EFFECT IN DOMINION

Otago Daily Times, Issue 26543, 19 August 1947, Page 5

EFFECT IN DOMINION

HIGH COURT MAY HAVE LAST WORD The announcement that the Federal Government had decided to nationalise all the private banks of Australia came as a bolt from the blue to banking and commercial circles in Dunedin There had been nothing to suggest that the Government intended taking such drastic steps, but the opinion was expressed with some confidence that the High Court of 'Australia may have the last word on the legal and constitutional positions elected by this latest move. “ It is a matter for speculation whether the Commonwealth Government will be able to carry out its grandiose scheme of nationalisation,’’ commented one authority. “ I think it is extremely doubtful, and this is borne out by the decision of the High Court only last week in which the Federal Banking Act, which sought to compel city and municipal councils to trade with the Commonwealth Bank, was declared to be invalid.” This informant was inclined to agree that the Government s sudden decision on the nationalisation of the banks was something in the nature of retaliation against the High Court’s ruling. Controlled in London It was also emphasised that one of the difficulties in trying to assess the likelihood of the scheme being carried out is the fact that so many of the Australian banks have their head offices in London, and a large proportion of shareholders are domiciled there. The banks are also controlled by British directorates. The nationalisation of the banKs means that there will be only one private bank doing business in the Dominion —the National Bank of Nc\v Zealand, the head office of which is also in London. Four of the Australian banks have branches in Dunedin and other centres in Otago, these being the Bank of New South Wales, the Bank of Australasia, the Commercial Bank of Australia, Ltd., and the Union Bank of Australia, Ltd. The Commonwealth Bank, which acts as the central bank, has no branches in New Zealand. Possible Closing There is naturally considerable speculation as to whether the Government will eventually close up the banks and replace them with branches of the Commonwealth Bank. II tms is done it will mean that throughout Australia and New Zealand a laige number of buildings in the most central of sites will become vacant. On the other hand, there is a feeling that# for some time, at least, there will be no such drastic change as this. • “ I think the Government will realise.” the informant said, “ that the various trading banks have built up an immense amount of goodwill. Some of them were amongst the very first institutions in the Dominion and they have played an important part m business development. The Government s advisers must realise the immense value of the goodwill and the traditions built up over the years by these institutions, and one could hardly conceive of them being wiped out altogether.”