POST OFFICE SAVINGS.

Dominion, Volume 5, Issue 1515, 10 August 1912, Page 6

POST OFFICE SAVINGS.

... i REMOVING A FALSE IMPRESSION. ■ AN ACBIMONIOUS DEBATE. The Hon..K. H. RHODES (PostmasterGeneral) said that owing to the discussion which aTOse in Parliament on July 31 about tho renewal of a Savings Bank in-restment-'With tho Minister for Finance, an', impression had been created that it was" the intention to reduce the rate of interest to depositors. Mr. A. 11. Myers: That was not suggested. •'•■ The Hon. E..H. Khode3: But tho impression has been created. I don't say it--.was'Stated- in the House, but it waa hinted at,very broadly. I wish to say that'that 'impression is quite erroneous. I "have no intention, and I havo never had any intontion of reducing tho rate payable on Savings Bank accounts. The interest ■ will remain at the old Tate, namely 31 par cent, on balance at credit up to and 3 per cent, on any balance over .£3OO up to .£OOO. The Hon. T. JUCKKNZIE (Egmont) said that what was said was that depositors would not receive tho benefit of the' increased pricp of money. _ The Hon. W. Eraser: That waa not The Hon. T. Mackenzie argued that this was what was intended. Tho loim from the Post Office had been renewed at the old rate, and depositors wore not going to participate in tho increased value of tho money. Tho' Hon. Jf. Allon: What do you suggest, then? ' '. lit.. Tho Hon. T. Mackenzie repeated that if money had risen, the depositors must

share in tie increase of the current value oi' money. Statement by Mr. Myers. Mr. A. M. MYERS (Auckland East) endorsed tho statements mado by the member for Egmont. When it had been stated that a loan of ,6800,000 from the Post Office- had been renewed at 31 nor cent., he had made a statement that prior to his vacating he had agreed to renew the debentures at 35 per cent.,' holding that it was only fair to the depositors in tho Savings Bank • that they should have the benefit of the increase in the ruling rate of interest. He believed the previous Minister had made tentative proposals also to this effect, and it was _ a matter for regret that the present Minister had beaten down tho Post Office. The Hon. I. Allen: Don't use those •Mr.'Myers argued that the facts justified the use of the words. ' The Prime Minister: No, you are not justified, and you ought to know it. ■ Mr. Myers: I am justified. The, Prime Minister: You don t know tho law. ' Mr. Myers maintained again that it was equitable that depositors in the Post Office Savings Bank should receive for it tho ruling rate of interest. He did not wish to bo unfair, but the Minister for Finance must ndmit that m reducing the rate on the debentures from 3| per cent, to 3i per cent., he was not doing justice to some thousands of depositors in tho Government Post Office.

How Interest is Fixed. . The PRIME MINISTER said that he was very glad to hear the explanations by Mi-i Mackenzie and Mr. Myers about what had been said on this matter two. days previously. ."Whatever these hon. gentlemen and others had intended to, say, there was no doubt that, an impression had been created-that the new Government intended to reduce the rate of interest, paid ■to depositors in the Post Office Savings Bank. The new . Government had' not had any such intention and it had no such intention now. The last speaker had implied that if 3} per cent had been ■paid on the debentures renewed) depositors would • get the benefit of the increase. This was not the case. The rateof interest., was fixed by Act of Parliament and could not bo raised or lowered by any act of tho Postmaster-General or Minister i for Finance. Parliament imist be consulted and the.'Act must .be amended;. He hoped that the position had been made perfectly clear because a very serious impression had been • created. Mr. Myers: Is it not done by regulation? The Prime Minister: It is dono by regulation under the Act. Sir Joseph Ward: The hon. gentleman is mistaken in regard to the Act. The Act proved D(l ,the maximum sum upon which a rato of interest could bo paid. The Prime Minister: But they cannot exceed the maximum rate of interest. Sir Joseph Ward: Yes, they can; they can alter the rate of interest without any alteration in the Act at all. To bo Found on Record. Sir Joseph Ward said that there had been no suggestion that the rate of interest would be lowered by the hon. gentleman. The point was the renewal of a sum of £800,000 invested by the Post Office with the Treasury at 3J per cent instead of SJ per cent. It had been said, that if this went on it would not be a profitable transaction for the Post Office and would eventually causo a lowering of interest to depositors. He was perfectly certain that the Postmaster-General would find it on record that a 3} per cent rate was not sufficient- for the Post Office for its investments with the Treasury. He had given authority in writing for the payment of a rate of , 3} per cent to the Post Office. Mr. Massey: On the £800,000? Sir Joseph Ward: On everything between the Post Office and the Treasury. The. Secretary to the Post Office, he continued, had brought it under its notice in an official note that 31 per cent was not sufficient for the Post Office to get and this occurred some time before the renewal of the .£BOO,OOO fell due. The Minister for Finance. ■ The Hon. JAMES ALLEN said that ho was sorry ho should have to differ with tlio hon. gentleman about what happened during his term of office Ho hau made a definite and clear statement to the House and the country that ho had arranged for the renewal of this loan at 3|j per cent. Mr. Myers. That, is quite true. Mr. Allen: I can find no record of it. The Secretary of the Treasury can find no record of it. Tho matter had been brought under his notice, ho continued, by a note from the Secretary of the Treasury asking him whether arrangements should be made for renewal. He sent for tho Secretary to the Post Office to males arrangements. At tho interview which followed, there was no beating down whatever. He objected very much to what had been said on this subject by Opposition members. A wrong impression had been created throughout the country. Ho would ask hon. members opposite to remember that they occupied a responsible position just as did tho Government. Tho Secretary to tho Post Office had informed him that if the .£BOO,OOO were' renewed at-31 per cent., a sum of £4000 or £5000 would make tho Post Office absolutely secure. The whole of tho Test of the debentures wero renewed at 3} per cent. Tho hon. gentleman had said in a previous statement that he hod renewed tho whole of these debentures. As a fact, one of tho lonns, which came due in March next, was not renewed at the present moment. If the hon. gentleman (Mr. Myers) would point to kny file which ho would like to havo produced it would lie produced.

