Evening Post. SATURDAY, FEBRUARY 11, 1933.

Evening Post, Volume CXV, Issue 35, 11 February 1933, Page 10

Evening Post. SATURDAY, FEBRUARY 11, 1933.

__ The chief Interest of the Legislative Council's debate on the Banks Indemnity Bill centred in the attitude of Sir James Allen and Sir Francis Bell. As.a Money Bill it was heyond the constitutional power of the Council to amend, nor could the possibility of the exercise of its constitutional right to reject the measure he regarded as coming within the. range of practical politics. But though through no fault of the Council its debate did not begin till the Minister of Finance, after getting the Bill through the House, had ruled that it was nigh time the controversy and agitation about the exchange vote was allowed to drop, the occasion was one of exceptional interest. Nor is it any derogation from the merits of the other members of the Council to say that on such a subject their opinions were of little value compared with those of-the two men we have named. It was a subject on which both of item had a dojuble rigjhi to speak. Primarily and principally a financial'and economic issue, the raising of the exchange rate, has also an Imperial aspect of great . importance; but the Legislative Council is weak in finance and economics, and though its . Imperial sentiment is sound'it 13 not strong in Imperial • statesmanship. On both aspects of the exchange problem Sir James Allen and Sir Francis Bell could speak with an authority unapproached by any other member of tike Council, and rivalled in the other place by Mr. Downie Stewart alone. ' . ~ No man in public life to-day has had a longer or more intimate acquaintance with our financial and Imperial problems than Sir James Allen., It is enough to say that he was given the portfolios both of Finance and of Defence in the first Reform Ministry more than twentyyears ago, that he was holding both these portfolios when he went to London as High Commissioner eight years later, and that his financial and Imperial education was completed by years of service there. It is of course possible for a High Commissioner to return from London with the same narrowness of views and sympathies with which he set out, but Sir James Allen "had the mind and the soul^to profit by the experience to the full. His general attitude to the present issue had notawaited the,debate in the Council to find expression. In an interview with the "Otago Daily Times" when the Government's decision was an-, nounced he described it as "deplorable" and even "inexcusable," and he was afraid that it would have farreaching effects. In his vigorous speech on Wednesday Sir James was able to deliver his considered and detailed judgment. Its general purport is indicated by the following extracts from our report: The Government's policy would seriously . jeopardise the economic and financial stability of the Dominion, and give practically jio relief to. the 1 primary producers. If an the good the Government alleged would accrue from the raising of the exchange was going to materialise why aid it not T?ut iup the rate even higher? That was only logical. ." .. ."■.: The policy of the Government was' liable to lead to national disaster. It had created a precedent which could be used by the Governments in the future. • . .He agreed with the ex-Minister of Finance (the Hon. W. Downie Stewart) that it was absolutely necessary that the Budget should be "balanced. If they were going to have deficits year after year, they wouH have toface the consequences. The. time: might come when the country could not pay its. way. ... The high exchange would have the effect of seriously curtailing the importation of goods from the United Kingdom, and was contrary to the spirit and reality of the Ottawa agreement. . . . The Government's policy was not even a palliative, arid only piled up the burden, on tho remainder of the community while; giving only partial: relief, to those in necessitous circumstances. As a Finance Minister of the old schoolitwas natural that Sir James Allen should lay the strongest emphasis on the need for balancing the Budget. He was naturally shocked by the prospective deficit of £9,800,000, was sceptical-as to the Government's ability to reduce it to £4,500,000, and wanted to know how even the reduced amount would be treated. Was it to be, added to the floating debt? Though Australia was supposed to have solved the problem her floating debt of £90,000,000 appeared to Sir James to be 'astounding.'^ The dangers of this insidious method of adding to the Public Debt, which Government advocates are now affecting to treat so lightly, were . afterwards very clearly and forcibly expounded by Sir Francis Bell: The Treasury bill is the equivalent in Dominion finance of the overdraft power of local authorities to obtain advances against revenue, and the whole basis of the Treasury bill authority is that it shall be redeemed out of revenue at the' end of the financial year. Here we are proposing, not proposing but admitting, that there will be by this process an annual addition to tho floating debt to be carried for-

ward past 31st March. Tho floating debt thus created wouki, ho added, have to be consolidated later, and would bo added to tho permanent debt of tho country. Of Sir Francis Bell's speech as a whole we may say that, though it came from the oldest member of die Council, it was just as conspicuously the outstanding speech ■in that Chamber as was that of Mr. Downie Stewart in the other. It is impossible to resist the conclusion that, if Mr. Forbes and Mr. Coates could have foreseen these crushing indictments of their policy, they would have remained on "terra firma" and never have taken their perilous plunge. Age seems unable to wither the intellect or the spirit of Sir Francis Bell. His head is as clear, his language as lucid, and his logic as. . irresistible as ever. In these respects Sir Francis's speech was fully worthy of a man who was once at the very top of his 'profession, but it was less in its lawyerlike qualities: than in its firm grasp of principle, its robust common sense, and its intimate familiarity with farming finance that it is calculated to impress the public. The most surprising and perhaps the happiest of his dialectical turns was that in which lie followed up the I passage we have • quoted about the floating debt . with the contention that by its high exchange policy our Government had not adopted the remedy which was saving Australia, but that it was reversing the very process which was actually saving her, namely, the change from a social experiment to a sane and solid government. . .■■,:,'■■■ The Government, said Sir Francis, did not seem to realise that it was proposing the one social experiment that the . Socialists were seeking—-the control of currency by the State. They had a Government formed by the country to save it from one peril, deliberately adopting the one principle which the Socialists and Communists alike demanded and sought, the' control of currency by the State.. It -was a, case of any port in the storm. It is impossible within the limits 'of this article to do justice to'fa j speech so closely reasoned and so full of matter, and we must content ourselves by asking the reader to test our judgment by a careful study of the.report that appears on another page, and by quoting in conclusion Sir Francis Bell's cheerful appeal to the Government to turn from the inexact science of the economists to a safer tribunal. - The idea, he sajd, that the Government C.an shelter itself under the tegis of political economists is denionstrably ridiculous.. What is the rule that we may be guided by in our businesses, or in. the business of the country when ■we are, called upon, to govern? The I rule is that of common sense, and common sense is,the complete answer to the proposals -of the Bill. Let the Minister of Industries and Commerce I (the Hon. E. Masters) be guided by the strong common, sense he possesses, and tell the political economists to go away. " • •>, We may add a word not in justification but in mitigation of the I Government's mistake. For aprac- ! tical man to submit his judgment tc a theorist in such matters may look like a. lack of common sense, but surely there is something to be said for him if he has common <sense enough to find out what the theorist is going to say.' This is what the Government did. Sir Francis Bell's verdict of guilty may still stand, but he will admit that there were extenuating circumstances.