SHARES IN BANK OF N.Z.

Southland Times, Issue 25652, 20 April 1945, Page 8

SHARES IN BANK OF N.Z.

GOVERNMENT POLICY EXAMINED

As the Government will not give reasons for nationalization of the Bank of New Zealand, we will (says a statement by the Associated Chambers of Commerce of New Zealand). They are:—

(1) To gain a foothold in the trading bank system for the ultimate purpose of completely owning and/or controlling the whole of that system, i (2) To secure, as a consequential outcome, ownership and control of all industry and commerce. (3) To avoid the risk of an unfavourable outcome to a reference to the people for a mandate. In explanation of (1) above, the Ministei - of Finance has more than once said the Bank of New Zealand is better run than the Government could run it. Therefore, as State ownership of the Bank of New Zealand could give the people no more benefits or service from the institution than they already have, the taking over of the bank is for another objective altogether. The Australian Federal Labour Government is pursuing a similar objective, which is revealed in the Commonwealth Bank Bill, now being promoted and fought. This bill aims to produce unrestricted party political control of the Commonwealth Bank, and of the advances policy of the trading banks. This will be achieved by an extension of the function of the Commonwealth Bank, also by the requirement that the trading banks shall permanently deposit with the Commonwealth Bank the whole excess of their funds over the '1939 level, together with an extension of the functions of the Commonwealth Bank.

The leader of the Opposition in the Federal House of Parliament (Mr R. G. Menzies) has pointed out that, with growing community assets and an increasing volume of business, the assets of trading banks might reasonably be expected to increase also, and this would necessarily mean the diversion of an increasing volume of banking business to the Commonwealth Bank in its trading capacity. The city editor of The Times, London, in commenting on the Australian proposal, said: “Clearly this could easily mean a State monopoly of financing the whole future expansion of Australian commerce—a State monopoly, itself largely financed by the public’s deposits with the trading banks. ‘Competition’ means little if one of the competitors can appropriate the other competitors’ boots, and act as referee as well.” Ownership of one bank can give Government a complete grip of every other bank as well —it can run them out of business without the need to buy them out.

Regarding reason (2) above, political control of the banks involves political control of the money which is in the banks —the people’s money. Let a Government get absolute control of the banks, and it can also control the people’s indivi&ual borrowing, and therefore their individual spending. How individuals in the community are treated in this respect may then depend on whether their politics are of an acceptable colour. Secondly, a Government could prevent private enterprise in industry, commerce, trade and the professions from borrowing for any purpose which did not appeal politically to the party in power. Then again, there is the possibility, as expressed by business people in Sydney, that if the publicly-owned bank took up shares in industrial undertakings which needed financial support, it would control of them, by making the granting of that accommodation dependent on the granting of a certain share interest. There are instances where both the Commonwealth and New Zealand Governments have acquired a controlling interest in the shares of a company; cases in point are Amalgamated Wireless (Australasia) Ltd. and the Clyde Engineering Co. Ltd. in Australia, and New Zealand Woolpacks and Textiles Ltd. in this country.

With regard to reason (3) above, nationalization of banking is sought in both Australia and New Zealand in pursuance of a party policy df socialization; and in avoidance of an appeal, to the people on the issue. At the 1934 Australian Federal general election, nationalization of banking was made an issue, the then leader of the Federal Labour Party (Mr Scullin) promising “vigorous competition with the private banks to secure for the people the profits and privileges of banking which are now practically monopolized by private banking companies.” The result of the election was a thorough defeat for such proposals. When the people of New Zealand put the present Government into office’ they had the pre-election pledge of the Rt. Hon. M. J. Savage that “the money system in New Zealand would, under Labour rule, be operated as it always had been operated.” Both Governments are (with an extraordinary degree of apparent collusion) now acting in defiance of their mandates.