/ "Evil Transactions of Days Gone By," He wanted to .tell the House how it was that the Post Office was undor the necessity of having a reserve fluid of .£190,000. It was not because ho had renewed this debenture at the same rato a* before, 3J per cent. There was a reason why tho Post Office had to build up a reserve, it was required to make up for tlio ovil transactions of days gone by, and tho House and the country should know it. Post Office- funds to the amount of •£2,200,495 were invested in inscribed stock at three per cent. Another smaller amount had been also invested at 3 per cent. Would the hon. gentleman oppo--site say that he did not do ft? Ho (Sir. Allen) was in the position of having to make up for the losses that hud been made by transactions of earlier days. Sir Joseph Ward: That is not fair at all. Mr. Allen: It is fair,- and the hon. gentleman knows it. Hβ did rob the Post Office in order to serve other purposes. That is plain English. At this point a spectator in the gallery ejaculated: "That's the way to talk to them," and was warned to preserve silence. Mr. Myers: What did you say the reservo i'luul was? I think you are .£IOO,OOO out. Air. Allen: I was speaking from momorv about Hie reserve fund. Mr. Myers: I think it is XJUfl.OOfl. Sir. Allen: That is all tho worse. At anyrate, there is a reserve fund, because wo have to pay 31 per cent, (o depositors, although the Post Office has lent money to a previous Ministry nt a lower rate. Surely, undor the circumstances, the Opposition should not have created nny po«sible suspicion with, regard to the post office,

Mr. Allen remarked, in concluding, Hint lie would like to ask Mr. Mackeuzio whethor lio deemed it desirable that Post Office dopositoM should receive high rules of interest. If more than 3J- per cent, was to bo paid to depositors in the. Post Office, what was going to happen to all tho banks. If tho banks suffered, every farmer and every mnu in tho country would suffer. Ho was 100 elnrly conscious of the responsibility bearing upon him to carry out any such transaction.

