GOOD PROGRESS

Rotorua Morning Post, Volume 2, Issue 392, 29 November 1932, Page 5

GOOD PROGRESS

("Post" Special Commissioner.)

WORK OF SESSIOH BANKING AND EXCHANGE QUESTIONS TO FOREFRONT CENTRAL BANK SCHEME

Wellington, Monday. | Subwtant.ial prog,?vsi-i wn* ng?in ' made bv Ihe Koutu- vf ' l-hi-.t wevk, and the Fr-«w :-ihiie1ee hns i not .yet hvcn eoinn- * eo fo appiy ihe ;) i es;!ure in order to adh:"-- t > 'd : : schedule. - in striking io :*?- eent sessions, the closure motion has not been once applied, and it is obvious that the Government is more than, pleased v/ith the manner in which the House is disposing of the legislation. In fact, there were two occasions this week when the Coal:- ! tion whips had to push up speakers j from their own ©side to piwent ihe ! collapsa of debates. There is no doubt that the legislation. on the whole has not heen eontentious. The most thorny measure, the Electoral Amendment Bill, is yet to come, land it is unlikely that it will be before th'e House until next month. The Superannuation Bill is another measure which may he determinedly opposed hy the Labour Party, hut if it comes back in, the dying hours of the session, the diseussion may not he* prolonged. The big achievement of the week was the disposa.l of tlie Puhlic Works Estimates'at one sitting. The passing of these Estimates is almost invariably preceded hy a lengthy diseussion on the department's annual statement, hut this year the statement was received and agreed to' in a faw seconds. Instead of the deliberations on the Estimates lasting ' nntil the approaeh of breakfast, they were assen.ted to after a dilatory three hours' diseussion. Banks and Exchange As far as the exchange controversy is concerned, the banks have expressed a vei'y definite view that the cost of bills of exchange for overseas transactions should be governed by the law of supply and demand. This means, as far as they are concerned, the rate of exchange will have a downward, instead of an upward, tendency. In view of the Government's decision that it has no intention, of interfering in the -rate of exchange, it would appear that the battle is over. If the controversy is eontinued, it must be taken on to the floor of the House, and there is a likelihood of this if Cahin°t or the farmers (or both) are dissatisfied with the altw-r-ative offered bv the banks. The Bank of New Zealand, whic1^ governs ihe situation, suggests th"-1-the vjovernment consider the question of .paying all farmers' rates to local hodies for the current year, and ct the same time wa'vo its claim for land tax. It is estim it d that this would cost £2,000.000, and the bank is prepared to find tlie- atiu our t reqnired 0 - reasonable terms. Th 1 fanning eloment of tlie House will probably weig% up the advantages of this scheme, as compared v'ith an artificial higlr exchange, and no doubt their decision will be taken into consideration whnn the Government comes to make its decision. There is one aspect of the proposal that will appeal to many farmers. Those settlers who ar-> indebted to financial institutions will see in this suggestion more immediate benefits than they would ohtain from the high exchange. The exchange premjum would probably go towards liquidating their indebtedness, while on the other hand their creditors will not sea the colour of the money by which they will he assisted in their rates and taxes. Another View However,, there is still another angle on the problem. There is an influential school of eeonomic thought which consider s that ia high exchange is necessary in order to stem the downward drift of internal prices and place the country on a sounder footing. It is argued that exchange inflation would separate the New Zealand price level from world parity, and" would eventually stimulate the credit structure of the Dominion, fostering internal industry and giving employment for a large number of those who are now workless. It is hardly likely that the intrieacies of the long line of eeonomic thought which has given rise to this conlusion is even vaguely ^ comprehensible to those who have with little or no preliminary study suddenly become "authorities" on a subject that economists consider takes a long perioa of study, hut when one has the example of a membor expressing his opinion in definite terms on the receipt of a cahle from Australia, one no longer ceases to wonder at the blatant assurance of memhers on deep-seatad and diffieult problems. There seems to be little doubt that the city memhers will accept the bank's proposal, as they generally recognise that the plight of the farmer is a serious one, hut the Lahour Party will very likely put forward as an alternative a proposal for credit expansion under the con.trol of the State.

The Central Bank The reiteration by the Minister of Finance (the Hon. W. Downie Stewart) of the necessity for a central reserve bank seems to lift any doubt there may have heen in Government circles as to the wisdom of radically altering the banking machinery of the Dominion during the present troublesome tjmes. His remarks on his arrival would appear to indicate that the financial authorities at Home are in favour of New Zealand falling into line with South Africa in banking , pplicy, and it is understood that the differences of opinion hetween the Tyeasury and the Associated Banks pvep the form of the legislation have hepn satisfactorily settled and that the wiay is now paved for an early . introduction of the Bill. .It is to be Hoped that Mr. Stewart will give the country further informaiipp, gathered from his travels in the near future, hecause it is evident that his trip has heen a most valuable one,.. There are many close observers of the national finances who are wait■iiliaiitfHuaBHMiUita