The Press FRIDAY, AUGUST 17, 1934. Banking and Politics in Australia

Press, Volume LXX, Issue 21245, 17 August 1934, Page 12

The Press FRIDAY, AUGUST 17, 1934. Banking and Politics in Australia

jMr Scullin's opening speech in the; 'Commonwealth election campaign,! j .summarised in the cable news yes-i Iterdav, shows that the Labour party; jis determined to make banking a; main issue. Strategically, the move • is a sound one. In Australia, as in; New Zealand, the depress' h:is. produced a fine crop of new . -1- j ary theories, the only enmn j ture of which is the assumption a' j the private bank;., as controllers cu • the existing monetary system, are i largely responsible 'or it K reak-! | down and must be superseded. Mr Scullin and his followers, by eor.eeutrating op the negative rather than , the positive sid' of their programme. ; will probably capitalise much of this. ; muddle-headed discontent. There is. J i however, some consolation in the; ! thought that, on the positive side, i Labour's banking programmes has j been substantially modified. A few months ago it seemed likely that j ; Labour would go to the polls with a ' ; definite promise to "nationalise ! the trading barks. Mr Scullin is i now anxious ♦.•> r'uvuunt " wild.

! " charges about Labour's intentions " regarding banking-" He propose* merely c.n extension of the powers ( of the Commonwealth Bank to en- j able it to " enter into vigorous com- i ••petition with the private banks."' There is nothing very revolutionary in this. The Commonwealth Bank j ! already competes with the private i j banks; and its powers have been; growing steadily for the last 20 i years. What is disquieting about Air Scullin's speech is his insistence that Parliament must '•determine "the Commonwealth Bank's policy "and administration." The illusion that " the people," acting through their elected representatives, can shape banking policy in detail is even more dangerous than the illusion that " nationalisation " of the banks is a short-cut to prosperity. Whatever faults and weaknesses can be charged against bankers as a class, the fact remains that banking is a profession demanding as high !a degree of specialised training and ! knowledge as law or engineering. ! ! There is a passage in the report of | the Macmillan Committee on Fin-j j ar.ee and Industry that is as rele- j va.'t to Australian conditions as it | i.< : • British: j An important thing to bear in mind is that financial policy can only be carried into effect by those whose business it is. We have in this country a great financial and banking organisation with great experience and great traditions. It is through and with that organisation that we have to work, for they alone are the j repositories of the skill and know- j ledge and they alone possess the, equipment necessary for the management of our financial affairs. Mr Scullin argues plausibly that the policy of the bar.ks is dictated by ilie interests of their shareholder; : rather than by the interests of the j community. Even if that is true, it will not mend matters to transfer ! control of the banks to politicians. [ The only remedy is to put the banks r in charge of bankers who have no • incentive to serve interests other • than those of the community.