australia and England, however, had commended the action take-in by thp Government as going to the true limits. It would have been improper in their judgment to have gone further.

Exactly the same position held now, said the Minister. The banks had complained that the Post Office Savings Bank was taking deposits up to £SOOO, thus robbing them, and he had agreed that the post office should not bo used for large temporary investments by business men. It was difficult, however, to retrace the steps at once. When the private banks put up the deposit rates money was withdrawn from the post office and the Government was enabled to place the limit on post office investments at £2,000.

The banks considered the last quarterly figures as satisfactory, said the Minister, and had promised that if the favourable position continued some concession should be possible. But the banks had given no indication as to when the reduction could be made, it would, however, be proper for the Government to make further representations, provided political pressure was not used. Orders-in-Council Necessary. Regarding the more frequent publication of the banking figures, which has now been arranged, Mr Stewart referred to the complaint that there was too much Government by Ordcr-in-Council. He made the comment, however, that it was inevitable that a great deal of work must be done by Ordcr-in-Council, supplementing legislation in view of the many difficulties that from time to time arose. So far as his own department was concerned, Mr Stewart explained, he tried to mitigate the evil by submitting such Orders iu-Coun-cil first to the interested parties, like chambers of commerce, for their criticism and suggestions, and in that way much valuable assistance was given. If there had been delay in the issuing of the regulations giving more frequent returns, it had arisen from that fact.

The Chief Statistician had met the bank to sec if they had any objection to the giving of more frequent information. The banks had criticised some details* but at length a friendly arrangement had been made. Regarding a suggestion that the figures should be released more speedily than through the monthly Abstract of Statistics, Mr Stewart said he would go into the question with the Department of Internal Affairs on his return to Wellington.