POLICY OF CONTROL OF INVESTMENTS

Dominion, Volume 38, Issue 278, 23 August 1945, Page 7

POLICY OF CONTROL OF INVESTMENTS

Plans For British Government

MINISTER SPEAKS ON FUTURE OF BANK OF ENGLAND

(By Telegraph.—Press Assn.—Copyright.) ■ LONDON, August 21. The Government’s proposals for the Bank of England would have the effect of bringing the law in, line with the facts of the situation as they had developed, said the Chancellor of the Exchequer, Dr. Hugh Dalton, in the House of Commons. There had long been close and friendly relationships between the Bank and the Treasury officials which would, of course, continue. The private stockholders would disappear from the scene, carrying with them fair compensation. This would make it abundantly clear that Government ownership carried with it, in the ultimate resort, the power of direction and decision.

It must be made clear beyond a shadow of a doubt where the ultimate power lay. It must rest not with stockholders, though they seldom exercised it, but with a Government responsible to the House of Commons and through it to the people who had suffered grievously in the past from unwise decisions taken on the advice of persons associated with the Bank of England, the Minister said. ■ It was not infended that there should be constant Governmental interference with the day to day working of the bank, and there would continue to be diyly contact aud exchange of views between the bank’s officials ami Treasury officials, but on important issues tbe Government must have the last word. Dr. Dalton paid <i tribute to Lord Catto, whom he described us a great public servant, and a man of wide commercial experience. Lord Catto had expressed his willingness to continue as governor for a suitable period in order to inaugurate the new regime. Dr. Dalton said he thought, the changes in the bank’s legal position would in no way lessen its esteem at home or abroad. On' the contrary, the Government’s hope

anil belief was that the close integration of the Bank of England with the Government and the passing of the private stock-holder, who was either a menace or an absurdity; would increase ratherthan diminish its influence, Continuation of Policy. Referring to interest, he said the Government must borrow as cheaply as possible, and’it intended to continue the money policy which had been pursued for some time. He was already consulting the Treasury and Bank of England experts. Meanwhile, the stage was set for the next great savings drive. Increasing purchasing power would result in frustration unless there were increased supplies, and while supplies were necessarily short a large part of the national income should go into savings. . “I take the view that British credit is a national, not a party, matter, be said. “We must avoid the dangers of

inflation and also deflation, and if we. are going to avoid inflation we must rigorously maintain price control, which was. .one of the administrative successes ot the war.” Dr. Dalton announced the intention to introduce another Budget in the autumn. This was indispensable because of the tremendous changes of the last few months. "It is essential that we reconsider the whole field covered by the Budget, both in revenue and expenditure,” he said.

“I warn the public against harbouring extravagant expectations of tax relief. There are some very grave financial problems to be examined in the autumn and for years ahead the financial path is not going to be easy. “On the contrary, for some years it will be hard and stony, but I am sure wo will have confidence in the eventual outcome and willingness to face all awkward situations ns we pass along. I am sure the House will back the Government. in approaching these problems in a coldly realistic spirit backed by an idealistic purpose. "We must not expect to find Utopia round the corner, but there is no reason why we should not proceed as rapidly as possible." Outlining the plans for the control of home and overseas investments. Dr. Dalton said that now investments would have to go on being guided in peace, as in wqr by what, best served the nation. Overseas investments might be both controlled and encouraged, but till Britain balanced her foreign payments she would not be able to afford as much overseas investments as in earlier days. Tiie present control of capital issue would be on a permanent basis. At home, also, the Government intended to take power for the permanent control of the available funds, specially of the large sums that would be needed to carry through the re-equipment of industry and the rehousing programme. Dr. Dalton indicated that a body would be set up to control priority in these matters, and assured Mr. Churchill., who intervened, that in re-equipment industry would gel n fair hearing. '.Mr. Churchill was not satisfied, and speaking of the great importance of the mailer, got Dr. Dalton to agree to do his best to make a fuller statement of police if a question was put down. Dr. Dalton emphasized that Britain would still have to borrow as cheaply as she could. United States Attitude Mr. Oliver Lyttelton (Conservative, former Minister of Production) said he was sure I lie Government would light lhe evils of inllation to tiie best of its ability Tins was more than ever necessary when rim Government was proposing Jo fiddh with the constitution of tile Bank of England and when a slightly shocked public saw the Old Lady of Threadncedle Street, who had long been living in chaste spinsterhood, now being hurried to the altar and married out of hand by a Government with three weeks’ standing, though it admittedly had a large idi'i-toral dowry. Mr. Lyttelton criticized the Government for its omission from lhe King's Speech of lhe Government's attitude toward economic collaboration with other countries. parlii'iilal’ly the United States. 'l’he stand,-I”.' of life of every citizen of Britain ami nearly every citizen throughout lhe Empire and Commonwealth, he said, was bound to fall without, synipaihelic help and a large measure of financial aid from the United States. He called for a statement showing the food and raw materials that had been supplied without payment under lend-lense and the proportion they bore to the total consumpl ion.

“If you wish to obtain assistance from the United Slates you must lie careful about ilie nasty things you say about private enterprise that will affront American opinion," Mr Lyttelton said. “Professor Laski's remarks were treated seriously in the United States.” Mr. Lyttelton added that Labour policy concentrated too much on the domestic view. Britain, if she were to maintain tier standard of life, had Io rebuild her position ;ts a carrier, hanker and produce merchants' clearing-house. The present organization of the Department of Overseas Trade in relation to the Board of Trade was anomalous. There could not be export policy in one compartment; and a trade policy for the home market in another.