COMMONWEALTH BANK

Evening Post, Volume CXL, Issue 57, 5 September 1945, Page 9

COMMONWEALTH BANK

SCOPE OF OPERATIONS

A correspondent expresses surprise that in the controversy^ about the Bank of New Zealand no mention has been made of the Commonwealth Bank of Australia. As a matter of general interest, he asks for some facts concerning the function of the Commonwealth Bank and the scope of its operations. The following information from official sources summarises the bank's history and activities. ' , The Commonwealth Bank started operations as a savings bank in 1912, and general banking was commenced :the following year. "~" In 7 1920 it took over control of the note issue, and in 1925 a rural credits branch was established to provide short-term credits to facilitate the orderly marketing of primary produce. Control in 1924 was vested in a board consisting of two ex officio members —the governor and the Secretary to Treasury—and six other members prominent in commerce and industry. They are retired by rotation. Prior to the establishment of the mortgage bank department in 1943 the profits of the general bank, apart from the note issue, were distributed, equally between the national debt sinking fund and the bank reserve fund. The aggregate net profits to the end of 1941 ,(the latest figures available) were £16,875,000. Since the establishment of the mortgage bank department, however, onehalf of the profit goes to the national debt sinking fund, one-quarter to the bank reserve fund, and the other quarter to the new department's capital account. New banking legislation introduced in the Federal Parliament this year formally recognised the Commonwealth Bank as a central bank. The_ stated purpose of the Bill was to strengthen the central banking functions of the bank; to ensure that the financial policy of the bank would be in harmony with the main decisions of Government policy and in the interests of the people; to ensure the development and expansion of its general banking function by active competition with the trading banks; to return control of the bank to the governor (who would be assisted by an advisory council); and to assist in developing small industries and in enabling the people to secure homes.