WHERE IT FAILS

Hawke's Bay Tribune, Volume XXV, Issue 159, 21 June 1935, Page 8

WHERE IT FAILS

BANK NATIONALISATION Points from Recent Speeches GENERAL ELECTION ISSUE The nationalisation of the banks is likely to be one of the issues at the next British General Election, as it is a feature of the Labour Party 's programme, says “Public Opinion.” Hero in concise form are the points made by the chairmen of the banks in their recent speeches. “We must not forget that a monopoly would still be a monopoly, even though under direct State management and control,” said Mr. Reginald McKenna, chairman of the AHdland Bank. “If it stood for a private combination of tho existing banks it would be called at money trust —a name of ill omen for commercial freedom; but it would be none the less a money trust if tho control were exercised by a nominee of the Government. “There is no such trust today. Tho banks uro in active competition with each other, and can maintain their own shares of the available business only by efficient service and sympathetic consideration of their customers’ requirements. Any bank which failed to satisfy its customers would lose them. “But what protection would the customer have if all banking were under one control? Then, indeed, the power of the single bank could be misused oppressively in a manner we aro now hardly able to conceive. ‘ ‘ Aloreover, a monopoly, which can be efficiently operated only on a basis of more or less complete standardisation, could not be expected to show the responsiveness to individual needs which is essential to good banking. What, then, is to be gained by it? So far as I have seen, nothing adequate or even feasible has been suggested. “I assume that no one wishes to make banking a State monopoly in order to earn larger profits and thus contribute to the relief of taxpayers. Any monopoly of an essential service can be used to extort large profits at the expense of the public; but a profitmaking motive is not favoured by those who urge this particular project of nationalisation. “I conclude that there is no assurance of any compensating benefit to set against the grave evils which must arise if all banking power were concentrated in one hand.” AN ANALYSIS. “Eighteen months ago I worked out an analysis of the deposits of our bank,” said Mr. Beaumont Pease, chairman of Lloyds Bank.

“I divided them into the following categories:—(l) ‘Trade’ —which term includes manufacturing, wholesale and retail businesses, public utility undertakings, agriculture, and other industries. (2) An omnibus title of ‘Personal and Professional.’ (3) ‘Finance,’ which includes banking, insurance, trust companies, and other financial institutions, and all foreign balances. (4) ‘Government and other public municipal and local authorities.’

“In 1931 I found that 25.6 per cent, of our deposits came under the heading of ‘Trade’; 61.8 per cent, under ‘Personal and Professional’; 8.8 per cent, under ‘Finance’; and 3.8 per cent, under ‘Government, etc.’ In the balance-sheet which we are now discussing at the end of December, 1934, the proportion under ‘Trade’ has risen to 27.7 per cent.; ‘Personal and Professional’ has fallen to 59.7 per cent.; ‘Finance’ to 8.1 per cent.; and ‘Government, etc.,’ has risen to 4.5 per cent.

“These are the actual facts, and the above classification represents in broad outline the actual owners of tho deposits in our hands. Is it likely that they would willingly sea their property put nt tho mercy of tho whims of any political party by the nationalisation of tho banks? And yet that is what is seriously threatened. “The total amount of deposits in the Joint Stock Banks of England, Scotland, und Northern Ireland, if divided by £l7O, which is the average holding in the case of our bank, represents 14,000,000 depositors, and even after allowing for some overlapping, there must be many million owners of these deposits, most of whom have votes. If and when Iho time comes, do you suppose they will cast their votes in favour of the proposed change in the status o fthe banks?” “I wish to refer to the attacks that have been made and continue to be made upon the British banking system,” stated the Hon. Ihipert E. Beckett, chairman of AVcstminster Bank. “FAR FROM IT.” “These attacks, whether well or ill informed, usually have their origin in a political creed which demands the elimination of the present proprietors and the placing of tho banks under State control. The change is advocated, not after any event or series oi events which has demonstrated that the banks have proved unworthy of the trust reposed in them—far from “I claim that the banks this country have surmounted the difficulties and complexities of recent years with enhanced prestige, and certainly with a record superior to that of any other group of banks in any country of the world. “Is this the time, then, seriously to propose that the control of the banks should be taken out of the hands of those who have proved themselves and placed under tho direction of a State department, and the savings of the millions of bank depositors made the basis of Socialistic experiment; or to suggest that the advantages enjoyed by the public through the active competition between the banks adequately to serve their needs should be sacrificed under the dead hand of a bureaucracy? “The danger is a real one. but you may be assured that our first concern will ever bo to safeguard the interests of our depositors and the rights of our shareholders. In so doing we shall also be serving the wider interests of the whole community.”