NOTES AND COMMENTS.

New Zealand Herald, Volume LXVIII, Issue 20867, 8 May 1931, Page 10

NOTES AND COMMENTS.

STATE CONTROL OF RANKING. The declared purpose of Mr. Theodore's policy is to establish political control of the monetary system of Australia. The instruments of his plan already revealed are the Central Reserve Bank Bill, which would set lip a new Slate bjink conducted by nominees of the Government; tho new Commonwealth Bank Bill, which abolishes the gold reserve and makes Parliamentary action the only regulator of the currency; tho Fiduciary Notes Bill, which would create a further measure of inflation; and the Bank Interest Bill, by which control of interest rates would be vested in the Government. Mr. Theodore is not the first to declare that "Parliament will protect the interests of the country and will act with duo wisdom and caution in matters of this kind." Tho theory of State banking has been tested in Russia with the result that its failure has been formally admitted. A decree issued on March 20 by the Council of People's Commissars of the U.S.S.R. for the reform of the system of giving credit to economic enterprises by the State Bank, explains that tho finances had become disordered by tho methods in practice during the last few years. Under the influence of definite credit plans mapped out in advance by tho State Planning Commission, the State Bank, it says, had constantly violated the ordinary rules of bank credit, had ceased to make certain that in individual transactions it was desirable to give credit, had accorded credit as a matter of routine, and losses subsequently incurred had been covered by the State Bank's resources. The decree requires the State Bank to return to the methods of capitalist bankers and even authorises the compulsory sale by tho State Bank of effects belonging to its clients to recover its losses, even though tho clients may be State organisations.

LICENSING OF EXPORTS. Pointing out that the inevitable effect of Mr. Theodore's inflation policy would be a flight of capital and a rising rate of sterling exchange, a bulletin of the Bank of New South "Wales states that Mr. Theodore is ready with an expedient to meet this complication—control of the rate of exchange by prohibiting exports except under licence. That was recently admitted by Mr. Scullin. who, in reply to a question, said that the Government's reserve powers to pi-event the flight of capital from Australia rested in the power to control exports. Tho Government could say what exports were to be made, and through what channels they were to go, and could lay down which banks in London were to make credit available. "He is in a dilemma of his own making," the bank's bulletin remarks. "If ho pays the exchange he pins tho farmers to their present fate of costs that exceed returns. If he does not do so, the attempt to buy sterling to meet tho interest bill will smash his Budget. . . Tho mere fact that tho Treasurer wants a stringent control of the exchange! rate is clear proof that he means to keep it below the natural rate set by demand and supply. The answer that his aim would be? simply to exclude panic demands on tho part of investors seeking to transfer abroad their command of capital concedes the destructive effect of his whole policy on enterprise and confidence. . . A flight of capital from the country might be prevented, but only at the cost of aggravating the flight from the currency which occurs whenever inflation is in progress. Folk would buy commodities as soon as they obtained their pay or income."

THE PROPHET OF CONSERVATISM. In a contribution to the journal of tho Primrose League, of which he is grand master, Mr. Stanley Baldwin referred to Disraeli as "tho great Victorian leader and prophet of Conservatism." "I call him prophet for prophet ho was in the truest sense, in that he had a statesman's vision that pierced through the accidental circumstances of his own time, so that his voice has remained as powerful, his inspiration as vital for Conservatives of succeeding generations as during his lifetime," Mr. Baldwin wrote. '-Though the problems of his day were not the problems with which we are confronted to-day, the fundamental principles which should guide us in solving our problems wore never enunciated more vigorously, more lucidly, or with greater felicity of diction than by that sagacious statesman and patriot. It is, I believe, true to say that hardly a single major issue of policy has c,onio before tho country in tho halfcentury since his death on which it is not. possible to find wise guidance in his speeches. In his day, as in ours, the Conservative Party, to uso his own words, stood for 'three great objects—the main tenanro of our institutions, the preservation of our Empire, and tho improve * ment of tho condition of the people.' In his day, as in ours, the Conservatives were Realists who found themselves opposed by a party of Sentimentalists, the Liberals, who even then wero sowing the seeds of which we are to-day reaping the barren harvest. If thero are any who are hesitating on the threshold of our historic party, or who have become, disillusioned with the false gods that other parties have misled tlieru into worshipping, let them turn to tho pure fount of Conservatism, (he speeches of Lord Reaconsficld. I promise them that every true lover of our country and all that it stands for will find therein refreshment and inspiration."