The Guardian And Evening Star, with which is incorporated the West Coast Times. SATURDAY, APRIL 19, 1930. THE NEW BANKING ACT.

Hokitika Guardian, 19 April 1930, Page 4

The Guardian And Evening Star, with which is incorporated the West Coast Times. SATURDAY, APRIL 19, 1930. THE NEW BANKING ACT.

Among the many financial and administrative proposals put forward by the unofficial British Minister of Industry to lessen unemployment, a foremost place may be claimed for his scheme of a great financial trust devised and controlled by the Bank of England for the reorganisation and stimulation of industry. Generally speaking, members of the Labour party are only too apt to regard financiers and capitalists as Labour’s natural enemy. Yet her we have a leading member of a Labour Government appealing to the banks to provide, the financial aid indispensable for his programme of industrial and commercial expansion, and making the Bank of England his special ally. And now the cable news on Tuesday informed readeife tlirf. the company with the required capital was being formed. It has been well pointed out Unit the scheme outlined by Mr Thomas means much more than the bare “nutionalisation” of industries or the provision of adequate fin an e for individual employin'* or enterprises. An attempt is to lie made to reorganise British industry by means of “a far-reaching policy of planned production” which will involve not only trades but co-operation between tlie leading reisrosentalives of these trades and 'financial assistance graduated and directed, not simply for the benefit of any one firm or enterprise, but in the in-.tereMrs of natlional industry. This is indeed a development of a most comprehensive kind, comments the Auckland Star, entailing duties and responsibilities never yet assumed on such a scale by British financial instiI ill ions. All this, however, may sound a lifile lon vague and I lieorel ieal for

practical purposes. Let us consider , then the special machinery devised by the Bank of England to carry these proposals into effect. A Securities management Trust has been set up j by the Bank of England, with the I Bailie's Governor as chairman, and a j number of distinguished finaimial and i industrial experts and magnates as his colleagues. This organisation is to function as “the industrial and economic instrument of the Bank, 0 ' nut ins chief duty will be to submit all < schemes for the “rationalisation” or reconstruction of given industrial enterprises to a careful technical and I iinariJnl assistance. Already the Bank j Juts followed these lines in financing | the Lancashire Cotton Corporation, as well as Vickers, Armstrong, Ltd., and other steel concerns, and the results so far have been satisfactory enough to strengthen confidence in the scheme and to encourage high hopes for its successful operation when it has been more fully developed. No doubt, in submitting this scheme to the consideration of Parliament, Mr Thomas had a two-fold purpose in view. 11 successful, it would not only revolutionise national production but it would enable the ba'ijiks to repel successfully the attacks of those critics who hold that the worst defect of our ’ banking system is the refusal of the Bunk of England and its satellites to extend 'adequate credit facilities to 'the, captains of industry.” The British. tradition is to the effect that it is Dot the busness of the.hanks to finance industry. The “Times,” however has pointed out- recently chat the banks have made very large advances to the representatives .of industry, and commerce since the war, and the present depression cannot be due to any illtimed parsimony on , their part, The trutu is that “they have lent unwisely and. have ln.uerto refused to face squarely the consequences of their prodigality.” What is needed now is not the introduction into Britain of that system of “frenzied finance” which twenty years ago converted the German banks into sleeping partners in countless trusts and combines, and brought Germany to the verge of finari:ia 1 ruin long before . 1914. But 'the systematic modernisation and “rationalisation” of British industry on sound technical lines, accompanied by generous financial aid, would make a vast difference to. Britain’s economic prospects, and Air Thomas can at least

claim that his scheme, endorsed as it is by “the Bank,” gi-ves 'better promise than any other project of the kind yet submitted to tne consideration of Parliament and the people.