The Guardian And Evening Star, with which is incorporated the West Coast Times. MONDAY, SEPTEMBER 18, 1933. RESERVE BANK PROPOSAL.

Hokitika Guardian, 18 September 1933, Page 4

The Guardian And Evening Star, with which is incorporated the West Coast Times. MONDAY, SEPTEMBER 18, 1933. RESERVE BANK PROPOSAL.

The Minister of Finance. (Mr Coates) is making every effort to establish, the Reserve Bank of New Zealand proposal favourably in the public mind. A review of tne proposed measure has been circulated under the authority of the Minister, and further propaganda was. noticeable in the Home cables last week, It would appear, therefore, that the measure will form a notable contribution to the Government policy this sessiin. The Bill has been much canvassed already so far as its general

principles are concerned,. while hankers are now giving more detailed criticism and ‘there has been a good deal of adverse comment on the important change proposed in regard to the monetary policy of the Dominion. Hitherto the" - commercial banks have been relied on entirely. In recent times they have managed the financial business in a manner beyond reprioach. In 1894, it will be recalled by many, the Bank of New Zealand drifted into very serious difficulties, and was on the point of closing down. When the .situation wis revealed to the then Premier \Mr R. J. Seddon) the Government came to the rescue of the bank wi ijh a Government guarantee and a national disaster was averted. It was a most important policy stroke, and there has never been any occasion to regret the prompt action taken. There is not any suggestion now that any of the banks need national support, but the Government proposes to seek to bring the monetary policy more in line with sterling values by creating a centra) reserve bank to do the overseas business of the country, control the note issue, regulate exchange) and general-' Iy ' stabilise tile national credit. Mr Coates in bis review of the measure and the policy it covers, traverses a good deal of the criticism levelled against the proposal, as well as vanning many cogent reasons 1 in support of the policy. The chief safeguard necessary naturally is to keep the new system, if established, clear of political influence. It is proposed to do that as far as the provisions of the Bill will permit, but these are times of changing conditions and some absolute safeguard' is required which will place the institution, once established, beyond the reach of any ambitious party which may have extreme ideas on finance and its manipulation in the way of creating credit with the aid of the printing press if the needs of their extravagant- policy so require. 'Such a development would, of course, lead to a worse financial plight than ever, and this aspect requires to be studied thoroughly. The Bill gives a very wide definition as to the primary clutv of the bank, namely: ‘‘to exercise control over monetary circulation and credit,” and although the end and aim may be to secure the stable value of the bank notes, the position remains somewhat elastic in the hands of a needy administration. No doubt there will be value in the co-ordination of the banking system. This should ensure more stability in regard to exehahge, and if the regulation of that I basis of monetary dealings can be removed from the power of the Government for the time being, the outcome will be of more .equitable value to the community. At present the Government is deliberately helping agrarian interests, and the general national benefits are not altogether clear—but penalties are. If this uncertain posi- ■ tion were controlled definitely it would be of benefit. The measure will meet : with much critical discussion before, i it becomes law.