DETAILS DISCUSSED

Poverty Bay Herald, Volume LX, Issue 18236, 3 November 1933, Page 9

DETAILS DISCUSSED

PROPOSED RESERVE BANK BILL FINALLY PASSED CHEEKS FOlt MINISTER iPer Press Association.) WELLINGTON, this day. Urgency was accorded the passage of the l reserve Bank of New Zealand Bill in its committee stage in the House of Representatives yesterday. •Speaking on the clause restricting the bank from purchasing shares of banks other than the Bank for International Settlements, the Leader of the Opposition, Mr. M. J. Savage, said that the Labor Tarty felt that New Zealand should base her monetary system on internal conditions. She should not be tied to any monetary system overseas. He suggested that New Zealand should put her own banking house in order before connecting herself with international conditions. He moved an amendment with the object of debarring the reserve bank from purchasing shares in the Bank for International Settlements. The Rt. lion. G. W. Forbes said the Bank for International Settlements had been set up to enable effect to be given to the financial arrangements of the League of Nations. This bank’s purpose was to provide finance in instances where the League of Nations was satisfied that financial assistance should be given to any nation having the support of the League in any difficulty, or any war that might arise. It was also an institution for the purpose of collecting information which was made available to hanks which became shareholders. AN! INTERNATIONAL VOICE It would be for the directors of the reserve bank to decide whether the advantages were such as to make it advisable for the bank to take shares in the Bank for International Settlements, he said. The decision was left entirely in the directors’ hands as to whether they should accept any liability that would be incurred in shares in the international institution. Mr. Forbes continuing, pointed out that the Bank for International Settlements was not concerned with any question of currency. The internal monetary policy of the Dominion or of the reserve bank would not he affected in any way. The Hon. W. Downie Stewart said ho thought that too much importance was being attached to possible dangers arising under the clause. The country would be taking shares in the Bank for International Settlements, and would require a voice in 'its policy. If questions of international policy were to be opened up, surely it would be much wiser to have a voice than not. lie had always understood that those who held that the depression was partly caused by the international monetary policy suggested that it could remove those causes. The country could not get out of its difficulties unless there was co-operation with other countries. He thought the directors of the bank would be wise enough to see whether or not it was in New Zealand's interests to have shares in the Bank for International Settlements. The amendment was defeated by 43 votes to 26, and clause 1 was passed. BANK’S RIGHT TO JUSTICE Speaking on the clause relating to the taking over of the gold held by trading banks, Mr. R. A. Wright. (Coal., Wellington Sub.) moved that in the event of any dispute over the price of the gold between the bunks and the Government, the price should bo fixed by arbitration. He said that this provision had been in the original bill, and it seemed to he one of common justice. He knew that banks were unpopular, but they had just as much right to justice as anyone else. Mr. Savage said this was one of the clauses in the bill in which it was possible to find justice. Under the war legislation, the banks had had their gold reserve protected, and had been enabled to carry out trading operations based on public credit, making huge profits. They had absolutely no moral claim to advantages of the fluctuations in the price of gold which they had been allowed to retain by Act of Parliament. Mr. A. E. Anscll (Coal., Chalmers) expressed surprise at Mr. Wright’s amendment. It asked for an impartial tribunal, but lie would like to ask if the Chief Justice was a shareholder in the Bank of New Zealand. ; Jlr. A. J. Stallworthy (Ind., Eden): You are making a very serious statement. Mr. Ansell said lie considered the Government’s decision was morally and legally correct. . * STATE BANK REJECTED The lit. Hon. J. G. Coates said he was sorry that he could not accept Mr. Wright’s amendment, and he did not think ho would be right in suggesting that the House should adopt it. The elauso indicated the considered opinion of the Government. There were some who believed that the clause dealt unfairly with the banking institutions cf New Zealand, and so far as ho was concerned he was prepared to keep the matter open. If the banks could show they bad a case-—if between now and the time tho reserve hank came into existence they could show that Parliament had been treating them unfairly in rcsjicct of the gold they hold—the matter could come before Parliament again. He had not so far been convinced by the representations which had been made, but be recognised that the Government must b 3 impartial in its judgment. So far, lie had not seen anything which would justify ail alteration in the clause. The amendment was defeated by 56 votes to live. Mr. F. Jones (Lib., Dunedin N.) moved an amendment to the clause dealing with the constitution of the hoard of governors, to the effect that the whole directorate should bo appointed by tho Governor-General-in-Council. Ho said the object was to make Ihe bank a State institution. Tho amendment was defeated by 43 votes to 24. APPOINTMENT OF OFFICERS Mr. W. .J. Jordan (Lab., Manukau) moved an amendment designed to give voting power to the Secretary to the Treasury, who is a member of the board under the provisions of the bils. Mr. Coates said the Secretary of the Treasury would be in a stronger position if lie was ,iot compelled to vote. ’Hie amendment was defeated by 45 votes to 24. By another amendment, Mr. Savage sought to provide that the governor and deputy-governor of the bank should bo appointed by the Government on each occasion. Mr. Coatfes said Hie adoption of this amendment would mean that shareholdI ers would have no say in tho appointment of these officials. He pointed out that the report on the operations of the bank would be submitted to a meeting

