BANKING AND CURRENCY.

New Zealand Herald, Volume LXVI, Issue 20333, 14 August 1929, Page 10

BANKING AND CURRENCY.

The theoretical advantages of State control of banking were discussed in a superficial fashion in the House of Representatives yesterday without a single reference to the State's responsibility for the fundamental function of a sound banking system, the regulation of currency. That the present position in New Zealand is unsatisfactory was acknowledged in a passage in the Budget directing attention to the necessity of overhauling banking legislation. The Prime Minister's observations were, however, neither enlightening as to the existing deficiencies nor explicit as to the steps proposed to lie taken. A valuable exposition of the subject was given by Professor Tockcr, of Canterbury College, in a paper read before the Science Congress in Auckland, and lately published in the Journal of Science. Briefly the position is that New Zealand is still adhering to inconvertible paper currency, and "now bids fair to achieve an unenviable record in the duration of her wartime paper-money regime." Britain returned to the gold standard in 1925: New Zealand shrank from the important task which this example invited her to follow, but the opportunity for its accomplishment was preserved by limiting the extensions of the war regulations to a year at a time. Now, however, as a result of the new Government's issuing an Order-in-Council 11 days after it entered office, those regulations have been extended until 1932. Professor Tocker has directed attention particularly to the • alterations in the legislation controlling the note issue. Before the war, the banks were required to keep their notes within the amount of a reserve of coin, bullion and public securities, at least one-third being coin. In practice, the coin and bullion reserve alone was about three times the note issue. In 1,016, however, the stipulation regarding the proportion of coin was suspended, with the result that the banks, might multiply their note issue many times "so long as they covered themselves and put notes info circulation by buying public securities." That no mischievous consequences have been produced by the "absurd inefficacy" of the present regulations is entirely due to the "admirable discretion" exercised by the existing banks in their management of the currency, but the dangers might lie realised should new banks, with less experience and less prudence, be invested with similar powers, especially if a Government with inflationary views became established. The situation contains real disadvantages and the possibilities of dangerous abuses, and steps toward permanent regulation are certainly necessary. Any legislation must probably await expert recommendations, so that there should lie no delay in appointing a technical commission to prepare the way for Parliamentary action.

j TEEES FOR THE MUSEUM. The War Memorial Museum is not, after all, to be surrounded by. exotic trees. The Parks Committee of the City Council, having heard a deputation representing various organisations, revoked its previous decision, arranged for expert advice in choosing the trees to be planted, and affirmed the principle of preference to those native to New Zealand. There can be no question that it has decided rightly. If the museum is to be a memorial to New Zealand soldiers, where would be the logic of placing it in a setting that might have been transplanted bodily from some other country? The preference shown for exotics in those streets which arc lined with trees has been defended by the explanation that evergreens create perpetual litter' by the continual shedding of their leaves, and overshadow the streets too much in the dark and wet months of winter. These objections' cannot apply to the museum approaches if the planting is done with sufficient judgment. Even if there were actual drawbacks of such a character, surely they could be waived in this instance. Some concession could be made to New Zealand sentiment. When there is no evidence that a concession is necessary, it is difficult to understand why the choice fell on exotics in the first instance. There arc plenty of stock arguments against the use of New Zealand trees for ornamental planting—they grow too slowly, they do not flourish away from their natural environment, they arc difficult to establish, and so forth. All these contentions have been disproved by enthusiasts who have taken sufficient trouble with plantations of natives. They have shown, in fact, that trees which flourished in this country long before the European trod its shores can still flourish if given a proper chance, especially, in many instances, if protected from the depredations of introduced animals. Experts told the Parks Committee yesterday that the museum grounds were well suited to carry native growth, that it would flourish there better than exotic trees. In face of that last assurance the committee could not have done other than it did. The great majority of people will be delighted to know that the War Memorial Museum will be given an appropriate setting.