BANKS AND POLITICS

Evening Post, Volume CXVI, Issue 106, 1 November 1933, Page 14

BANKS AND POLITICS

CONFIDENCE OF PUBLIC

"VICIOUS PROPAGANDA"

"Evening Post," November 1. Mr. Spooner, Assistant Treasurer of New South Wales, warned Australian business men of the clanger of political^ influ- , ence over the ; banks. Addressing the New South Wales Chamber of Manufactures in Sydney, last week Mr. Spooner said: — "There can be no surer way to send Australia to perdition than to allow t:ae politician to get his fingers into the banking system." Those politicians who realised their responsibilities would fight to prevent the proposal by informing the public mind as to its effect. Let the public assess the knowledge and the intentions of the politicians who advocated that course. A very simple illustration would lay bare the fallacy that a greater volume of credit could be circulated under a nationalised system based upon sound currency. The invested capital and reserves of the trading banks in ' Australia amounted to £08,165,778. To this figure was added their deposits, totalling £291,741,192; this gave a total fund amounting to £359,906,970, made available for advances to the industry and to the public by the banking system. The crude exponent pf nationalisation declared that he would issue public stock to the shareholders and proceed to carry on the banks. He did not attempt to indicate what would happen if the depositors; who contributed 81 per cent, of the funds available for advances, were to withdraw their moneys because they had no confidence in political control of banks. FLIGHT OF CAPITAL. • Mr Spooner referred to the inevitable breakdown of industry in an endeavour to -realise moneys necessary to repay depositors. It was not Bufhcient to,say that moneys withdrawn from one bank must necessarily be redeposited In another bank within the same system. The experience of the Scullin-Lang regime jn Australia during the past few years proved how quickly millions of capital could be ■ exported from Australia to havens of safety. That capital was the life-blood of industry It was the means by which employment was created. Its departure from the :S)?nSr "ould be the cause of distress and banking system had been proved to be safe arid sound Therefore, let them tell the public frankly that they could not afford to play with fire. _ Let them take steps,to tell the public a i advance that any interference, with a wellestablished sysfein would be at the ,_» A.of their jobs and their comfort. If any woof was required of the soundness of tioned solidity during the strain Qft" t>ression, and the continuation of public diffidence after .four years of stress would provide convincing proof of the assertion Sat it could be entrusted with the development of industries m the iuture. A CHALLENGE. "We will not allow the demagogue to : spread his vicious propaganda without examination," proceeded Mr. bpooner. "We wHI make him produce his credentials and declare his intentions. We will make him show that he has something better to offer, and that he can support W h facts his contention that a socked system of credit issue is in the interests the past these crude policies have <been sprung upon the people on -the eve of elections when there was inUroßle We will compel him to Prove S atby interfering with a systerri that; has established confidence, he really has^ath^ S 1 Astern'is not to be the plaything of the Shasising at length what he termed the outward and visible in the years that lie ahead there would come the necessity for investment m assets that had not been utilised during the years of depression. Was there, he asked any likelihood that industry would fail to secure all the reasonable and justifiable, credit that would be required.' BRUNT OF THE DEPRESSION. The speaker earlier in his remarks on politics and the banks showed how the Australian banking system hac sustained ' the weight of the depression and provided • complete confidence that it could respond to the requirements of the future. There ■ was no indication in the position now disclosed that- there would be any lack of capacity on the part of the banking system to meet the demands of the situation. Because of the contraction of business and the reduced price levels since 1929, ■ which had necessitated smaller, demands upon the banking system, the deposits with the trading banks in Australia had increased by £13,000,000 since 1927. - There could be no greater evidence of the sustained confidence of the general • public in the continued stability ot the private banking system than the fact that the people, in times of stress, entrusted to the private bank's the custody of their funds. '(Applause.) There could be no Teater evidence of increased elasticity ot advances when funds were required, than the fact that the moneys were available and could only be fully employed in the future by utilisation in trade expansion. Mr. H. Gordon Bennett, president of ■the Associated Chambers of Manufactures, remarked that they had had one experience in New South Wales which they did not wish to see repeated. On that occasion, during the depression, only one bank failed. And that one failure was in the case of the only bank that was then controlled or influenced by politicians. Mr Spooner's address was timely. It constituted a warning of which the community Rhould take heed. Australia should, above all, preserve the bankjng system which had carried it safely through its difficult times.