“CONFISCATION”

Poverty Bay Herald, Volume LX, Issue 18234, 1 November 1933, Page 7

“CONFISCATION”

LINK WITH BANK OF ENGLAND. Replying to Air. At. J. Savage, Leader of the Opposition, when the House resumed, the lit. Hon. (!. W. Forbes said the Government was not so optimistic as to expect that the bill Would be passed during the current sitting, but it was endeavoring to ensure that reasonable progress would be made. Oonl ilining the debate on the second reading. Mr. •!. A. Murdoch (Coal., Marsden) said that if the New Zealand banking system was linked up with the Bank of England, there would ho nothing to fear for the Dominion’s monetary system. The Bank of England bad stood the test of time, and was standing up to the present crisis in a unique .manner. He, said Hie bill gave Parliament definite control over the monetary system, and this would be found to be most satisfactory. New Zealand was not rushing blindly into the institution of a reserve bank. Reserve banks bad been successful wherever they had been tried. .Mr. AV. 10. Rarrv (Lab., Auek. C) said that Labor believed that public credit should be controlled by the State, and employed for the country’s development. The bill would not help tho country out of its difficulties. GOLD OWNED BY BANKS. Mr. AY. P. Ernlean (Coal.. Parnell), approving the bill, said that the appointment of shareholders’ directors was a, great safeguard. They could be trusted to select men of great knowldge and integrity. Regarding tire governor, the Government should even go outside New Zealand if necessary to get a man with the widest knowledge. The transfer of the gold question should be dealt with by a tribunal composed of Supreme Court judges. 'The banks could put up a ease with justice, and the Government had to give it attention. The gold was owned by the banks- —earned by their trading negotiations. Mr. R. AV. McKeen (Lab. AVellington S.) asked bow the reserve bank would prevent a slump. It would have no control over the six proprietary banks. It appeared that Parliament was going to tax the people by £1,000,000 to secure £500,000 worth of private capital. AA'hy should the credit ot the nation be pledged for tho sake of a few. Opposing tho bill, Mr. D. McDougall (Ind., Mataura) likened the establishment of the central bank to the construction of main highways parallel to railways. No one wanted a reserve bank, an institution which would only accentuate the present difficulties. If the people could pull through the slump of the ’eighties without a central bank they could do the same to-day. Mr. E. J. Howard (Lab., Christchurch S.) said that most of the Government speakers had started by praising the bill and concluded by condemning it. If they were all asked to delete the clauses to which they objected, there would be very little of the bill left. KILLING CURRENCY REFORM Air. Wright said reserve banks had nut been successful everywhere, lie contended that the Reserve Bank in the United States had been largely responsible for tho world-wide slump. He declared that if the Government had wished to impose its currency policy on the. country, the trading banks would not have hindered it, but would have given every assistance. It appeared to him that tho reserve bank would have to carry the whole burden of the exchange manipulation, and he suggested that \v;us the reason for tho proposal to establish it. It was being created so that the Government could “stand from underneath when the crash comes.” It had been claimed that the reserve hank would assist in the rehabilitation' of the country, lie said the reserve bank could not increase the price of commodities, but would have to act just as other banks had acted. Air. 11. T. Armstrong (Lab., Christchurch K.) alleged that the main purpose of the bill was to make it more difficult for currency reform to he brought about. That was the purpose of those people who had instructed the Government in the matter. He. asked whether the bill proposed to do anything to stabilise the value of money or whether the value of money would be fixed by the more powerful institutions with which tho country would bo associated as the result of passing the bill, lie was afraid that the bill would not only lead to co-operation with other financial institutions, hut would also lead to domination. “As far as Parliament is concerned we will have no say for seven years,” he added. ANOTHER WEAKNESS Air. W. A. Bodkin (Coal.; C. Otago) said he did not know of one international conference since 1920 that had not affirmed the principle of central reserve banking. World prosperity could only be achieved by international cooperation in an endeavor to raise the prico level, 110 suggested there was a weakness in the bill, in that it did not provide for the representation of stock firms. Mr. J. A. Lee (Lab., Grey Lynn) said that increased production and reduced wages had failed to get rid of the depression, and now they were going to try a central bank. He contended that the Reserve Bank Bill did not propose to bring about the reform of the banking system in the interests of the people. Deflationary legislation had driven out of existence about £4.000,000 worth of purchasing power, but the bill would not restore this money. Both inflation and deflation should be rejected, and money should be placed on a commodity basis. Mr. W. A. Yeitch (Coal., Wanganui) said lie believed the central banking system would eventually he established throughout .the world for the purpose of preventing price fluctuations, ft was vitally important that there should he an international monetary standard, and to make this possible world control was necessary. The one great barrier against the freedom of trade between Now Zealand and the United Kingdom was not lack of a central bank, but debasement of tho Dominion’s currency. If the management, of the central bank was to lie given a free hand to fix the rate of exchange, great, benefit would be conferred. ' AMENDMENT REJECTED Mr. Vcioh said that if the Minister of Finance would give an assurance that the bank directorate would be allowed to fix the exchange rate in accordance with the balance of trade and without political interference, lie would support, the bill, but, if that assurance was not forthcoming, lie would oppose it. Mr. A. Al. Samuel (Coal., Thames) intimated that lie would vote against the bill on the ground that it was a last desperate endeavor to prop up the present; financial system—to preserve the monetary system, the domination ot which had enslaved the great percentage of tho population of the world for the benefit of a few. Mr. AV. J. Broadfoot (Coal., AYaitomo) expressed the opinion that the capital of the bank should not be inSava money—use Fairy Dyes .for those : faded curtails. *