Mr. Myers Explains. > Mr. A. M. MYERS (Auckland East) rose to make a personal explanation. Ho had. made a deliberate statement that before leaving office ho had arranged with the Secretary of the Treasury and tho Secretary of the Post Offico ti lenew the debentures falling duo at tho end of the financial year at 3J per cent. Tho thru Postmaster-General was present at tho time, and ho (Mt. Myers) was satisfied to renew at 3J per cent., having regard to the fact that tho rate o£ interest had risen, since the debenture had been sold to the Post Office. It there were to bo a still further increase in the rate of interest, would it be a fair contention to say that tho Minister would still be justified in again renewing at tho original rate? Tho depositors had an interest, direct or indirect, in the profits made by tho Post Office. The Minister for Finance had stated that there was no official record of the arrangement. He detailed other arrangements made as to othel loans to bo received from the Post Office. The Hon. J. Allen: Did yon put it in writing ? . . Mr. A. M. Myers: I didn't put it m writing. But those gentlemen wero present; will they deny it?The Hon. J. Allen: It was not done. Mr. Myers said ho had had an hours interview with the officers mentioned, and arranged for tho amounts ho was to receive from them. > The Hon. J. Allen: How much was it? Mr. Myers, said he hod already stated the amounts. The Hon. J. Allen-: You don't know your work. , Mr. A. M. Myers: Tou gentlemen evidently haven't 'had as much experience as I- have. Government members laughed, and theSpeaker called "Order." Mr. Myers said that at tho interview ho had had with tho Secretary of the Post Offico the latter said he would like 3J per cent., and he (Mr. Myers) said he would go into the whole matter. Sir Joseph Ward: I understand the honourable gentleman said four millions was invested at 3 per cent. The Hon. J. Allen: I said .£2,260,000. Sir Joseph Ward: At 3 per cent.?. The Hon. J. Allen: Yes; done by you. Sir Joseph Ward: When was that done? The Hon. J. Allen: It was dono during the last 20 years. Rate of Interest. Sir Joseph Ward said the Minister ought to reconsider what he had .said, in view of the fact that tho rate of interest to depositors at the time the. money was invested in inscribed stock was less than 3 per cent. .'. " ■ ' • The Hdn.> J. -Allen: When did the ininvestments in inscribed stock begin? Sir Joseph Ward: Thirty years.ago. The Hon. J.' Allen: I said within tho last 20 'years. Sir Joseph Ward said it was unfair to suggest that tho interest paid during his term as Postmaster-General was less than the rate now. When the honourable member referred to inscribed stock he should remember that the Post Office was not allowed to. invest money in private mortgages, and that investments must be found for moneys coming into the Savings Baak. Ho had put on record before he loft office authority in writing to have a higher rate than 3J per cent, for their investments. There could bo no doubt that that Tecord was in tho Department. Hon. J. Allen: When was that? Sir Joseph Ward: Some time before I gave np my office. Hon. J. Allen tho date? Sir Joseph Ward: Any period you can name within the last three or four months before I gave up office. I sent for tho Secretary of tho Treasury, and I authorised the rate of 3J per cent., and that authority is in writing. Hon. J. Allen:'Without any exception? Sir Joseph Ward: I made no exception so far as I know. Tho honourable gentleman can get the record, and the record will speak for itself. Ho declared that tho Minister was endeavouring to cloud the issues by referring to many years ago, when the Post Office rates were lower, and when the Post Office required investments. . .- Clearing Up Doubts. Mr. H. G. ELL (Christchurch South) raid he could clear up any doubt, if any doubt existed, in connection with the statements made by Mr. Myers and Sir Joseph WaTd. He (Mr. EH) had signed an authority—several authorities—fOT loans at 3} per pent., and he was assured by the Secretary of the Post a.nd Telegraph Department that arrangements had been made to pay 3} per cent, instead of 34 per cent., ami that was carried out whilo he was in office. Tho Secretary had complained that 3J per cent, was not enough, and ho could not understand why thjs- sudden chaugo had come about, because only tlirto months ago the Secretary said it was not enough, and , now it was said tho Deportment was satisfied to accept 3J per cent. The Hon. J. Allen: No. The only loan renewed at 3J per cent, is one for .£BOO,OOO. I agreed to renew a loan of .£1,744,000 at 33 per cent, for this year alone. Mr. Ell said ffie lato Minister had assured him that 3} per cent, was to bo Hie rate. The Secretary had said that 31 was not'enough to save tho Department from' loss. Their margin of profit was so narrow, that they should jet 3J per cent. The Hon. V. M. B. FISHER,: Might I ask the last honourable gentleman if it was proposed by him that in tho event of tho Post Office getting 35 ■ per cent, instead of 3J per cent.—was it intended to raise the rate of interest to depositors? Mr. Ell: Tou didn't give me time enough. Mr. T. M. Wilford nsked the Minister for Finance why the 33 rate, was paid on ono loan and not on the other. The Hon. J. Allen said it was done in order to give the Department sufficient money to pay the money lost on the three par cent, loans.

A Deposit Bank in London. ' Mr. A. S. MALCOLM (Clutha) asked the Minister whether he would open a depositors' bank in London ( to receive moneys to the amount of our loans. A great deal of money was available in London, nnd the amount of our loans would bo a very small item. Sir Joseph Ward raised a point of order. A now c|iiostion had been raised, and he asked whether members would bo allowed to speak on it. Mr. Speaker said that members had no right, except on Wednesdays, to discuss answers to questions. Mr. Malcolm then said that he would introduce his question nt a more opportune time. Mr. J. VIGOR BROWN (Napier) asked the Treasurer whether he knew from tho Post Office—it had been said thoro was nothing on the file—anything of the conversation with tho late. Treasurer about the 3J per cent. rate. Tho Hon. J. Allen: I had no knowledge of any such arrangement then, nor have I any to-day. "Where Have They Got To?" Mr. Brown: I have heard the hon. member for Christchurch South 'say ho Bigned authorities. Whcve have- they cot to? The iron. R. H. RHODES (PostmasterGeneral) : I can assure the hon. member for Napier that I can find no record on tho files of any authorities in connection with this matter signed by the hon. member for Christchurch South that this loan was to be at 3J per cent. There was apparently some nebulous conversation on the mutter, but I can find no record that any arrangement was come to. Mr! A. M. Myers: Have you asked him tho direct question whether the conversation that 1 have alluded to took placo or not? Tho Hon. R. H. Rhodes: I didn't asK him about the conversation, but whether any arrangement had been come to. lie didn't understand that any arrangement bad benu made. Mr. EH urged thnt the Secretary of tho Post Oflice understood that it was possible that tho higher ralo would be paid. Mr. Nosworthy: Why didn't you got it in writing? Mr. Ell! These things are usually airanser) rcjtb the Dopnrtaientnl litads without documents cabins.

