LABOUR'S BANKING POLICY

Otago Daily Times, Issue 22717, 1 November 1935, Page 8

LABOUR'S BANKING POLICY

The sharp drop that has been recorded in the price of Reserve Bank shares is no doubt correctly traceable to the existence of the apprehension on the part of some holders that the Labour Party may be successful at the coining elections, and to forebodings engendered by the utterances of its representatives respecting its policy in relation to the banking institutions of the country. Should it secure the opportunity, the Labour Party will, it asserts, assume control of the public credit in the interests of the people. While its members have harped on this theme in a confused way, political control is clearly the objective. All the significance of this plan of nationalisation Mr Savage has not attempted to explain. In fact, he has been decidedly evasive about the details, and these have yet to be supplied. One of his lieutenants has j?ecently stated, however, that if the Labour Party gains office it will purchase the Reserve Bank shares owned by private individuals at the market value —this, of course, being an uncertain quantity—with the object of making the bank an instrument for the execution of its policy. The effect which the expression of the party's ambitions to control and use the public credit through the Reserve Bank has had upon the public mind provides at once an illustration of the sensitiveness of capital and a presage of the (light of capital that would occur if a party with a policy such as that of the Labour Party* were successful in establishing itself on the Treasury benches. While it is the definite intention of the Labour Party, if it is given the opportunity, to convert the Reserve Bank, of which an essential feature is its freedom from political control, into a purely State institution, its designs in respect of the trading banks have been variously indicated from time to time. If the nationalisation of banking means anything it means that the design of the Labour Party is to gain control of the banking system and make use of it for its own political purposes, or as Mr Savage has put it, for the provision of a money service sufficient to give effect to the will of Parliament. It is a policy, admittedly, which is not peculiar to the Labour programme in New Zealand. The Labour Party at Home, which does not hesitate, as the party in New Zealand does, to call itself a Socialist Party, claims that the banks in the United Kingdom should be owned by the State and that the machinery of credit and finance should be operated in the interests of the nation. It is pertinent, in the circumstances, to quote the words of an eminent banker in the Old Country: " It is not surprising to find that a feeling of much alarm has been created in the minds of depositors and of the business world generally, for it is obvious that if the money of depositors at present in the careful custody of banks is to be locked up in the promotion of Labour Party political projects it will not be forthcoming when the rightful owners demand its return,

and the only method of meeting the obligation of the nationalised banks will be the printing of notes and the consequent reduction in the purchasing value of the currency." The instrument upon which the Labour Party would play is the public credit, and it talks as if, in command of the public credit, it would have the open sesame to an Aladdin's cave containing all the wealth required for the financing of its cherished schemes. But in the pursuit of its designs what would happen to the public credit upon which it bases its roseate calculations? It is open to question whether a community really has any such credit apart from that which it derives from the general confidence in those who look after its money, namely the banks. It is certainly not easy to imagine the maintenance of that confidence under a banking system controlled and operated in the interests of a particular political party. The " easy-money " objective of the Labour Party points obviously to inflation. The experience of other communities has shown how ruinous that may become and has furnished a warning, which the people of New Zealand would be foolish to disregard, of the grave dangers comprehended in the political manipulation of banking.