CONTENTION DENIED.

Waikato Times, Volume 114, Issue 19117, 30 November 1933, Page 2

CONTENTION DENIED.

DOMINION’S CREDIT GOOD. AUSTRALIAN CRITIC AN3WERED< VALUE APPRECIATING. WELLINGTON, Wednesday. In tSe House this evening Mr H--9 S. Kyle (Government — Riocarton) asked the Minister of Finance how the credit of New Zealand stood today. Mr Kyle referred to a statement made bv Mr T. Buckland, president o. the Bank of New South severely criticising the contemplated action of the New Zealand Government. with reference to the gold reserves of the hanks. Mr Buckland had said this would seriously damage the credit of New Zealand in the Old Country. . TT T r The Minister, the Rt. Hon. J. G. Coates, said Mr Auckland's speech was based on entirely incorrect information. Perhaps the best answer to’ the suggestion that New Zealand s credit was’ sinking to a low level was that New Zealand’s last loan was raised at considerably less than the Commonwealth loan, namely, 81 per cent at £97. Another loan had been raised by a Dominion local body-oil the same terms, showing that the credit of New Zealand local bodies •was appreciating on the London market. ... . ... Another answer to the president at the Bank of New South Wales was that that day a cablegram had arrived .from Australia making inquiries for the investment of £300,000 in Government stock —not at the ruling rate of 3} per cent, but at 31 per cent. That was a further reply to these constant oroaldngs, and it came from 'the very country that had been the latest to cry out about New Zealand. I am glad the honourable gentleman raised the point,” ■ said Mr Coates. The position, is very different from what some people would have us believe.” CREDIT CONTROL. DANGERS AND PITFALLS. POSITION. IN NEW ZEALAND. BANKER’S SEARCHING COMMENT. “ in. all times of depression and orisls there come forward many with plans and proposals to cure our eoonomio ills,” said Mr T. Buckland, chairman of directors, at the annual meeting of the Bank of New South Wales in Sydney, when reviewing world affairs. “This crisis Is no exooptiob. to the rule. There are those who pin their faith to the nationalisation of banking, to the sooiali-j sation of credit, and yet others to 1 national xyedit or the release of credit Credit iu belief, confidence, or, as the cynlo puts it, 1 ‘suspicion asleep..' For this reason, credit, both Individual and national, can easily be destroyed. “To maintain credit our flnan'ces must be controlled; What the, people: need above all is a unit of credit and of currency having a steady purchasing power, not only from day to day or from week to week, hut from year to year. This must be the aim and objeot of every credit system—not the •release of oredit, but the maintenance of the purchasing power of the oredit currency. The workman demands a seoiirlty that the same amount o; wages shall provide him, his wife, and ; family with ■ -approximately, the same amount of food, olothing, house room, recreation and amusement throughout the years and that his savings shall in the yeans to come, when he has need of them, supply his ■wants to the same extent as his selfdenial made them possible. “ !Polltloal management of our railways and other industrial undertakings has been disastrous enough, and an extension of political Interference to tho management of the highly intrioat# oredit system would shatter oonfldenoe,-and send us headlong into unmanageable inflation. I have confidence enough- in the common sense of the Australian people to believe that they will never sanotion such a •tepl . J Menace In New Zealand. ** I am afraid, however, that such optimism cannot be felt in regard to Ne\<r Zealand, where political interference with private finance is being threatened. 'The most Important piece of legislation in New Zealand during tho year, as far as this bank is concerned, has been the proposed establishment of the Reserve Bank of New Zealand. The development of central banking has been one of the outstanding features of recent years, and this hank has strongly supported the development of the Commonwealth Bank of Australia towards a central bank and:the establishment of a central reserve institution in New Zealand. But there has been 'some controversy between the New Zealand Government and the Associated Banks of New Zealand over the actual Reserve Bank Bill presented to Parliament. Unlike this bank, all the New Zealand banks did not support the proposal when it was first made. It was not this, however, that led to the controversy. “ The Bill has several objectionable features, including provisions which may lead to unduo Government influence, but the most objectionable feature is the price at which the Reserve Bank is to take over the gold holdings of the trading banks. It was agreed that all the gold in New Zealand should be centralised In the Reserve Bank, so as to enable it to function efficiently. But the Government proposes taking over tho trading banks' gold at £3 17s 10id per standard ounce, the' old fixed mint price, and placing any profits, -socalled, which would arise from this sale of gold in the open market, to tho public account. The banks consider that this proposal amounts to nothing less than confiscation of propertv. The gold is the private property of the banks and the amount held is far in excess of the legal requirements for note issue reserves, as the banks have not been allowed to export gold coin. Investment Uninviting. . “ Tho Government, however, is persisting in its attitudo to take the gold over at the mint price, and if it carries out these intentions, the step will inevitably he linked with I lie desperate financial position of liie Government.. Taxation in the form of confiscation is not countenanced either jh Great Britain or Australia. In both these countries the central bank purchases gold at market value. The .(Continued in next column.)

New Zealand proposal, If carried out, must damage the credit of the Government in London as there is nothing to guarantee that future governments of that country will not follow the example and confiscate other property at predetermined prices. . “ Investment in New Zealand Government securities under such circumstances will be risky and uninviting. Already the New Zealand credit in the London market has been damaged by the Government permitting local bodies to meet their Interest payments in New Zealand ourrency instead of sterling, and if the New Zealand Government caps this doubtful procedure with the confiscation of gold, New Zealand cannot maintain her position in the eyes of the world. Nor has the Government of the Dominion taken the same steps towards making ends meet in the. public accounts as the Australian Governments. The I Dominion Government Is still showing Increasing deficits, and even these do not show the whole seriousness of the position, since they have been kept down only by allowing some deterioration of the capital position, " New Zealand lias been living on reserves for some years past, anti has in spite of this shown deficits. The deficit budgeted for this year was £■1,500,000, but Hie present position Indicates that this may be doubled, and points to the necessity of New Zealand adopting a plan similar to |ne Premiers’ Plan in Australia In order to regain control of its finances."