THE OTATO DAILY TIMES Monday, May 21, 1945. THE BANK OF NEW ZEALAND

Otago Daily Times, Issue 25849, 21 May 1945, Page 4

THE OTATO DAILY TIMES Monday, May 21, 1945. THE BANK OF NEW ZEALAND

It is expected that the Minister of Finance will address a meeting in Hamilton this week in support of the candidature of the Labour Party’s nominee for the seat in the Legislature that is now vacant. In this event the electors will be justified in hoping that he will take the opportunity of explaining how it is that he is now proposing a course of action respecting the Bank of New Zealand to which he had in the past expressed firm opposition. It seems to have taken only a few minutes at the Labour Party’s conference last year for him to change his front on this question, and the community is entitled to ask him for an explanation of the reason why, and the circumstances in. which, he suddenly abandoned the view that had on various occasions been publicly expressed by him upon the proposal that the State should acquire a trading bank, preferably, because of the interest it already possesses in this institution, the Bank of New Zealand. Mr Nash has repeatedly declared that the trading banks in the Dominion are performing a service that could not be better performed by any State bank and that no advantage would accrue to the State from its acquisition of any of these banks. Mr Nordmeyer, Minister of Health, repeated at Hamilton last week the cry that “the Government could not implement its policy to the full until it controlled one of the private trading banks.” This is simply stupid. The Government at the present time has the right to appoint four of the six directors of the Bank of New Zealand It is in a position therefore to exercise very complete control over the operations of the bank. It is already provided with the means which Mr Nordmeyer thinks it should possess to implement its policy. If this were not sufficient, it has, by an amendment of the' law for which it is itself responsible, ensured that the Reserve Bank shall be amenable to the influence that may be exerted by the Minister of Finance with a view to the fulfilment of the Government’s policy. The Government will not, through the acquisition of the privately held shares in the Bank of New Zealand, extend the control which is now exercised by it over the operation of the monetary system in the Dominion. It is necessary, in consequence, to look for some other reason for the action which it intends to take in relation to the Bank of New Zealand. Mr Nash has been singularly reticent on the whole subject since he effected his somersault at the Labour Party’s conference and he has given no indication of what this reason is. Mr Nordmeyer has hinted at it, but for a frank statement of it we must read what Mr Langstone, the member for Waimarino, says—for Mr Langstone it was who was the leader of the movement at the party conference that culminated in the adoption of the resolution upon which the Government proposes to act. Mr Langstone has made it perfectly clear that if the Bank of New Zealand is operated under State management in the way that is contemplated by him and those associated with him, it will enter upon a plan of cut-throat competition with the other trading banks with the purpose of driving them out of the field. The State bank will not se.ek to make profits. It will lower interest rates to a level at which no other bank will be able to compete with it. .It will make advances freely—to deliver farmers, in Mr Nordmeyer’s terms, from “ the clutches of the stock and station agents”—and will abolish some of the charges that are now made by all the banks. By these means it is designed that the State-owned Bank of New Zealand may obtain a monopoly of the commercial banking business of the Dominion. Whether this will contribute to the maintenance of the economic security of the country, of which the need is being stressed by Mr Nash in his war loan campaigning, the public may judge for itself. How a development of this description is likely to be regarded in Great Britain, which is our creditor to the extent of scores of millions of pounds, is a point upon which some reassurance will undoubtedly be desired. The implications of the Government’s proposal are seriously far-reaching and disturbing. They are of so grave a nature that the country should not, without prior reference to it, be committed to a policy which would expose it to the dangers that would seem likely to flow from the adoption of it.