Banks May Challenge Right To Tie Up Credits

Chronicle (Levin), 13 August 1948, Page 5

Banks May Challenge Right To Tie Up Credits

Received Thursday, 7.20 p.m. CANBERRA, Aug. 12. Au oul-righl. challenge to the 194-1 Banking Act under which the Comnion wi-allh kas tied up nearly £300,000,000 M private hank deposits, is expected by ihe Government followiug the Higli 1 innl re.jectiou of the Bank NationalLatiun Act. E\ eu without nationalisation the Go\ eruinent has held trading banks i.uder severn control with the deelared «.l, jective of curbing inflation which lisight follow Ihe unrestricted issue of ' ii-dii. Tliese controls were notified to i.anks last year in a long list of instruc*i i-ius which covered every type of i*ti lit juK hih*!*

Ihe latest banking statistics show r r - : 1 1 £294,000,00(1 is lield in speeial ac-c-.uiiis deposited bv private banks wich G.- « 'oiiiiiionwealth Bank as required by the 19 11 Act. Mr. Chifley regards these . •■■(jiitii.s as the crux of tlie credit con- ! '1 giveu to ihe 'onimonwealth Bank. i ! e has expressed doubt wliether the ti i-di Court would upliohl the validity • i lei'j ions 18 to 22 which recpiire tra.ln.g banks to make speeial deposits. Jt belicved that the trading banks were ruifddering challenging. the validity of • i ■ e sections wlion the Government, !"uing this, decided on the bokt ■ ->iir>e of nationalisation. Witli nation-i.-ation now onlv a remote possibility, •>h er\ ers believe that ihe banks are al-_ ...i-t certain to proeeed with their in-N-n!ion to challenge the 1941 Act.