EMPIRE CENTRAL BANKS

Northern Advocate, 28 December 1934, Page 4

EMPIRE CENTRAL BANKS

Sir Josiah Stamp recently delivered the Oust Foundation lecture at University College, Nottingham, on Central Banking as an imperial factor. The main thesis of his discourse Avas the necessity for developing financial co-operation Avithin the Empire as an indispensable element of Imperial economic policy, since finance- and trade are inseparably connected. Until quite recently it has often almost unconsciously been assumed that finance and commerce are separate departments, and indeed in the pre-War Avorld Avith its “automatic” gold standard this assumption Avas not unreasonable. But today in a Avorld of fluctuating currencies and unstable exchanges the financial factor is all-important, because it exercises a vital influence upon the direction and volume of trade between the different countries of the Avorld. If Empire trade is to develop it Avill Tie necessary, therefore, to evolve some community of policy between the monetary authorities of its constituent parts. In the Avorking out of this monetary co-operation the central banks of the Empire are obviously destined to play a leading part. Within recent years the countries comprising the British Empire have, one after another, set up central bank's of their own, and there noAv exists a chain of these credit institutions Avhich embraces Great Britain, South Africa, Australia, Ncav Zealand, India and Canada. In several of these countries tin* creation of a central bank, Avhich should really be regarded as the hallmark of financial maturity, has been greeted Avith some suspicion, prompted by. the fear of dictation from the Mother country. Such fear, as Sir Josiah. Stamp rightly pointed out, is really groundless. It is fully realised in London that the first consider-

ation of each of these new central banks must always he the interest of its own country. But if the Empire is to develop a successful system of financial cooperation—such as was envisaged, for example, in the monetary resolution framed by the Empire delegates at the "World Economic Conference last year — it is clear that sectional interests in each of its constituent parts must in some degree be subordinated to those of the Cmpire as a whole. In organising these common interests, fi.nhnce must take its share; and not the least important function of the central banks will be to promote Imperial economic interests by working out a policy of monetary co-operation. "What form precisely this co-operation is ultimately destined to assume cannot yet be foreseen; but the existence of a ‘’sterling area” is already presenting the various countries of the Empire with new opportunities for collaboration, and the instrument for the development of a common policy has already been created in the system of Empire central banks, now all but complete. Sir Josiah Stamp has done good service in calling the attention of financiers and statesmen to these questions, and his thoughtful and stimulating address will be welcomed by all those who are concerned about the future development of Empire finance.