THE BANKS’ GOLD

Poverty Bay Herald, Volume LX, Issue 18236, 3 November 1933, Page 7

THE BANKS’ GOLD

TERMS OF TRANSFER EX-MINISTER’S OPINION A LOST OPPORTUNITY sfelE “INSIDE” HISTORY (Parliamentary Reporter.) WELLINGTON, this day. How the banks missed an opportunity, and have themselves to blame for the worse terms under which the proposed reserve bank of New Zealand will take over gold coin and bullion reserves from the trading banks, was described to a highly interested House by Mr. W. Downie Stewart, who was Minister ot Finance when the original Reserve Bank Bill was drafted and introduced. He gave “some ‘inside history ot tne gold clause.” The original measure contained a provision that if there was any dispute as to the terms under which gold coin and bullion should be taken over by the reserve bank, the matter could be submitted to arbitration.. _ “What was in my mind in submitting that clause,” explained Mr. Stewart, “was that if Parliament had it m ns mind that the profit belonged to the people, the banks might justly have a grievance, and say Parliament was both judge and the beneficiary in tins matter.” _ ~ The banks would not consider Parliament an impartial tribunal, so he took it upon himself, in order to avoid that accusation, and without expressing an opinion on the merits of the case, to draft a clause providing for an appeal to a tribunal if no friendly settlement could be effected. He anticipated a friendly settlement, but considered the machinery should be available if it was needed. BANKS’ GOODWILL NEEDED A further motive which prompted him was that his reading on central hanking had led him to realise that unless such on institution carried with it the support, co-operation, and goodwill of the commercial banks its task would b£ extremely difficult. All the authorities agreed that in establishing a central bank with no experience or tradition behind it, if there was strong opposition or hostility ffom the commercial banks it would be difficult to make it a success, so he thought it necessary to remove any possible suggestion that the tribunal would also be the beneficiary. He got the Cabinet to agree to a clause drawn on the lines he had indicated as desirable. “There was a, good deal of argument before I got it to that stage,” continued the ex-Mmister, “and if the banks find that they have lost the benefit of a clause which would at least have given the appearance of an impartial tribunal, the blame is largely their own, because I made it quite clear that if the bill did not get to the House within reasonable time there was no prospect of getting it passed before Christmas. The bill was only introduced the day before Parliament rose.” Mr. Stewart reminded members of the way in which the exchange problem then absorbed the attention of the House, so that it was impossible to deal with central banking. “If the banks complain,” ho declared, “the fault is their own in the delay •whjch .they imposed upon me.” Several speakers in the debate, said Mr. Stewart, had assumed that if there was a tribunal the decision must go the other way from that provided in the present clause. “Surely if their case is overwhelmingly strong—and I think the Minister of Finance has made out a good case—they should not fear to put the facts and arguments before a tribunal which is other than a beneficiary.” DANGER OF HOSTILITY

Mr. J. A. Lee (Lab., Auckland East): Who is to be supreme, Parliament or the Supreme Court? Who is to rule the country? Mr. Stewart w'ent on to say that he realised that the clause was a very clumsy one, and that it was difficult to get a suitable tribunal. His own idea was that it should comprise somebody outside the area of controversy. Since he had handled the matter, it was true that tKe present Minister had secured a good deal more information. Mr. W. J. Jordan (Lab., Manuk.au): From London? Mr. Stewart: From London and elsewhere, and apparently there is a strong authoritative body of opinion, as expressed in the bill as he now presents it, and those opinions were not available when I was in charge of the bill. I think the Minister has a weighty body of evidence in support of his view, but even assuming that the banks' arguments are entirely unsound they should have the right to submit to a tribunal the arguments which they have not submitted to Parliament, but which they have placed before the Minister. The speaker suggested that the banks could have no grievance if Parliament took up the attitude that, so conscious was it of the soundness of its view, that it was prepared to submit it to a tribunal. The Minister of Finance had been doing his best to find some means of carrying with him the goodwill and co-operation of the banks, but if he failed to find some means of adjustment, and the central bank started with the hostility of the trading banks, this would be a real difficulty. Therefore, he would like the Minister to indicate whether he had any intention of modifying the present clause, without abandoning any of rights he claimed, and which Parliament was determined he should possess. A COALITION CAUCUS

“I know that a vote of the House,” added Mr. Stewart, ‘‘would be practically unanimous in favor of the clause, but I still hold that we should not give them even the appearance of a tribunal settling a matter of which it is a beneficiary. The co-operation of the trading banks is so desirable that whatever the merits may be, some friendly arrangement should be made. A Coalition caucus immediately the House adjourned for dinner was a sequel to this committee discussion. i It is understood that the chief purpose was further consideration of the gold clause in the bill in view of the sugges- ■) tion that it might be modified, giving the banks an opportunity of submitting their case to arbitration. However, there was a strong body of opinion favoring the retention of the Rt. Hon. J. G. Coate’s proposal to take over the imld coin and bullion reserves at the book value of £3 19s lOd an oz., and the sequel promptly followed when the House resumed, Mr. R. A. Wright’s amendment to substitute Mr. Stewart’s original clause being defeated by the solid majority of 56 votes to five, the latter comprising Messrs. Wright, H. Atmore, J. Hargest, Stewart, and C. A. Wilkinson. Another question revived at the Coalition caucus was the bank’s directorate, and the decision was to stand by the bill as introduced.