A long time ago, in a galaxy far, far, away...

A vast sea of stars serves as the backdrop for the main title. War drums echo through the heavens as a rollup slowly crawls into infinity:

It is a period of hope. Born from the victorious Rebel Alliance, the New Republic has defeated the remnants of the Galactic Empire. The New Republic now seeks to usher in an age of peace and prosperity to the galaxy and bring about the end of war.

Star war.

However, despite a 55.4 quadrillion credit bailout package, growth in the manufacturing sector remains low across the galaxy, with some star quadrants even experiencing protracted periods of negative growth. Economic analysis indicates that more stable growth could be achieved through greater centralised control of the banking and finance sector.

FINANCE MINISTER LEIA ORGANA SOLO is fighting to push a bill through the New Republic Senate. The bill provides for a major restructure of the banking sector and the formalisation of certain powers exercised by the GALACTIC RESERVE BANK in relation to the administration of monetary and banking policy, along with consequential amendments to the Appropriations Act and the revocation of Executive Orders 104 and 111. The bill faces stern opposition from the OPPOSITION SPOKESPERSON ON TRADE AND FINANCE, DUKE REGIS.

EXT. CITYSCAPE, CORUSCANT - DAY

The capital planet teems with spacecraft and space joggers.

A space jogger is nearly bowled over by a flash REPUBLIC SHUTTLE. He shakes his fist.

SPACE JOGGER

(in Alien language)

Hey!

EXT. LANDING PAD, CORUSCANT - DAY

The shuttle lands on one leaf of a clover-shaped landing pad.

A small group of STAFFERS waits to greet Finance Minister Organa. They are led by ISH'NGTHON, a space alien kind of like a FISH with a JAPANESE ACCENT (late 20s); and GRONK, like an African human female but with a tumor-like growth protruding from her forehead (late 30s).

The Senator's CHIEF OF SECURITY, COLONEL ALMEDA, removes his battle helmet and addresses the Minister.

ALMEDA

I guess I was wrong, M'Lady. There was no danger at all.

He looks around significantly, but nothing bad happens.

Ish'Ngthon hands Leia a SPACE MANILA FOLDER.

ISH'NGTHON

I present the revised costings and detailed projections Hector discussed with your honourable staff. May their rigour bring glory to my Office.

LEIA

Thank you both. This debate is very important. You did your duty, and now I must do mine. Come, Colonel. I foresee a great political battle.

She turns and they walk away.

EXT. SENATE BUILDING - DAY

The Massive Senate building glistens under Coruscant's sun.

INT. SENATE CHAMBER - DAY

Hundreds of senators on floating pods line an enormous hive-like structure.

The Chief of State, PRESIDENT UGROM, chairs proceedings. He is an elephant-headed alien with a very deep voice. He has a bit of a Desmond Tutu vibe.

UGROM

I may state that it had been arranged that we should begin with the Ion Fuel Control Bill. But, upon consultation with the Honourable members present from both sides of the chamber, it appears to be the consensus of opinion that for obvious reasons we would better defer the second reading of that Bill to a later date and begin the session with the second reading of the Galactic Reserve Bill, the first reading having occurred near the close of the previous sittings. The Senator for New Alderaan and Minister for Finance has the floor.

Leia steers her pod to the centre of the Chamber.

LEIA

I move that the Galactic Reserve Bill be now read a second time.

She looks around for objections, but none arise. She reads, word for word, a prewritten speech.

LEIA

It will generally be agreed that banking policy plays an important part in economic life throughout the galaxy. At present, when we are facing grave problems and momentous economic issues, any legislation affecting the banking system is of vital importance. A banking system must always be in process of evolution, continuously adapting itself to changing conditions. This adaptation, until recent times, has largely taken place under the direction of a Dark Lord of the Sith with his own evil agenda. Since the fall of the Empire, it has come to be recognised throughout the galaxy that changes in the banking system should be the result of conscious decisions of policy. This legislation is based on the conviction that the Senate must accept responsibility for the economic condition of the galaxy. The problems of the post-war period, with respect to employment, development and trade, are of such magnitude, and involve such serious consequences that no other attitude could reasonably be maintained. Accordingly, I propose that the Senate assume the powers which are necessary over banking policy to assist it in maintaining galactic economic health and prosperity.

Leia sips from a glass of water.

LEIA

It is appropriate at this point to refer briefly to the Republic Commission on Space Monetary and Banking Systems. The commission's five hundred and thirty-four separate recommendations must form the starting point for any review of the functions of the Galactic Reserve Bank. In its report, the Commission recognised that the Galactic Reserve had developed into a de facto central bank; but believed that certain extensions were required in the powers and the functions of the bank in order to enable it to carry out its responsibilities. The relations of the bank with the Senate were also considered by the commission, and various detailed recommendations were submitted, several of which I will later referred to in their appropriate context, and not in an inappropriate context or at an inappropriate time.

Leia checks the audience. A few listeners are checking out, but she ploughs on.

LEIA

In the absence of appropriate statutory powers it was found necessary during the war to use Emergency powers to bring the banking system under greater control, in order to check any tendencies towards inflation and to aid in the war effort. The banking controls embodied in Executive Orders 104 and 111 have worked satisfactorily, and we have not received any complaints that they have operated harshly. In at least one respect they have brought about a substantial benefit to the galactic community through the reduction of interest rates. They have provided experience in the operation of banking controls, which will be of very considerable benefit, and a number of the principles on which they are based should be embodied in the permanent legislation to meet the problems of the post-war period.

SENATOR BAO-SHAN, a Zabrak from Anobis (space equivalent of a English-born Korean), cries out.

BAO-SHAN

What kind of problems?

Leia goes off-book, putting her notes to one side for the moment. It's a risky move.

LEIA

The Imperial Remnant and the Dark Lords of the Sith may be defeated, but we expect to face sharp increases in retail prices. These increases in retail prices will represent the economic equivalent of any Death Star, causing a catastrophic softening of demand. Action is required, and in so acting, we must take full advantage of the experience that has been gained in operating war-time financial controls. In addition, we expect certain special problems in the sphere of housing and industrial finance. Active competition by the Galactic Reserve with the trading banks and other financial institutions will ensure that these services are supplied to humans and intelligent alien creatures adequately and cheaply.

Bao-Shan is satisfied by the answer. Leia returns to her pre-written speech.

LEIA

The necessity for changes in banking legislation has been demonstrated by the Commission's report, confirmed by the experience of war, and established beyond question by the requirements of the future. Briefly, the main purposes of the Galactic Reserve Bill are as follows: Firstly, to strengthen the central banking functions of the Galactic Reserve Bank. Secondly, to ensure that the financial policy of the Galactic Reserve Bank will be in harmony with the main policy decisions of the Inner Council and in the interests of the humans, aliens and robots throughout the galaxy. Thirdly, to ensure the development and expansion of the Galactic Reserve Bank's general banking business by active competition with the trading banks. Fourthly, to return the control of the Galactic Reserve Bank to the Inner Council who will be assisted by an Advisory Council with appropriate technical expertise. Fifthly, to assist in developing small industries and in enabling humans, aliens and robots to secure homes or whatever sleeping arrangements their kind prefers. The principal function of the Galactic Reserve Bank must be to fulfil its responsibilities and duties as a central bank. The commission in paragraph 135 of its final report stated that "the chief function of a central bank may be said to be the regulation of the volume of credit - not credits, but credit - including currency, that is to say, credits, as opposed to credit. What this involves was put more fully by the right honorable Senator for Ord Mantell when, as Treasurer, he introduced amendments to the Galactic Reserve Act seventy years ago...

A FLASHBACK begins.

It is a different Senate Chamber. An elegant Chamber for a more civilised age. The SENATOR FOR ORD MANTELL, a human male with a crisp British accent, speaks.

ORD MANTELL SENATOR

The important functions of banking can properly be performed only with the guidance and control of a central bank. Decision and settled policy are essential. Divided counsel and clashing interests of individual bankers must in the end be fatal to good credit management, and banking can be raised to its greatest perfection only by the action of a central bank working always for the good of all.

Silence.

Then, a lone alien stands and claps.

Then another.

And another.

One by one they stand, clapping whatever limbs they have, until the house erupts into a mighty round of applause.

We return to the present.

LEIA

We have learned much since the Republic Financial Reform Bill of 21 BBY. Reduced to its simplest terms, one of the main responsibilities of a central bank is to control the issue of bank credit by all the banks in such a manner as to avoid expansion of credit in times of boom and contraction of credit in times of depression. Whilst there is now a better understanding of central bank responsibilities, it is nevertheless essential to ensure, by appropriate legislative action, that the central banking functions and powers of the Galactic Reserve Bank are strengthened so as to ensure that the broad lines of its monetary and financial policy will be in harmony with the economic policy of the Executive and in the interests of the people, aliens and robots of the galaxy. In order that the status of the Galactic Reserve Bank may be put into proper perspective, suitable provisions have been made in Part II of the bill, "Constitution of the Galactic Reserve Bank", and Part III, "Central Banking". The general functions of the bank are set out in the form of a charter. Clause 8 is particularly important and reads as follows: -

INT. SENATE CHAMBER, GALLERY - DAY

As Leia reads the clause verbatim, famous droids C3PO and R2D2 confer in the viewing gallery.

THREEPIO

Oh, my, Artoo! This is exciting!

Artoo whistles and hums.

THREEPIO

What we are seeing here represents the culmination of a lengthy and rigorous policy development and legislative drafting process. First of all, Princess Leia--

Artoo hums sharply.

THREEPIO

--sorry, Minister Organa Solo consulted with her staff at the Ministry of Finance on the need for central banking reform, having been requested by the Inner Council to consider the recommendations of the Republic Commission on Space Monetary and Banking Systems. This was what we will call the 'issue identification' stage of the process, during which the Minister's staff worked tirelessly to delineate the issues with the banking sector. A lengthy process of analysis followed, for which the Minister activated a battery of policy droids to determine, with a coordinated inter-agency 'whole of government' perspective, and report on the implications of the various recommendations presented by the Commission in its final report. Relying on the policy droids' analysis, and the key messages from further consultation with public and third estate stakeholders such as the Galactic Reserve Bank executive, leading academics with expertise in galactic finance, and NGOs, not to mention a broad cross-section of informed members of the alien and human community from each sector, the Minister's staff engaged the Senate's specialist legislative drafting Jawas to prepare the draft bill now before the Senate. This bill was circulated widely and met with general approval among the Senate majority, but there has been some dissension from key members of the opposition, as I am sure we will later see.

Artoo whistles and hums just like he did in the other "Star Wars" movies.

THREEPIO

An excellent question, Artoo. I expect it will be get interesting very soon. After all, I have heard rumours that a dreaded Sith Lord has returned. Of course, I am not one to place much faith in such rumours. The odds of a Sith Lord returning to the galaxy are nine hundred and eighty-two thousand, three hundred and seventy-five... to one! And I, for one, hope that we never see one. Do you remember the last time that we encountered a Sith Lord, Artoo? What an adventure that was! Nevertheless, I maintain the view that it is just as important and exciting to engage in discussions aimed at addressing the financial issues that can act as a contributing factor in decisions to go to war with prospective future Sith Lords and their hypothetical Galactic Empires. Don't you?

