“FASCIST FINANCE”

Evening Star, Issue 25701, 26 January 1946, Page 7

“FASCIST FINANCE”

REACTION TO INVESTMENT CONTROL CAN NATION MEET INSURANCE PAYMENTS? (Rec. 11.45 a.m.). LONDON, Jan. 25. Statements from the " Big Five" banks, though showing extreme reluctance to discuss controversial measures, suggest a division of opinion on the nationalisaton of the Bank of England and the Governments new powers over the commercal banks, says the Australian Associated P.ress special correspondent. The chairman of the Midland National Provincial Bank is apparently unperturbed, but the Westminster chairman, on the other hand, talks of the joint stock banks coming- under the dead hand of officialdom, and foresees possible difficulties between .banker and customer unless great care and restraint are exercised; Lord Balfour of Burleigh, the new chairman of Lloyd's, does not expect any particular good results, and seems to fear harm through the substitution of rigidity for the former flexibility. Lord Balfour's, statement is otherwise notable for his complaint of the disproportionately onerous flnancail burden imposed on Britain by the Washington Agreement, and also the dangerously short time before current sterling receipts become freely convertible into dollars. The sterling balances are again prominent in financial comment. The current city view is that, at best, up to one-third of the balances will be permanently held in London. The ' Financial Times ' suggests that any realistic plan for the liquidation of the remainder must provide firstly for the virtual elimination of interest; secondly, for the release of the greater part of the principal only over a comparatively long period; thirdly, for some scaling down of the capital sums involved. The Chancellor's plan for control of investment has had a hostile reaction in the financial Press. ' The Statist' describes it as Fascist finance. The ' Economist' strongly disapproves of the Government's preoccupation with the instruments of financial control, which may have penalising and stultifying effects when the immediate necessity for regimentation has passed. Financial opinion seems more critical of the new State plan for insurance than of the earlier Beveridge scheme, on the ground that this, like other social reforms, pays insufficient attention to the nation's capacity for the payments in view of the diminished national wealth, and increased depedence on exports. This is believed to be all the more serious because the rise in coal andi other costs is prejudicially affecting industries and competitive capacity. The stock markets showed a firm tendency. New Zealand Loan and Mercantile attracted notice among the stock companies likely to benefit appreciably from the new Dominion income tax arrangements.