creased without the consent of Parliament. On a division being taken at midnight, the Labor amendment on the second reading was defeated by 43 votes to 28. Messrs. H. Atmore (Inch, Nelson), 11. M. Rusliwortb (C.P., Bay of Islands), Samuel. A. J. Stallworthy (Tnd., Eden), I-!. T. ' Tirikatene (hid., S. Maori), Vcitcli, <’. A. Wilkinson (hid., Ivgmoiit), and Wright joined Labor members m voting for the amendment. SECOND HEADING CARRIED Replying to the debate on tho second reading, Mr. Coates said it was difficult to understand Mr. Veitch's point of view. the Minister said that one of the principal purposes of the bank would be to consider the economic position of the country. It would play a very important part in maintaining the trade balance of our own country. Replying to Mr. Bush worth, Mr. Coates'said that Parliament would have the right at any time, to amend the hill. Mr. Ihishworth had created the impression that the whole bill was characterised by suspicion. “I have never known anyone who can preach suspicion as he does,” the Minister said. “They are unworthy suspicions. It should bo accepted that most men in this counrlv are honest nidi ami want' to do their best for New Zealand.” The bill was read a second time by 43 to 28. Mr. Rusliwortb then moved : “That it be an instruction to the committee on the bill that it has power to sot up a special committee composed of representatives of all groups in the House to conduct full and open enquiries into the existing monetary, and banking system of the Dominion and possible alternatives and that the report of this enquiry be included when the bill is reported back to the House.” Mr. Speaker ruled the amendment out of order. He said that it sought to give a most unusual power which was quite outside the. function of the committee on the bill. The House rose at 1.35 a.m.

RESERVE BANK BILL MR. WRIGHT’S HOSTILITY CRITICISM OF MINISTER (Parliamentary Reporter.) WELLINGTON, this day. Strong words were used by Mr. It. A. Wright (Coal., Wellington Sub.), in the House yesterday, when intimating his unrelenting hostility to the provisions of the Reserve Bank Bill. “This,” lie declared, “is one of the most revolutionary measures that lias ever been before this House, and those who vote for it will be doing so with, their eyes open, and they must accept the responsibility for their action.” The Minister of Finance had stated that’ he was going to,take the gold out of the coffers of the banks at its book value and sell it at the market valifc. line bank, since 1914, had imported gold to the value of £550,000, and the Government proposed to take it. “If I voted for that sort of tiling,” declared the member, “I would feel lhat 1 was in the company of Dick Turpin,. Ned Kelly, and other brigands. Mr. Speaker: I think I must check you. You are reflecting on other members. Air. Wright: Well, I will say that R I voted for the proposal 1 would be admitting that I do not understand the rudiments of common honesty. EXCHANGE SCAPEGOAT Called again to order, Mr, Wright said - he would, perhaps, be permitted to say that the proposal amounted to confiscation. It would take much to convince him that the gold was the property of the people, as contended by the Minister. Mr. Wright said lie failed to see how a reserve bank would assist in the rehabilitation of New Zealand. The real purpose of its establishment was that the Government might place on its shoulders the cost of the manipulated exchange. The Rt. Hon. J. G. Coates was the high priest who was placing the burden on the head of a scapegoat. Thq. only trouble was that he was not sending the scapegoat out into the wilderness. •‘lt is also a pity,” Ah’. Wright added, “that the Minister is not going out into the wilderness himself, and staying there.” Although the South African Reserve Bank had been referred to as an example, it had lost £I,SCO,OOO in one night, and its reserves were practically wiped out. It reminded him of the fable of the lion and the mouse. When the lion —the bank—got into difficulties, the mice—the two trading banks—had had to come to its assistance. “A PERSONAL ATTACK” Air. Coates, the Minister of Finance, replying in the early morning, dealt with Mr. Wright’s criticisms as, a personal attack on himself, which, he declarer], he could not understand, though Air. Wright* had lately taken that attitude “He was an associate of mine for many years,” continued Air. Coates, “and 1 cannot understand why ho lias become utterly hostile. It is something new to me. However, he seems to have made up his mind and set his course. Whether he is disappointed or not, I am unable to say. I did notice that he gave certain definite figures, and as soon as he floated them off a very prominent banker got up and walked out of the House. I say now: Who is in the hands of the bankers? Whose voice is the echo of the banker? Mr. Wright: I am not. Afr. Coates: The hon. gentleman must clear himself, because he has left the impression in the minds of members that he is being worked by the banks. • Air. Wright: I have no overdraft with any bank, and I have never had one. Mr. Coates: I envy you. Members: So do we. Air. Coates concluded his references to the member for Wellington Suburbs with the declaration: “His speech was utterly personal from beginning to end."