ARTOO

(Whistles)

ON LEIA

As she continues her speech:

LEIA

The stability of the "Credit", and the bill here uses that term in the defined, capitalised sense to refer to the Galactic currency; the maintenance of full employment throughout the galaxy, and the economic prosperity and welfare of the people, aliens and droids of the galaxy. It is necessary to provide for possible differences of opinion between the Executive and the Board on questions of policy. The Commission contemplated such a difference of opinion arising and indeed recommended a procedure that should be followed in those circumstances. Where there is a conflict between the Executive's view of what is best in the galactic interest, and the Board's view, the first essential is full and frank discussion between the two authorities with a view to exploring the whole problem. This full and frank discussion should be as fulsome, frank, reasoned, and long as possible, plumbing the depths of even the most tiresome details. The Commission made thirty-seven separate recommendations as to the process for discussions alone, including that no party should speak for less than 30 parsecs at a time, in order that they may fully express their views without feeling any need to compress their views or introduce reductionist tendencies into their arguments. In most cases, the excellent procedure recommended by the Commission should ensure agreement on a policy to be carried out by the Bank which it can reconcile with its duty to the Galactic community, and which has the approval of the Executive. In cases in which it is clear beyond doubt that the differences are irreconcilable, the Executive should give the Bank an assurance that it accepts full responsibility for the proposed policy-

Murmurs rise about the chamber. Leia is forced to raise her voice.

LEIA

- full responsibility for the proposed policy, and is in a position to take, and will take, any action necessary to implement it. Clause 9 gives practical effect to this. We have also given consideration to the measures which will be necessary to develop the central banking functions of the Galactic Reserve Bank. Part III of the bill prescribes a number of general powers including control over the issuance of currency. These powers will enable the Galactic Reserve Bank to fulfil its functions as a central bank. The main powers required by a central bank are those which enable it to control the policy and activities of the banking system of which it is the head. These powers will be of the utmost importance in the post-war period for the proper disposition of the available credit resources and they have been fully provided for in the bill presently under discussion.

ON THREEPIO

THREEPIO

She seems to have composed herself, Artoo. This is really something. I feel we are witnessing a liminal moment in Galactic history.

Artoo hums and whistles.

ON LEIA

LEIA

It has been held that a central bank should not compete with the members of the banking system which it supervises. This view has had considerable influence on the administration of the Galactic Reserve Bank for many years, and has largely been responsible for the lack of development of its general banking business. It is my view, and the view of other members of the Executive, that the Galactic Reserve Bank should participate in active competition with the private banks, and that this function can be most suitably performed by a separate division of the Galactic Reserve Bank. It is therefore proposed that its general banking activities should be expanded. The central banking functions and powers of the Galactic Reserve Bank will strengthened so as to ensure that the broad lines of its monetary and financial policy will be in harmony with the economic policy of the Senate and in the interests of the people, aliens, robots, and other things that live or have attained sentience and are affected by economic policy yet cannot accurately be described as living, such as Midichlorians, throughout the galaxy.

Leia coughs. The lengthy speech seems to be wearing a little on her vocal cords.

LEIA

Up to the present, the recruitment, promotion and dismissal of the bank's staff has been at the discretion of the Galactic Reserve Bank Board. After reviewing the position, the Inner Council considers that equality of opportunity should be provided for entry to the bank's service, and also that the position of officers already in the bank's service should be protected with respect to promotion, dismissal and disciplinary action. It is proposed that candidates for appointment to the bank's staff should be required to pass a prescribed entrance examination in open competition, and that appointment should then be made in order of merit. There will, of course, be need for some flexibility so that exemptions can be granted in special cases. Women, for example, will be required to pass a different test to other lifeforms.

Leia turns a page. She is coming to the end of her speech.

LEIA

The close of the war will undoubtedly bring with it increasing responsibilities and functions for the Senate and a strong central bank will become an even more essential part of the equipment of government than it has been in the past. A banking system must always be in process of evolution, continuously adapting itself to changing conditions. The Galactic Reserve Bank was initially founded on legislation passed centuries ago, and we can point with pride to its success as a great institution, and retained in spite of the rise and fall of the Galactic Empire and the establishment of the New Republic through a legislative process too detailed and irrelevant to explain in even this speech. It has built up a solid foundation for future development, but at certain stages the bank has been unduly conservative in its policy, and at present there are some gaps in the powers which it will need in the post-war period. These deficiencies will be removed by this bill. Under the provisions of this bill, the Galactic Reserve Bank will grow to full stature. It will be shaped to meet our post-war requirements and, on the lines now proposed, it will surely develop as one of the principal agents of galactic stability and progress.

Leia thanks the chamber with a nod and a few Senators voice their agreement.

SENATORS

Hear, hear!

As she sits, the Senate Opposition Leader, JON 347, moves his pod to the centre of the Senate chamber. He has a New York-Jewish accent and 12 tentacles.

ISH'NGTHON

I've got a bad feeling about this.

Leia nods.

JON 347

We are approaching a time when keen discussion on the financial policy of this house is necessary. I do not imply that I intend to give a long dissertation on space banking. I am but a simple lay alien, a mere 'interested amateur' in the fields of space economics and star finance. I propose to deal only with the salient points of the measure now before us. The measure now before us, being the measure to which I referred by the same description in my previous sentence, is the beginning of a great gamble. The stakes at issue are the economic well-being and the standard of living of robots and other creatures including aliens and human males all over the Galaxy. The Minister for Finance is cheerfully taking that gamble although, possibly, the odds are against it achieving that objective. Success for the Minister, of course, will mean glorification of her policy of socialisation of industry, and will assist her to attain her major objective; but failure to achieve that objective will mean disaster: that the people of the Galaxy will need to tighten their space belts. It will involve the loss of savings, and a hard time for everybody.

There are murmurs of agreement from around the chamber, making Leia shift uncomfortably.

JON 347

By this legislation, free money is to be provided.

One of Leia's cabinet colleagues, a female TWILEK IN A BIKINI, speaks up.

TWILEK

There is no mention of that in the bill.

JON 347

The powers to which I am referring are in the bill. I shall deal with them later.

TWILEK

What does the bill say about free money?

JON 347

It provides that the Galactic Reserve Bank may issue as many credits as it likes! The mirage of money is an obsession of the honorable Minister and her allies opposite. It is the basis of most of the socialist fallacies in which they believe. They regard money as a great god, equivalent to the Force. They worship it above all else. Apparently they do not realise that money without tangible assets to back it is worthless. When they regard money as the first essential in progress, they ignore the fact that the standard of living of any community depends upon what it produces.

LEIA

Where does this bill provide anything like that?

JON 347

I am saying that. The Honorable Minister will not deny that for many years she and her colleagues have proclaimed that the money available in the galaxy has not been sufficient, and that the Executive should have full power over money and credit. If more money is not to be put into circulation what is the object of this measure?

LEIA

Money will not be made available in excess of the requirements of humans and space aliens.

JON 347

The term 'requirements of humans and space aliens' is most elastic. How much money do they require? The fundamental principle is that the value of money depends upon the assets that back it. This is neither controversial nor wrong, unlike everything the Minister has said. It is not correct to say that our financial problems can be solved by conferring upon the Executive power to issue additional currency. In the Honorable Minister's speech, she said, and I quote: "A banking system must always be in process of evolution, continuously adapting itself to changing conditions." I agree entirely with that, but it is the very point which the Minister herself ignores. Our banking system has, for many years, been undergoing a process of evolution. The Galactic Reserve Bank, originally the First Galaxy Bank, set out originally to do trading bank business, but gradually evolved until it became, for the most part, a central bank, and carried out most of the functions which this measure now proposes that it should carry out. Therefore, looking at the matter impartially, there is no need for a measure of this kind, which gives dangerous powers to an institution which in the past has discharged its functions to the great benefit of the people of this Galaxy. Relative to the Force, or even to the stars and planets and space stations that we orbit and live on, the technique of central banking is not old. It has developed quickly, especially during the last few decades. Honorable Senators opposite have based many of their arguments upon the bank crashes that occurred last century; but they have ignored altogether the development of the financial system since then, not to mention the relative decline in Midichlorian levels. The well-known failure of several major interstellar banks in BBY 47 was not due to insolvency, but to the fact that their assets were sufficiently liquid to meet the demands made upon them. That is a condition which will be accentuated by this legislation. The banking business of the Galaxy will be centralised in the Galactic Reserve Bank, and whereas a central bank can afford to keep its assets in more or less liquid form, a trading bank cannot do that, because it has to invest money in commercial undertakings and in mortgages. Under this legislation the Galactic Reserve Bank will assume the role of a trading bank and, therefore, to some degree, its assets will be tied up in various commercial enterprises, and in mortgages. It is claimed that the Galactic Reserve Bank requires strengthening, and that the added strength required is provided by this measure. But what method is employed to achieve that objective? A proportion of the funds the trading banks is to be held by the Galactic Reserve Bank so that that money cannot be used for industrial purposes; however, it may be loaned to various sections of the Galactic Reserve Bank, which of course amounts to the same thing. To strengthen the Galactic Reserve Bank, the private banks are to be restricted to their pre-war business. This legislation will hamstring the competitors of the Galactic Reserve Bank; yet it is claimed that the Galactic Reserve Bank will enter into fair competition with the trading banks! Over the years, the cry of honorable senators opposite has been decentralisation, yet the tendency of this legislation is exactly the opposite of decentralisation. It will centralise banking control and administration at the headquarters of the Galactic Reserve Bank, on Coruscant. There will be branches of the bank throughout the Galaxy, but the entire economic policy of the bank will be directed from one centre. In the past, the risks taken be bank depositors have been distributed over various banking institutions, thus ensuring a certain degree of safety, but now banking is to be centralised, and assets will not be liquid. One of the main objects of the honorable senators opposite--

LEIA

Is full employment.

JON 347

The object of this bill is to provide more money than is at present circulating in the community. It will be issued by the central bank for the purpose of providing full employment; but full employment cannot be created unless there is industry to provide it. The Minister proposes to provide the money to create full employment but that money will be issued without assets to back it.

LEIA

Who said that?

JON 347

That is the whole object of the bill. The Inner Council will be acting under compulsion, and when it is asked to back some particular project and it is found that the credits are not available, the Inner Council will say to the Treasury, "Make the credits available". The fact that the result of such action would be the depression of currency does not concern the Honorable Minister for Finance.

Leia is getting flustered. She turns to Ish'Ngthon for support, but he studiously avoids eye contact.

LEIA

We all know quite well that the quantity of credits that can be issued is determined by the productive capacity of the Galaxy.

JON 347

Everybody knows that the quantity of credits issued is not determined in accordance with the productive capacity of the Galaxy. Many of the credits issued are not used for productive purposes, but are deposited away for various reasons. I am not so foolish as to believe that, the greatly increased number of credits now on issue is used by the people and aliens for space pocket money and other purposes of that kind. The issue is that there is no limit to the amount of credits that may be issued.

