GREAT SHOCK.

Auckland Star, Volume LXII, Issue 96, 24 April 1931, Page 9

GREAT SHOCK.

BANK SUSPENSION.

Closing Follows Assurances to the Contrary. POLITICIANS BLAMED. (United F.A.—Electric Telegraph—Copyright) (Received 11.30 a.m.) SYDNEY, this day. The Government Savings Bank crisis has caused a tremendous shock throughout New South Wales. The actual suspension of operations was unexpected", owing to repeated assurance in official and unofficial quarters concerning the safety and vast resources of this institution. However, thousands of depositors today bemoan the fact that they are not among the never-ending stream of customers who withdrew either the whole or a portion of their savings. It is stated that small tradespeople are likely to be inconvenienced, and among them scores of elderly people who took full advantage of the 'liberal interest which the bank provided on current accounts. The suspension of payment by the bank caused considerable excitement in the country centres, where the bank's business has been very large. The Mayor of Deniliquin has convened a meeting of the citizens, with the object of requesting the Government to take all constitutional means of dissolving Parliament. A number of depositors went to the Commonwealth Bank in Sydney to try to learn when the Government Savings Bank would reopen or whether there was any hope that the Commonwealth Bank would _ tide them over their present difficulties. Business at the Commonwealth Bank was above normal with a fairly general excess of deposits over withdrawals. Some of the other banks report substantial increases in deposits. The question was asked in the House of at Canberra by Mr. E. J. Ward, the newlv-elected Labour member for East Sydney, whether it were true that there was now a run on the Commonwealth Bank as a result of which it was likely to close its v doors shortly. The Prime Minister, Mr. J. H. Scullin, replied that the question was entirely unwarranted and without foundation, and that the rumour existed entirely in the mind of Mr. Ward and nobody else. Press Indicts Politicians. Referring to the closing of the State Savings Bank, the "Sydney Sun" says: "The temporary closing is the result of politics. Australian politicians hold that nothing is more important than politics. For six months the bank has been treated by politicians of all parties as a means to discredit other politicians. "'lt began with the Nationalists in their election forecasts, that if Mr. Lanj became Premier, the bank would be imperilled. The Federal Treasurer, Mr. E. G. Theodore, commented unnecessarily on the Bank Commissioner's announcements as efforts to convince the people that Mr. Lang co.Jd not lay hands on their savings.

"Mr. Lang's own actions in resorting to repudiation, and the conduct of some members of the Federal Caucus in their hostility to Mr. Lang, deliberatey shook the «redit of the bank. All are responsible for disturbing the confidence on which this, like other banks, must exist.

"One legislator advised the electors publicly to take their money out of the bank, so as to help to destroy the iniquitous capitalistic system. A general assault on the banks has been a notable feature of Labour politics for the past nine months. Neither Mr. Lang nor his enemies can escape censure for what has happened."'

Officiate of the Commonwealth Savings Bank began the investigation into the affairs of the State Government Savings Bank in order that the proposed legislation dealing with the absorption be facilitated.

The president of the State Bank, Mr. H. D. Hall, said the investigations would take time, but probably an announcement would be made early nest week to relieve the necessitous cases amongst the depositors.

LANG'S WILD TALK.

INFLATION MAY RESULT.

("Times" Cables.)

LONDON, April 23,

The city editor of "The Times-' 5 says the closing, of the New South Wales Savings Bank is the outcome of Mr. J. T. Lang's policy of repudiation. His reckless talk has naturally unnerved depositors.

In order to give the necessary assistance the Commonwealth Bank may have to increase the fiduciary note issue. Although the bank frowned on Mr. E. G. Theodore's Fiduciary Note Issue Bill, an issue to meet, an emergency of this kind differs fundamentally from a deliberate policy of permanent inflation. In the one case depositors have a elaim to be paid in currency; in the other case there is-no such claim, the object of the inflation being to raise the price level. In times of grave emergency a prompt but temporary issue of fiduciary notes is unavoidable.