BANK OF NEW ZEALAND BILL

Wanganui Chronicle, Volume 89, Issue 270, 15 November 1945, Page 5

BANK OF NEW ZEALAND BILL

SECOND READING DEBATE (P.A.) Parliament Bldgs., Nov. 14. The public galleries were filled when the second reading debate on the Bank of New Zealand Bill was resumed in the House of Representatives to-night, urgency being accorded by 37 votes to 33. The debate was adjourned.

Mr. W. F. Broadfoot (Opp.—Waitomo) said the establishment of the Reserve Bank was the greatest monetary reform introduced in New Zealand, but it had been continually abused by the Miniver of Finance, who had issued more credit through it tl<an there were goods to purchase. Britain was doing what New Zealand did years ago, but they aid not propose to interfere with the trading banks. The taking over ui the Banx of New Zealand was, he considered, entirely unnecessary, and was. it seemed, being dolre to appease’ the Member for Waimarino, and his “funny money” followers. Mr Broadfoot dealt with the reasons given by the Minister of Finance lor taking ovA- the bank, and said they showed the extent to which the Government had control of the banks. Dealing with the method of taking over the shares, he said those who were protected by English and Australian company law were apparently to get a belter deal than those in this country. No reason had ever been given in the House for the Minister of Finance’s change of front in regard to taking over the bank. Apparently, the Minister was prepared to fortake his opinions for the sake of retaining office. Theoretically, there was a very strong case for the Government having control of the banking system, but experience proved that the temptation for Governments to debauch rha Reserve Bank was too great. This was illustrated in the case oi our own Reserve Bank, whose governor and directors had been unable to prevent the Government to inflation of currency. How would the directors of the Bank of New’ Zealand be able to oppose the Government policy? It was just plain arrant humbug, to say they could do so. , £ WORTH ONLY 10s Inflation had proceeded so far, said Mr. Broadfoot, that, in his opinion, the pound to-day was not worth more than ten shillings in terms of purchasing power. Mr. Cis.de Carr (Govt. —Timaru): What is your opinon worth? Mr. Broadfoot said that as much as £9,000,01)0 might have poured into lhe country's money stream to meet the shareholders’ demands for cash. Yet the Government denied the soldier lump sum gratuity payments on the pretext that inflation woulu reslilt. The essence of democracy was that individuals had a right to bargain about 'heir personal property, but bank shares weie Jpeing expropriated and their price had been liAed by the expropriator. The Minister of Works, Mr. Semple, said the Opposition was using the same old worn out and rusty slogans and propaganda to scare the people, and he thought the general public was sick of it. Those tactics had been tried year after year, election after election, and had failed and would fail again. The same "Tory ’ tactics had failed in England. He analysed the causes which brought about the worldwide depression and said it was admitted that the depression was an evilly designed scheme, perpetrated by the manipulators of finance. Why, he asked, should money control the destiny of mankind? It was time that system was stopped. The hoarding of millions was a weapon against society. No man rould become a millionaire by his own hands.and skill, but only by robbing others. FINANCE MINISTER CRITICISED

Mr. R. M. Algie (Opp., Remuera) said the people of this country must have watched with very great amazement the extraordinary and unexplained attitude of the Minister of Finance with his lunchtime conversion from sound finance to crazy finance. The Minister . as now saying "Aye, aye, sir!” to the member for Waimarino. The Minister, who has been noted for his devotion to high finance, had be£n left to carry out a policy with which he did not agree. There were two grounds only on which the Government should take over the private property cf citizens. The first was if the owners had abused, or misused, that property, but such charge could not be laid at the feet of the shareholders of the Bank of New Zealand. The second was that if it had shown that such action was in the interests of the public and then compensation must be fixed by a fair method. The Opposition did not dispute that community interest transcended private interest, but in this case what was happening was simply the taking of private property by the Government. Th? Opposition’s case

was that a Stale bank would become a political bank. It was a transfer of private propertv without prnner compensation fixed bv a proper tribunal. A GREAT BILL Mr. H. Atmore (Govt.—Nelson) said -the Bill was one of the greatest Now Zealand ever had. and wa; an attack on the citadel of finance in the Dominion. The Government would have to decide whether the Bill was to function for the people of New Zealand, or was merely a change of ownership. He hoped the Government would not falter, and allow the, measure to become an empty gesture. He predicted that there would not be one private bank in ten years time, and if the Opposition came to power it would not repeal this legislation. He congratulated the Government on bringing down the Bill and hoped its policy would be ooin enough io ensure that the bank functioned for ;he people. Mr. W. A. Sheat (Opp. —Patca) said the Minister of Finance had given assurance; that no major change of policy was intended, and he believed the Minister would refuse to cany out the policy lhe member for Waimarino wanted. He considered the clause which stated that the board of directors were to have regard to ne representations of the Minister of Finance was the rea] core of the Bill, and that the preamble to the Bill, dealing with post-war reconstruction, development, and rehabilitation of returned : ervicomen. was camouflage, rhe task of financing the war had been accomplished succcssiuily unaer