ON THREEPIO

THREEPIO

Oh my, Artoo! Minister Leia has no answer to this. The bill clearly does not provide for a limit on the quantity of credits that may issued. Of course, there is an obligation on the Galactic Reserve Bank to act prudently in the exercise of its functions. And in practice, it is highly unlikely that the Galactic Reserve Bank would, of its own volition, issue credits without regard to the potential inflationary effect of such an action. Such an action is even less likely to be directed by the elected representatives of people and aliens whose wealth depends upon the maintenance of the value of the currency that represents the product of their labor. Nevertheless, the Minister cannot directly contradict the assertion that there is no limit to the amount of credits that may be issued. If this Bill is defeated, Artoo, I fear that... Artoo?

He looks around. Artoo isn't there.

THREEPIO

Where did you go?

Threepio walks out of the chamber, looking for Artoo.

ON JON 347

JON 347

...whereas the supporters of the Minister believe that so long as there is plenty of money available nothing more is needed.

TWILEK

That is a stupid comparison.

JON 347

The honorable Senator is biased and female, and therefore she is incapable of judging fairly. She should not attempt to define stupidity, because she is a living example of it.

Burn. But to be fair, she does look like a bit of a bimbo.

JON 347

I suspect that the bill before us will pass in the form which the Minister desires. Time will tell what its effect will be. We are engaging in a great gamble in which the stake is the well-being and economic security of the Galaxy.

Another alien, the same sort as Yoda except he has blue skin, speaks. His name is BLODA, which is short for 'blue Yoda'.

BLODA

If not passed the bill is, a greater gamble it will be.

JON 347

If we could ensure that the Treasurer of the New Republic would always be a superman, actuated by the highest motives, we might believe that this legislation will not do much damage; but when we have regard to the Dark Side of the Force, and recall the Treasurers that we have had in the past and are likely to have in the future, and reflect also that great pressure will be brought by the Dark Side to bear upon future Treasurers, I can foresee only disaster, if the financial policy of the Galaxy is to be directed by the Treasurer of the day. I visualise with horror Senators being inundated with complaints from constituents that they cannot get space overdrafts from the Galactic Reserve Bank, and seeking aid in support of their applications, even though they have no substantial security to offer. Senators will be told that it is their job to get the advances and should they not be willing to support such applications, I visualise letters threatening them with loss of support. Only a Treasurer who is a superman or really tough robot or alien will be able to resist the pressure that will be brought to bear. The Governor of the Galactic Reserve Bank will be told, "You must obey the Inner Council, and must lend money to this or that alien, or for the establishment of this or that industry, regardless of the security offered. If necessary, you must deprive this industry of financial support in order to assist that industry. Should that happen, the end will be worse than the beginning. I had hoped that the Honorable Finance Minister's policy, that money in plenty could be provided easily and that money, not production, can save us, would not be given legislative effect. If the bill passes, I hope that the Minister for Finance will, at least, show some common sense and accept some amendments which my allies will propose, but I know that is expecting too much. Nevertheless, we shall continue to hope that future Treasurers will measure up to the standard which I have mentioned, so that the danger which I foresee to the well-being of the people of the Galaxy will not become real.

Jon 347 sits, with a smug smile and his tentacles rubbing together gleefully.

Bloda moves his pod to the centre of the room. With wisdom visible in his eyes, he speaks.

BLODA

Support the bill to expand the functions of the Galactic Reserve Bank to include the regulation of banking principles generally along the lines which war-time experience has shown to be desirable in the galactic interests I do. Provided a sound basis for the whole of our war effort they have. Continued and expanded must they be, as indicated the experience gained has, if to meet the many problems which will inevitably arise in the post-war period we are. Only solved can such problems be if have the Inner Council does such powers as necessary to implement its financial policy may be. Necessary it is under the existing regulations for the private banking institutions to deposit with the Galactic Reserve Bank all excess funds which possess they may at a rate of interest that cover administrative costs only it will. End with the conclusion of the war the expansion of credit will not, because hope we do in the postwar years to lay the foundations which make the galaxy great they will. Obvious it is that credit for that expanding economy credit provided must be.

Bloda's pod vanishes mysteriously.

TWILEK

Typical Bloda.

The OPPOSITION SPOKESMAN FOR TRADE AND FINANCE, DUKE REGIS, manoeuvres his pod into the speaking place. He wears a long black cloak and a dashing but villainous moustache.

DUKE REGIS

This bill represents probably the most important measures that have been introduced to this Senate during its currency. They are extremely important, from the point of view of their supporters as well as of their opponents. I have given a good deal of serious thought to the way in which I should address myself to them. It would be possible to discuss these matters, which have a broad and obvious political significance, in, perhaps, a broad political fashion. From some points of view, that might be a good idea. But the bill itself is full, not only of matters which have a broad political significance, but also of matters which, on the face of them, are technical; and if I refer tonight to technical considerations, with all the tentativeness of an amateur in such matters, it will be simply because I believe that in some of the technical considerations some of the more important aspects of the bill may be found concealed. The measure professes, on the face of it - and, indeed, was so explained by the Minister for Finance - to be one that is enlightened and progressive, and designed to give security to people and aliens and robots and other wondrous creatures beyond description, whereas in fact, carefully analysed - and I propose tonight to submit it to such careful analysis - it is reactionary and unsound, and will increase the insecurity of sentient beings and, indeed, decrease the security of those selfsame sentient beings. As explained by the Finance Minister, it professes to strengthen the Galactic Reserve Bank. I shall have occasion later to refer to an observation by the Minister on that point. In reality, it weakens the central bank. It offers to protect the credit - but in reality it runs a good to very good chance of destroying it and crushing it into tiny, grey smithereens. In saying that, I do not mean that the effects of this legislation will be seen immediately, or very drastically. I have a shrewd notion that when these bills have reached the statute-book, it will be remembered that elections are to be held in eighteen months' time, and there will be a good deal of "soft pedalling" by some of the advocates of the measures until those elections have passed. As a good deal of reference will necessarily be made, of necessity and without any free will or choice on my part, in the course of my own remarks, to the trading banks as a part of the banking structure, I wish to make it clear right away that I regard the pecuniary interests of the banks and their shareholders as of minor importance in this matter.

In the gallery, a group of Jewish-looking aliens wearing gold jewellery exchange displeased glances.

DUKE REGIS

The most vital element in the trading banking structure, I remind honourable Senators, is to be found in the depositors in those banks, and the paramount interest in the consideration of banking is the welfare of the people and other stuff that lives in the Galaxy as a whole. Therefore, every banking proposal, such as the one that is now before the Chair or any other banking proposal that should come before the Chair but is not presently under discussion, must be tested by asking, not how it will affect bankers, but how it will affect the people. This bill is an amending, re-enacting and consolidating measure. The Finance Minister has adopted the course that is convenient, of embodying the existing law, so far as it is unchanged, in this bill, so that we may have the whole picture before us. But out attention will be directed primarily, not to the old, but to the new provisions of the banking law. Looking at the bill I have found - and I dare say it will agree with the judgment of others - that there are six principal new provisions. The first is the suggested strengthening of the central banking function of the Galactic Reserve Bank. The second is the abolition of the Board of Directors of the Galactic Reserve Bank and the substitution of one-man, or one-alien, as the case may from time-to-time be, control. The third is the subordination of that man or alien - the Governor of the bank - to the Inner Council of the day. The fourth is the establishment of active competition with the trading banks in general banking business. The fifth is the abolition of board control of the note issue. The sixth is the abolition of the currency reserve. There are other matters in the bill. If time permits - which I begin to doubt - I shall say something about one other aspect before I sit down. In broad principle, however, those are the six major matters with which the bill deals by way of new provisions. I propose, for convenience, clarity, and in a demonstration of general mastery of rhetoric, to take them in that order. So, I take the first - the suggested strengthening of the central banking function of the Galactic Reserve Bank. If we are to understand that quite clearly, it will be necessary to refer - very briefly, of course, to some historical matter; because these problems are not to be judged except against the background of experience. That is to say, they are to be judged against the background of experience. No honourable Senator will disagree with that. That is to say, every honourable Senator will agree with that. At the present time we have, broadly speaking, banks of three types, namely, the trading banks, the savings banks, and the Galactic Reserve Bank. We do not have any other types of bank. We did have laser banks for a brief time, but they have since fallen by the proverbial wayside. I intend to focus the following discussion only on the three extant forms of bank, though the Honourable Senators will perhaps indulge a brief excursion into laser banks should I fail to restrain my urge to speak of them. The trading banks were established on the branch banking system. The advantage of the branch banking system, as everybody except the Minister for Finance will plainly realise, is that it distributes risks and interests, and is utterly distinct from the system of individual banks that collapsed in 128BBY. The next kind of bank that we have is the savings bank. It has a long history. Its history is largely untarnished by default or failure, unlike laser banks. Laser banks were little more than an economic construct for theorisation of indeterminate market forces. They had many lasers, but this ultimately did not prevent their collapse when it was recognised that they were little more than hollow concepts, having neither trading nor savings arms. The third kind of bank is the Galactic Reserve Bank. Because a great deal of Bantha poodoo is talked about the origin of the Galactic Reserve Bank and what it was designed to do, it is well, so very, very well, that we should be reminded of its origin. It was established primarily as a competitive trading bank. The issue of credits was not controlled by it at first, but continued to be controlled by the Treasurer. At that time, most of the supporters of the Galactic Reserve Bank quite plainly had not in their minds any notion of establishing the Galactic Reserve Bank as a central bank, but directed their attention to it as an instrument of competitive trading. But whatever many of his supporters may have thought, the then President of the Republic indicated that he was looking towards two things. One was, that the bank should ultimately become a bank of banks - that is, the lender of last resort, or LoLR - and the other was that the control of the bank should be entirely non-political. In the course of his notable speech at that time, he said, "While the bank may deal in all kinds of securities, it will in time grow to be rather a bank dealing in ordinary bills of exchange and liquid securities. It will ultimately become a bank of banks, rather than a mere money-lending institution. Later, a governor was appointed as the controller of the bank. Shortly after he became governor, he announced in an interview that he wanted the bank to be able to stand behind the other banks in a crisis. There we have two statements, one by the founder of the bank in the political sense, and the other by the first governor of the bank, clearly indicating that each of them was looking in the long run towards the development of the Galactic Reserve Bank, not as a mere competitor in the market of the other banks, but as a future central bank for the Galaxy. Perhaps regrettably, there is no mention of laser banking in either of these statements. The early reference to the Galactic Reserve Bank as being a bank of banks, or a bankers' bank, were, of course, correct. A central bank is a bankers' bank in the sense that it is the bank of last resort, or BoLR. It is the controller of the credit structure of the trading banks, and the bank in which the trading banks keep most of their credits. I refer to that fact largely for the purpose of pointing out that the tendency has developed in later years of saying that the Galactic Reserve Bank must be converted from a bankers' bank into a people's bank. During the Sith Wars, the Galactic Reserve Bank had rapid growth. It had intense experience in the financing of government, but nobody would suggest that it was in any sense equipped to be a central bank for the entire galaxy. At that time it had not the necessary technique for the task. In some respects it had not the necessary power. There was a good deal of confusion of thought, which has not yet entirely disappeared, about the respective functions of the central and the trading banks. That is not to be wondered at, because central banking is a modern space art, and to the degree that it is a science, a modern space science, and to the degree that it involves use or application of the Force, it is a modern use or application of the Force. It is as well to recall that fact to mind, when one hears discussion on what the Galactic Reserve Bank and the trading banks should or should not have done or should have not done or should not have not done during the last galactic economic downturn. I point out that during the famous depression of BBY 414, there were very few central banks at even a planetary level, and very little was known about central banking functions. When we have that date in mind we shall be forcibly reminded that it was as the result of the intergalactic depression that the minds of thoughtful men became directed to how far we could strengthen the power to control credit and the efficiency of controlling credit in the great modern star systems. Much thought was directed to the problem, and it would be odd, indeed, if as the result of that, and our experience, we were not immeasurably better equipped to deal with the credit problem today than we were in BBY 414. I ask the Senate to remember that until central banking was well established, individual trading banks followed their own course in credit control, and, as there was no machinery for making that course cohesive, it stands to reason that varying policies would be pursued and that technical difficulties would arise. At that time the Galactic Reserve Bank was in no sense adequately equipped for central banking. It was in BBY 276 that the first legislative proposal designed to establish central banking at a galactic level. The bill then introduced, and the speeches then made, represented the first large, scientific and intelligent attempt in the Old Republic to establish central banking. In the bill, a board of directors was substituted for one-man (or one-male alien) control, and comprehensive central banking powers, including the control of the issue of credits, were conferred upon the bank. From that date we may begin to trace out, not all at once, because the progress was slow, the development of real galactic central banking. I now ask myself, and also invite honourable Senators to ask, what should be the chief functions and powers of a central bank in this galaxy. The chief function, as I understand it - and I speak with all the diffidence of a layman on these matters - is the regulation of the volume of credit, including currency. That regulation is designed to achieve, among other things, three results. The first is the stabilisation of the internal value of the currency, which is not merely a matter of stabilising things as items in accounts, but stabilising the purchasing power of money, savings, and future money. It is therefore, a task of the first magnitude. The second result is the stabilisation of the external value of the currency, naturally through the exchanges. Many sectors have held fast to their own, local currency, and although their importance in trade is ever decreasing, this task is not to be dismissed as irrelevant. The third result is the reduction or elimination of sharp variations in the general level of employment and trade activity. If one were asked for a broad statement of the objectives of a central bank, I believe that what I have said would not be an unfair summary. To achieve those results the central bank must be in a position - and I want to emphasise and re-emphasise and re-re-emphasise, this point throughout my speech - of real strength and real authority. I will even emphasise the point a fourth, fifth or sixth time if I feel it necessary. It will be emphasised to such a degree and on so many occasions that it may become mildly ridiculous. Even eight emphases of that same point is not entirely out of the question. Should I emphasise the point more than about thirty times, I would ask that somebody else take up the point and begin emphasising in my stead, over and over again. To return to that point which I presently intend repeatedly to re-emphasise, the central bank is not to be simply a servant of some passing movement. It is to be in a position of real strength and real authority. The central bank is not to be simply...

