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Call for the re-establishment of a true national bank

The Australian group Citizens Electoral Council who promote the political program of Lyndon La Rouche is certainly a group with which candobetter has serious differences. They could fairly be described as extreme techonologically optimistic1 cornucupians. Examples of media releases which illustrate this include: Populate or Perish: Australia needs 50 million people plus! and "Lies, damned lies, and 'global warming' statistics" of 6 Jan 10.

Nevertheless, we aim to give credit where credit is due. If we can put aside the CEC's environmental myopia, it does have some ideas of merit. These include proposals for radical reform of our monetary system. Of Lyndon Larouche, Ellen Brown wrote in  "Web of Debt":

[Lyndon La Rouche proposes] to make cheap national credit available for putting the unemployed to work developing national infrastructure. La Rouche has launched an appeal for a new Bretton Woods Conference to reorganize the world's financial system, a plan he says is endorsed by many international leaders. It would call for:

  1. A new system of fixed exchange rates,
  2. A treaty between governments to ban speculation in deriviatives,
  3. The cancellation or reorganisation of international debt, and
  4. The issuance of "credit" by national governments in sufficient quantites to bring their economies up to full employment, to be used for technical innovation and to develop critical infrastructure.

La Rouche's proposed system of exchange rates would be based on an international unit of currency pegged against the price of an agreed basket of hard commodities. With such a system, he says, it would be the currencies, not the commodities, [which are] given implicitly adjusted vaues, as based upon the basket of commodities used to define the unit.2

In accord with La Rouche's fourth point, the CEC's media release of 14 January calls for the re-establishment of a national bank as the (now privatised) Commonwealth Bank was prior to 1960, when Prime Minister Menzies took away its central banking powers that are now vested in the Reserve Bank which uses these powers secretively beyond any scrutiny by Parliament or the Australian public.

Candobetter would certainly want to join in the CEC's "fight to re-establish a national bank," referred to in the media release below, but we could not recommend a vote for CEC candidates should they choose to stand in the Federal elections, because of their extreme anti-environmental stance.

However, we see no reason why such policies could not be adopted by other parties with stances less hostile to the environment, such as the Greens or the New Australia Party.

If such parties, seriously wish to be considered as serious alternatives to both of the two major pro-big-business parties, then their adopting such a proposal would almost certainly add enormously to their electoral appeal.

However, after two and a half decades of their existence, the Greens, for their part, have failed to adopt any policy which challenges the fundumental economic direction of this country, so we don't hold out any hope that that will change any time soon.

The full media release from the Citizens Electoral Council is included below.

Citizens Electoral Council of Australia

Media Release 14 January 2010

To defeat the Money Power and guarantee Australia's economic future:
Re-establish a true national bank

Fifty years ago today—14 January, 1960—Prime Minister Robert Menzies committed an act of treachery on behalf of his private banker friends, and neutered Australia's national bank, by removing the Commonwealth Bank's central banking powers, and reducing it to a mere trading and savings bank.

The powerful central banking function, by which the Commonwealth Bank had regulated and leashed the private banks, was renamed the Reserve Bank of Australia, and placed under the control of a private board of directors; its first Governor, H.C. "Nugget" Coombs, boasted that he was a member of "the international freemasonry of central bankers".

The City of London-directed private banker fraternity, including Menzies' best friend, financier Staniforth Ricketson of J.B. Were & Son, whom the patriots in the early Labor Party called the "Money Power", had finally achieved what they had strived for since the Commonwealth Bank's establishment in 1911—the end of sovereign government control over banking.

Today, Citizens Electoral Council leader Craig Isherwood called on Australians to rejoin "old" Labor's fight against the Money Power, and demand the re-establishment of a true national bank like the Commonwealth Bank.

"If Australia is to have a prosperous economic future, we must harness the nation's credit to build large-scale water, power and transport infrastructure, and foster essential agricultural and manufacturing industries, which means we need a true national bank, owned and run by the government for the common good," he said.

"The early Labor Party fought against the Money Power's private control of banking, because they understood that a government only had true sovereignty, if it exercised ultimate control over the monetary system through a national bank.

"Thanks to the influence of pro-American forces in the early Labor Party and among the writers of our Constitution, Australia is a unique country, in that we are the only nation outside of the U.S. to have had a true, Hamiltonian-style national bank, which was expatriate American and Commonwealth Bank architect King O'Malley's intention when he created it, going so far as to proclaim, 'I am the Hamilton of Australia...'" [Alexander Hamilton was the 1st U.S. Treasury Secretary under President George Washington, and the inventor of national banking.]

