Chifley Introduced Bank Nationalisation Bill

Greymouth Evening Star, 16 October 1947, Page 8

Chifley Introduced Bank Nationalisation Bill

CAItBER&A, October 15.

„:2 “Oil public ownership of baiiki will ensure the control of banking in the public interest,” said, the Prime Minister (Mr Chifley), introducing in the House of Representatives the Government’s bill to nationalise the private-trading banks of Australia.

“It will ensure the taking of effective steps against the dangers of secondary inflation,” Mr Chifley went on. “It. will assist us to stave off depression and to avoid a repetition of the miseries of 1930. Beyond, this, it will open the long-locked doorway to the development of a monetary and banking system truly adequate to our Rational requirements and wholly devoted to the service of Australia.

‘‘The proposal' to take over the banks is being condemned..in some quarters,, in recklessly . extravagant terms. '..A1l kinds of hidden purposes are being wrongly ascribed to it front the .same sources. The opponents of banking change seem always to have fought against new developments, while belatedly . approving such changes as have been made —changes which they originally opposed.” Ey amalgamation, he _ said the power of private banking in Australia had become concentrated in the hands of boards of directors comprising relatively of a few men, who were responsible for the exercise of their- powers, not to the nation, but to a limited number of people—some who h ( ad invested money in bank shares.

“Banks not Helpful”

. “Time and again, the policies of the private banks have run counter to the national needs for steady growth and for high levels of employment,” declared Mr Chifley. “It is correct to say that the banks fed the boom and promoted the unsound development in the ’twenties. When the depression came, the banks, as a whole, restricted new lending, and they called in advances. Between December, 1929, and March, 1932, the banks advances fell by approximately £45,000,000. The effect.of .this was to accentuate th.e contraction-, of business and the unemployment of. those years. “They helped but little in the recovery during the ’thirties, waiting, rather, for an improvement to come from other sources, instead of taking..the initiative, and helping to promote a recovery. They followed these ..courses because it seemed the best and the safest from the standpoint of .their own interests.” .He added that the Labour policy envisaged the strengthening of the Commonwealth Bank so that its services would be extended to meet the needs of all sections of the people.

The reduction, of interest rates was an important .part, of the policy. On bfdad policy issues, the Commonwealth Bank had, in turn, been advised by the Government. Conflict has not arisen at any stage. Government’s Powers

“It is timely to record that, under Section Nine of. the Commonwealth Bank Act, of 1945, the Government cannot interfere in the internal transactions of the bank. Its power is limited to the laying down, where necessary, of broad lines of monetary and banking policy.” “Business people and private citizens will have all the safeguards as to the conduct of their banking business Which can be. given by law and by long arid honourable administrative tradition of the Commonwealth Bank. - • ■ - ' >

. “On the purchase or acquisition of a. bank, the shareholders are assured of jubt. comperisation, the bank employees,are protected, the depositors are guaranteed, and the business will be. carried on without interruption. Object of Bill

Mr Chifley explained that the purpose of the Bill was to empower the Commonwealth Bank to take over the banking business at present conducted in Australia by the private banks, and that the State banks and the savings banks, would not. be affected, ft wopld be. the responsibility of the Commonwealth Bank, under this legislation, first, to provide, in accordance with the conditions of normal banking business, adequate banking facilities for any State or any person requiring them; secondly, to conduct this business without discrimination; arid, thirdly, to observe, except as otherwise required by law, the practices and usages customary among bankers,, and, in particular, to maintain strict secrecy within the law as to the affairs and dealings of its customers. ’

The Bill also envisaged the development, under public ownership, .of a comprehensive banking service that would strengthen and assist the growth of Australian economy, and provide facilities adequate to its rapidly expanding and changing needs.

He quoted the Views expressed in

1937 in the report of the Royal Commission on the monetary and banking systems in Australia, namely, that “the general objective of the economic system for Australia should be-to achieve the best of bur productive resources,, both present and future. This means the fullest possible employment of the people and the resources, under conditions that will provide ’the highest standard of living. .It mean,s, too, the reduction of a fluctuation in general economic activity. Since the monetary and banking system is an integral part of the economic system, its objective will be to assist with all the means at its disposal in achieving these ends.” Mr Chifley said that these views were subscribed to by all the members of the Commission, even though there was some difference of opinion as to the ways of achieving them. The Labour Party had maintained, for many years, that, since the influence of money was so great, the entire monetary and banking system should be controlled by the public authorities responsible, through Government, and through Parliament, to the nation.

Private Banks

“On this principle, the Labour Party holds, further, that, since the private banks are conducted, primarily for profit, and therefore have followed policies which, in important respects, run counter to the public interest. Their business should be transferred to public ownership. ... “For this . view,” he said, “the strongest reasons could be stated.— First, in the absence of control, the private banks , could , expand . or contract,the volume of their lending, and so vary, within wide limits, the supply of money , available., to .the public; secondly; they, could when and where they wo'xfld lend, ahd upon what terms, and in those operations they were guided by the interests of those who owned . and controlled them; thirdly, whatever regard they might claim to pay to wilder concerns of the nation, their policies were dictated in the last resort, by the desire to make profits, and to secure the value of their own assets.” Opposition Move Fails

In the House of Representatives today, the Leader of the Opposition, Mr R. G. Menzies, sought to deny leave for the Prime Minister, to introduce tonight the Bill to nationalise the private trading banks. He said: “We shall fight here, and outside, until the people rise to defend their rights and throw the Government out of office.”

Leave was granted by 40 votes to 25 to introduce the Bill. Debate on Mr. Menzies’s motion was gagged, and the division taken. When Mr Chifley sought leave to introduce the Bill, Mr Menzies voiced strong opposition. He declared that it was a Bill to reduce substantially the normal freedom of the Australian people. He said that it should be rejected, first, because the Australian electors had not been consulted directly or indirectly; secondly, because the purpose of the measure was to create a monopoly of a tyrannical kind; and, thirdly, because it would create bitterness and uncertainty, which, at the moment, would be the deadliest enemy of production.

No Mandate

“A mandate for legislation is different from constitutional power,” he continued. “It is something that must be obtained from the people. Mr Chifley cannot profess that he has any affirmative mandate. By every implication he conveyed to the people at the last election, that there would be no such proposal. In these circumstances, the Government has a plain duty, either to hold a referendum or a general election.”, Mr A. D. Fadden, Leader of the Country Party, spoke next. After Mr Fadden concluded, Mr Scully, moved the “gag.” There was a burst of Opposition protest. Leave to introduce the Bill was then granted by 40 votes to 25. “It looks as though the days ol capitalism are numbered,” the Minister of Immigration, Mr A. A. Calwell, was heard to remark.