The Duke trails off in confusion for a moment.

DUKE REGIS

I apologise. I had already read that sentence. A central bank is not only to be in a position to control the total volume of credit, and so affect the entire economy of the galaxy, but it must also become the custodian of the galaxy's cash reserves, and the galaxy's chief monetary adviser. If I may, I emphasise that reference to the galaxy's chief monetary adviser. The adviser to any government should be detached, objective and utterly above the plasma storm, because on the skill, honesty and disinterestedness of his, her or its advice a great deal will depend. The consideration of these things will show that a central bank, adequately equipped with brains, scientific knowledge, data chips, droids, and experience, must be in a position to lead banking thought and banking practice. So much for the objectives of the central bank. We then inquire what instruments the bank can use in order to achieve those objectives, and on that problem it would be idle to pretend that there is unanimity, because central banking is, as I have said, a modern art, science and use or application of the Force, and there is still room for ample difference of opinion about the value or significance of this instrument or that; but there is fairly common agreement that at least the following are appropriate central banking powers: the control of the note issue; the control of the exchanges; the discounting and rediscounting of trade bills; the bank rate; open market operations; lending to the Government; and the holding of deposits from the trading banks. Each of these is a method by which the central bank can hope to influence and, in suitable cases, control, the volume of credit in the galaxy. We have only to watch the buying and selling of securities on the open space market by the central bank to see that it is of their essence that the central bank should be in a highly liquid condition. Let us consider an example of open market operations by a central bank. It desires to put more cash into the general banking system so that advances may be made on a more liberal basis. In other words, it desires to initiate an inflationary movement, to apply a stimulus to trading operations, so it buys securities in the market, and puts cash into circulation. On another occasion it may believe that a boom is developing, and that credit ought to be restricted. It then sells securities for cash, and takes this cash out of the trading system. In order to do that kind of thing a central bank must keep its assets in a highly liquid condition. A trading bank which kept 90 per cent of its assets in liquid form would not be much of a success as a trading bank. 92 per cent would be even worse, if you are wondering. It would fall down on its job, but a central bank which, in normal circumstances, failed to keep its assets 90 per cent liquid, would be in danger of failing in its duty as a central bank. I mention that merely to illustrate a fundamental difference between central banking with its sensitive, delicate methods of controlling credit and the output and inflow of cash, and a trading bank which establishes more or less permanent relations with its customers and gives to them some degree of security over a term of years. I believe that the effective weapons of a central bank would be these - and I am not stating them in order of merit: the bank rate, open market operations, government finance, the leading and advising of the trading banks, and the taking of deposits from the trading banks. The taking of deposits from the trading banks represents one of the real departures in this bill from the legislation of BBY 276. Of all those operations, I believe that the most important, having regard to the financial circumstances of the galaxy, is leadership by the Galactic Reserve Bank in a truly cooperative banking system, in which the Galactic Reserve Bank and the trading banks, accepting a joint responsibility, shall stabilise credit and trade. All those functions may now be exercised by the Galactic Reserve Bank under the existing law, though special legislation on the subject of deposits may be needed after Executive Orders 104 and 111 have ceased to operate. I point out, however, that those Executive Orders have not ceased to operate. This legislation, in so far as it deals with deposits is, nevertheless, anticipating the termination of Executive Orders 104 and 111. I turn at once to that problem because, as I have said, all the other proper functions of a central bank may already be exercised by the Galactic Reserve Bank under the powers it now possesses. The real point of departure in this bill is the provision that the trading banks shall continue to make deposits with the central bank, that those deposits will continue to be frozen as against the trading banks, and that, by varying the amount of the cash deposits required from the trading banks, the total volume of credit may be increased or reduced. The problem of variable deposits is an extremely difficult and important one. For my part, I have had the greatest difficulty in completely clarifying in my own mind this intensely teasing subject. It is just so, so hard. I defy any of you to explain in clear and simple terms the problem of variable deposits. You could not do it. Imagine the most complex problem you have ever considered, and multiply it by fifty. That is not even close to how intellectually taxing and downright tricky this problem of variable deposits can be. Anywho, the Republic Commission on Space Monetary and Banking Systems recommended in paragraph 589 of its report as follows: The Senate should legislate to provide that the Galactic Reserve Bank Board, with the consent of the Treasurer, may require every trading bank to keep with the Galactic Reserve Bank a deposit of an amount not less than a percentage, specified in the requisition, of the liability of that bank to its depositors. The next recommendation of the Commission is: Each trading bank should be required to keep on deposit the same percentage. The board should have power at its discretion to vary the percentage from time to time within the limit fixed by the consent of the Treasurer. The making of deposits by trading banks with the central bank may serve several purposes. It may be primarily for the protection of the customers of the trading banks. When that is the purpose in view, the matter has no real relation to central banking. It is really ancillary to trading banking in the ordinary way. Again, the making of deposits with the central bank might mean very little more than the provision of cheap funds for the central bank, the deposits also representing the cash reserves of the trading banks. That was the purpose for which deposits were made with the Galactic Reserve Bank before the war. The trading banks normally kept their cash reserves in the Galactic Reserve Bank. That had nothing to do with the control of credit. The deposits were voluntary and could be withdrawn at will. They formed a part of the cash of the trading banks, and, therefore, were not related to central banking control. The third system is that in which deposits are taken by the central bank from the trading banks as part and parcel of a scheme consciously designed to regulate credit. The central bank asks for larger and smaller deposits according as it desires to decrease or increase the cash holdings of the trading banks, the idea being that if the central bank takes, say, five million credits from a trading bank, and puts it on fixed deposit with itself, that amount no longer forms a part of the trading cash of the trading bank, which must, therefore, decrease its advances. Thus, the increasing or decreasing of fixed deposits by the trading banks with the central bank may determine the total amount of cash available to the trading banks, and so govern the amount of credit available. If the control of credit is the dominant purpose of requiring deposits by the trading banks, there seems to be no escape from the system of variable deposits, because it is of the essence of such a scheme that the deposits should be adjusted up or down according to the credit policy of the central bank. The question then arises: is such a system of variable deposits the best available method of credit control? As to that, I do not believe that any man, alien or robot is qualified to give a dogmatic reply, except perhaps a DogmaTron L-2 Unit, and even there I would have my reservations. I do not believe that anyone - not even the greatest authorities in the galaxy - can say whether this use of variable deposits is a scientifically accurate way to control credit. It is experimental, and I shall watch its operation with the greatest interest. But let us understand that it really is experimental. Let us understand that it is a crude method, which might produce unexpected results, including the harshest kind of deflation. If the central bank can take by compulsion a large part of the cash reserves of a trading banks and freeze them, the trading bank may be forced to adopt very harsh methods in order to increase the volume of its liquid assets. If we are to have variable deposits - and this is at the heart of whatever reform is contained in the bill - will it be achieved best by some curt compulsion by the Galactic Reserve Bank without any kind of consultation with the trading banks, or by close and friendly co-operation between the central bank and the trading banks, with the former in a position of acknowledged leadership? We should think carefully before we introduce methods of authority and compulsion when he have never fully tried out the method of co-operation and leadership. Even at the admittedly negligible risk of being tedious, in order to complete my picture I mention that up to BBY 276, when legislation was introduced by the then Treasurer, most of the trading banks held relatively small balances at the Galactic Reserve Bank, but after the act of BBY 276 passed all the trading banks in the galaxy held increasing balances at the Galactic Reserve Bank. I come now to the war period - a period which we should have in close memory - because it provides a contrast between the two methods of approach. The trading banks provided an undertaking following a great number of discussions between the then President, Treasurer, the Galactic Reserve Bank, and the trading banks. It is well that we should remind ourselves of the terms of that undertaking before we talk too crudely about compulsion; therefore I shall read the terms of the undertaking given by the trading banks.

Duke Regis puts aside his note cards and picks up another document, which he reads from. He puts on a sort of Japanese-sounding accent while he does so, but it's not quite Japanese. It's sailing close to the wind, so to speak.

