RESERVE BANKING BILL

King Country Chronicle, Volume XXVII, Issue 4460, 21 October 1933, Page 5

RESERVE BANKING BILL

IMPORTANT AMENDMENTS. Changes of vital importance are disclosed in the revised Reserve Bank of New Zealand Bill, which was introduced in the House of Representatives on Thursday night. The element of State control has been greatly strengthened, and a drastic alteration effected in the constitution 'bf the directorate, which will be wholly, subject to Government appointment until the shareholders exercise their first right of election in 1936. On the much-debated question of the terms on which gold and bullion held by the trading banks will be taken over, the Bill takes the “short cut,” and assesses it on the book value of £3 17s 10£d per ounce. The original provision for monopoly issue of notes has been modified by the elimination of the important word “sole” from the governing clause, and the measure also makes it clear that the bank will not be required at any specific date to bring the rate of exchange on London closer to parity. RECEPTION OF THE BILL. MINISTER’S EXPLANATION. The principal changes made in the Bill since its circulation last session were outlined by the Minister of Finance (the Rt. Hon. J. G. Coates) to the accompaniment of a bombardment of interjections and questions. Mr. J. A. Lee (Labour, Auckland East) asked whether the bank would operate immediately in the event of private individuals failing to subscribe capital. “If the bank is to take over exchange liability,” he added, “I could not understand any private subscriber wishing to take over a white elephant of that nature.” The Minister: Is it a white elephant, ten million sterling assets? I would say, “Think again.” Mr. A. J. Stallworthy (Independent, Eden): What is it costing the taxpayers of the country? The Minister: Will you calm yourself? The country has a very tangible asset, and it is worth its face value in sterling, and more, of course, in New Zealand currency. Mr. Coates said there had been no major changes in the workng of the Reserve Bank, but there had been some alteration in its powers and in the constitution of the board of directors. Provision would be made by consent of the Government for the issue of bank notes of a denomination of less than 10s. Mr. H. T. Armstrong (Labour, Christchurch East): So you are cutting out the silver? The Issue of Notes. There was a further burst of questioning and comment when the Minister indicated that the word “sole” had been eliminated from the clause giving the Reserve Bank the right of note issue. Mr. J. O’Brien (Labour, Westland) : And let the other fellows “have a go” if they like? Mr. P. Fraser (Labour, Wellington Central): What is the object of it? The Minister: It just gives the right of issue so long as the board— Mr. O’Brien: And give the other fellows “a go”? Mr. W. E. Parry (Labour, Auckland Central): That is rather significant. “There are no traps in it,” retorted the Minister of Finance. Captain H. M. Rushworth (Country Party, Bay of Islands): Were there any traps in the original Bill? The Minister: None whatever. We think the new Bill is an improvement. There was a further outcry from Labour members when the Minister intimated that another alteration ensured that gold held by banks on account of others would not be taken over by the Reserve Bank. Any profits derived by the Reserve Bank from the sale of gold transferred to it by any trading bank would be credited to the Public Account. In the previous Bill, in the event of non-agreement between the Governor of the Reserve Bank and the trading banks as to the aportionment of such profits, the question was to be referred to arbitration. That provision had now been omitted. “The simplest way of explaining this,” said the Minister, “is to say that the gold is taken over by the Crown at book value.” Mr. H. G. R. Mason (Labour, Auckland Suburbs): Face value? The Minister: No, book value. Mr. Lee: At what date? The Minister: To-day. Mr. W. J. Jordan (Labour, Manukau): What! While the exchange is on? Mr. Langstone: It means £8 3s 9d an ounce. (Government laughter.) Mr. R. A. Wright (Government, Wellington Suburbs): What does the book value mean? Mr. Lee: The bookmaker value. (Laughter.)