PLAN DEFENDED

New Zealand Herald, Volume LXXIII, Issue 22388, 7 April 1936, Page 13

PLAN DEFENDED

MINISTER'S EE PLY DECIDING BANK POLICY NO COERCION OF DIRECTORS HOUSE TO RATIFY PROJECTS [BV TELEGRAPH —SPECIAL REPORTER] WELLINGTON. Monday Opposition criticism of the proposals contained in the Reserve Bank Amendment Bill was answered by the Minister of Finance, Hon. W. Nash, in his reply to the second reading debate on the bill in the House of Representatives to-night. Mr. Nash contended there was no difference between State control and political control. The State could only be controlled by a political party, for once a party became the Government it automatically became in charge of the State. Credits in London would be utilised to pay interest and other charges arising out of debt services and sums above what was required for that purpose would be automatically made available through reciprocal trade agreements for the importation from Britain of goods required in New Zealand. The Government would endeavour to see that goods which could be economically manufactured here were made in the Dominion and those that could not would be purchased from Britain from the sale of New Zealand products.

Status o 1 Directors When the Government had decided upon its policy it would approach the Governor of the Bank and indicate what it proposed to do. If the directors gave sound, solid and legitimate reasons why such a policy should not be carried out then it would not be adopted. Mr. Nash said it appeared that Mr. Coates wished the directors to have the power to decide on the policy of the bank However, he could give an assurance that there would be no coercion on the part of the Government. " Mr. Coates also raised the point about testing the value of assets," the Minister continued. " The policy of the Government will be to order the use of credits only for the production of profitable assets. All our projects will first have to be ratified by the House. We will ask for authority to issue credit for specific purposes." The Hon. A. Hamilton (Opposition —Wallace): Nothing will be done before it comes in front of the House? Railways and Pledges

Mr. Nash: We propose to lay our plans before the House, and if the House ratifies them we shall go ahead. Estimates will have to be passed in the ordinary way. I do not say that will apply in every instance, but it will be general. Mr. S. G. Smith (Opposition—New Plymouth): Will it apply to the*east coast and South Island railways? Mr. Nash: I doubt if it will, because the Government has already given election pledges in those directions.

The bank would not be subject to the political machine, Mr. Nash continued. Tt would be subject to the Cabinet of the House, which in its turn was subject to the House itself.

It had been stated that Government enterprise in the past had failed, he said. History showed that whenever private enterprise had failed Government enterprise had always to come in. Surely private enterprise had failed during the past few years. Mr. Hamilton had referred to the need of having men of experience and judgment in charge of the bank. The Government had seen to that by selecting the men who had been selected by the previous Govrnment for those very same reasons. Mr. Hamilton: You are taking power to over-ride them. The Minister: That is necessary to avoid conflict in the carrying out of our policv. The power we are taking will be used in accordance with the prudence and care necessary. " No Word in Bill About Notes "

Contradicting the suggestion of a lack of confidence since the advent of the Government, Mr. Nasli said that after the first period when there had been a falling tendency. New Zealand stocks in London had been consistently high. There was 110 feeling in England similar to that which the members on the Opposition benches were trying to create in New Zealand. Mr. J- Hargest (Opposition—Awarua) had asked what the public credit was. It was the availability of labour and material that were used for the purpose of turning them into assets, and the stream that came in through money or credit was the means for bringing those services into use. . • lteplving to a question concerning the of notes, the Minister said there was not a word in the bill about notes and 110 authority to issue them. There was authority to finance guaranteed prices, but that was merely doing tomorrow what the trading banks were doing to-dav. There could not be any inflation except in certain circumstances to a slight extent when it would be well controlled.