BANKING

Hauraki Plains Gazette, Volume 54, Issue 32628, 1 October 1945, Page 5

BANKING

(To the Editor.)

Sir, —Your correspondent, Mi’ Hamilton, fails to realise many things. The Commonwealth Bank as first constituted, was an ordinary trading bank. Its functions have been considerably changed. It is now a central or Reserve Bank and, under the recent banking legislation just enacted in Australia, no bank can grant credit without consent of a State official who is of course subject to directtion by a political party. Under such a system democracy cannot long survive. In New Zealand' to-day under the existing banking system the power of contracting or expanding credit is wholely and solely with the Government. The trading banks merely distribute credit in accordance with Government policy. The only power the Government does not possess is the power to decide what particular individuals shall obtain credit. At the present time this is left to the competitive system of the trading banks —political freedom and economic freedom are thus both preserved, for no single individual or , single group of individuals has the sole power of deciding who shall obtain credit. Directly any individual, political party or any single board, committee or council has the sole decision l, as to what customers to to be overdrafts then democratic government will cease to exist. —I am, etc., PETER WEM'SEY.