OUTSTANDING SHARES

Otago Daily Times, Issue 26915, 29 October 1948, Page 5

OUTSTANDING SHARES

BANK OF NEW ZEALAND MOVE TO CLOSE OVERSEAS REGISTERS • P.A. WELLINGTON, Oct. 28. The Minister of Finance, Mr Nash, moving the second reading of the Finance Bill in the House of Representatives to-night, said there were at present 4504 ordinary shares and 1699 D long-term mortgage shares in the Bank of New Zealand still in private hands on the London register. The Melbourne register contained 50 ordinary shares and the Sydney register 809 ordinary and 62 D long-term shares. The Bill empowered the Government to take over these shares for a fair cash price, but negotiations were at present going on with the holders of several blocks of shares on the overseas registers with a view to buying the shares on a mutually satisfactory basis. Only four owners were involved in the outstanding shares in Australia, and it was desirable that the overseas registers should be closed as soon as possible. When Mr Nash referred to the clause in the Bill empowering the Minister of Marine to conduct shipping services, several Opposition interjectors suggested the clause might be used in future if the Government wishes to take over the* Lyttelton ferry, but Mr Nash said the clause merely gave, in relation to the existing ships operated by the Government, a power which the Auditor-general said did not exist under the present Statutes, hut whiclf was desirable. The Leader *of the Opposition, Mr Holland, said he could not overemphasise the importance of having a sound financial system. This system, however, could easily be wrecked by the creation of what was now known as “ funny money.” There would never be a stable price level while the Government continued to create credit without a corresponding increase 9 in goods. The Reserve Bank legislation of 1934 laid down that if ever the exchange rate was increased there was a statutory obligation on the Reserve Bank to pay the Consolidated Fund an amount equal to that by which its assets had been increased in terms of New Zealand currency. There was also provision that should the rate be reduced the Minister of Finance should pay to the bank out of the Consolidated Fund an amount equal to that reduction. The provision now sought was to liquidate the Government’s obligation to the bank. Was it realised by the Left Wing of the Government that the trading banks were going to suffer losses, and was the Government going to compensate them, too? The Minister of Finance had stated on Budget night that he had seriously considered the matter of bank losses but he did not indicate how he was going to discharge the obligation. He asked how much the losses totalled when the exchange rate was adjusted. Mr Nash said that there was £17,400,000 to the Reserve Bank, £2,500.000 to the trading banks, and £1,800,000 on account of forward exchange, making a total of £21,700,000. Mr Holland asked how the Government was going to find that sum. The Minister did not even give an indication in his reply to the Budget debate. When prices decreased after the reduction in the exchange rate, the amount available to purchase goods should also have been reduced. The whole of the money in the Consolidated Fund was required to pay for Social Security and Government services and subsidies. Mr Holland said the fact really was that there was no money in the fund to pay over to the Reserve Bank for its exchange losses so the Minister was going to the Reserve Bank asking it to create £21,700,000 of new money for which he would give as security some new Government stock. In effect the Minister, on behalf of the Government, owed £21.700,000 to the bank. The bank created the money, the Minister paid it into the fupd and the fund paid it back to the bank. It was overwhelmingly important that men and *women of New Zealand should realise they were unconscious victims of a financial system under which money was created without the corresponding goods and services. The provision authorising the bank, through the Minister, to create additional money through the printing press would affect the every-day life of all the people. One way they would understand it was when they went to buy goods. The reduction in the price of goods caused by the exchange adjustment would be counteracted to a considerable extent by the passing of the Bill. Statements from the Reserve Bank in earlier years had called attention to the need to provide in times of prosperity a pool which could be used in times of need.