The Timaru Herald TUESDAY, APRIL 8, 1930. TWO BIG ISSUES.

Timaru Herald, Volume CXXV, Issue 18538, 8 April 1930, Page 8

The Timaru Herald TUESDAY, APRIL 8, 1930. TWO BIG ISSUES.

although the Federal Government of Australia will be conronted with considerable opposiion when it embarks on the ampaign in support of the referndum on the proposals to amend he constitution, a more controersial, if less vital measure, vhich will engage the attention f the Federal Parliament, is the irojected. Bill to enlarge the cope and functions of the Gov-rnment-owned Commonwealth Sank, with the object of bringing t into direct and intense competiion with the private trading •anks. The objective of the jabour Party is to make the Commonwealth Bank the dominnt financial institution in Australia. This objective has ieen partially achieved since the eturn of the Labour Party to lower by the Bill giving the Commonwealth Bank the right to mobilise gold—that is to call up .nd requisition the gold reserve f the trading banks which eceive Commonwealth notes in eturn for their gold—and to irohibit the export of gold withmt the consent of the Commonvealth Bank board. The Labour ’arty aims to make the Commonwealth Bank not only a entral reserve bank like the federal Beserve Bank of the Jnited States, but,a huge trading orporation meeting the old estabislied private banks at better ban even terms. This latter ibjective will be sought by bringng the Commonwealth Savings lank branch under the direct :ontrol of the Commonwealth lank board, instead of permiting it to remain entirely severed rom the other functions of the >ank as at present; by opening >ranches of the Commonwealth 3ank in every important centre n Australia; by bringing the lote issue under the direct con;rol of the Commonwealth Bank; )y altering the constitution of the 3ank board to give the Governnent increased representation tnd organised Labour at least one ■epresentative, and by taking ■very step possible to increase the luthority and importance of the jank while correspondingly depressing the influence of the private banks. This is regarded py the rank and file of the Labour Party, as a step forward on the 'oad to what is termed “nationilisation of credit.” The Federal rreasurer (Mr Theodore) bitterly ppposed the amendment to the Commonwealth Bank Act introlueed by the Bruce-Page Governnent in 1927, which made the pavings bank business a completely separate branch of the Commonwealth Bank. He complained at the time that the aational credit was almost at the mercy of the private banks, and pf the power they exercised in fixing the bank rate, and in controlling loans and financial conditions generally. This Bill will

be fought at every stage by the Opposition, which will take the 3 stand that it represents political f interference with' banking, of a s type which has had disastrous ( consequences in other countries, j Even the Federal Reserve Bank ; of the United States is being i attacked by financial authorities, j because of its political aspect. In j the January issue of The Banker’s ■ Magazine, the editor asserts that ' the considered verdict of history 1 must be that the Federal Reserve Bank was responsible for the two ] periods of inflation and collapse j experienced in America in 1920 and 1929. He considers the linking up of banking with the Government through the Federal Reserve Board establishes a condition almost sure to be inflationary. Similar criticism will be directed against the banking policy of the Commonwealth Government. It would not be surprising if a deadlock resulting in the dissolution of both Houses, arose as a result of the 'opposition to this Bill. The Opposition will be powerless in the House of Representatives, but it has an overwhelming majority in the Senate. If the Bill is thrown out by the Senate, the Government can make an election issue of it, by bringing it forward during another session, not earlier than three months since its rejection. If the Senate again throws the Bill out, the Government must drop the Bill, or it may ask the Governor-General to dissolve both Houses. This was done in 1911 on a test issue and the Senate was victorious. If history repeated itself, the Labour regime would come to an abrupt end. The Government hopes to get the Referendum Bill carried in time for the vote of the people on the constitutional amendments to be taken in July before the departure of the Prime Minister for the Imperial Conference. But here again, the Senate commands the position. It can postpone or reject the Bill at will. Unless it is willing there can be no referendum in July at all. It is generally believed, however, that the people will be given the option of voting to vest solely in the Federal Parliament all power to amend the constitution, or to give the Parliament complete control over all industrial questions only. They may, of course, reject both the proposed amendments. There is little prospect of the Australian people consenting to such a revolutionary proposal as the first. It would mean tearing up the funda-

mental law of the nation, and of permitting a Parliamentary majority to destroy completely the basis of the bargain with the States which made Federation possible. It would mean what in Australia is called unification — the complete destruction of the States, and the concentration of all power in the Commonwealth Parliament, which could delegate back to the bodies set up to replace the existing State Parliaments, just as much power as the Commonwealth Parliament wished. There is a good prospect, however, that the people would consent to amend the constitution by giving the Commonwealth Parliament supreme control over all industrial matters, seeing that constitutional amendments having this object have been submitted by two previous nonLabour Governments, and but narrowly defeated. The need for such an amendment is now conceded by all political parties in the National Parliament.