The Dominion. SATURDAY, FEBRUARY 6, 1937. THE KING-PIN OF SOCIALISM

Dominion, Volume 30, Issue 113, 6 February 1937, Page 8

The Dominion. SATURDAY, FEBRUARY 6, 1937. THE KING-PIN OF SOCIALISM

“What we have done,” said the Hon. \V. E. Parry i n (i a reference once to the Government’s legislative enactments, is revolutionary.” Yet it is probably true that this fact has not yet fully penetrated the consciousness of the general public. Considet, for instance, the Reserve Bank amending legislation by which central banking was brought completely under political control. The first step toward the socialised State, according to the ideology of British Socialists, is “the complete socialisation of the banking system and control of credit.” This stejo has been taken by the Government under its amending legislation. That legislation was forced through Parliament as an emergency measure; it gives the Minister complete control by enacting that the directors must g*y e effect to the monetary policy “as communicated by the Minister ; the directors of the Bank hold office at his pleasure; power has been taken to call up and use all available credit by the Government; and absolute control of credits abroad has been given to the Minister in his power to suspend the Bank’s obligation to deliver sterling in London for its notes.

Political control of banking is the king-pin of the Socialist system. It is essential to the application of Socialist principles. . Extreme Labour policy in Australia laid down this principle of action in these words: “You must remember there are always first steps. You must socialise credit first. The other things will qomc later If you want to go through a door you must have the key first. Socialisation of credit is the key.” Lenin in a pre-revolutionary address at Moscow in 1917, said: “We are all agreed that the first'step in this direction [toward Communism] must be such measures as the nationalisation of banks. . . . Through the nationalisation of the banks they [the people] may be tied hand and foot.” It has been the policy of the New Zealand Labour Party throughout its attempts to gain power to vilify the banks. Similar tactics have been pursued in Australia. To such extremes were these tactics carried out in the Federal election campaign of 1934 that the Prime Minister, Mr. J. A. Lyons, was moved to remark that for the purposes of the election the private banks had been “invested with the forbidding vestures and lineaments of the devil.” And he went on to say: In all the history of Australian banking the percentage of advances to deposits has never been so high as it has been during these years of depression. Instead of forcing embarrassed borrowers into liquidation the trading banks have strained their resources to the limit to support all who have the slightest hope of carrying on. The suggestion that the banks have withheld their help from Governments I can only describe as indecent. Right through the depression the banks have devoted the funds they could spare to the support of public finances, and their holdings of Treasury bills have exceeded £30,000,000. That has also been the experience in New Zealand. There is no shadow of evidence that the trading banks have used their powers oppressively. On the contrary, as Sir James Grose pointed out in a speech at Dunedin some time ago, the banks not only “carried” their hard-hit clients through the depression, but in actual fact have also incurred heavy and irrecoverable losses in doing so. The aspersions cast by the Labour Party on the trading banks were ostensibly based on alleged oppressive dealings in order to provide some colour of reason for its desire to change the banking system. Actually the party was manoeuvring for a favourable opening for taking the essential “first step” toward the Socialist ideal of banking control, and conceived the idea that the best method of attack was by slandering the trading banks without reason or evidence. As the result of a similar campaign in Australia the Federal Government in 1935 appointed a Royal Commission “to inquire into the monetary and banking systems at present in operation in Australia, and to report whether any, and if so what, alterations arc desirable in the interests of the people of Australia as a whole, and the manner in which any such alterations should be effected.” This commission has not yet reported, but its findings should be of great value to this country as a measurement of the soundness of the New Zealand Government’s banking policy. After all, what is' wanted in this country is a banking system that will be really useful and helpful to the community, not something that is essential in the evolution of the complete socialised State contemplated by the Labour Party, and toward which the present Government has already taken such rapid strides.