CARDIFF CORPORATION BILL (By Order).

Part of Private Business. – in the House of Commons at on 30 April 1930.

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Photo of Mr Cyril Culverwell Mr Cyril Culverwell , Bristol West

I would like to read these few further lines from the Bradbury Report: The Governor of the Bank of England thought that the establishment of municipal banks would cause very serious embarrassment to Government finance, and that no worse time than the present or during the next 10 years could be chosen for recommending their extension. Is the position any better to-day; is the need for converting debt any less urgent than it was three years ago; is unemployment better; is trade better; are financial conditions better, that we can go back on this considered opinion of the Governor of the Bank of England, expressed less than three years ago? The Treasury said that they could only view with the greatest apprehension any project which tended to reduce the £8,000,000 or £10,000,000 of new capital resources which comes in every year from the Post Office and Trustee Savings Banks. Have conditions altered since the Treasury expressed that view? I venture to suggest that the conditions are even worse than they were in 1927.

I now want to deal with the Treasury opposition, or lack of opposition, to this proposal. In 1926, the Bristol Corporation promoted a Bill which included powers for the establishment of municipal banks. I will not be tempted into a discussion of their reasons for asking for those powers, although there is a very good explanation. What I am concerned with is the response of the Treasury to this proposal. The Treasury addressed a letter to the Bristol Corporation, on the 18th February, 1926, in these terms: I am directed by the Lords Commissioners of His Majesty's Treasury to inform you that they must request the omission of Part XVI of this Bill, which contains proposals for the establishment by the Corporation of a Municipal Bank.…Similar provisions were omitted from the Swansea Corporation Bills of 1920 and 1922, and were disallowed by Parliament in the Wigan Corporation Bill of 1921 and the Stoke-on-Trent Corporation Bill of 1923. My Lords would conceive that it was the intention of Parliament, while recognising the existing Birmingham Bank, not to encourage further Municipal Savings Banks. The primary object of the Bank would appear to be to take deposits withdrawable on demand and apply them to housing and other fixed capital expenditure. There are very obvious dangers in borrowing short and lending long in this fashion, and these dangers are much more considerable when the risk is concentrated in one place.…My Lords would therefore find it necessary to oppose the Bill if the Clauses in question are proceeded with. What has altered the Treasury view in this very short space of time? [Interruption.] Is it because there has been a change of Government? Is it that political pressure has been put upon the Treasury? If so, that is a very serious state of affairs. Less than three years ago the Treasury expressed the decided view that an extension of facilities for municipal banking would be inimical to the public interest. To-day, with a Socialist Government in power, are we to assume that political pressure has been brought to bear on the Treasury to withhold their opposition? I am reminded rather of the charge which the Chancellor of the Exchequer brought against my right hon. Friend the Member for Epping (Mr. Churchill), whom he accused of manipulating the Bank rate, of exercising influence upon the Bank of England to prevent a rise in the Bank rate. It is quite true that the right hon. Gentleman, as many Socialists do, completely contradicted himself only a few months later, when he told the Trades Union Congress that the Government had no influence whatsoever upon the Bank of England; but he did state, when it was convenient to him, that my right hon. Friend the Member for Epping had put pressure upon the Bank of England. I would ask the Financial Secretary whether that has taken place in this case—whether political pressure has been brought to bear on the Treasury officials—because what we fear in the case of municipal banks is that political pressure will be brought to bear upon those who run these banks. We are quite aware that the policy of hon. Members opposite is to socialise the banks, to nationalise the banks of this country, and one can quite understand that from their point of view the municipalisation of banking would be a step in the right direction. There is one further argument, and that is that already municipal Government is over-burdened with duties. Local councils are overburdened with the duties which this House thrusts upon them. I am a councillor of the City of Bristol, and I know perfectly well—