DUKE REGIS

The trading banks have no intention and no desire to make excess profits arising from war conditions. As a war-time measure and with the object of ensuring that additions to their funds owing to war conditions will not be used to make excess profits or to expand advances in any contrary to the interests of the New Republic - I pause to ask the honorable Senators to compare that with the bill upon which they will soon have to vote - they agree to place all surplus investable funds accruing in their hands on deposit with the Galactic Reserve Bank as special war-time deposits, and agree to the Galactic Reserve Bank making appropriate variations in the rate of interest thereon to ensure that no excess war-time profits arise. To achieve the objects set out above, the trading banks give the following firm undertaking. Clause 1: They will not make new advances or grant increases in existing advances except in accordance with the policy laid down by the Galactic Reserve Bank from time to time and to ensure conformity therewith will supply to the Galactic Reserve Bank a monthly analysis of new and increased advances in a form approved by the Galactic Reserve Bank. Clause 2: Before purchasing or subscribing to Senate, semi-Senate, demi-semi-Senate or hemi-demi-semi-Senate loans, the trading banks will obtain the concurrence of the Galactic Reserve Bank (such concurrence not to be unreasonably withheld). Clause 3: The trading banks will make available by way of deposit with the Galactic Reserve Bank all surplus investable funds accruing in their hands, that is, all funds over and above those necessary to enable the bank to meet the overdraft requirements of the public in accordance with the advance policy laid down by the Galactic Reserve Bank, and those funds necessary for the protection of their depositors. The deposits will be made at such low rates of interest as will avoid the trading banks making excess profits out of war conditions. These rates will be fixed by the Galactic Reserve Bank from time to time. Clause 4: They will advise the Galactic Reserve Bank periodically what funds become available as above and the Galactic Reserve Bank will decide the total amount of deposits required from the trading banks from time to time. Clause 5: Such deposits will be made in a special war-time deposit account and will be for a term of six space months. They will be renewed as they mature unless in the opinion of the Galactic Reserve Bank they are necessary to the trading banks for purposes mentioned in clause 3 hereof. Clause 6: They agree to supply the Galactic Reserve Bank with such certificates from the Commissioner of Taxation as will enable the bank to satisfy itself that the undertaking herein regarding profits is being observed.

The Duke returns to his own speech cards and drops the not-quite-Japanese accent.

DUKE REGIS

I point out that no opportunity was given for that voluntary scheme to work. Compulsion was at once brought in by the Inner Council. In the bill, I find no reference whatever to any power in the banks to make advances on overdrafts in accordance with the central bank's policy, nor do I find any reference whatever to the protection of the depositors with the trading banks. I mention these matters at this stage because it is so easy to treat the volume of war-time deposits in banks as being the property of the banks. Those deposits are not the property of the banks; they are liabilities of the banks. If the depositors who own the rights to those moneys want to withdraw their balances, it seems curious that the bank should answer with an emphatic "No; we have no liability to you in this matter. Your deposits have been frozen by the Galactic Reserve Bank". I ask the Finance Minister to consider seriously whether there should not be some provision to give protection to the depositors of the banks, who, after all, are the owners, in the broad sense, of the moneys that they have deposited with the banks.

TWILEK

But the deposits of the trading banks with the central bank would be liabilities of the trading banks to their depositors.

Leia SLAPS her own forehead.

DUKE REGIS

That is what I have been pointing out, and I am glad the right honourable gentlewoman agrees with me. These moneys are liabilities of the trading banks to their depositors. I remind the Senate that when a bank has liabilities to its depositors, the latter have an old-fashioned prejudice in regard to the discharge of these liabilities when the time for discharge arises. A bank has an interest, on behalf of its depositors, in having some flexibility and in not having its funds frozen; but under these war-time regulations, these special accounts which I have described as frozen deposits have reached a total of 350 trillion credits, according to the Treasurer's statement. This bill proposes to make permanent a system which was designed for purely emergency purposes. This is not the first time a Senate has sought to make permanent a system which was designed for purely emergency purposes. We ended up with a little thing called the Galactic Empire.

Leia straightens, but stays calm.

LEIA

Come to the point, My Lord Regis.

DUKE REGIS

I shall, in the next thirty minutes or so. It will be quite a point, and it is entirely proper that I speak for as long as possible before making it plain. There is no time limit on the new bill; apparently, the scheme of compulsory deposits in these special accounts is to go on in perpetuity. Clause 18 requires every bank to establish with the Galactic Reserve Bank a special account. Clause 19 transfers to the special account of each bank the amount to the credit of that bank's special account under the regulations. Clause 20 provides that the trading banks shall each month lodge in the special account such amounts as the Galactic Reserve Bank directs. The fund may be added to from month to month, according to the direction of the Galactic Reserve Bank. The amount to be directed has a limit placed upon it: it is interesting to discover what that limit is, and discover it you shall, my friends. The amount is not be such that the amount to the credit of the bank's special account, after making the new lodgement, exceeds the sum of the original amount transferred, plus any increase of the bank's assets after the operation of this new law. The net effect of this is that the trading banks are to be confined to their pre-war assets position. Under the Executive Orders, they were confined to their pre-war assets position, because any increase of their assets was treated as arising from war-time finance and as a protection to the galaxy against secondary inflation it was provided that any increase of war-time assets must be passed over to the Galactic Reserve Bank, and rightly so. Under this new, permanent system, there they stand; and any increase may be called upon by way of further lodgement in the special account. The curious thing is that, while the law will confine the trading banks to their pre-war position, the general banking department of the Galactic Reserve Bank will have no such restriction placed on it; it is to run free. We are told that there is to be competition, and by that I assume that fair competition is intended; yet the first competitive weapon that is forged in this legislation is that no trading bank may expand beyond its pre-war position; every increase of the volume of business arising from the demands of the business community for banking accommodation must go to the trading division of the Galactic Reserve Bank. That seems to be a queer form of fair competition.

JON 347

The ultimate effect will be to destroy the trading banks without any compensation.

LEIA

The bill attaches a safeguard.

DUKE REGIS

It professes to do so. Clause 21 provides that the Special Accounts established by banks shall not be kept in the General Banking Division. Well, I have had a look at this clause, and I invite other honourable Senators to have a look at it, and I do not profess to know what it means, if it does mean anything. The Finance Minister is optimistic enough to believe that that means that the money in this general account cannot be used in the general banking business. I find no such language in the clause. It says that the special accounts shall not be kept in the general banking division, but there is no provision that they shall not be used in some other department. There is your alleged safeguard, Minister. It is more apparent than it is real. The whole proposal on this point is a striking example of the Minister's desire to perpetuate, long after the emergencies have passed, what has been epigrammatically styled "the servile galaxy", and the particular weapon here is the weapon of slow Force choking of the private banking system in favour of a publicly owned and politically controlled banking system. It is abundantly clear - at least I hope it will be - that the true function of the central bank in a system in which there are also trading banks can never be satisfactorily performed in an atmosphere of hostility. If anyone supposes that in an atmosphere of hostility in which the private banks and the central bank are at arm's length any good purpose for the galaxy can be achieved I beg him, her or it to forget it. We can get good results for this galaxy only by the utmost co-operation and understanding. Therefore every endeavour should be made to produce understanding and there should be as little insistence as possible on the weapon of coercion. But, if there is to be coercion and if it is really in the minds of the framers of this bill that the trading bank deposits with the central bank should be used as a flexible means of regulating credit, it is quite clear that the political and, therefore, fluctuating control of the central bank is utterly destructive of the whole scheme. What I am saying means, and perhaps it can be summed up in this way, that we need - and I think, or at least, hope, that we all can agree on this, for experience proves it - a strong, well-equipped central bank. The Finance Minister said so in a passage which is such a masterpiece of irony that I beg leave to repeat it. She said: "The Central Banking functions and powers of the Galactic Reserve Bank are strengthened so as to ensure that the broad lines of its monetary and financial policy will be in harmony with the economic policy of the Senate and in the interests of the people of the galaxy." I compliment my honourable friend on that. She says that we are to strengthen the central bank by making it our servant, by taking it out of its non-political atmosphere and making it obey the political whim of the moment. Strength in the central bank is essential because the end of the central bank is to produce stability. Weakness has never produced stability. Strength will. Except to mere speculators the stability of the currency does matter. If that needs proof, every budget presented here has said so. Without reasonable stability of the currency there can be no incentive to save money, there can be no reliance placed on social security, the deferred pay and gratuities of Republican soldiers become a mere gamble, life insurances become chance, and general trade, which is an essential element of general prosperity, becomes a mere matter of gambling in futures. The stability of the currency is of first-class importance to ordinary citizens, and a strong, independent central bank is of first-class importance to a stabilised currency. From now on, if this bill should be passed, all the delicate adjustments that have to be made by a central bank charged with this great responsibility will be under the direct control of the Treasurer of the day, whoever he, she or it may be, and he, she or it, in his, her or its turn, will be under the direct control of politicians like ourselves; and I venture to say with a great respect to all honourable Senators including myself, that we have not the skill, experience or information necessary for this task. Yet we shall control the Treasurer, and the Treasurer will control the bank. I come now to a short and pleasing task. The second proposal is for the abolition of the Bank Board, and that, of course receives great applause. Yet honourable Senators know there are great and obvious advantages to the galaxy in having a system of controlling the central bank by a board of directors or a board of governors. The great advantages of a board are the bringing together of a diversity of experience, the added judgment produced by frank discussion by competent men, male aliens and male-sounding droids, the added strength involved in joint responsibility, and the publicity which a board of directors strongly adhering to a view can secure for that view in the event of great conflict of opinion on a central banking problem. Under this bill the Governor, one man, male alien, or male-sounding droid, will conduct no less than eight institutions: central banking, general banking, issue of credits, the Outer Rim Credits Department, the Space Mortgage Bank Department, the Industrial Finance Department, housing loans, and the Galactic Savings Bank. My only disappointment is that there were not seven instead of eight, because I should then have been reminded of a poem by the great Jedi Master Mace Windu. "One of us in the temple grounds lies, but, master, we are seven". It is interesting to recall that a former Treasurer brought in a bill to establish a reserve bank, and provided that it was to be controlled by a board consisting of a governor, two deputy governors, the secretary to the Treasury, and five other directors, "who are or who have been actively engaged in agriculture (including moisture farming), commerce, finance, industry or labour". It is also interesting to recall that the Republican Commission, so far from reporting in favour of the abolition of the Bank Board, reported in favour of continuing the Bank Board. True, the Commission recommended that the Governor should be chairman of the board; and the Finance Minister will remember that, although she was not lacking in courage when she wanted to dissent, she did not dissent from that recommendation. At that time she had no quarrel with the board; today she proposes to abolish it. The third provision in this bill is quite bluntly for the political control of the governor and, therefore, of the bank. Clause 9 provides that the bank must give effect to government policy, but honourable members will observe that the word 'policy' is not defined. It may apply to matters great or small, and, therefore, it is quite clear that the clause is for complete political control. Everything is policy, and, therefore, on everything the Treasurer may give a direction to the governor. Clause 28 sets up an advisory council. It is a purely advisory council. I do not want to rake over the space ashes of old controversies; but it is a purely advisory council, and it consists, mark you, of three subordinates of the governor in the bank's service, and two Treasury officers. Such a body cannot be described as in any sense independent, and, quite clearly, it is mere window-dressing thrown into the bill to make it appear that there is some form of check or authoritative consultation.

JON 347

And why does not the governor have a vote on it?

