Orders of the Day — Finance Corporations

Part of the debate – in the House of Commons at 12:00 am on 2 March 1945.

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Photo of Mr Herbert Williams Mr Herbert Williams , Croydon South 12:00, 2 March 1945

I think that very few decisions of that kind ought to be made. In other words, I am all for freedom. I am glad that we had from my right hon. Friend a new side of his character. I hope the cartoonists will represent him producing raspberry jam. One good thing about his speech was that, in the presence of the Chairman of the Labour Party, he has cast the cloak of respectability over the capitalist system. That was really very satisfactory, but when he said that the bankers took all the plums, and left the dough to others, I do not know in what sense he was using the word "dough," whether in the sense of the four-ate bar or otherwise. At any rate, we have made some progress in the direction he indicated. He drew attention to a very important matter when he pointed out what new capital really is. Our currency and banking system effectively avoids the need for barter, because barter is the most inefficient way of transferring goods from one person to another.

My right hon. Friend drew attention to the fact that new capital is not something created by the banker, and that all the banker can create is credit, which diminishes the value of the existing capital. It is, rather, a measure of certain resources. What resources? That stock of food, clothing and shelter which has to be used to maintain those people who are producing, not consumable goods, but capital goods. That is what new saving means, and the amount of saving depends on the extent to which the community are willing to cut their standard of living so far as consumable goods are concerned in order that a number of people may be engaged in producing capital goods. There is a limit to that. Therefore, there is a limit at any given moment to the amount of new capital. It depends in part upon the decision of every member of the community as to the extent to which he will abstain from the consumption of consumable goods. I agree that unemployment affects it. If we are not skilful in our organisation, and a lot of people are idle, we reduce our production of goods. At any rate, whatever the factors, there is a limit at any given moment.

Therefore, these banking institutions which the Chancellor has brought into being, or which, at any rate, have been brought into being, because of something he has done—[Interruption.] It is no good the Chancellor looking like that. The control of the Treasury over the Bank of is far too great. What is the use of having institutions with experience and then having further institutions to tell them what they have got to do? Is all wisdom centred in the Treasury or in the Bank of England? Of course it is not, but the traffic is running all too much one way as if it were. What happened? The Chancellor or some of his minions sent for the Governor of the Bank of England. The Governor sent for the Big Five and for the insurance companies. They were told of this new plan, and they all with great timidity agreed. The insurance companies were told what they had to put into these new Corporations. I happen to be a director of a little insurance company, and I was told that our contribution would be so much. The rest of us round the board expressed a little surprise, but the managing director said it had all been fixed up by the insurance companies' association. Our trade union, in fact, had arranged it all. That is how this thing has been worked. It is a. case of complete dictatorship by the Treasury, and the banks and insurance companies never dared say a word. The biggest lot of political rabbits in this country are the chairmen of the big banks. They dare not stand up to the Treasury, and it is no good the Chancellor of the Exchequer, with his innocent face, pretending otherwise.