Outlines Plan For Future Control Of Bank of England

Northern Advocate, 22 August 1945, Page 4

Outlines Plan For Future Control Of Bank of England

(Rec. 1.30 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 (Dr. Hugh Dalton) in the House of Commons.

There had long. been close and friendly relationships between the bank and Treasury officials, which would, of course, continue. Private stockholders would disappear from the scene, carrying with them fair compensation. This would make ; t abundanly clear that Goveernment 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 ultimate power lay. It must rest not with the stockholders, though they seldom ex: ercised 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 the advice of persons associated with the Bank of England.

No Undue interference It was not intended that there should be constant Governmental interference with the day to day working of the banks. There would continue to be daily contact and exchange of views between the bank’s and Treasury officials, but on important issues the Government must have the last word. Dr. Dalton paid tribute to Lord Catto, the present Governor of the Bank, whom he described as a great public servant and a man of wide commercial expex-ience. Lord Catto expressed willingness to continue as governor for a suitable period in order to inaugurate the new regime. Dr. Dalton believed that the changes in the bank’s legal position would in no way lessen its esteem at home and abroad. On the contrary, the Government's hope and belief was a close integration of the Bank of England with the Government and the passing of the private stockholder, who was either a menace or an absurdity, would increase rather than diminish its Influence. Referring to interest. Dr. Dalton said the Government must borrow as cheaply as possible, and if; intended to continue the money policy which had been pursued for some time. He was already consulting Treasury and Bank of England experts. The stage, meanwhile, was set for the next great savings drive.

Inflation Dangers

Increasing purchasing power would result in frustration unless there were increased supplies, and while supplies were necessarily short, a large part of the national income should go into savings.

“1 take the view that British credit is a national, not a party, matter,” he added. "We must avoid the dangers of inflation, also of deflation, and if we are going to avoid inflation we must rigorously maintain price control. which is one of the war's administrative successes.”

Dr. Dalton announced his intention to introduce another Budget in the autumn. This was indispensable, because of the tremendous changes in the last few months. "It is essential that we reconsider the whole field covered by the Budget, both in revenue and expenditure. I warn the public against harbouring extravagant expectations of tax relief. There are some very grave financial problems to be examined in the autumn, and in the years ahead the financial path is not going to be easy. Chaste Spinster to Wed. “On the contrary, for some years it will be hard and stony, but I am sure we will have confidence in the eventual outcome and willingness to face all awkward situations as we pass along. “I am sure the House will back the Government in approaching .these problems in a coldly realistic spirit, backed by an idealistic purpose. We must not expect to find a Utopia around the corner, but there is no reason why we should not proceed as rapidly as possible.” M% Oliver Lyttelton said he was sure the Government would fight the evils of 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 England and when a slightly shocked public saw the “old lady of Threadneedle Street,” who had long been living in chaste spinsterliood, now being hurried to the altar and married out of hand by a Government with three weeks’ standing, although it admittedly had a large electoral dowry.