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TAKE OVER BANKS ON "IALK-I4
Plan Took Cabinet By
Surprise
GCANBERRA, Sunday.--The Federal Government's
bank nationalisation scheme, it was authoritatively
stated to-day, proposed the complete taking over of all
except State private banks in the Commonwealth on a
''walk-in, walk-out" basis.
Mr. Chifley announced after a Federal Cabinet meeting yes
terday that he and the Attorney-General (Dr. Evatt) had been
authorised to prepare submissions to the Federal Parliamentary
Labour Party on the nationalisa tion of banking.
When the Ministers assembled only three of them
knew nationalisation would be raised or, in fact, that
it had even been seriously considered.
The proposal was not circulated to Ministers as
ordinary Cabinet agenda, but held a close secret by
Mr. Chifley, Dr. Evatt and the Minister for Health
(Senator McKenna) and a handful of trusted Gov
ernment officials.
If the Federal Government
succeeds with its plana to
nationalise banking, it is ex
pected to proceed to take over
private insurance. This was
indicated to-day, when it was
learned that officials were
already examining the impli
cations of such a move.
Mr. Chifley said after tile Cabinet
meeting that the scheme would cover
all but State banks.
Nationalisation of the banks was
first seriously considered at a secret
three-hour conference in the Prime
Miimster's suite at Parliament House
last Thursday. Only the three Min
isters, the Governor of the Common
wealth Bank (Mr. Armitage), the
Secretary of the bank (MIr. Richard
son), and Economic Adviser to the
hank (Professor Melville WVheeler)
attended.
Here, after discussing the world
economic position, the dollar short
age, and the decision of the High
Court invalidating Section 48 of the
Banking Act, Mr. Chiflev asked for
opinions on nationalisation of bank
ing.
When the conference dispersed at
7 pI.m.. it had been decided that the
su:ggestion should be put before Caib.
inet at the wck-end.
Durihg discuseinns at this confer
ence, it is believed, one of ,the
aspects of nationalised banking dis
cussed was its potential value to the
Government in tlhe event of the dis
turbing economic trends now appar
ent overseas eventually hitting hard
at Australia.
In sonime quarters here it is be
lieved that if the Government had
control of all banking it would be
much better equipped to cushion the
effects of any economic recession.
Nationalisatlon of banking will
mean completion by the Federal
Government of four points of a "plan
of action" set down in the party
platform for the progressive reform
of hanking.
These four points are
I. Operations of the Commnonwealth
Bank to be removed from and
made entirely independent of pri
vate banking interests and free
from Rectional influences or con
straint.
2. Abolition of the Commonwealth
Bank Board and re-establishment
of the original method of control
as set up at the time the Common
monwenalth Bank was founded.
3. Expansion of the bank's business
as a trading bank, with branchlo
in all suitable centres in vigorous
competition with private banking
esthablishmnents.
4. A statutory provision that bank
ing of all public bodies be reserv
ed for the Commonwealth Bank.
·~,,t ~~g~, ~,·~108~.
The cost of compensating comn
panies for the loss of their assets is
reliably estimated between £90 mil
lion and £100 million.
Mr. Chifley said after the Cabinhlet
imeeting that proper protection would
be provided for shareholders, deposi
tors, borrowers and staffs of private
banks. . .
If the amount. of .conmpensation
cannot be reached by ?greement the
Goveirnmnent will ask that it be fixed
by one of'the' superior couirts.
Not only nine major trading banks'
but all the smaller banking cmipatni!sb
w'ill be taken over urnder the Com
mnonwealthl plan.
No consideration has yet bees~
given as to whether provision could
be included in the legislation to pre
vent .1 later Government opposed to
nationalisation from handing the
banks back to private enterprise.
The Ministers have little fear that
this step will be taken. They say
tlhat once banking is established on
a nationalised basis and the enormous
machinery for its control is set in
motion there will he little likelihood
of any subsequent government tack
ling the tremendous problems of de
nationalisation.
Special Set-up
Cabinet, it is understood, was told
that the Government proposed that
all private banks when taken over
under the nationalisation scheme
should be conducted under the con
trol of the Commonwealth Bank.
It is believed that suggestions have
been made, however, that a special
banking set-up, much more far-reach
ing than the present Commonwealth
Bank set-up, might be established
within the Commonwealth adminis
trative machinery to handle banking.
Preparation of the legislation will
require a great deal of investigation
into banking assets and other aspects
on which the Government must have
full information when dealing with
compensation.
The proposal is believed to have
been unanimously endorsed by all
Ministers at the Cabinet meeting.
"Has the Power"
Cabinet decided upon nationalisa
tion after hearing a report from Dr.
Evatt on the legal aspects.
Dr. Evatt, it is Understood, told
Cabinet that private banks could be
nationalised by the Commonwealth
Parliament under power of Section 51
of the Commonwealth Constitution.
This sets out the powers of Parlia
ment. It, says--"Parliament shall
have power to make laws 'for the
peace, order and good government
of the Commonwealth with respect
to: Sub-section XII., banking other
than State banking, also State bank
ing extending beyond the limits of
the State concerned, incorporation of
banks and the issue of paper money."
The proposal to nationalise bank
ing was a direct result of the High
Court's declaring invalid Section 48
of the Banking Act, which forbade
private trading banks to do business
with local or semi-governmentie
bodies
Since nationalisation of banking
has been a point of the Labour plat
form for some time. there is little
doubt that draft legislation will be
endorsed by Caucus. Thie draft bill
may be ready f(or consideration Iby
Caucus early in the next Parliament
ary session, to begin September'l7.
If so, the bill will probably be in
troduced to Parliament and an at
tempt made to secure its passage
through the House of Representatives
and. the Senate before Parliament
rises in, November.
* Insurance
SA senior.Minister said to-day that
there was no doubt that the Com
monwealth would. have adequate
power under the Constitution to take
over insurance.
Section 51, sub-sectiou. 14. of the
Constitution, cave Parliament power
to make laws for the neace, order and
good government of the Oommon
wealth for-Insurance other than
State insurance. also State insurance
extending beyond the limits of the
Stnte concerned.
Noationalisntion of banking credit
and insurance, including sick. acci
dent, life and unemployment insur
nuce. was part of the Australian La
bour, Party's Federal platform for
socialisation of industry. he said.
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