STATE CONTROL OF BANKING.

Wanganui Chronicle, Volume 74, Issue 114, 16 May 1931, Page 1 (Supplement)

STATE CONTROL OF BANKING.

The declared purpose of Mr Theodore’s policy is Io establish political control of the monetary system of» Australia. The instruments of his plan already revealed arc the Central Reserve Bank Bill, which would set up a new State bank conducted by nominees of the Govcrmennt. the new Commonwealth Bank Bill, which abolishes the gold reserve and makes Parliamentary action the only regulator of the currency; the Fiduciary Notes Bill, which would create a further measure of inflation; and the Bank Interest Bill, by which control of interest rates would be vested in the Government. Air Theodore is not the first to declare that “Parliament will protect the interests of the country and will act with due wisdom and caution in matters of this kind.” The theory of State banking has been tested in Russia with the result that its failure has been formally admitted. A decree issued on March 20 by the Council of People ’s Commis ears of the U.S.S.R. for the reform of the system of giving credit to economic enterprises by the State Bank, explains that the finances h»d been disordered by the methods in practice during the last few years. Under the influence of definite credit plans mapped out in advance by the State Planning Commission, the State Bank, it says, had constantly violated the ordinary rules of bank credit, had ceased to make certain that in individual transactions it was desirable to give credit. had accorded credit as a matter of routine, and losses subseauently incurred had been covered b.v the State Bank’s resources. The decree required the State Bank to return to the methods of capitalist bankers and even authorises the compulsory sale by the State Bank of effects belonging to its clients to recover its losses, even though the clients may be State organisations.