The Wanganui Chronicle. WEDNESDAY, FEBRUARY 6, 1933. QUESTIONABLE PUBLIC ADVOCACY

Wanganui Chronicle, Volume 79, Issue 31, 6 February 1935, Page 6

The Wanganui Chronicle. WEDNESDAY, FEBRUARY 6, 1933. QUESTIONABLE PUBLIC ADVOCACY

JT IS to be hoped that the methods adopted by the public advocates of the Reserve Bank Bill when it was before Parliament will not be duplicated in regard to Ihe proposed National Mortgage Corporation proposal. It will be remembered that the Government gave out that there would be no material alteration from the Bill as originally introduced, but when the second Bill was placed before Parliament it was found 1o contain provisions which had never been contemplated by the public before, jettisoning a solemn agreement on the gold issue. The precipitate change of front on an imporlant matter, challenging as it did the rights ot private property, -was supported by deliberate misstatements by Mr. Coates and Sir James Parr. Mr. Coates proclaimed that the course proposed to be followed in taking over the gold from the commercial banks at nominal par and not at market value had been taken by certain other countries. This was referred to in the committee proceedings in Canada on 1 he Reserve Bank issue, when Mr. S. 11. Eogan said “ While it is probably true that in the cases namc<l by him ( Mr. Uoates) these Governments touk the profits ou the gold held by their < eniral Banks, it is not stated that such Governments touk the profit in like manner on gold acquired from the Commercial banks. “Such was certainly not the case in France in 1928, when the commercial banks, upon transferring their gold holdings to the Bank of trance, received the full premium of about 400 per cent. ’ ’ “Similarly in Belgium, the commercial banks in 1926 received the full premium of about 50 per cent, upon the transfer of 'their gold to the National Bank of Belgium.” “In Italy in 1926 the Banks of Naples and Sicily surrendered their note issue and privileges to the Bank of Italy and transferred to it their statutory reserves of gold and foreign exchange, being paid it: full the ruling gold premium. “The fact that the three leading countries named, upon investigation, are found to have done the exact opposite to what Mr. Coaites said they did, should dispose of the whole fabric of argument based on the Now Zea land ease and upon Mr. Coates’ allegations.” In the pamphlet issued by Mr. Coates is included an extract irorn a speech made by the Hon. Sir James Parr on the second reading of the Reserve Bank Bill in the Legislative Council: — “In India two banks issue a small amount of bank notes, while the Government issues the currency notes. “In discussing the valuation of gold assets which were to be transferred to the Reserve Bank, and how profits on such gold would be dealt with, the Committee ou Indian Reserve Bank Legislation

stated: ‘‘ln principle such profits should belong rather to the Government than to the bank but our view is that this unrealised margin should in some way or other be kept available for strengthening the position of the currency reserves.” In accordance with this unanimous decision the Committee recommended that the old valuation be retained. Clause 33, sub-clause (4) of the Reserve Bank of India Bill, 1933, reads: “For the purpose of this section gold coin and bullion shall be valued at 8.47512 grains of tine gold per rupee, rupee coin shall be valued at its face value. . .’’ “Clause 33 deals with the assets to be held against the. notes.” A perusal of the Committee’s report and of the Bill itself shows clearly that neither the Bill nor the Committee’s recommendations refer to the valuation of the gold assets which were to be transferred to the Reserve Bank, but to the assets of the Reserve Bank itself held against its owqi note issue. It did nol touch the matter of the value of the gold to be transferred from I lie two commercial banks of issue to the Reserve Bank. As a matter of fact the taking over of the gold reserves of ihe trading banks did not arise in India at all, because, there was nothing in the Bill enabling the Reserve Bank to buy or sell either precious metal in any other way except through the open market. Sir eJames Parr’s reference to the position in India was, therefore, wholly fallacious, and it is hard to escape the belief that the effort was a deliberate altenipt to mislead, lakcn with Mr. Coates’ efforts in the same direction a very disquieting state of public advocac y is revealed. Recently Mr. Coates lias indulged in the statement that there are 50,000 bankrupt farmers in New Zealand, and, on being challenged by Mr. Beany, the secretary of the Associated Chambers o£ Commerce, has not yet met the suggestion that he was grossly exaggerating. More recently Mr. Coates has challenged the representative character of the Associated Chambers of Com merce, alleging that it did not represent the opinion of the Associated Banks. In view of the fact that Mr. J. Cruickshank Morrison, an inspector of the Bank of New Zealand, acted on Hie committee for the banks, which fact was surely known Io Mr. Coates, the representative character of the committee re-spoiis'-de for the Chambers of Commerce memorandum could hardly be denied. The issue between Mr. Yaldwin ami Mr. t oates ean be left to the parties I. but why .Mr. Coates should hine seized upon such a straw is past comprehension However, Mr. Yaldwin’s assertion that the memorandum does llle endorsement, of the banks disposes of the point. It must be said that these recent events, coupled with the e\cuts which occurred during the debate on the deserve Bank entitle the public In regard with seejitiei.sm anv slate ol alleged tael coming from the Miiti.sler of Linam-e