The Guardian And Evening Star, with which is incorporated the West Coast Times. THURSDAY, JULY 27, 1933. THE RESERVE BANK.

Hokitika Guardian, 27 July 1933, Page 4

The Guardian And Evening Star, with which is incorporated the West Coast Times. THURSDAY, JULY 27, 1933. THE RESERVE BANK.

It i 6 forecast that when the New Zealand Parliament reassembles in September most probably, the Government measure designed to give effect to one of Sir Otto Niemeyers’ suggestions, the, Central Reserve Bank, will he brought forward with the intention of enacting the measure. The suggestion was made in the first instance as one of tire proposals of the expert to assist in the financial rehabilitation of the country. It is the same suggestion made by the expert in other countries where he was consulted about financial measures. When the bill was last before the House of Representatives it passed its first reading only, and was dropped for the time being. The acting head of the Government is said to bo bent on putting the bill through in thu coming session, and as Mr Coates is displaying tenacity of purpose in other financial avenues, not universally approved (notably the maintenance of the exchange rate), he may be expected to be as good as his word. There is a good deal of outspoken opposition to the measure in high places, and in particular the associated banks are not in accord with the proposals. The measure was dropped in the pre-, vious sessibn owing to the state of the Dominion’s finances, and it may be said the position is certainly not any clearer at present. The marketing of a large part of New Zealand produce is still at a very uncertain stage, and until the stituation is clearer, the Government must needs watch its stem The Central Bank when established as proposed, will greatly affect the present trading banks by reducing their facilities for general finance. It does not seem at all clear that the central authorities could do better, nor perhaps as well with the funds as the present banks do. The existing banking system has been well tried,’ and is conducted On sound business lines. The personnel of tlie Central Bank may be largely political and that would be a doubtful advantage. Banking should be clear of party influences and should be staffed only by those with a thorough training and grounding in the ramifications of the system. At the present time credit is a necessity for general trading and the change over would have a restrictive effect on that aspect of general- banking business. This would cause- a degree of stringency which could not be helpful to the general situation. There is an appearance of experiment about the proposal which suggests an inherent danger in the change. The New Zealand banking system appears to be soundly established and the quarterly returns published enables the public to retain their confidence. In other countries, banking systems have revealed serious faults, and tlm'-i have been heavy losses. In America, for instance, there is a federal system, but it was not strong enough to save many hundreds of banks from dosing and the depositors losing their savings. Our country is much smaller and more compact than America, and a concrete system has been built up which has engendered a high degree of confidence. Matters have run smoothly even over a protracted period of grave monetary difficulty, and that achievement is to the credit of the existing system, and is a very adequate answer at the moment to any sugest’on of exchange, the farreaching effect of which can be guessed at only. It is certainly not a time for an experimental operation in the handling of the people’s- money.

I? ati o xali s ati( jn of industry means large-scale operation and organisation for the following purposes: to concentrate production in the plants most suitable from the point of view of costs and distribution—to make fresh capital expenditure in the best geographical positions—to spend it on large-scale plants specially designed for a specific manufacture as against a number of isolated linns each spending freely and duplicating many times over the actual capacity required to take up the estimated new production—to control wisely sales policy as against the haphazard chaos so prevalent td-dav. Price associations, quotas and such like are all artificial means of trying to get the benefits of rationalisation at tlu cent of the consumer. None of these antificial methods allows for scientfio comprehensive planning of an industry, either as a whole or b v regions, commented Mr J. Asher Cooper in a recent speech. They are not permanent; they are not even watertight, and, because of that, they breed distrust between the very people who ought to be working together for a common end. Quotas do not lower costs. They put them up by keeping many works operating on a low percentage of production. To get lower costs you must have concentration, bulk purchasing, large-scale research. A wav must'be found of running the great basic industries somewhere between the Russian method of Government Socialistic control with its dead hand on initiative and enterprise maintaining a static poistion amidst ever-changing markets on the one hand and the unrestricted cut-throat romnetition that has grown up to-day i'n Great Britain on the other. It is by rationalisation, an generally understood. that this forward movement must be made. Those who oopose it trv to wove that it does .not work by givincr instances of casco which they consider have foiled. But T would remind vnu of some of those industries ; r , ivlik.-b it swcceed <v d—chemicals, rubber manufacture, milling cement, tobacco, sugar and multiple shops.