Bankers Decry Mr Walsh’s Plans For Nationalisation

Press, Volume C, Issue 29504, 4 May 1961, Page 22

Bankers Decry Mr Walsh’s Plans For Nationalisation

(IV.Z. Press Association)

WELLINGTON, May 3. It was disappointing that the president of the Federation of Labour (Mr F. P. Walsh) should still consider nationalisation the panacea for all economic ills, in spite of the fact that most democratic countries were now convinced that nationalisation was generally undesirable and useless, said Mr J. W. Rowe, research director of the New Zealand Bankers’ Association, in a statement today. "Mr Walsh’s plan for a Reserve Bank freed from political control, plus a State-operated trading bank conducting all the nation’s banking business, both under the control of boards of directors representing only groups desirous of obtaining bank credit, is an incredibly dangerous one.

“It would be hard to imagine a scheme more calculated to result in an explosive creation of credit. “No Government can, or should, abandon its ultimate responsibility for economic policy in such a reckless manner,” the statement continued.

“Furthermore, no Government should be a party to the establishment of such a powerful monopoly, “Since New Zealand has no written Constitution and any Act of Parliament can therefore be subsequently amended without difficulty. Mr Walsh’s plan would simply pave the way for a Government with different views to bring the whole banking system directly under political control. “Mr Walsh’s ludicrous statements about bank profits suggest that he is unaware that the banks employ any staff at . all. let alone that staff salaries, superannuation, etc., account for well over 50 per cent, of gross income.

"Most 'of the remaining gross income goes in paying interest to depositors and the Reserve Bank, in meeting maintenance charges on buildings and equipment, in replacing obsolete plant, in payment of rates, and numerous other incidental expenses—the least of which are ink, pen-nibs, and paper.

“The Government then takes about two-thirds of the residual net income by way of taxation and Bank of New Zealand dividends, leaving a very small sum for private shareholders. “Proof of this is given by the fact that Australian banks for many years have

had the lowest profit record of any group of companies and that New Zealand banks show a net profit on shareholders' funds of less than 5 per cent. “So far as profits are concerned, the banks might as well close down and invest their capital in Government stock. “This is surely proof that the banks do not pursue profits to the detriment of their responsibilities to depositors. “Mr Walsh ignores the fact that the trading banks operating in New Zealand are already subject to very

close control by the Reserve Bank. "His suggestions would not result in any better control. but only in denying the public any choice in their banking affairs. “The present system preserves a most valuable element of personal choice—without which democracy cannot survive.

“In short, Mr Walsh is simply advocating socialism camouflaged to some extent by inaccurate and misleading comments on bank lending and profits.” the statement concludes.