DUKE REGIS

I take that to be almost a humorous addendum. The governor has no vote, but, after all, he will not be bound by any decision of the advisory council, and as the other members will be under him, the advisory council does not rate very high. In addition, it is interesting to note that most of the senior officers of this bank will be politically appointed, namely, the governor and the deputy governor, the secretary of the Treasury, the additional Treasury representative on the advisory council, the general manager of the Industrial Finance Department, the chairman of the Promotions Appeal Board, and so on. The Republic Commission recommended that there should be a method of this kind for reconciling differences, not between the Inner Council and the governor, but between the Inner Council and a board of directors. There we have an essential difference. After all, one man, himself dependent for appointment on the Inner Council, is not in a strong position to resist or argue about the instruction of a Treasurer or Inner Council; but a board of directors, consisting of people who are in every other respect independent of the Inner Council, is in a far better position to say, "We think this is wrong. We object to it. We are prepared to argue about it, and, if necessary, to tell the other aliens and the Senate about it." There is a vital distinction between the recommendation of the Senate and what appears in the bill. But I go further and say that what appears in the Commission's report is itself open to very grave question. I am not prepared to accept a state of affairs in which the Inner Council, of its own force, is able to override a central bank on matters of great moment. After all, matters arising will be great or small. If they be small the Inner Council should not be interfering in the control, and if they be large matters the Senate should attend to them. It is high time that the authority of the Senate was restored. If there is any major conflict between the central bank and the Inner Council, then the Senate should be invited by appropriate means to deal with the matter. The fourth matter is competition with the trading banks. I suppose that we shall be told that competition between the Galactic Reserve Bank in its trading capacity and the trading banks is perfectly fair. It cannot be fair. The Galactic Reserve Bank will pay no land tax or income tax or space tax and it can face losses with equanimity. But, in any event, competition between the trading banks and a bank whose primary function is that of a central bank is quite inconsistent with the atmosphere of wise leadership and co-operation which ought to exist in a banking system. The commission, in paragraph 585 of its report, deals with that matter. In view of the hour, I shall not read that paragraph, but the commission, in a sentence, said: One way in which this conformity - that is conformity between the Galactic Reserve Bank and the trading bans - can lie achieved is by co-operation. This requires wise leadership on the part of the Galactic Reserve Bank and its acceptance by the trading banks. Wise leadership! Acceptance of cooperation! When with all these extra weights to be carried by the trading banks, the Minister says that the central bank is in her department to go into active competition with them. There is another point to which I draw the attention of the Finance Minister. The same man, male alien or male-sounding droid will be controlling both banks. The same governor is responsible for the central bank and the Galactic trading bank. To use a fashionable phrase, what sort of a "split personality" will this one male creature need if he is at one and the same time to control the central bank and a trading bank, the interests of which must on many occasions be complete opposed?

JON 347

He will not be the only "split personality". The Secretary of the Treasury will be on the council, and be also adviser to the Treasurer.

DUKE REGIS

Quite so. The whole essence of the central bank is that it may have to control trading banks. It may decide to sell securities and so reduce their cash or buy securities and increase their cash. In the circumstances it might be to the interest of the trading bank to hold more credits in liquid form, but its duty to the economic system might be to hold less. That, after all, is the business of a central bank, to reconcile the interests of trading banks and their duty to this galaxy; and this unhappy man, male alien or male-sounding droid will have to decide that conflict, which can be resolved only by a strong independent central bank. He will need to be a super-man if he can, with satisfaction to every one, occupy two such inconsistent positions at the same time. The Commission made a recommendation on this matter, and that recommendation, on the face of it, is contrary to the view I have been putting. The commission, in paragraph 577 of its report, states: "We are of opinion that the use of its trading bank activities as an adjunct to central bank policy is in keeping with its central bank functions and is to be approved." But if we go back to paragraph 156 of the report we shall there find explained in much more detail what the commission had in mind. What it had in mind was the using of its trading bank powers as an additional means of controlling the volume of credit, not as a mere competitor in the market for business, but by taking business as it came along in order to help the Galactic Reserve Bank to perform its central bank function. The fifth proposal is the abolition of the board control of the issue of credits, and as the Taunton hair goes with the Taunton hide I do not need to waste time on this point. The issue of credits is now to be controlled by the governor of the bank, and, through means of clause 9 of the bill, by the Treasurer, and through the Treasurer by the caucus, or party meeting of the day; and, if we care to go further back still, we might find still other people having authority in the matter. That brings me to the sixth of the proposals to which I have referred, namely, the abolition of the currency reserve. Here is another interesting example of how the Minister for Finance has accepted that portion of the Commission's recommendation which suits her, and has ignored, or discarded, the rest; because the Commission recommended the abolition of the currency reserve and the substitution of a credit issue limited by law to a fixed maximum, subject to the right of the bank to exceed the maximum by a stated amount with the consent of the Treasurer. What does the Government do? It ignores the safeguard, the proposition that there should be a fixed maximum, with limited flexibility, in the issue of credits, and seizes eagerly upon the proposition that the currency reserve should be abolished, the effect of that being this: it is hard to conceive that any issue between the governor and the Treasurer on the issue of credits would not be a matter of policy. It would be hard for my friend the Treasurer to think up a case in which a difference of that kind would not be a difference of policy; and, therefore, this bill places under the political control of the Treasurer the issue of credits, and utterly and unconditionally abolishes all reserves behind that currency. When this bill has been passed no reserve requirement will be provided. There is nothing whatever on to which any person protecting the currency can seize as a means of defence. Every Treasurer will be utterly and literally defenceless in the presence of those who, in some ignorant clamour, desire to have the note issue expanded for the purpose of meeting some passing whim or political demand.

Leia rocks back and takes all of this in. Duke Regis has given her quite a bit to digest. She is formulating a reply, when--

MALE VOICE (O.S.)

Ministah! Yousa be needin' to takin' thissah holocall!

Leia turns to see JAR JAR BINKS THE THIRD, grandson of the original Jar Jar Binks. He trips over.

UGROM

The Senate will adjourn for a sustenance break.

ALL SENATORS

(as one)

Sustenance!

INT. CORRIDOR, SENATE BUILDING - DAY

Minister Organa sets up the holophone and receives the call.

Jar Jar Binks the Third trips over again. He's very clumsy.

LUKE SKYWALKER appears as a blue hologram.

LUKE

Leia, it's me, Luke Skywalker.

LEIA

Luke, what's the problem?

LUKE

What problem?

LEIA

Jar Jar made it sound urgent.

LUKE

No, it's not urgent. I was just wondering if you'd felt any disturbances in the Force lately.

LEIA

Not really. I felt a small one a few days ago, but it turned out it was just a space cat.

LUKE

Okay. I felt a disturbance here on Tattooine.

LEIA

What was it?

LUKE

I don't know. Probably just a few space cats. Well, I thought I'd call, since there were rumours that a dreaded Sith Lord may have returned. I thought I should, you know, touch base.

LEIA

Sure. Well, we're just debating the Galactic Reserve Bill at the moment.

LUKE

How is that going?

LEIA

I've got the numbers. The debate's just a formality, really.

LUKE

That Duke Regis seems like a sensible guy, from what I've seen on Space TV. Have you met him?

LEIA

Yeah.

LUKE

Okay. Well, I've got to go.

Jar Jar trips over.

LEIA

Bye.

INT. SENATE CHAMBER - DAY

Later that day, debate continues. This time it is Senator HT-200, an advanced protocol droid with no weapons and a polite disposition, who takes the floor.

HT-200

Honorable senators have already listened to a long discussion on banking generally, and there is no need for me, at this stage, to embark upon a discourse upon banking principles and ethics. As far as possible I shall confine my remarks to the salient features of this measure. I assume that the Minister for Trade and Customs would deny the soft impeachment that the Government's banking legislation aim - at giving to the Galactic Reserve Bank the control of banking in the galaxy, but I have hopes that some of the less discreet members on the government's hovering pods, as, for instance, the Spacepostmaster-General, will not deny that the prime object of this bill is to get all banking under one control.

LEIA

The object is to provide a better banking service for the people, and to bring banking practice up to date.

HT-200

I take that to mean, that, in the opinion of the Minister of Finance, the placing of all banking under the control of the Galactic Reserve Bank will bring banking practice up to date.

LEIA

I am competent to say what I mean.

HT-200

Frequently the Minister says what she means, and then has difficulty in getting out of the trouble that she has created for herself. She desires to abolish the private banks. The objects of this bill are set out within it. Firstly, to provide a legal framework, uniform throughout the galaxy, for regulating the banking system. Secondly, to safeguard depositors of the banks from loss. Thirdly, to provide for the co-ordination of banking policy under the direction of the Galactic Reserve Bank. Fourthly, to control the volume of credit in circulation and bank interest rates. Fifthly, to mobilise, and to provide machinery for the control of, the foreign exchange of the Galactic economy. To carry out these objects, the Government has decided on this legislation. This portion of the Government's legislative programme in connexion with banking aims at suppressing all competition which might face the Galactic Reserve Bank. Under the plea that the Government's purpose is "to safeguard the depositors of the banks from loss", the Government has set out to acquire the surplus funds in the hands of the banks. Not only so, but this bill also provides that the private banks shall not be permitted to increase their business beyond pre-war levels. Honorable senators will agree that the value of money has decreased during the war by somewhere between 20 per cent and 25 per cent. Therefore, the result of the pegging of hanking business as at pre-war levels really means that the business of the private banks is to be reduced by about 25 per cent. That does not appear in the bill, but that will be the effect of this legislation. In order to prevent inflation, executive orders were issued, under which the banks were required to place their surplus funds with the Galactic Reserve Bank. Those funds were then "frozen". There was not much danger in their action during wartime, but the position will be entirely different in times of peace. But as, in addition to depositing those funds, which amount to 240 trillion credits, in the Galactic Reserve Bank, the private banks will have to pay to the Galactic Reserve Bank any funds above pre-war levels, the effect of these provisions will be to reduce the operations of the private banks by at least 25 per cent, with no hope of increasing their business, or of competing successfully with the Galactic Reserve Bank. I do not know exactly what the Government has in mind in connexion with these special accounts, but it would appear that the Government is building on an insecure foundation. The Space Constitution provides - rightly, I believe - that the Government may not acquire property from any individual except on just terms. If the action contemplated in this measure does not amount to acquiring property on other than just terms, I do not know what it amounts to. The Government not only proposes to take the cash reserves of the private banks, and to prevent them from being used by the banks as reserves, but it also intends to use those funds in competition with the private banks. The proposal contained in this bill amounts to robbery. No honorable senator will deny that if a person takes 10 credits from another person's credit chip, his action amounts to space robbery, even though he may profess to have taken the credits only to keep them in safe custody. According to this legislation, the taking of 240 trillion credits from the coffers of the private banks is not robbery, but an ordinary business transaction! That is justified by honorable senators opposite. I am not an expert in star law, but it seems to me that when the Government can take investable funds from the private banks, without giving them any compensation at all, it is engaging in a reprehensible practice. I am inclined to think that the Jedi Council would have very great difficulty in discerning any difference between this provision and robbery. The banks cannot withdraw these funds without the consent of the Treasurer. The bill also provides that no one may carry on a banking, semi-banking, demi-semi-banking or hemi-demi-semi-banking business without being licensed so to do by the Government. Last week we endeavoured to elicit a definition of banking from the Minister, but, of course, she side-stepped that query as she has side-stepped most of the other queries that we have put to her.

