THE TRAIL OF MR. LANG.

Auckland Star, Volume LXII, Issue 103, 4 May 1931, Page 6

THE TRAIL OF MR. LANG.

As a natural consequence of the disastrous shocks inflicted recently by Mr. Lang upon the stability of the financial system in New South Wales, a serious "run" was started at the close of the week on the Savings Bank department of the Commomvealth Bank. Of course, the depositors whd were anxious about the safety of their money had no difficulty in getting it out, but if this state of apprehension and anxiety is prolonged or intensified, it will be necessary to retard the process of withdrawal. No bank ever keeps in its possession the whole of the money deposited with it, for the obvious reason that, if it did, it would never be able to invest a surplus and make dividends for the shareholders. The facts of the situation have been clearly explained by Sir Eobert Gibson, who, as Chairman of the Commonwealth Bank, has assured the general public that the Bank is perfectly sound and their money is absolutely safe. The trouble has apparently been caused by a number of nervous people, who, being scared by Mr. Lang's threats of repudiation and confiscation, removed their money from the State Savings Bank to the Commonwealth Bank a few days ago, and are now looking round for some safer place to put it in. Sir Robert Gibson has told these people emphatically that they had better withdraw their funds, as the Bank does not want customers of this kind. Of course, if all the people who put money in any bank should ask for all their money at once, no bank would be safe for an hour. The Commonwealth Bank will certainly be supported by the Federal Government to the best of its ability, and Sir Robert Gibson has already announced that the Bank will have at its disposal ■ "any extension of the note issue deemed desirable in any emergency." This statement does not indicate permanent inflation, but such a temporary enlargement of the note issue as was permitted to the Bank of England three times during the nineteenth century by the temporary "suspension of the Bank Charter Act." As a measure of alleviation and relief, it was entirely successful at Home, and no doubt it would be equally efficacious in Australia. But if Mr. Lang persists with his fantastic tricks in high finance—as, for, example, the demand for cash guarantees from the insurance companies—there is no knowing where the panic that he has started in Sydney may end.