CREDIT FACILITIES

Otago Daily Times, Issue 24420, 4 October 1940, Page 9

CREDIT FACILITIES

USE OF RESERVE BANK WARNING NOTE SOUNDED CRITICAL PERIOD AFTER WAR (From Our Parliamentary Reporter) WELLINGTON, Oct 3 An opinion that although Reserve Bank‘credit could probably be used to a greater extent than had already been done it would be unwise to make 100 great use of it. and thus deprive the country of an asset that would be of supreme importance in the critical period after the war was expressed by Mr A. H. Nordmeyer (Govt.. Oamarul during the debate, on war finance in the House of Representatives to-night. That was a point he said, which should never be lost sight of by the advocates of Reserve Bank credit £27,000,000 to Date “ There are some people wiio suggest that more use should be made of Reserve Bank credit,” Mr Nordmeyer said, “but it is not generally realised by the public that the bank has been called on to date to the tune of more than £27,000,000, Sir Alfred Ransom ‘ (Opposition, Pahiatua): Will you ever pay it back? , Mr Nordmej’er: I am not personally concerned about that aspect. It amounts to a question whether we will ever pay ourselves back. Those who suggested that the Government should find the whole of its needs by using the Reserve Bank either overlooked the fact that £27,000,000 had already been borrowed or the danger of inflation. Mr Norameyer said. The Government would use Reserve Bank credit further for housing and other services as the necessity arose, but it had always to be borne in mind that no matter how much anyone might wish to use those credit facilities they could not, without disaster, be extended beyond the point that goods and services were available. Meeting Post-war Debts “ I do not think we have reached that point yet,” Mr Nordmeyer added. “Mr' Lee has emphasised that there must inevitably be a debt- remaining after the war, but he must concede that whatever system of finance we adopt—even if we use the Reserve Bank to find all our domestic requirements —that is not going to pay for what we need overseas.” Mr Lee: I would not challenge that for two minutes. Mr Nordmeyer: Well, so far as we have to borrow to pay for our overseas requirements, that means imposing a debt on the people of New Zealand, and we must take the greatest possible advantage of the British Government’s offer of cheap loan money. A time would come after the war when to maintain the country’s stability it would be necessary to call on the Reserve Bank to an extent not done previously, Mr Nordmeyer concluded. If it was suggested, therefore, that the Reserve Bank should be used to the full—-and he believed it could be used more fully—that might easily mean that the Dominion would be deprived of an asset that would be vital in the dangerous and critical times after the war.