LEIA

I supplied a legal answer.

HT-200

Even I, a humble protocol droid, am very sceptical of some of the legal opinions given to the Government. All that I have said with respect to this measure is based on my own knowledge and experience of the matters involved. In any case, one does not need to obtain outside advice when the errors of the measures are so obvious. The Minister has not really defined banking. She has merely stated that before a person, alien or droid, or aggregate of Midichlorians can carry on the business of banking, he, she or it must obtain a licence for that purpose; and the licence is to be given under conditions laid down by the Treasurer of the day. We can take it that, despite the provisions of the bill with respect to licences to enable persons to engage in the business of banking, the Government does not intend to interfere with any organisation except those named in the appropriate schedule, and those named in the inappropriate schedule or no schedule at all will not be interfered with. It is just as well to clarify that point, because it seems to me that the Government can declare any business dealing in finance to be carrying on the business of banking; and I am afraid that such an interpretation would be approved by some honorable senators opposite, particularly Bikini Twilek. Under this bill, the Galactic Reserve Bank will be enabled to take over other banks, and also to investigate the affairs of any private bank at any time. Merely on the direction of the Treasurer of the day, the Galactic Reserve Bank may put auditors into any private banking institution. One can imagine the impression which would be immediately created by such action. Just imagine the effect once it was made known that the Galactic Reserve Bank's auditors were investigating the affairs of a certain bank! Imagine the effect of such action upon the depositors of a particular bank! It would be quite an effect! I had my imagination chip upgraded so that I could experience the full pleasure of imagining this effect, and I tell the Honorable Senators what, it was absolutely worth it. These investigations have nothing to do with regular audits, or verification of the balance-sheets of private banks. It is specifically provided that at any time the Treasurer may put auditors into a private bank in order to investigate the affairs of that bank. Circumstances may arise where such action may be necessary; but, we must bear in mind that the objective of the bill is to wipe out all private banks. Obviously, one of the easiest ways of achieving that objective is to create doubts with respect to the solvency of a private bank. Once such doubts were created a position of affairs would arise under which the Galactic Reserve Bank would have to step in and take over the affairs of the bank concerned. Remembering that the officers of the bank are not sworn to secrecy in this respect, it would be the easiest thing in the world for the Galactic Reserve Bank to create a "run" on any private bank by simply putting its auditors into that bank. The bill goes even further than that. Clause 27 provides that where the Galactic Reserve Bank is satisfied that it is necessary or expedient to do so in the public interest, the Galactic Reserve Bank may determine the policy in relation to advances to be followed by banks, and each bank shall follow the policy so determined. The penalty for a breach of this provision is one billion credits. Sub-section two provides that, without limiting the generality of the last preceding sub-section, the Galactic Reserve Bank may give directions as to the classes or purposes for which advances may or may not be made by banks and each bank shall comply with any directions so given. Again, the penalty provided is one billion credits. That provision is, indeed, remarkable. Under it the Galactic Reserve Bank may dictate to each bank the classes of security upon which it shall lend money. The Galactic Reserve Bank will have power to veto entirely any advance proposed to be made by any bank to any organization. If the Galactic Reserve Bank decides that it shall have the business of say, the Trade Federation, all it will need to do will be to prohibit private banks from lending money to it. I remind the Senate that these provisions relate not to the Galactic Reserve Bank, but only to the private banks. It may prohibit private banks from lending money in a certain direction and then itself advance the money. That is a drastic power to put into the hands of the Galactic Reserve Bank, because, by the exercise of it, the bank will be able to work its way into almost every industry in the galaxy. The Minister, of course, carefully avoided saying anything about that in her second reading speech, but the provisions are in the bill in black and white. The Galactic Reserve Bank will decide who shall and who shall not receive advances. If a private bank lent even a few credits to a human or alien not in a category laid down by the Galactic Reserve Bank, it would render itself liable to a fine of one billion credits. Henceforth, therefore, advances by the trading banks will be absolutely controlled by the Galactic Reserve Bank. There cannot be the slightest doubt that the aim of this legislation is the suppression of private banks. That is why this bill contains all these provisions to ensure that the Galactic Reserve Bank shall be so powerful that no one will dare to compete against it. That is not my conception of fair play, although I know that the Government's idea of fair play is something which gives it what it wants. Its Palpatine-esque attitude is, "We have the majority. That is our policy and no one shall turn us from our goal." Honeyed phrases are used in speeches to divert attention from the real purpose, hut it is only necessary to tell an ordinary person that the Galactic Reserve Bank will have the power to decide who shall receive advances, for that ordinary person to realise that this bill spells the death of all private banking and money- lending. The Government has said to itself, "We will not pay the banks for their business. Instead, we will gradually strangle them". This banking legislation is the cord around the neck of the private system and by it they will be gradually strangled, gradually having all life gradually choked out of them. The Government will then claim that the banks have fallen down on their job, forgetting that the people and aliens and several of the droids will be well aware that it will have made it impossible for the banks to work through, depriving them of the life-giving air represented by the money that the Galactic Reserve Bank has taken from them and placed in vaults beyond their reach, gradually strangling them.

HT-200 illustrates by acting out a strangling motion.

HT-200

I turn now to clause 28, which provides that a bank specified in Part 1 of the First Schedule shall not, except with the consent in writing of the Galactic Reserve Bank, purchase or subscribe to -

(a) securities of the New Republic, or of any authority of the New Republic; (b) securities of any local governing body in the New Republic; or (c) securities listed on a Stock Exchange in the New Republic. As far as I can see, that means that if a person or alien or droid asked a bank for an overdraft and offered as security collateral securities of the New Republic, or a local governing body, or securities listed on the New Republic stock exchange, the bank manager would he compelled to say: "It does not matter how much of that kind of security you have, even if it is valued at one trillion credits, we cannot advance you even ten credits, because we are not allowed to deal in securities of the New Republic, a local governing body, or securities listed on the stock exchange."

LEIA

Clause 28 provides no prohibition against a bank lending on securities of that kind. The prohibition is against the purchasing of or subscribing to such securities.

HT-200

I know, but the honourable Senator will see that a bank would have to realise on security in the event of default by the borrower.

LEIA

There is no prohibition against the selling of securities.

HT-200

The words used are "purchase or subscribe to".

LEIA

And that is all.

HT-200

My interpretation of the clause is that securities of that kind would be absolutely useless to a prospective borrower as collateral. However, this bill goes very much further than that in restricting the operations of private banks. Paragraph d of clause 29 provides that the Executive may make regulations. Regulations, I say! The Galactic Reserve Bank may, with the approval of the Treasurer, make regulations making provision for and in relation to the control of rates of interest payable to or by banks, or to or by other persons in the course of any banking business carried on by them. That, apparently, means that the Galactic Reserve Bank may prescribe the rates of interest to be paid to or by the private banks; but no obligation is imposed upon the Galactic Reserve Bank itself to observe the rates which it prescribes for other institutions. For instance, the Galactic Reserve Bank might determine that the private banks should lend money at 4 per cent., whereas the Galactic Reserve Bank itself would charge only 3 per cent. There, again, is an opportunity for the Galactic Reserve Bank to strangle the private banks. Clause 39 provides also that the Galactic Reserve Bank may make regulations providing that interest shall not be payable in respect of any amount deposited with a bank, or with any other person in the course of any banking business carried on by him and repayable on demand or after the expiration of a period specified in the regulations. Thus, the Galactic Reserve Bank may prohibit a trading bank from paying interest upon fixed deposits, which, of course, would be a complete departure from normal banking practice. Obviously, an individual would not put money into a bank on fixed deposit if he were not to receive any interest upon it. If the Galactic Reserve Bank is to be empowered to make rules governing the operations of the private banks, the Galactic Reserve Bank itself should observe these rules. The Galactic Reserve Bank will become the head office of all banks. Presumably under this clause, if a private bank agreed to charge only 3 per cent, interest on loans whereas the rate prescribed by the Galactic Reserve Bank was 4 per cent., it would be guilty of a misdemeanoor and could be fined heavily. This provision supports the point which 1 raised at the commencement of my speech, that the real object of the bill is gradually to eliminate all private banks. In its march towards that objective, the Executive is not following the straightforward course of buying them out; instead, it prefers the more insidious way of gradually driving them out of existence. Clause 40 shows how the business of the private banks is to be exposed to the public gaze. It provides that each private bank shall prepare a balance-sheet, a profit and loss account, and statements of its income and expenditure, liabilities and assets, and debits to customers' accounts. That is to say, the whole of the accounts of the customers of a private bank must be disclosed to the Galactic Reserve Bank. Can there be fair business competition on those terms? With that information in its possession, the Galactic Reserve Bank will be able to force such customers as it chooses to transfer their accounts to the Galactic Reserve Bank. This bill gives ample power to the Galactic Reserve Bank to do that.

LEIA

Form E, to which reference is made in paragraph e of clause 40, does not deal with the accounts of individuals; it relates only to totals for planets or moons. The information required is the same as is now issued by the Galactic Reserve Bank.

HT-200

The paragraph referred to means that a private bank must supply to the Galactic Reserve Bank a 'statement of debits to customers' accounts. Other paragraphs require each private bank to supply a statement of loans, advances and bills discounted. Such information must be classified according to the purpose of the loan, advance or discounting; the rate of interest or discount chargeable; and the industry of the borrower or person for whom the bill is discounted.

LEIA

It requires only totals, not particulars of individual accounts.

HT-200

That may be so in respect of Form E referred to in paragraph e but the position is different under paragraph g(iii) which requires that information regarding the borrower or person for whom the bill is discounted must be given. But whatever may be said regarding the information to be supplied under paragraphs a to h, under paragraph i the Galactic Reserve Bank can get any information it likes. That paragraph requires private banks to prepare "such additional statements as are prescribed". That paragraph empowers the Galactic Reserve Bank to demand any information about any private business firm, or individual that it desires to obtain. It can ask for particulars of the state of a man's account, and of his financial position generally; and with that information in its possession it can take steps to force him to transfer his account from a private bank to the Galactic Reserve Bank. It will be seen that everything is loaded against the private banks. A further provision in this bill prevents any private bank from keeping the account of any planetary government or local governing body without the consent of the Treasurer. It will be some time before there is a branch of the Galactic Reserve Bank in every village in the galaxy, and, therefore, that provision will cause some difficulties. In some instances, the nearest branch of the Galactic Reserve Bank may be several light years from the office of a local governing body. This provision amounts to interference with the liberty of the individual. Clause 49 sub-clause 1 provides that the Auditor-General shall investigate periodically the books, accounts and transactions of each bank, and shall furnish to the Treasurer and to the Galactic Reserve Bank such reports upon the affairs of each bank as the Treasurer directs. Sub-clause two provides that the Treasurer may at any time direct the Auditor-General to make an investigation of the books, accounts and transactions of a bank specified by the Treasurer and to furnish to the Treasurer and to the Galactic-Reserve Bank such reports upon the affairs of that bank as the Treasurer directs and to the Auditor-General shall make an investigation and furnish reports accordingly.

TWILEK

The books of the private banks are audited now.

