POLITICAL FACTOR.
Assuming that nationalization of our banks were carried through, there would probably be a development in, two main directions. First, what would be the policy of the Government on finding the control of credit in its hands ? In this connexion the political factor cannot be stressed too much. There is a tendency, probably natural where office is dependent on the will of the electorate, to strive after popularity, and probably nothing is so likely to interfere with the attainment of this object as the imposition of heavy taxation. Hence there is a tendency to adopt the easier method of borrowing, and, if the expenditure is not of a productive nature, credit is created on an unsound basis, with a consequent increase in prices.
At present Governments may come and go, but our existing banking policy is concerned solely`with the Main- tenance of sound monetary conditions, whereas one can imagine a very different state of affairs if the central bank were controlled by the Government, or by the political chief of a Government Department !
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