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Hokitika Guardian, 21 November 1932, Page 4

Referring to th'e agitation in political circles in connection with the exchange problem an East Coast paper states it dees not agree with the statement that the responsibility for the inflation of the currency rests on the trading banks and not on the Government. That is a principle to which we do not subscribe, for it seems to us to be according to the banks a power—and ia- responsibility—far in excess of any contemplated when the banks received their charters. The question at issue is one of national policy which surely ought to be decided by the Government of the Dominion. It is a question far mere important in its winy than the decision to make banknotes legal tender, and that decision, properly, was made by the ■ Government of the day. The rate of exchange is fixed by the banks -according to the relative, demand for funds in Londoh and New Zealand and the rate varies within limits imposed by considerations that -are well-known and uniyersiaJly approved. We have no hesitation in saying that if the hanks of their o-wn motion departed from the recognised practice! land principles of sound banking and by so doing arbitrarily varied the values of New Zealand securities and the- wage: rates they would euormpusly strengthen the demand for the nationalisation of banking. The representations that were made to the Government were concerned solely with the price level of pastoral products, but the measures proposed to increase that price level would affect, . very gravely, the interests of the- whole community, those of the trading community .immed'itateTy and ultimately those of the whole- body of workers. This is not a re-ponsibility to be fill if ted to the- ,shoulders of the bankers. It belongs to the Government, and the Government should not make a decision concerning it without studying the consequences and without mhkjrp- sure tint i-»tp—\sts likely to he prejudiced will he safeguard-d. The question at b«"r> is not whether an additional 15 per cent, will save the farming industries, Tt is whether a great 'question of national policy shall he decided ’y t’ n fbvevrment, whose responsibility it clearly is, or referred to the bankers and decided 1 y them under political pressure.