And so this interesting story continues. Miller died in 1923, and in 1924 the bankers got back in control, throttling the activities of the Commonwealth Bank and preventing it from saving Australians from the ravages of the 1930s Depression. In 1931, the bank board came into conflict with the Labor government of James Scullin. The Bank's chairman refused to expand credit in response to the Great Depression unless the government cut pensions, which Scullin refused to do. Conflict surrounding this issue led to the fall of the government, and to demands from Labor for reform of the bank and more direct government control over monetary policy.
The Commonwealth Bank received almost all of the powers of a central bank in emergency legislation passed during World War II, and at the end of the war it used this power to begin a dramatic expansion of the economy. In just five years, it opened hundreds of branches throughout Australia. In 1958 and 1959, the government split the bank, giving the central bank function to the Reserve Bank of Australia, with the Commonwealth Banking Corporation retaining its commercial banking functions. Both banks, however, remained publicly-owned.
Eventually, the Commonwealth Bank had branches in every town and suburb; and in the bush, it had an agency in every post office or country store. As the largest bank in the country, it set the rates and set policy, which the others had to follow for fear of losing customers. The Commonwealth Bank was widely perceived to be an insurance policy against abuse by private banks, serving to ensure that everyone had access to equitable banking. It functioned as a wholly owned state bank until the 1990s, when it was privatized. Its focus then changed to maximization of profits, with steady and massive branch and agency closures, staff layoffs, and reduced access to Automated Teller Machines and to cash from supermarket checkouts. It has now become just another part of the banking cartel, but proponents say it was once the lifeblood of the country.
Today there is renewed interest in reviving a publicly-owned bank in Australia on the Commonwealth Bank model. The United States and other countries would do well to consider that option too. Any proposed legislation should contain careful checks for accountability. The Commonwealth Bank served Australia brilliantly well for its first 11 years under the stewardship of one honest man, Denison Miller. When he passed away in 1923, the bank was delivered into the hands of a board of businessmen more interested in serving their own interests than the nation's. Legislation would need to be drafted that prevented that from happening again.
Special thanks to Peter Myers for reproducing major portions of Jack Lang's book in his weekly newsletter.