The Hon. If. H. Rhodes: There may have been discussion, but no arrangement. Ho added that the .01,741,000 loan was to bo rpninved at HJ per cent. Mr. T. M. Wilford: Why? The Primo Minister: Because of the loss of debentures at 3 per cent. An Attempt to Drive a Wedge. Tho Hon. I?. H. Rhodes said that tho discussion on July 31 had tended to create an impression that the interest to depositors was coming down, and if this discussion had done anything to romovu that impression it had been a profitable discussion. Honourable members, he knew, were trying to drive a wedge between his colleagues and himself. They were trying, and especially tho lato Minister for Finance, to create the impression that the Minister for Finance was overbearing, that Mr. Allen was trying to make him take a lower rate of interest, and that he was incapable of defending his Department. • He was, however, capable of defending his Department. (Hear, fir. A. M. MYERS said he did not wish to give that impression, or to drive a wedge between Ministers, but he asked them to have regard for their responsibilities. He said that had tho late Postmas-ter-General remained in offico tho matter would hsivo been put in writing long before this. Tho Hon. J. ALLEN repeated that he had brought no pressure to bear on tho Postmaster-General and tho Secretary of the. Post Office. Mr. F,LL: Some doubt has been thrown on what I have said. The Secretary-of the Post Offico said 3J per- cent, was not enough for the Department. He told mo the Treasurer had agreed to pay 3J per cent, on all future advances. That bears out the statement made by the lion, member for Auckland East and the hon. member for Awarua.

The Practice in the Past. The Hon. W. H. HERRIES (Minister for Railways) said it was interesting to note what had been tho practice in the past. The Minister of Finance had been blamed for having renewed debentures nt the same rate as they wore issued previously, but in the record of past transactions there were examples of Post Office debentures being renewed at a lower rate of interest: In last year's transactions with tho*Post Office one investment at 4 per cent, had been renewed at 3$ per cont. Sir Joseph Ward: What was tho current rate of interest then? Mr. Herries laughed. ; Sir Joseph Ward: Interest ie higher ! now in tho country, and everybody knows it. The Hon. W. H. Herries: But the honourable gentleman reduced the rate of,interest. He added that throughout Sir Joseph Ward's term as Treasurer the rate of interest to the Post Office was continually boing reduced. Last year also r.nother loan at 1J per cent, was renewed at 3! per cent. He did not say that two wrongs, made a right, but at the samo timo the records showed that tho lato Treasurer had reduced the rates. Tho present Minister of Finance had not dono that. He had simply renewed Post Offico debentures at tho samo rate. Sir Joseph Ward declared that referenco to previous loans was simply drawing a red herring across tho scent.' Mr. G. W. FORBES (Hurunui) - said the discussion did not show that tho Minister of Finance was to blamo, but ho paid it did show that the PostmasterGeneral had not had sufficient iregard for tho interests of depositors. A Satisfactory Transaction. Tho PRIME MINISTER said that be thought tho discussion had gone quite ,far enough. Tho Government did not object to tho discussion, but a suggestion had been mado that by the transaction under which the sum cf *fcSOO,OOO had been renewed at 3$ per cent, somo injury had been dono to Post Offico depositors. It had not mado very. slightest difference to the depositors. It had been a satisfactory transaction from tho point of yiow of tho country as a whole, but no injustice had been done to the depositors and no injustice would bo done to them. Public Accounts Committee. At this stage, Mr. J. B. HINB (Stratford) presented the report of the Public Accounts Committee. ■

Mr. T. H. DAVEY (Christchurch East) asked whether he would bo permitted to discuss the previous question. The hon. member seemed inclined to burke discussion. Mr. Hine, amid cries of Gag! Gag! raised a point of order. • . Tho ruled that Mr. Davey could not proceed if the member 'for Stratford objected. Mr. Hine said that he would raise a point of order on account of the language used by the hon. member, who had accused him of wishing to gag discussion.. ' . Mr. Davey eaid that he had not mentioned anyone by name. • ' ■ ■ . ■ There was some further talk and Mr.. Davey observed: "Ono good turn deserves another, by and by." Mr. Speaker: If the member for Stratford gives way -— Mr. Hine: No, eir, I do not give way.