BANK OF ENGLAND

Manawatu Standard, Volume LXV, Issue 225, 22 August 1945, Page 6

BANK OF ENGLAND

LABOUR'S PROPOSALS.

CHANCELLOR EXPLAINS. (N.Z. Press Association.—Copyright.) (Kec. 1.10 p.m.) LONDON, Aug. 21. The Government's proposals for the Bank of England would have the effect of bringing the law in line with the facts of the situation as they had developed, said the Chancellor of the Exchequer (Mr Hugh Dalton) in the House of Commons. There had long been close and friendly relationships between the Bank and the Treasury officials which would, of course, continue. Private stockholders would disappear from the scene, carrying with them fair compensation. This would make it abundantly clear that Government ownership carried with it in the ultimate resort the power of direction and decision. It must be made clear beyond a shadow of doubt, where there is ultimate power, why it must rest not with- the stockholders, though they seldom exercised it, but with the Government responsible to the House of Commons and through it to the people who had suffered grievously in the past from unwise decisions'taken on the advice of persons associated with the Bank ol England. It was not intended that there sliould be constant Governmental interference with the day-to-day working of the banks. There would continue to be the daily contact and exchange of views between the banks and Treasury officials, but on important issues the Government must have the last word. Mr Dalton paid a tribute to the Governor of the Bank of England (Lord Catto). whom he described as a great public servant and a man of wide commercial experience. Lord Catto had expressed his willingness to continue as Governor for a suitable period in order to inaugurate the new regime Mr Dalton opined that the changes in the bank's legal position would in no way lessen its esteem at home or abroad. |On the contrary, the Government's hope and belief were that the close integral ion of the Bank of England with the Government and the passing of the private stockholder, who wa? either a menace or an absurdity, would increase rather than diminish its influence. | Referring to interest, Mr Dalton I said the Government must borrow as cheaply as possible and it intended to Continue the money policy which bad been pursued for some time. He was already consulting the Treasury and Bank of. England experts. The stage was set meanwhile for the next great savings drive. . I Increasing the purchasing power 'would result in frustration unless there were also increased supplies, and, while supplies were necessarily short, a 'large part of the national income should go into savings. PRICE CONTROL. "I take the view that British credit is a national and not a party matter, lie said "We must avoid the dangers of inflation and also these of deflation and, if we are going to avoid inflation, we must rigorously maintain price con'trol, which was one of the war's administrative successes." Mr Dalton announced the intention to introduce another Budget this autumn. This was indispensable because ot the tremendous changes of the last few months. "It is essential that we consider the whole field covered by the Budget, both in revenue and in expenditure." he said. "I warn the public against harbouring any extravagant expectations of tax relief. There are Isome very grave financial problems to be examined in the autumn and in the year* ahead the financial path is not iroing to be easy. On the contrary, for some vears it will be hard and slonv, but'l am sure we will all have confidence in the eventual outcome and willingness to face all the awkward situations as we pass along. I am sure the House will hack the Government in approaching these problems in a coldlv realistic spirit, backed by an idealistic purpose. We must not expect to find a Utopia around the. cornet, but there is no reason why we sliould not proceed as rapidly as possible." Mr Oliver Lyttelton (President of the Board of Trade in the previous Government) said he was sure the Government would fight the evils ol inflation to the best of. its ability. This was more than ever necessary when the Government was proposing to fiddle With the constitution of the Bank of JEng'and, and when the slightly shocked public saw the "Old Lady of Threadneedle Street", who had long been living in a chaste spuisterhood, now being hurried to the altar and married out of hand bv a Government with on'lv three week's' standing—although it admittedly had a large electoral dowry.