Editorial: State Control of the Banks
It is the fate of the Labour reformists always to have their reform demands stolen by the openly capitalist parties as soon as the work of popularisation has been carried sufficiently far to give the demands an election value. A particularly cruel theft has just been perpetrated at the expense of the I.L.P. by Lord Beaverbrook, who is a Conservative.
At the last election the workers showed emphatically that they did not like the Labour Party-I.L.P. programme. This chilling experience caused the I.L.P. to polish up its old reforms and look round for some new and more attractive ones. One of the old demands that appeared to contain promise of being a good vote-catcher was the nationalisation of the banks. But hardly had the I.L.P. published the Report of its “Finance Policy Committee,” recommending a scheme of state control for banking and credit, than Lord Beaverbrook snatched it up.
These are the two proposals for a state bank.
The I.L.P. :—
A central bank supervising the issue of credit and currency, international exchange operations, and government income and expenditure.
A unified banking system, with branches throughout the country, for the local financing of industry and commerce. (New Leader, March 25th.)
Lord Beaverbrook : —
Send the Bank of England about its business ! Let it continue to perform the functions of a joint-stock bank. Establish a Central Bank, owned by the nation, equipped with all the powers necessary to provide abundant credit and hedged about by ail the restrictions required to safeguard the permanence and stability of the structure.” (Sunday Express, April 17th, 1932.)
Lord Beaverbrook’s article was headed “Don’t Reduce Wages !” and in it he appealed to the workers to rally round the demand for nationalised banking as the way to prevent wage reductions.
The idea that the workers’ troubles can be solved and the contradictions of capitalism overcome by state control of the banks is shown by the experience of other countries to be false. The Labour Magazine (published by the Trades Union Congress and the Labour Party) published a survev of the world’s banking systems and demonstrated that in all but two countries either state ownership or a large measure of state-control is already applied to the central banking institutions.
The writer in the Labour Magazine (February, 1929) said : —
“Apart from the Bank of England there is only one other Central Bank of any importance, the constitution of which does not reflect in greater or less degree the principle of national control. That one case is the German Reichsbank, which is outside the control of the Government. . . .
America, the paragon of the individualists, adopted the Labour principle of national control when she reorganised the whole of her banking system in 1914. The Federal Reserve Board at Washington, the American equivalent of the Bank of England, consists of eight members. The Secretary of the Treasury, and the Comptroller of the Currency are members ex-officio. The other six members are appointed by the President of the U.S.A. with the approval of the Senate.”
Among the countries with a state bank or state controlled bank, the following were mentioned : Australia, Austria, Belgium, Bulgaria, Chile, Finland, France, Hungary, Italy, Japan, Norway, Sweden, Switzerland and the U.S.A.
May we ask the Labour Party, the I.L.P., and Lord Beaverbrook, in which of these countries the state control of banking has provided immunity from the world crisis and protected the workers against the usual evil effects of capitalism ?