RESERVE BANK TO BE A STATE INSTITUTION .

Nelson Evening Mail, Volume LXX, 21 March 1936, Page 6

RESERVE BANK TO BE A STATE INSTITUTION .

THE important announcement of tho Government’s intention to make the Reserve’ Bank of New Zealand a “straight nut State institution” has not come as a surprise, even it is a little earlier than was generally expected. It appears to be part of the Government’s major financial policy and is to be one of tho first measures to be dealt with during the session of Parliament which opens next week. The Prime Dlinister gives the assurance that while the Government will take control of the currency and credit of the country, tlie administration of the money system is to remain as it is to-day. In the actual administration of the banking system those who understand it are still to be at the helm. But the Government will lay down the policy to be followed. Whether tlie Government knows better than the banking experts, who have done so well, the best policy to pursue in the interests of the country is open to serious doubt. There is some degree of reassurance in the statement by Dir Savage that “the Government has sense enough to know that the mere turning of the handle of a printing press is not the way to get rich.” Dlost assuredly it is not. What then does the Government intend to do under the new power it is about to acquire? Apparently we must await the introduction of the Government’s finance legislation upon which practically all the rest of its programme depends. So far as the private shareholders in the Reserve Bank are concerned they have the announcement of Mr Savage that they will be bought out and will lose nothing. How the Government will provide for buying them out is not disclosed, but we have the statement of the Prime Dlinister that “shareholders can rest assured that they will suffer no injustice.” It has been previously stated that the price to be paid for shares would be that existing on the day the Labour Party was returned to office —the 27th November last. The position of the shareholders, however, important though it is to large and small investors alike, is not to be compared with the possible effect on the Dominion as a whole of the decision to make the Reserve Bank “a straightout State institution” and thus under political control. It may be for ill or for good. It adds tremendously to the powers of the Government and the people will hope fervently that the responsibilities involved will not be lightly undertaken but receive the most serious consideration before the present banking policy is changed. Dir Savage says the Government is not/out to smash anything except a nebulous “Kelly Gang,” of Auckland-nebulous to most people. With the majority he has been given by the electors there seems to be no need for the Prime Minister to worry about “Kelly Gangs.” He should concentrate on retaining the goodwill of the people of which he is so confident.