BANKING AND POLITICS IN AUSTRALIA

Press, Volume LXX, Issue 21246, 18 August 1934, Page 20

BANKING AND POLITICS IN AUSTRALIA

j TO TOT ISDITOB OT TUB PR*SU. t Sir—Your leading article on banking J and politics in Australia will probably j appear in many forms and in many ! places in the not far distant future. Even "The Times," London, has opened its columns to discussions on banking policy and its relationship to politics and economics. If this is a sign of a new trend of thought and a new approach to political questions, it is also a signal for the best information available. I agree with "The Press" in saying there is a great deal of muddle-headed discontent, and would also add that there is a considerable amount of muddleheaded complacency. The failure to differentiate between questions of policy and questions of administration appears to be common to both the discontented and upholders of the status quo. For example, socialists who strain every nerve to get control of city council affairs, are inconsistent in that they afTirm on the one hand that capitalism haa broken down, and only socialism can succeed, and on the other hand they express their general desire to administer the affairs of a large organisation within the capitalist system, which they say is hopeless. There are, too, a number of muddleheaded currency reformers who say that the way to improve banking is lo alter the administration, i.e., nationalise the banks. If the banks were nationalised the only difference would be that bank employees would be public servants instead of private servants, just as the Government Insurance Department employees are public servants. There is no difference in the service rendered to the public by government insurance offices as distinct from private insurance offices. If Mr Scullin merely wishes an extension of the powers of the Commonwealth Bank to enable it to enter into vigorous competition with the private banks, then I must agree with "The Press" that there is nothing very revolutionary about that. And there is nothing about it that is likely to be of the slightest benefit to Australians either. You say that banking is a profession demanding as high a degree of specialised training and knowledge as law or engineering. Quite so, and there should be no more difficulty or danger in getting bankers to administer a banking policy laid down by the people's representatives than there is in getting Supreme Court judges to administer justice on this principle. But muddle-headedness seems to have crept in here also. Undoubtedly banking policy is a matter tl?at vitally concerns the people, and undoubtedly banking administration should be left to banking experts. I do not for one moment believe that the majority of anti-social-ists and anti-labourites who control our farms and factories believe that banking policy is to-day laid down for their benefit,, but I believe they are seeking knowledge on the subject and have been impressed with the Central Reserve Bank' 3 action in meeting a cheque for £22,000,000 without touching their capital of £500,000. This transaction bears evidence of expert administration, and as the central bank has acquired approximately £24,000,000 in London without giving up anything of value to itself, its pol-» icy is obviously designed to benefit the central bank and not the people of New Zealand. I suggest therefore that the growing demand for an alteration in banking policy will have to be met with more frankness than hitherto; objections will not necessarily be considered valid because they are served up with the socialists' administration sauce.—Yours, etc., D. C. DAVIE. August 17, 1934, 10 Til» IDnoa or TUB SBJSSS, Sir, —In the concluding paragraph of your leading article in your issue of August 17 in reference to banking and ! politics in Australia you say the only remedy is to put the banks in charge of bankers who have no incentive to serve interests other than those of the community. Now this suggestion, coming from you, meant or should mean that you have some reason for doing so. Perhaps you are referring to a state bank, but then you are afraid of politicians. Well we aro forced to trust the politicians with the formation of all the luws of the land. However, if you will kindly elucidate what you mean and show how it can be put into legal practice, you will deserve to be immortalised.—Yours, etc., A. DENISON. August 17, 1934. ]