Isherwood to Gillard: Rebuild the nation with a national bank

Julia Gillard should stop bowing to the City of London’s monetarist diktats to balance the budget, but instead invoke the early Labor Party’s policy of a national bank to finance Australia’s post-flood reconstruction, said Citizens Electoral Council leader Craig Isherwood today.

“You don’t put monetary budgets ahead of human lives!” he exclaimed.

“Australia faces a mammoth reconstruction task, far greater than anyone has officially acknowledged, costing probably into the hundreds of billions of dollars, and the only way this can be actually achieved is through long-term credit issued by a government-owned national bank, a ‘people’s bank’ like the old Commonwealth Bank.”

He explained, “A national bank would be owned and controlled by the government, and would issue credit to the government on 30-plus year terms and at much lower interest rates than ‘the market’, to finance the government’s responsibility to provide basic economic infrastructure.

“There is virtually no limit to how much a national bank can finance this way; however, if Gillard and her government don’t do this, but instead stick with their public statements of deep budget cuts and tax hikes, it raises the question: what are they planning to not rebuild? How much of Queensland’s and Victoria’s transport and rural infrastructure needs are they planning to ignore, just so they don’t upset the City of London?” he asked.

Mr Isherwood quoted 1930s NSW Labor Premier Jack Lang’s account, from his book The Great Bust, of how the Commonwealth Bank terrified the City of London’s private financial monopoly by successfully financing Australia’s wartime needs in WWI, just after its establishment by the Labor Party in 1911:

“The City of London for more than two hundred years dominated the financial affairs of the world. It had mastered the technique of the management of money. London was the exchange hub of the world. … The Victorian era had been one of great commercial expansion. With that rare genius for political invention, Gladstone, Disraeli and other British statesmen sought a substitute for the old system of Crown colonies. They found it in the British Empire. The formula was to hand to the colonies the right to govern themselves, providing they did not break the financial nexus with the City of London.”

“But”, Lang wrote, “during the First World War the centre of gravity changed slightly. … In Australia the war had been financed by the then newly established Commonwealth Bank. It had found all the money to keep the armies abroad, and also to finance the producers at home. It had financed the Commonwealth Shipping Line deal for Hughes. Denison Miller had gone to London after the war had finished and had thrown a great fright into the banking world by calmly telling a big bankers’ dinner that the wealth of Australia represented six times the amount of money that had been borrowed, and that the Bank could meet every demand because it had the entire capital of the country behind it. The Bank had found £350 millions for war purposes.

“A deputation of unemployed waited on him after he arrived back from London at the head office of the Commonwealth Bank in Martin Place, Sydney. He was asked whether his bank would be prepared to raise another £350 million for productive purposes. He replied that not only was his bank able to do it, but would be happy to do it.

“Such statements as these caused a near panic in the City of London. If the Dominions were going to become independent of the City of London, then the entire financial structure would collapse. The urgent problem was to find ways and means of re-establishing the financial supremacy that had been lost during the war.” [emphasis added]

Mr Isherwood concluded, “Since the Hawke and Keating Fabian ‘reforms’, Labor has betrayed its forebears’ fight against the City of London, and handed Australia over to its monetarist dictatorship, by imposing its demands for financial deregulation, so-called ‘competition policy’, free trade tariff cuts, and brutal budget austerity.

“If Gillard continues those policies in the face of this national crisis, she will destroy Australia, so I call on my fellow Australians to stand with me and demand we go back to policies that work for the people, and rebuild the country with a national bank.”