LABOUR’S PLATFORM

Wanganui Chronicle, Volume 79, Issue 266, 13 November 1935, Page 16

LABOUR’S PLATFORM

POLICY SPEECH DELIVERED MR. COTTERILL AT ABAMOHO LABOUR IN GREAT BRITAIN A general outline of the Labour Party’s policy was given by Air. J. B. Cotterill, Labour candidate for the Wanganui electorate, in the Duchess Theatre, Aramoho, on Alonday night. Air. Cotterill was accorded an attentive hearing and at the conclusion of his adrress was the recipient of a unanimous vote of thanks and confidence. Air. J. Kobertson was in the chair. “The Government candidate has been stating that the British Laboin Government was responsible for the financial crisis in 1931. This statement has been widely circulated by the anti-Labour propagandists, and will be used to serve many another turn in this campaign. The truth is that the crisis was caused by the speculative policies of the British banks,” said Mr. Cotterill. “The crisis had its roots in the action of the London merchants’ banks and the financial houses in lending to Germany money deposited with them by European depositors. These depositors consisted in the main of people belonging to the French, Dutch, Swiss and Scandinavian nations. In the early party of 1931 the net liability of the London banks to these depositors was £254,000,000. On these deposits the bank paid interest at the rate of 3to 4 per cent. Although investment in post-war Germany was an extremely risky speculation, the banks lent this money to that country at from 5 to 8 per cent. Between 1925 and 1931 the British banking system was on the gold basis. Thifs bank payments were made in gold if it was demanded. The total gold reserve in London on Alarch 31, 1931, was £160,000,000, this being held by the Bank of England. But the whole of this £160,000,000 could not be available to meet mass withdrawals of European deposits, because a large sum of it had to be held against the claims of British depositors and the British Treasury,” said the speaker. “So that if for any reason a ‘run’ on the. banks was started by the European depositors payment in gold would speedily become impossible. If payment were to stop the banks would have to close their doors, unless they could get accommodation from other sources, and a first-class banking crash would occur. Actually a ‘run’ of a frantic description took place. The ‘run’ was the inevitable effect of a series of events which just prior to, and at the beginning of the year 1931, caused serious apprehensions as to the stability of the British financial system.

“Some of these events reveal without exception the ruinous wastefulness of private enterprise financial operations. There was the Hatry frauds which involved investors in a loss of £19,000,000. In the Wildcat company promotion in 1928 £117,000,000 was subscribed for shares in 248 companies. In 1931 70 of these companies had been wound up, and the capital of 36 others has no ascertainable value. The loss on those companies was£2o.ooo,ooo The loss on the whole 284 cjmpinics by Alay 1, 1931, was £66,000,090. The Royal Mail Steam Packet debacle, in which millions were lost, and Lord Kyisant, chairman of directors, was imprisoned for issuing a misleading prospectus. “As was only natural, events such as these and others like them, reared nervousness in the investing world. So far as the European depositors were concerned this nervousness was changed to alarm by an occurance of the most threatening complexion. Germany declared a moratorium i-i the matter of certain debt obligation’!. She defaulted in the interest payment of £559,090,909 of loans in which Great Britain and America were participants. The first question which flew to the minds of the European depositors was: If Germany is not paying interest to the British banks, how will the British banks pay interest to us? “That settled it. The French depositors began to draw on their balances at a rapid rate. In one week they took out £20,000,000 in gold. This frightened the Dutch, Swiss and Scandinavian holders, who rushed to make heavy withdrawals, and. a desparate ‘run’ was on. It-must be remembered that not one ot these banks are in a position to meet depositors’ demands for gold. The English banks had taken speculative chances, against all. the rules of sound banking, if there is such a thing as sound banking under the existing order. “The bankers appealed for aid to the Bank of England. The bank represented to the Government, the second Labour Government, that as the liquidation of any one of the trading banks would have a calamitous effect on British, credit, an authority to obtain £59,099,009 credit from the French and American banks to stein the rush should be given. The authority was given. The £599,990,099 was raised but in a short space of time it had all been paid out to the foreign depositors. The Bank of England then sought authority to raise £89,909,000 from the same quarters, and it was this point that the proposal was made which ultimately divided the Labour Government. It was urged that proof of British financial solvency would have to be forthcoming or the French and American bankers might refuse to lend money and suggestions were made with regard to financial policy in the Budget. “The National Government then took charge. The dole to the unemployed was cut as were also the wages of the Civil Servants. The £80,990,909 for the bankers was immediately forthcoming. The banks were saved from their own speculative actions. The unemployed were sacrificed. “At the general elections a few weeks later, all the newspapers affirmed that Labour had caused the crisis. The people fell for it and the Labour Party was defeated. The election was fought on the gold standard, and yet within a month of the election the National Government, which was elected to defend the gold standard, abandoned it. The newspapers which had. prophesied disaster if this were done, hailed it with delight*,” the speaker added. Air. Cotterill also dealt with guaranteed prices, guaranteed wages, unemployment, education, national superannuation, health service, exchange and monetary reform on the lines of previous addresses.