(he existing system, and there was nothing to suggest that reconstruction and rehabilitation could not be carried out as successfully. WASTED 20 WEEKS Mr. Sheat said the House was on its 71st si.ting day at the close of a 20weeks’ session, but its time wa being wasted on a measure which had no rea! relationship to the economic problems facing the country at the present time. During those 20 weeks the Hous? had not faced up to these major economic problems. Tho e 20 weeks had been one of the most important periods in the history of this country, marking a transition from wdr to peace. In spending their time on such legislation the members were not doing their duty as representatives

of the people. The country’s problems which demanded attention included shortages of essential goods, shortage of houing, shortage of coal, of clothing, of transport facilities, and of cigarettes; nor was New Zealand putting up its best effort as a food producing country. The Government, instead of bringing before the House measures to increase our production, was trying to bring about economic betterment by changing the name on the front of a bank. The Minister of Finance already controller our exgort and import trade, the Reserve ank, the State Advances Corporation, and now this Bill gave him control over the major financial institution of the country. The Bill affected not only the shaieholders and the directors but the customers of the bank. The Minister would have control over the financial resources of the bank’s customers. The Minister saw in the Bill a means of further tightening his grip on the country’s financial resources.

The Bill would immeasurably Increase the Minister’s powers, for good or evil, in this country. It was wrong for the House to pass a measure vesting further power in the Minister wiio already exercised a power so vast that lie already was a virtual dictator of the country. The Bill would reduce the so-called directors of the bank to a position pf complete subservience to the Minister of F inance.

Mr. C. R. Petrie (Govt., Otahuhu) said that until we had control of the international financial system there was a potential danger, even to our economic system, and our social security in New Zealand. All we could do was to take control of our own financial institutions, and hope that, by precept and example, we would persuade other countries to follow our example. When the bank became a national bank, with a national outlook on policy, it would be a better instrument of the Government’s postwar policy.

Mr. Petrie said the taking over of the bank would enable the experience and knowledge of the bank’s directors to be used in the interests of the country instead of in the interests of the shareholders. In any case the present directors exercised only nominal control. Their decisions always had been guided by the general manager and the executive officers. Th? bank’s general manager had two loyalties, one to the directors and shareholders, and one to the customers, but none to his country. He had a definite duty to secure the maximum profit with the least risk of capital.

With the Government taking over the bank the general manager rould change his policy without violating any principles of hanking. He could use the hank’s and eountry’s resources in furtherance of the Government’s policy.

Mr. M. H. Oram (Opn.—Manawafu): Without additional risk? Mr. Petrie: What is risk? I cannot waiste any time over that! Mr. Petrie said the greatest blunder ever made in this country was when the Government became th? shareholder in the bank instead of bccominr? its owner. That enabled the bank, with Government guarantee, to enrich a few shareholders at the exnense of the farming and trading sections of the community, and to build un assets for which the countin’ now had to pav millions of pounds. Mr. Petrie said that if N?w Zealand industry was to expand, iY ability tn do so would depend on th? country's eredit policy. Tho Opposition was fighting a rearguard action, driven bv private interests, which had given it th« hopeless task of trving tn stem th? march of progress. The Opposition had become a suio’de squad, and whet? dying, bit by bit. By fim end of the session nothing would h? left of them. Mr. F. Langstone (Govt.—Waimarino' : Wo are passing a Coroner’s Bill for them?

Mr. G. Harker (Opp., Waipawa) said the Opposition would always interfere where there was rn attempt to introduce totalarianism into New Zealand. The Bill was bared on a violation of justice. The Government wanted control over money so that it could increase its power over th? private lives of the people. The aim of the Bill, he said, was political rather than for the service of the people, Tho whole principle of faking over the bank compulsorily by the Government which constituted itself the fixer and payer of the price, was bad. There was no cure for the banking aucstion bv the mere acquisition of the bank if it was to run or. existing principles, .nnd still less was there cure if it was to run for party political principles. Mr. A. F. Armstrong (Govt., Napier) said the public interest was endangered by the ownership and operation if credit and currency by private enterprise. That was the reason for th? decision of the Government to take over the ownership and control of the Bank of New Zealand. Mr. E. P. Aiderman (Opp.. New Plvmohth) said th? Government was taking over an institution which d’d more than half of New Zealand’s banking business, and th? control which the Government would thus obtain was so erer.t that the country’s whole economic life must inevitably be affect ed. The Hous? rose at 12.3 a.m.