WELLINGTON NEWS

Hokitika Guardian, 30 October 1928, Page 2

WELLINGTON NEWS

NATIONALISATION.

[Special To The Guardian.]

; WELLINGTON, October 27. There is a big difference between nationalisation and rationalisation: the former means the destruction of an industry, while the latter is for the public good. Nationalisation is the creed of the Labour Party in Australia, New Zealand, and to some extent in Great Britain, but the. Labour leaders in Britain think arid act differently. The Labour men in Australia and New Zea-. land who know little or nothing about finance and still less of the science and technique off banking, talk glibly of tampering with the banks.. The,,Commonwealth Bank, owes; its origin to the

Labour Party,; for it was while the late Andrew Fisher .was Pririie Minister that the Act' was passed setting up the. bank. With-the ordinary management of a trained; banker the concern could not help paying from its inception because of the many exclusive advantages conferred upon it by legislation. Since the war when currency in inflation was a very hard problem, ideas on banking changed, or rather it became necessary to revise banking and currency machinery. In most European countries a central bank exists for the control of credit, and this is merely an adaptation of. the British system Where the Bank of England has been "the central 'hank > of the United Kingdom. Australia has been desirous off falling into line wtih Britain in this matter, and Sir Ernest Harvey, Comptroller of the Bank of England, visited Australia recently to advise t'hq Commonwealth Government on the subject. He recognised that as the Commonwealth Bank was engaging in general banking business to an' increasing extent, its competition would affect the favourable development of the central ban|c idea. He did not disguise his conviction that it; was unwise of the State to ' have anything to do with even with a central bank. The Labour Party would knock this scheme on the head and would make the bank a people’s bank whatever that may; mean. The egotistical, halfbaked financiers, and peanut, politicians of New Zealand would, if placed on the Treeaury Benches, immediately establish- a State'bank with sofe right of note • issup and to the ultimate exclusion qf private banking. / ; • The report-on currency, banking and credit, by ,a Committee set up by the Labour Party was recently issued and its merit lies in, the that the subject has been seriously considered and although it cannot be endorsed, it contains some very sound ideas. As/ to currency, the report statesxthat; international action is re r quired to secure at one and the same time stability; of - the exchanges and stability of the purchasing power of money. In the matter of banking’ it is urged that the currency and credit policy of the country ought not to continue to be left in the hands of a purely private body. Control of the Bank of England, it is claimed, ought to be vested in a public corporation containing representatives of such essential factors in the community as the Treasury, the Board of Trade, Industry, Labour and the co-operative movements. Existing banking facilities ought to be extended to people with small means through the spread of municipal and co-operative hanks. With respect to credit, three points, says the report, have to be carefully home in mind. Firstly, whatever system of banking is in operation, there must be a relationship which in practice amounts to a ratio between the maximum of credit and the quantity of currency. Secondly, under different systems, different ratios will require to be found. Thirdly } in view of the limit in the total amount of credit, it is highly desirable that the best possible use should be made df the available supply. The report breaks new ground, and is, therefore, interesting. It says that the recent course of events on the Stock Exchange indicates that a large amount of money is being invested in wild cat enterprises, and it is reasonable to assume that a, proportion of the available credit supply is similarly being squandered. Orthodox economic science takes little heed of such tendencies for the reason that its outlook is wholly quantitative, and not qualitative. It applied its general terms —wealth production, capital, goods, and so on—indiscriminately to bread, clothes, gramophone records, kinema films and facing tracks. No well ordered family manages its affairs On srich, principles, and any true social economics must admit of qualitative as well as quantitative principles. This is unbroken ground and appears to deserve investigation.