THE RESERVE BANK

Otago Daily Times, Issue 24526, 7 February 1941, Page 6

THE RESERVE BANK

A correspondent from whom, over a pen*name which .seems to have been assumed in a spirit of playful irony, we have published numerous letters on the economic system has written to us this morning deriding the suggestion that a strong man is needed as Successor of Mr Lefeaux in the office of governor of the Reserve Bank. It might involve no misinterpretation of the views of the correspondent if they are construed in the sense .that it is immaterial whether the governor of the Reserve Bank is a strong man or a weak man since the whole banking system is an invention of the devil designed to effect and perpetuate the impoverishment of the people. .But it is pietty clear that, if a chdjee had to be made, the correspondent would prefer a weak man to a strong man, because a weak man would be no betterj or little better, than a tool in the hands of the Minister of Finance. Jt is the unfortunate fact that, as a result of an amendment of the law relative to the Reserve Bank, the Government now exercises a control over it that is inconsistent with the complete discharge by it of the, functions of a central bank. But that does not make.it less necessary that the governor of the Reserve Bank should be a man of experience arid demonstrated capacity in the realm of central banking, It would rather seem to make it more necessary. Over a month has passed since Mr Lefeaux retired from office, and, while the deputy-governor ftas, by Order-in-Council, been empowered to perform the duties of the governor, neither the Prime Minister nor the Minister of Finance has afforded any information with respect to the Government's intentions in the matter of the vacancy. The names of two or three persons, more or less unsuitable, have been mentioned as those from which an appointment is likely to be made, and in the meantime the business of the bank is being controlled by a depleted board of directors. In the absence of a governor, there are two ex officio members of the board, and the seven members appointed by the Government as representati"e of the producing, commercial, and industrial communities have apparently been reduced to two by reason of the neglect or disinclination of the Government to fill vacancies as they have occurred through the expiry

by effluxion of time of the terms of office of original members of the board. The insouciance of the Government respecting the composition of the board of directors of the Reserve; Bank may be regarded without disapproval by those people who distrust the operation of the banking system. There may, also, be many persons in the community who have not yet arrived at the conclusion that there is a real need for the existence of a centra] bank in the Dominion. Even these, however, will probably agree that since the Reserve Bank has been brought into existence it should be operated to the best advantage in accordance with those " best traditions of British banking," about which our correspondent this morning is disposed to be satirical, and that it should not be treated by the Government merely as an institution providentially created for the purpose of enabling it"to utilise credits.