In the two periods when the Commonwealth Bank was able to function as a true national bank under government control and directing finance for the public good, 1912-19233 (under the governorship of Sir Denison Miller) and 1941-1945 (under the Labor government during WWII), its achievements were stunning:

  • The Trans-Australian railway;
  • Financing the national wool clip in WWI;
  • Stopping a run on the private banks during WWI;
  • Financing Australia's miraculous war-time economic mobilisation in WWII;
  • Zero war-time inflation during WWII.

In 2001, the CEC published its book, What Australia Must Do to Survive the Depression, which includes ready-to-enact legislation for a new national bank, the Commonwealth National Credit Bank Bill, and an explanation for how a new national bank would function to be as successful as its predecessor.

Mr Isherwood concluded with a challenge: "Next year, 2011, is the 100th anniversary of the 22nd of December, 1911 passage of the Commonwealth Bank Act, the single most important piece of legislation in our history," he said.

"Join the CEC's fight to re-establish a national bank, and let us set that anniversary as the deadline to achieve it.

"God knows we need it," he said.

Craig Isherwood, National Secretary

PO Box 376 Coburg VIC 3058
Phone: 03 9354 0544 Fax: 03 9354 0166
E mail: cec [ AT ] cecaust.com.au
Website: www.cecaust.com.au

See also: Cut Wall Street out! How states can finance their own economic recovery of 3 Nov 09 by Ellen Brown, How a state-owned bank could make Queensland asset fire sale unnecessary based on original article by Ellen Brown of 29 May 09 by Ellen Brown, Call for the re-establishment of a true national bank of 17 Jan 2010

Footnotes

1. The CEC does have some worthwhile ideas about technology. An example is their media Isherwood: Australia & India should cooperate on thorium nuclear power of 11 Jan 10. However, we regard their apparent belief that such technologies can fix all possible ecological, social and economic problems is reckless in the extreme.

2. The Web of Debt(2008 edition) is a towering work which blows apart the mystique of the worldwide monetary system. Its core thesis is that money has no intrinsic value and is no more than a means to exchange goods and services. As such, all money should be created as a service by the Government, whether as coins, paper, or electronically and not by private banks. The book shows how the undemocratic usurping of this function by private banks in most countries, principly the United States, has been the cause of almost every major economic crisis for the last 300 years. (This somewhat casts doubt on the Marxist thesis, that I had previously accepted, that capitalism, in and of itself, has an inbuilt dynamic that inevitably leads to economic crises.) The book does have flaws, including its implicit argument that monetary reform alone can fix nearly all the world's problems. As an example, it fails to acknowledge that China, which does have essentially the kind of monetary system that Brown (rightly) advocates, faces serious ecological crisis and may well be the casue of global ecological collapse. Also precisely because China's own economy works so well, other economies largely crippled by private banking system, such as Australia's face the threat of colonisation by China.

3. The achievements of the Commonwealth Bank during this period, including enabling Australia's participation at a cost considerably less than would have been otherwise possible has to be somewhat tempered by the ongoing controversy about our participation in that war at the cost of 60,000 Australian lives. Another cost, not widely acknowledged, is the Armenian genocide, largely triggered as a consequence of Australia's participation in the attempted invasion of Turkey at Gallipoli. The Armenian genocide was swept under the carpet during rapproachment between Australia and Turkey following the war. The outcome of the First World, in paricular the Treaty of Versailles, was unjust and laid the basis for almost continuous conflict since then including the Second World War.

See also: Call for the re-establishment of a true national bank of 17 Jan 2010.

Comments

The fundamental change proposed as part of the CEC's national bank proposal is seigniorage reform. (Link to article and discussion about CEC added by editor) This means changing the rules about how money is created and who profits from its creation.

Currently in Australia (and most other Western nations) the vast majority of the money in circulation is created by privately owned banks as interest bearing debt. Numerous studies have linked the interest component of this money to inflation and the impetus for further economic growth. In addition, the appropriation of profit by private interests creating a publicly owned commodity (our national currency) is a modern-day case of the enclosure of the commons. The fact that it goes on is testament to the lack of general awareness of how the system really works.

Reforms proposed by James Robertson and Joseph Huber would see this power returned to the people through a central bank. Those interested can download a free copy of their work 'Creating new money' here:

www.jamesrobertson.com/book/creatingnewmoney.pdf (378K)

With regard to the CEC, I agree that many of their assertions seem rather odd. Personally I'd be more concerned about their notion that the British Royal family is involved in drug dealing and that Prince Charles is a reptilian alien than their technological optimisim.

But, as you say, their calls for a national bank are valid, even if they themselves may not fully understand why.