THE PUBLIC CREDIT

Otago Daily Times, Issue 23517, 3 June 1938, Page 16

THE PUBLIC CREDIT

USE BY THE GOVERNMENT PRIME MINISTER’S CLAIM , DISPUTED (Special to Daily Times) AUCKLAND, June 2. A claim that the Prime Ministei (Mr Savage) had not made the public credit available, but, by way of loan, had seized moneys belonging to private individuals, was made by Mr C. H. Weston, Dominion president of the National Party, in an address to-day to members of the Junior National League. Mr Weston referred to the statement made by the Prime Minister at the annual Labour Conference at Easter to the effect that the Government had made more than £11,500,000 of public credit available for national purposes, and that more would be available as the need arose. Mr Weston said that Mr Savage did not say how it had been done, but it was obvious that the £11,500,000 represented moneys borrowed at interest. They had been borrowed from the Reserve Bank and from the Post Office Savings Bank, the Government Insurance Department, and other Government departments mentioned in section 92 of the Public Revenues Act, 1926, and, what was worse, as far as the Reserve Bank was concerned, by means of forced loans, because the governor and directors of the bank, when asked for that money, could not say “ No.” Before the Savage Government amended the Reserve Bank Act the governor and directors had some measure of independence. To-day they had none. “ It is true that the Reserve Bank has £ 1,500,000 of the Government’s own money to lend, but that has been exhausted already many times over,” Mr Weston said. “In reality, so far as the Reserve Bank is concerned, these moneys borrowed are moneys belonging to a limited number of people in New Zealand, a fairly large number, but none the less only a portion of the population. They are the men and women who have deposited their moneys mostly in small amounts of £IOO or £2OO for safety with the six trading banks of New Zealand. Under the Reserve Bank Act the six trading banks are compelled to place a considerable part of their deposits with the Reserve Bank and it is really those moneys that the Prime Minister is using when he says he is using the public credit. The trading banks are compelled to lend to the Reserve Bank and the Reserve Bank is for all practical purposes compelled to lend to the Government. The chain of compulsion is complete. Mr Savage has not made the public credit available, but has seized by way of loan, moneys belonging to private individuals. • ' “I draw your attention to the fact,” Mr Weston added, “that the Government as yet cannot lay its hands upon moneys that are deposited with building and investment societies and with provincial savings banks, such as the Auckland Savings Bank, but that state of things may not continue for long.” In 1628 the Petition of Rights was passed taking away from the dictator kings of England the power of forcing loans from their people. He wondered if 1938 would be a date remembered in the history of New Zealand as taking similar powers away from the Socialistic Government.