PUBLIC CONTROL OF FINANCIAL POWER.

Auckland Star, Volume LV, Issue 250, 21 October 1924, Page 7

PUBLIC CONTROL OF FINANCIAL POWER.

(To the Editor.l Sir, —With reference to the subject of cycles in trade, and alternating boom and slump periods, a London weekly journal draws attention to a suggestion put forward by Mr. H. N; Brailsford in discussing the problem of a practical policy for the prevention of unemployment. Mr. Brailsford is editor of the "New Leader,"' and incidentally a convinced Socialist. Everybody is agreed that fluctuations in trade are the chief cause of unemployment in commercial countries. His idea is apparently to use Government pressure on the monetary powers that be, i.e., banks and other large financial institutions, to prevent recurring boom and slump periods, and thus to avoid the conditions which cause unemployment. His suggestion is to arrest the boom in its upward progress at a supposed safe point by, I presume, a compulsory raising of the bank rate and a restriction of credit. By thus putting an effectual brake on the speculation at the psychological moment the boom would be stopped, and the after-slump, with its disastrous effects, would never occur. Mr. Brailsford points out that these trade fluctuations are regarded, even by the friends of our present economic order, as being inseparable from the capitalistic system. Therefore it is in accordance with the Socialist movement that the arbitrary power, which must belong to those who control national finance, should not be left in private hands. It is very true that the banker has become, to a very great extent, the autocrat of civilisation, and Mr. Brailsford's figure of speech, that he not only "fixes the bank rate, but also the birth rate," is not altogether unjustified. Where banking interests coincide with the public in-, terests no doubt all is well. But it is not inconceivable that economic conditions may arise when financial groups of international scope may see opportunities of making enormous profits for themselves, through their unrestricted control of monetary forces, at the cost of much public and private loss. This fact is a very real social problem, and it becomes a more serious menace every day to the secure happiness of millions of toiling humanity. The question is, can we hope the answer to it is so simple as Mr. Brailsford thinks? Can the State be trusted to tinker with bank rates and commercial credits with sufficient export knowledge and care, not to do some material — and probably wholly unexpected—damage to the industrial machinery? In a critical situation, from an economic and commercial point of view, it would be easy for a Government official to pull the wrong lever, or to pull the right lever too soon ox too late, and so bring the train of national trade to wreck and ruin. It would not be much consolation to know that the disaster had been brought about by a Government official, and with the best and most upright intentions. Still many of us cannot help thinking that some means can be devised to so regulate "big business" and "high finance" that the material happiness and prosperity of the great bulk of humanity should not be at the mercy of a certain number of monetary autocrats playing a big game for their own advantage, without any political responsibility to the public.—l am. etc., GERALD L. PEACOCKK.