THE LIABILITY OF THE STATE

Timaru Herald, Volume CXLV, Issue 21188, 8 November 1938, Page 9

THE LIABILITY OF THE STATE

To the Editor of “ The Timaru Herald " Sir, —You permitted me in commenting on London funds to quote Hansard No. 9, page 202. I find I quoted the page in error and should have quoted pages 200 and 209. What really lead to the error was the fact that the page quoted dealt with superannuation funds which the Finance Minister (than whom no man in parliament Or outside parliament is more capable of passing judgment) declared, “if the accepted definition of bankruptcy is correct, then the Right Hon. J. G. Coates, ex-Minister of Finance,” will find that all the funds are bankrupt.” To which the Right Hon. ex-Minister of Finance interjected “that is right, but as Minister of Finance I made the statement that the State stood behind those funds.” Sir Joseph Ward also said at an earlier date “never mind the funds; the liability is on the State, and to the extent that there is a liability the State must meet it. Why build up funds?” The writer has known the State step in when "closed pending reconstruction” was the notice posted on the front doors of all but three Australian banks. The State stepped in and saved the awkward situation in the case of a New Zealand bank and the State stepped in and saved civilisation when the Old Lady of Threadneedle Street buzzed off in financial hysterics after bolting her doors. To-day in this country we hear of one here and another there withdrawing their money from a State Savings Bank! One hears rumours even among the hills of this and that variety all of which tend to make this scribe wonder whether the Old Lady of Threadneedle Street has quite got over the jitters of 1914. And when London funds are in question one wonders much whether there was anything really significant in the quiet question put to Sir Alfred Davidson, general manager of the Bank of New South Wales, by a member of the Royal Commission on banking or in the answer that information of secret or “hidden” reserves could not be given without consulting “my London directors,” and “in any case that information is beyond the scope of this inquiry.” And one does really wonder whether if in the final analysis the State does stand behind the blinking issue, whether there are not shrewd grounds for asking why hidden reserves should be at the discretion of London directors when a transfer of debts to the country to which those reserves owe their origin could make absolutely no difference to the banks' stability, and, as external debt would cease to be, as Dr Belshaw observes a source of internal anxiety. Until all external debt is domiciled in this Dominion, every ship load of imports is fraught with menace of default or a load of debt ballast . . which? A very few years ago one fine morning “The Herald” in common with other Dominion papers proclaimed the fact that we had freighted debt to the tune of £11,000,000. A few hours later we were told that we were O.K. again, “the position had been met." which reminds me of Captain Cuttle’s remark to Captain Jack Bunsby: "You carry a weight of mind as would swamp a man of my tonnage. How do you do it?” How indeed.—l am, etc., T. POWELL. Albury, November 6.