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LONDON STIR OVER SOCIALISING BANK

N.Z.P.A.—Special Correspondent—Rec. noon LONDON, August 2. Just as the proposals of the Government of New Zealand to nationalise the Bank of New Zealand are creating a stir in the Dominion, so in Britain the announcement hy Professor Harold J. Laski, chairman of the Labour, party, in a broadcast to America that the Bank of England is going to be socialised has caused a flutter in the City of London, with the bank's stock falling and the trend of Stock Exchange prices being generally downward. Some surprise is expressed that it should be Professor Laski who should make the first announcement of the proposed nationalisation of the Bank of England, and, of all things, make it to America before Britain.

Professor Laski's remarks on the socialisation of the Bank of England came half-way through his "question and answer" broadcast with Mr. Edward Murrow. Professor Laski had remarked that the Labour party were "revolutionists in the sense that we want by rational processes of democratic government to reorganise the central principle of our civilisation and we think we have got the chance of doing it by common consent and through the mechanism of Parliamentary Government. We are not ardent expropriators of everybody's property. We are not going to touch any of the little man's savings. We are going in a straightforward orderly fashion to socialise the ownership stage by stage on a carefully considered plan of priority of the vital instruments of production upon which the life of this nation depends and we are going to do it through Parliament." At that stage Mr. Murrow asked: "What gets first priority • in this programme of nationalisation?" Professor Laski replied: "The Bank of England is going to be socialised and the direction of investments will be planned as part of the process of industrial reorganisation. Then mines and electric power, then iron and steel. Alongside this, of course, housing and the proper development of science and technology have got seriously to be married to industry." Flood of Comment Started These remarks not only resulted in the Bank of England stock making a total post-election drop of 21 points, but also started a flood of comment. The Daily Telegraph remarked: "To what extent Professor Laski can be regarded as the spokesman of the Socialist party is a point which only the actual course of events will reveal. It would be foolish at this stage to read overmuch into the priorities laid "down in broadcast speeches. What is of primary importance to investors in all industries under the nationalisation threat is the basis to be adopted for the fixing of compensation." The Manchester Guardian remarked that outside the circle of the initiated great uncertainty prevails about what "socialisation" will mean in practice. The Guardian added: "Great Britain is almost the only country in the world to have a privately owned central bank. It is true that the present owners have no say at all in the policy of the bank, but if the Government became the owner by buying the shares the situation would change. It could, for example, demand an election of directors nominated by it. There is reason to think that the present governor, Lord Cato, is acceptable to the Labour leaders and the first change would probably be the addition of further industrial and trades union representatives to the court of directors. As regards the bank's policy it has been subordinated to the decision of the Treasury ever since 1931, and even Lord Norman, when he was governor of the bank, always loyally carried out the decisions taken against his expressed advice, which were not rare. The bank is, of course, the Government's banker and adviser on financial technique, and its advice must have carried great weight with past Governments, but the last word has long been with Whitehall.

Politically, however, the bank has been independent of Parliamentary control and that is where the most important change will come in." The Financial Times remarked that from a broader angle the facts of the situation limit the practicability of startling changes. The paper added: "Never has the Bank of England been more closely identified with—even subservient to—the Treasury. It may be said that to a considerable extent the talk of nationalising the bank is like pushing against an open door but since nationalisation has obviously to be accepted it remains only to say that this should be carried out in such a way as to minimise the disturbance and ensure at. least. that the public interest will be served not less well, than by the existing institution. Whatever new organisation is created must be such as will not alienate the confidence of the public if the trade and industry of the country are to flourish. Mr. Attlee has already declared in regard to the nationalisation of industries that while public interest should be protected there should be scope for business organisation and application of scientific methods. This principle is at least sound and equally applicable to monetary practice." "Something More Ambitious" The News Chronicle says to all and purposes the bank is nownationalised and suggests that it may be that the intention is something more ambitious than merely bringing the Bank of England formally under the control of the Treasury. "It may be that the reconstituted bank will at once be invested with formal powers of control of joint stock banks in furtherance of the Labour Party's declared policy that their operations be 'harmonised with industrial needs,'" the paper adds. "In this event the prospect of a much more complex and controversial train of legislation is opened up." The chief effect of Professor Laski's remarks perhaps is to concentrate interest still more intently on the King's Speech. There has been no comment thus far on the New Zealand Government's plan for the nationalisation of the Bank of New Zealand.

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https://paperspast.natlib.govt.nz/newspapers/AS19450803.2.60

Bibliographic details

LONDON STIR OVER SOCIALISING BANK, Auckland Star, Volume LXXVI, Issue 182, 3 August 1945

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LONDON STIR OVER SOCIALISING BANK Auckland Star, Volume LXXVI, Issue 182, 3 August 1945

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