June 29th 2019


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Articles from this issue:

COVER STORY John Setka, for all his faults, is the perfect scapegoat

FIGHTING FUND NCC president Patrick J. Byrne outlines the goals for 2019

SPECIAL FEATURE Author Rod Dreher brings St Benedict to bear on our decline and fall

INTERNATIONAL AFFAIRS One million protest China's attack on Hong Kong's freedom

GENDER POLITICS Vatican issues document on gender ideology

POLITICS AND SOCIETY New secularist strategies to bury Christianity

HISTORY OF SCIENCE Faith and reason and Father Stanley Jaki, Part 4: Ancient Jewish view of the cosmos

NATIONAL AFFAIRS Cardinal Pell's appeal: An account from the live streaming

BANKING FEATURE Greed works ... at least for a while and for a few

IDEOLOGY Feminist claims for equality, Part 2: What feminism should be

IDEOLOGY WARS Roger Scruton and the Tories: a sorry tale

MUSIC Melodic abundance: John, Paul, Duke and Antonio

CINEMA The End: Staging the apocalypse

BOOK REVIEW Scenes from Dante's Inferno

BOOK REVIEW Mrs Gould: she who drew the pictures

LETTERS

POETRY

NATIONAL AFFAIRS A Q&A to clarify issues in Cardinal Pell's appeal

Books promotion page
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BANKING FEATURE
Greed works ... at least for a while and for a few


by Jeffry Babb

News Weekly, June 29, 2019

Banks perform a necessary function but, if all they do is reward greed, the societies that host them will not benefit.

Banking in one form or another has been around for thousands of years but modern banking became prominent in the Quattrocento, when Northern Italian bankers perfected a number of ideas necessary for modern banking, including double-entry bookkeeping.

The name “bank” comes from banca, Italian for the benches or tables where the bankers worked. If someone was declared bancarotta (bankrupt), their table would be broken so they could no longer deal.

According to the Bible, it is a sin to lend out money at interest. This restricted the business bankers could do. This had a number of implications. During the early Renaissance, trade was growing. Italian woollen mills would buy wool from England, which was like the OPEC of the day. The English would be paid in florins, which were converted into pounds Sterling. The banker would take a margin, depending on the exchange rate, for changing the currencies. Thus, he wasn’t really charging “interest”.

The term for lending money at interest was usury. This was a sin, so the great bankers, such as the Medicis, made enormous donations to the Church in terms of money and art. The Jewish scriptures also forbade usury, unless the loans were made to “strangers”. So, Jewish bankers couldn’t lend to other Jews, but they could lend to Christians, who were “strangers”.

In the early Renaissance, the centre of European banking was Northern Italy, in particular Florence, Venice and Genoa. Shakespeare’s play, The Merchant of Venice, was about banking. Shylock’s bond was a pound of the merchant Antonio’s flesh. When Antonio has “three argosies richly come to harbour”, it seems Antonio may be saved, but Shylock insists on having his bond, a pound of flesh.

Only the clever advocacy of his counsel, Portia, saves Antonio. Shylock is condemned to become a Christian.

THE PEOPLE VS THE BANKS
by Michael Roddan
Melbourne UP, Carlton
Paperback: 438 pages
Price: AUD$34.99

It would not be unsurprising if Australia’s farmers see banks as wanting their pound of flesh. The People vs the Banks by Michael Roddan (MUP, 2019) is a blow-by-blow description of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industries. The conclusions of the inquiry make it clear that Australian bankers do not understand the nature of agriculture. For example, great swathes of the eastern states are in drought, while West Australian grain growers have just had one of their best seasons ever. A similar banking inquiry in the 1930s reached much the same conclusions.

Roddan is a financial journalist. He has a good journalistic style and knows his subject. He followed the banking inquiry closely. He was shocked by the testimony of some of the major players, such as Ken Henry, chairman of National Australian Bank (NAB).

Henry had once been one of the most powerful public servants in Australia when he was secretary of the Treasury. The import of what the inquiry was discovering about Australian banking did not seem to be sinking in. He resigned in ignominy shortly after the inquiry concluded.

Henry and other high-flyers did not seem to realise that the inquiry found that the Australian financial system, with a few honourable exceptions, promoted and rewarded greed. AMP, for example, charged dead people for advice in managing their portfolios. The reputation of AMP, one of Australia’s most venerable financial institutions, was trashed in three weeks of hearings.

One of the few institutions that came through the inquiry with its reputation for probity intact was Bendigo and Adelaide Bank. Bendigo and Adelaide Bank is, by comparison with the Big Four banks, not a major institution but it has steadily developed its business by working with the communities it serves.

The Big Four banks, which work almost in lockstep, have continued to close branches, especially in rural and regional areas. They say that cash is going out of fashion, but it’s very useful stuff if you’re in an outback shop without an electronic terminal.

The countryside is not a profitable area of investment for the big banks. The old days, when every settlement had a bank, are long gone. Agriculture is cyclical, it needs specialist lenders that can ride out the good times and bad times with their customers. From the point of simple convenience, access to financial services make life liveable.

In the 1980s, Australia went through a wave of bank closures, which caused great resentment and inconvenience. Many suburban and regional bank branches were closed. There seems to be no way of actually forcing the Big Four banks to stay in the bush. NAB, for example, had a very strong rural lending business that it now appears to be running down.

It may be that the best solution is to establish a financial institution that deals specifically with rural, remote and regio­nal Australia. A specialist rural lender, with the support of the government, would prevent the rug being pulled from under people going through sporadic misfortune. It would also allow people on low incomes access to financial services.

We had such institutions in the past, and they worked. Remember Victoria’s State Bank and WA’s Rural and Industries Bank? Why not do it again?




























All you need to know about
the wider impact of transgenderism on society.
TRANSGENDER: one shade of grey, 353pp, $39.99


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April 4, 2018, 6:45 pm