Today, Australians have access to a wide array of financial institutions. Yet, a new book, Battle of the Banks, exposes how the country almost became a "one bank town" when Ben Chifley set out to nationalise the banking sector.
After the Second World War, Prime Minister Chifley’s Labor Government sought greater financial control as the economy shifted from war to peace and Australia entered the Cold War.
In August 1947, he announced the compulsory takeover of Australia’s eight private banks, which were valued at £1 billion and employed 20,000 staff.
These banks would be consolidated into a single national institution that combined central, retail, and development bank functions. With Labor holding a parliamentary majority, nationalisation was law by Christmas.
The banking industry, headed by Leslie McConnan of the National Bank, swiftly and vehemently opposed the plan. The banks instigated legal challenges and propaganda campaigns and encouraged traditionally conservative bank staff to win public support.
Their goal was to compel Chifley to abandon his plan or call a referendum on banking while striving to unseat Labor at the 1949 election.
The private banks proved skilled at pressing their case publicly and behind closed doors. They poured millions of pounds into their own campaigns and supported (at times secretly) political parties, community groups and individuals who opposed nationalisation.
Recently digitised records reveal how the Commonwealth Bank intended to become a mega bank by dismantling its competitors. Privately, staff at the Bank felt sympathy for their colleagues at the private banks.
In the end, the private banks won. Labor lost the 1949 election to Robert Menzies’s Liberal Party, which went on to dominate Australian politics for nearly 25 years.
The banks, however, did not rest. Throughout the fifties and sixties, they worked – via what is now the Australian Banking Association - to protect their industry from future nationalisation threats and to ensure Australians always remembered the benefits of free enterprise banking.
• Award-winning marketing identity Bob Crawshaw has written Battle of the Banks, now available from Australian Scholarly Publishing for $49.95