The Press SATURDAY, MARCH 2, 1935. Banks and the Public

Press, Volume LXXI, Issue 21412, 2 March 1935, Page 12

The Press SATURDAY, MARCH 2, 1935. Banks and the Public

In a speech reported in " The Press " yesterday Mr A. V. Winchester, the retiring manager of the Bank of Australasia in Christchurch, protested vigorously against indiscriminate public criticism of bankers and the banking system. Indeed, he went so far as to suggest that newspapers had a duty to suppress this criticism in the interests of social stability. It is very easy to understand and sympathise with Mr Winchester's point of view. For a man who has spent the greater part of his working life grappling with the practical problems of banking, who knows the amount of expert knowledge and judgment required of a good banker, and who is conscious that in the last few years particularly New Zealanders have reason to be grateful to their bankers, it must be galling to hear so much uninformed and ungenerous criticism. Further than that, it must shake his faith in human nature to find so many of his fellow citizens firmly convinced that some fantastic method of issuing credit is a cure for all economic ills. Nevertheless, Mr Winchester's suggestion that the newspapers should undertake the defence of the banks by suppressing hostile criticism cannot be taken very seriously. Apart from other and far more important considerations, it does .not seem good tactics to suppress the type of criticism to which Mr Winchester objects. When Major Douglas came to New Zealand the newspapers and Parliament's monetary committee gave him every opportunity to state his views. The consequences for the social .credit movement in New Zealand were disastrous. With every opportunity to explain and justify his views and to give them a practical application, Major Douglas took refuge in cloudy abstractions. In the historic words of Calvin Coolidge, he " did not choose "to run." When ultimately social credit goes the way of technocracy, yo-yo, and the New Zealand Legion it will be mainly because the newspapers gave it a fair chance to justify itself. The banks have little need to worry about these " sub- " versive theories " of currency and credit. What they should worry about is the increasing agitation in Australia and New Zealand for direct political control of the banking system. It is not only a LabourSocialist agitation. A remarkable feature of the Parliamentary debates on the Reserve Bank Bill and on all recent bills affecting the banking system has been the bias of a large section of the Government's supporters towards political control of that system. The tendency is also noticeable in the debates on the Mortgage Corporation Bill. The banks cannot counter this agitation by a dignified silence; and it is no use Mr Winchester saying loftily that they have "neither the time "nor the inclination" to answer criticism. The truth is that the banks cannot, whether they like it or not, keep out of public discussion. In the last few years it has come to be realised that monetary and credit policy is a matter which concerns, not merely the bankers, but the Government and the community. To the extent, therefore, that the banks control or influence monetary policy their affairs concern the whole community. Conversely, the views of the banks on public issues affecting them should be carefully and competently stated. The speeches of bank chairmen, the evidence tendered on behalf of the banks in the recent monetary enquiry, and the statements issued on behalf of the Bank of Ne v Zealand at the time of the central bank controversy all suggest that New Zealand bankers and bank directors have not yet realised the importance of being able to justify their actions to the community. When the chairman of an important bank makes crude mistakes of fact and logic in his annual address to shareholders, public confidence in the banks is not strengthened. This is a sceptical age; and bankers need not expect that their wisdom and good intentions will always be taken for granted.