Letters to the Editor

Hawke's Bay Herald-Tribune, Issue 198, 7 September 1937, Page 3

Letters to the Editor

JAS,

. HEFFERNAN.

Banks and Governments

Sir, — On reading your report _ of Professor Murphy's lecture at Hastings on banks and banking you omitted- to say anything about Government control of banks. As I lattended the lecture 1 heard the Professor say, "the Government in every country has control of the bank"ing instilutions in case of emergency. Even that digniiied, venerable Old Lady of Treadneedle Street has to bow to the will of the British Trcasury. The professor was very empahtic on this phase of his subject. He likened a Government to the man with the big stick. Although tho banks appeared to be a power unto themselves thcy dare not refuse to stand and deliver if needs be, The professor went so far as to compare a Government with the old i'armcr who threatcned" his children Avheu ealing their food to eat ehccrfully or hc would knoclc their hides off. The children, of coursc, wcre in the same positiou as the banks. Tkc professor said that our Laboui Government had not recourse to tho big stick so far. ~ The chairman at the lecture, Mr. Baird, asked the professor if thcre was any chance of the exchange rate being lifted, but the professor could not answer the question and hc appeared to be somewhat nebulous about the miatter. I fail to see how tho exchange rato can be lifted unless wc balance trade with Britaiu; If we send our primary ■products " to the Old Country to tho extent of £30,000,000 and we only take £10,000,000 worth of goods in return, how on earth can our pound hold its own with the British pound? If wo prefer to buy from ten to fifteen millions worth of cars, oil, ctc., from the U.S.A. while she only buys about five millions worth from us, how are we going to • get anywhere, seeing that we are mortgaged to the cxtcni of about three hundred millions to Britain in the way of national debt? It scems to me that Britain has just cause to complain about the way wo are treating her in not cndeavouring to balance trade. When Mr. Forbes was last m England he complained that tho people in Britain only consumed twenty pounds of butter per head yearly, while wo eat forty pounds each yearly. Someono reminded Mr. Forbes that if we boughi more goods from Britain thcre would be less unemployment - in Britain and those given employment would be able to buy more butter. This was a very homely and reasonable reply to the right honourable gentleman. Mr. Savago, on his return from Englanu, stated that every shilling spent by Britain in buying our produce would be reciprocated. Quite right. — Yours, etc..

Hastings, 4/9/37. The report of Professor Murphy's address bcgau by quoting his remarks about the complete authority held by the Government over the banks. In another part the professor's comment about a central or rcserve bank being able to bite as wcll as bark was quoted. — Editor.