of shareholders, who, if they were satisfied with the administration, would recommend the reappointment of the officials. Whatever appointment was re-' commended by the shareholders would have to be approved by the Government. The Minister expressed the opinion that there was a definite advantage iu the bank’s report being open to examination and approval by two distinct sections of the public—the shareholders and Parliament. Mr. W. J. Poison (Coal., Stratford) said that lie agreed that the governor of the bank should at all times be appointed by the State, but lie was not satisfied with the wording of Mr. Savage's amendment. He himself would subsequently move an amendment which ho considered would meet the position i more satisfactorily. Mr. Savage’s amendment was defeated | by 39 votes to 23. THE ISSUE OF SHARES. Mr. Coates then suggested the postponement of consideration of the clause. Ho said lie had in mind an amendment which would set out that tho board of directors should recommend the appointment of the governor and deputy-governor. It would then be for the Governor-General-in-Couneil to say whether these appointments were acceptable or not. Tho clause was postponed. Mr. D. W. Coleman (Lab., Gisborne) moved to extend to members of Parliament and to servants of the Crown the right to hold oflieo as members of the board. This was defeated by 40 to 24. The remaining clauses of the bill were then passed. At the instance of the Minister of Finance, an amendment was made to the clause relating to shares in the ; bank. A proviso was inserted restricting the issue of shares to British subjects who are ordinarily resident in New Zealand or who, having been so resident, may, at the time of allotment, temporarily be out of New Zealand for the purposes of their business or other sufficient reason. Mr. P. Fraser (Lab., Wellington C.) asked whether it would be illegal, in the'event of shares being listed on the; Stock Exchange, for them to be sold to any person other than a British subject. Mr. Coates replied in the affirmative. The Minister explained that the amendment covered the point raised by Mr. Wright. It was more satisfactory, because it did not debar a person who might temporarily be absent from the Dominion for some good reason from holding shares. NON-POLITIC A L CONTROL Consideration of the clause relating to the, appointment of the governor and deputy-governor was then resumedMr. F. Lye (Coal., Waikato) said that he and other Government members had given a great deal of thought to this matter. He had two suggestions to make: (1) That the governor and the deputy-governor should he appointed bv the Governor-General-in-Council on the recommendation of the Minister after consultation with the board ; (2) that the governor be appointed by the State and tlie deputy-governor by the hoard. In the event of the latter suggestion being put into effect, lie suggested that the governor should have a deliberative and casting vote and the deputy-governor should be without a vote. If the former suggestion be adopted, he suggested that the voting should he in the usual manner, the governor having a deliberative and a casting vote. Mr. Lyo mentioned that lie had studied the machinery of the 17 reserve banks in other countries and, in 15 instances, the governor was appointed by a State head and not by the shareholders. Mr. Poison said that he was satisfied that the community would definitely prefer that the State should have control of its own machine. Mr. Coates said that his suggestion that the appointments should be recommended by the hoard of directors and approved by the Governor-General-in-Council would maintain that element by removing any suspicion that polities were participating in the running of the bank. Many people would say that, because the appointment was made by the Governor-General-in-Council, it was a political appointment, and attention should Do paid to this aspect, because the success of the bank so greatly depended on the public being satisfied that polities were not unduly entering into the management of the hank. COMMITTEE STAGE PASSED Mr. Savage: Unless it suits the board, no man will get its recommendation. Mr. Coates: “If lie is not suitable to the Government, or if a deadlock arises, the matter will be dealt with by the Governor-General-in-Council.” Mr. Savage: Why not make it a straight-out State appointment? Mr. A. E. Jull (Coal., Waipawa) said there should be co-ordination between the board and the Government, hut he thought the Minister should make the recommendation. Mr. Coleman asked what was the difference between the proposed amendment and the original clause. Mr. Coates said the meeting of shareholders would make its recommendation and go home. It would not be possible to negotiate with the shareholders as it would with the’directors. On Nil-. Coates’ motion the clause was amended on the lines he bad indicated, namely that the appointment of the governor and deputy-governor, other than on the first occasion, be made by the Governor-Geiieral-in-Couneil, oil the recommendation of the hoard of directors. The committee stage was then completed, Mr. Coates being applauded. The bill was reported to the House at 12.45 and the third reading speeches were commenced. The Dill was read u third time by ,‘!7 votes to 21 and passed, and tlie House rose at '5.10 a.m. I ill 10. HO o’clock this morning.