The Guardian And Evening Star, with which is incorporated the West Coast Times. "WEDNESDAY, OCTOBER, 18, 1933. THE BANKING ISSUE.

Hokitika Guardian, 18 October 1933, Page 4

The Guardian And Evening Star, with which is incorporated the West Coast Times. "WEDNESDAY, OCTOBER, 18, 1933. THE BANKING ISSUE.

Ihe proposal for a Reserve Bank 10r rSiew Ae aland now bctore Parliament, will occupy tlie centre of the .political stage for some tune. There js considerable diversity of opinion in the measure, and the trading banks ar e strongly opposed. The first suggestion for a Central Reserve Bank came irom Sir Otto Neimeyer in 1931, who: visited New Zealand to advise the Government regarding financial adjustments generally. The proposal, was 'therefore the advice of an expert, and naturally considerable attention was given to the suggestion. A reserve bank may be described as a bankers’ bank. One reserve system is carried out thereby, the trading banks keeping certain reserves in the Reserve Bank. This single system is the outcome of the proposition that if a number of independent Tranks each has to keen its own safe reserve, the total of the immobilised reserve is much larger than is necessary if the reserve is concentrated, in one hank, and that under the reserve proposal considerable economy is effected and more funds released for general /purposes. The secondary consideration is that such a bank, also banks for the Government. At the present time the trading banks have considerable surplus funds in hand if required for trade or development, but money here is not as cheap for loan purposes as with British banking, but we take it, banking is on more conservative lines here as to securities foi advances, which means little or no risk for the lending institution and therefore saf= er, though not necessarily, sounder business. A reserve blink might be of sneciltl service iff regard to bversca trading, and Mr Coates has said that “'ahy monetary action ill the direction of raising world prices is to a largo ©stent dependent on international co-operation, and a great deal might be possible given co-operation among the central banks of the world.” The trading banks are dissenting from the proposals of the bill in regard to the appropriation of gold, and this is an issue which requires to be settled on amicable lines: There is also the question of control. Sir Otto Niemeyer advised that the bank should be free from Government control, and this appeared likely in the earlier drafts of the measure. Since the Coalition caucus there is an adjustment of the terms of the bill, and Government representatives are to be given larger representation. This major may not be a defect. There are degrees of Government control. We have various boards, including railways and trading projects, which are directed by. Government appointees, and generally the work is being done well, without evidence of undue interference by the Government. But Governments change in personnel, and changing Governments may come into power with different ideas about banking finance, so that there is an element of danger to be considered seriously. The trading banks complain also of the overriding powers in the bill, and these points are still under discussion. It does not 'appear a full agreement will be reacted, though the spirit of compromise is sure to be abroad. The Government has a definite line of policy in regard to the matter. Apart from Mr Coates’ wholehearted enthusiasm, Mr Forbes has returned from London fortified in his support of the measure. The general principles seem to be 'accepted fully, and it is now a- matter of discussing the details. This is the task of the Parliament, and the important meassurc will have the fullest consideration —and we may be sure the fullest criticism. It is to he hoped that a sound and workable measure will emerge from the deliberations.