DANGEROUS NATURE

Manawatu Standard, Volume LVII, Issue 193, 16 July 1937, Page 8

DANGEROUS NATURE

RESERVE BANK ACT. HON. J. G. COBBE’S WARNING. Describing some of the measures passed by the Government last session as being of a far-reaching and disturbing character, Hon. J. G. Cob be > M.P. for Oroua, and a former Minister of Justice and Defence, is an address at Apiti last evening, spoke or the Reserve Bank of New Zealand Amendment Act as being of “a most dangerous nature, and may ultimately have a very serious effect upon tne linancial affairs of the Dominion. “It is a great mistake to think that when a bank is nationalised its control passes into the hands of the people,” he added. “It does nothing or the kind. It passes into the hands ot a small group of politicians, who can, if they wish, use its resources in party interests instead of interests of the whole community.” Comment was made by all' Cobbe that one of the Ministers, speaking after the passing of the Act, had said that the Government, haying taken control of the Reserve Bank, had the power to use that instituiton m any wav it liked. . , Dealing with the increase m the note issue, Mr Cobbe said that although there was a lot of money in circulation at the present time, it should be remembered that an excessive issue ot notes, without a convertible backing, did not add a single penny to the real wealth of the country. Real capital could not be increased by printing and issuing an excessive nuinbe rof notes. The effect of such an issue. when carried to an extreme, was that although nominal wages may be doubled or trebled, real wages may not be increased at all. . . Increases in costs, in town and country, and in the cost of living, were finally borne by the real, the original. source of practically New Zealand’s wealth —the land. Many millions were being spent upon public works, some of which might add to the convenience of tourists and other travellers, but many of which, while adding enormously to the country s burden of debt, would not provide a corresponding advantage. RASH FINANCIAL METHODS. The present rash and ill-considered methods of finance were already affecting the value of capital, said Mr Cobbe. Suppose a man had £IOOO when the present Government came into power. To-day that amount was not worth as much as it was 18 months ago; the owner could not buy nearly as much with it as previously, lie could not get the same service for it as formerly, he could not give as much employment as before. Referring to the Governments power under the Reserve Bank Amendment Act to regulate and control credit and currency in New Zealand, the transfer of moneys to and from N<e\v Zealand, and the disposal of moneys derived from the sale of New Zealand products and held for the time being overseas, Mr Cobbe said tile subclause was one of the most dangerous on the Statute Book. A man’s money was not really under his control todav. He may want to transfer £IOOO overseas, but the Minister of Finance may forbid him to do so. A sheep-farmer mav export bis seasons wool, but the Minister can say liow that man’s money is to be dealt with. “SOCIALISTIC MILESTONE.” The State Advances Corporation Act, which is really an amendment of the Mortgage Corporation Act, was, as altered, another milestone on the Socialistic road, the speaker added. It had always been regarded as a matter of paramount importance that all State departments having to do with the lending of money should be entirely free from even the suspicion of political influence, but the new Act opened wide the door for the very tiling til at should be guarded against. The reasonable conclusion was that an originally good Act, passed by the previous Government, had been spoilt for the purpose of giving the Minister of Finance inquisitorial and autocratic power —power such as no Minister should have. Another far-reaching measure was the Primary Products Marketing Act. This Act. which took the chief products of the country out of the hands of those who owned them, was an example of Socialism —naked, unblushing and unashamed! It allowed the Government to take the fruits of the farmer’s industry and enter into business with that which the farmer produced. And as time went on, and tile inevitable inflation came into operation in New Zealand, the sound money paid overseas for the farmer’s produce would l>e retained there to meet interest and pay for imports, while the New Zealand producer could ho paid in home-made notes, the purchasing value of which would depend upon the volume of issue.