APPROVAL OF CAUCUS

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

APPROVAL OF CAUCUS

LITTLE OPPOSITION EXPECTED LEGISLATION NEXT SESSION SYDNEY, Aug. 18. The Federal Government decision to nationalise Australia’s private banks has shocked the business world. The Labour Caucus will consider the proposal, the approval of which is regarded in Canberra as certain, and legislation will be introduced next session, which begins on September 17. The Government’s decision affects ninte private trading banks which at present control £719,500.000 in deposits and shareholders’ funds. Disclosed shareholders’ assets, the market value of bank shares, advances, and deposits of individual banks are as follows:

Royal Commission Recommendation In 1936 a Royal Commission on Banking recommended against the nationalisation of banking, with Mr Chifley as the sole dissentient. Those who signed the majority report were Mr Justice Napier, Mr Edward Nixon, Melbourne, accountant; Professr R. 'C. Mills, of Sydney; Mr Henry Pitt, Victorian Director of Finance; and Mr J. P. Abbott, vice-chairman of the Australian Wool Board. The Royal Commission said: “ The Bank of England' never offers the Commonwealth Bank advice, and there are no grounds for the suggestion made in the evidence, that the policy of the Commonwealth Bank is dictated by the Bank of England. There is no evidence to suggest that there is any organisation or association of trading banks for the purpose of eliminating competition with one another.” Fall in Profit Rate The profits of the banks declined steadily during the war years, and dividends were lower. In 1939 the trading banks earned profits of 4.2 per cent, on shareholders’ funds, and paid dividends equal to 3.8 per cent, of those funds. In 1944 the profit rate fell to 3.7 per cent., and the dividend rate to 3.4 per cent. The figures for 1946 show a small recovery to 4 and 3.7 ner cent, respectively. Two years ago' the Commonwealth Government passed two Acts which reduced the trading banks to mere agencies of the Commonwealth Bank. They perpetuated war-time banking regulations by limiting deposits with the trading banks to 1939 levels at the pleasure of the Commonwealth Bank and giving the Commonwealth Bank power to dictate the broad direction in which trading banks might make advances and to control interest rates and foreign exchange. A statement by the Bank of New South Wales says that the most obvious effect of the measure is to destroy an important indicator of economic activity. From 1817 to 1941 the trading banks functioned as free agents in free economy. They are owned by private investors, but the Royal Commission discovered that the average shareholding was £6Bl in Australia, £409 in New Zealand, and £4OB elsewhere. They maintain that they have, provided a service which the Commonwealth Bank cannot beat, because they are responsible to the shareholders for profit, not .to the Treasury for policy.

Bank of New South Wales: £15,421.396, £183,294.000. £16,133,250, £71,307.000, Comercial < Bank of Sydney: £9,350,638, £89,410,000. £9,136,816, £33,134.000, Bank of Australasia: £9.383.310. £10,192.500, £29.722,000, £61,655,000. National Bank of Australasia: £86.109,957, £83.450,000. £10,515,000, £35.806.000. Union Bank: £9,135,086, £8,800.000. £26.635,000, £54,200.000. E.S. and A. Bank: £5,208,871, £7,725.000, £28,975,000, £74,434,000. Commercu d Bank of Australia: £6,605.013, £63,108,000. £6.677,085. £27,674.000. Bank: Queensland National £2,687,305, £20,791,000. £2,800,000. £9.798.000, Bank of Adelaide: £2,333,797, £1,850,000, £6,454,000, £14,187,000.