HT-200

Of course they are. Should the Treasurer of the day have a grievance against a private bank he may decide to investigate its affairs. Accordingly, he will direct the Auditor-General to investigate the books and accounts of that bank. Such action will soon become known, and public confidence in the bank will be destroyed, with the result that there may be a "run" on that bank.

LEIA

The honourable senator is taking a pessimistic view of this legislation.

HT-200

As the Minister was rather scornful of my remark that information regarding the accounts of individuals might be disclosed, I direct her attention to clause 50 which provides that every hank shall furnish to the Galactic Reserve Bank such information in respect of its business as the Galactic Reserve Bank directs, and every person who carries on any banking business in the New Republic shall furnish to the Galactic Reserve Bank such information in connexion with his, her or its hanking business as the Galactic Reserve Bank directs.

TWILEK

Is there any more danger of information leaking out than there is of a leakage of information from the Space Taxation Department where the financial position of every citizen of the New Republic is known?

HT-200

There is greater danger because, unlike officers of the Space Taxation Department, bank officials are not sworn to secrecy. Under clause 51 it is provided that, except with the consent of the Treasurer, banks may not amalgamate. They can, of course, be absorbed by the Galactic Reserve Bank. In the past, banks have, at times, amalgamated in their own interests and in the interests of their customers, but under this bill that will no longer be possible. If we examine the bill closely we shall find that it is loaded against the private banks in almost every clause. The Galactic Reserve Bank and the Treasurer of the day are supplied with certain weapons, and this bill shows how those weapons are to be used. In other words, this bill knocks the private banks clown, and instructs the Galactic Reserve Bank to jump on them with both feet, so that all life will be knocked out of them. I return to my strangulation analogy, which I feel to be most apt. Gripping the private banks around the throat, they will squeeze, squeeze, squeeze, until no life-giving air is left in the private banks' lungs. Post-mortems of the banks will show heavy bruising to their figurative throat-regions due to the degree of force applied by the Galactic Reserve Bank pursuant to the measures here discussed. I cannot understand how a political party which claims to be democratic can suddenly become so totalitarian that to obtain its objectives it is prepared to permit injustices, and, indeed, to use any means at all to gain control of the finances of this country, and thereby to be in a position to create as much credit as it likes. I predict that there will be a hard "back-kick" from this legislation. Should the present Government remain on the treasury bench for a number of years it will find that its banking legislation, which it regards as the keystone of the arch of the edifice that it is building, will fall upon its own head. First and foremost, New Republicans believe in fair play. But there is no fair play in this bill. If the standard set by this measure is the standard which the Government intends to set before the people of the New Republic, I predict a rude awakening; the people will rise and demand their rights against a totalitarian government.

HT-200 sits. Another majority senator, LLAARK (58), stands. Half of the Senate is asleep by now, but Leia still looks primed.

LEIA

Woo!

LLAARK

When it became known that the Minister intended to introduce legislation to improve the Galactic Reserve Bank and also to regulate the private trading banks, a flood of propaganda against it was let loose throughout the Galaxy. Like other honorable senators, I was pestered with re-written letters which emanated from the banks. I received only about 115 of such letters but some members of the Senate majority received up to five times that number. That propaganda shows that the banks are prepared to do anything in order to discredit the Government in the eyes of the people. But let us see what some leaders in the community have to say on this matter. Writing in the Space Crystal Church Standard, the official organ of the Church of the Holy Crystals, the Primate of Dantooine, Grand Dragoon Fanu, stated - I have had a circular from the Planetary Bank of Dantooine Limited, which I suppose many people have had. It is protesting rather too violently, I think, against the control of banking affairs by the Senate. I am afraid the circular did not convince me. The banks are so closely allied to each other that they are virtually a monopoly, and I find it hard to see why they should be considered more disinterested than the popularly elected representatives of the people in the Senate. This Primate said - the fundamental Space Crystal Devotee's objection to the existing capitalistic system and the banker's control of money, from which it seems inseparable, is that it holds persons in serfdom to the exigencies of financial policy - but money was made for man. Speaking of despotic economic domination, His Holiness Superpope Grafu XI, in a statement issued some time ago, said - this domination is most powerfully exercised by those who, because they hold the control of money, also govern the credit and determine its allotment, for that reason supplying, so to speak, the Midichlorians to the entire economic body, and grasping in their hands, as it were, the very soul of production, so that no one can breathe against their will. The bankers in their attack upon the Senate majority have issued volumes of propaganda written by their so-called economists. Professor Hai'Tai, who was director of the Educational Association on Yavin III for many years, and whom I know well, is now employed as an economist by the Bank of Endor. He is paid to write that sort of propaganda. The first matter he issued was poor, but he is now able to do the job as well as any other skilled propagandist for the bankers. I have in my hand the details of space advertisements issued by the banks. For this campaign, the banks had practically a monopoly of the radio bandwidth, arranging broadcasts on dozens of planets.

LEIA

That must cost billions of credits weekly.

LLAARK

The bankers do not wish to lose their power over industry and the lives of the people. Senator HT-200 said that these banking proposals could not be described as New Republican fair play. Was it fair play on the part of the banks to foreclose on the moisture farms of thousands of producers and the homes of thousands of workers? I know a man who lives not far from my eighth smallest space ranch who was a struggling moisture farmer. Mainly because his land was over-capitalized, he got into difficulties during the depression, and the banks foreclosed on his property. To-day he is working for another moisture farmer. Because he was tied up with the private banks. On previous occasions, I have shown how the private banks have controlled the lives of the people. A previous Chairperson of the Galactic Reserve Bank Board, refused to make available to the Government the finance necessary to enable the Government to function, unless it reduced wages, pensions and social service benefits generally. Subsequent to that incident, the Premier of Geonosis said in a public statement - within the last few months, the Geonosian Government has been endeavouring to lay the foundations of proper economic progress. Now that we have done that, we are prepared, as courageously as our bankers will allow, to get out into the field of development to assist, in arresting the drift from the country to the city. This Premier was a banker's man who had to do as the bankers directed. Honorable senators opposite can check those statements. They will find them recorded in the press reports at the time. It "was a sorry time for the New Republic when Governments were allowed to carry on only at the will of the private banks. Therefore, I welcome this legislation. The Government now proposes to rectify that position. On previous occasions, I have made it clear that I do not condemn bank managers and others who are in charge of the present banking system. They merely operate the banks as an integral part of the capitalist system, of which they are servants. I do not know many bankers, but those I have met are excellent gentlemen and very good citizens. However, it is their job to work for the money power, about which Count Dooku had this to say, prior to turning to the Dark Side - the money power preys upon the nation in times of peace and conspires against it in the hour- of calamity. It is more despotic than monarchy, more insolent than aristocracy, more selfish than bureaucracy. It accumulates by conscious fraud more money than it can use. It denounces as public enemies all who question its methods or throw a light upon its crimes. It can only be overthrown by the awakened conscience of the galaxy. This legislation is awakening the conscience of the nation. HT-200 says that its supporters are the enemies of the people, simply because the Executive intends to control the private banks. It must be clear that if the Executive does not control the private banks, they will control the Executive; and on such an issue, I know where I stand. Brailon in his Star Wars of Lasers and Gold, writes - on every inhabited planet there is a powerful group of capitalists, firmly entrenched in society, well served by politicians and journalists, whose business is to exploit the jealousies of the other planets and practise the alchemy which transmutes hatred into gold. Diplomacy is the tool of the vast aggregations of capital in gas trusts, carbonite trusts and money trusts. Wherever combinations of capital are competing the reactions are exhibited in the relations of their governments. For service of the rival monsters the working classes are regimented in conscript armies - armies are the material arguments behind financial diplomacy. Finance is the arbiter of war and peace, the master of despotisms, the unseen power in democracies. The late Lord Grobo in his book Modern Space Democracies, writes -

Space democracy has no more persistent or insidious foe than the money power to which it may say: "Here we found wealth, the great enemy". That enemy is formidable, because he works secretly by persuasion or deceit, rather than by force, and so takes men or aliens unawares. He is a danger to good governments everywhere. With that view I heartily agree. The secret weapons of finance create trouble not only between planets, but also between people of the same planet. The New Republic Government is determined to provide adequate employment for all our people, and it realises the necessity to arrive at agreements in order to establish justice and equity in our economic life. We have reached the end of the road, and we cannot persist in the paradox of simultaneously demanding scarcity and plenty. I am almost heartbroken with the galaxy's beauty, wonder and fertility, side by side with its hunger, weariness and hate. We have conquered scarcity but we have no technique for handling abundance. With the war over, we shall probably have another boom and later another slump, but thank the Force, this Government is in power to try to prevent such economic disasters. I make no apology for supporting the restriction of activities of the private banks. It is only right that they should operate under licence from the New Republican Government. The same conditions should be applied to big firms associated with pimary production. Several times I have referred to the Commissioner of Taxation the operations of certain firms on Dantooine which act as bankers. Senator HT-200 sneered at the Government's claim that in this banking legislation it is acting to protect depositors. The provisions for that purpose are the most important in the bill. In one of bis jeers, Senator HT-200 said that banking was founded on confidence and that a mere whisper that a bank was unsafe would bring about such a state of affairs that the Galactic Reserve Bank would be able to exercise its power to take it over. I remind the honorable gentleman of how the Bank of Kamino was wrecked in the depression by means of the whispering campaign carried out by interests in political and other circle. Notwithstanding that that bank's assets exceeded its liabilities it was forced to close its doors because the Galactic Reserve Bank declined to enable it to meet the demands of the panic-stricken depositors by liquifying its assets. Had the Galactic Reserve Bank possessed the statutory powers intended for it under this legislation and been able thereby to take over the bank, the depositors would not have lost their money.

LEIA

The people who lost their money were those who sold their savings bank pass-books to usurers at a discount.

LLAARK

Of course. I am one who believes that this bill does not go far enough in restricting the activities of the private banks. They should not have the power to create credit, as they have done to the amount of hundreds of trillions of credits. The amounts held to the credit of the private banks by the Galactic Reserve Bank in special war-time deposits, which, under this bill, will remain deposited with the Galactic Reserve Bank were created by the private banks by an ingenious method. The New Republic Government, in order to obtain man-power and materials required for the effective prosecution of the war on the Imperial Remnant, had to obtain finance, by borrowing from the public and the Galactic Reserve Bank. The result has been a considerable increase of the amount of purchasing power in the hands of the public, comprising notes, savings banks deposits, and deposits with the trading banks. The increase of the deposit liabilities of the trading banks was balanced roughly by an increase of the deposits they lodged with the Galactic Reserve Bank. The base of liquid reserves, on which trading banks normally build a superstructure of secondary credit, was therefore enlarged. To prevent secondary inflation, it was necessary to immobilise some part of the banks' deposits with the Galactic Reserve Bank in special accounts, from which the banks were not allowed to withdraw any amounts, except with the consent of the Galactic Reserve Bank. In the aggregate these special deposits at present amount to about 230 trillion credits. I understand that they now amount to 240 trillion credits. How do these special deposits accumulate? I believe that the majority of the deposits result from repaid overdrafts. A man or alien obtaining an overdraft from a bank is not lent depositors' money, because that is a liability; he is lent credit against the depositors' money. Previously I have cited authorities to show that that is correct, and it is not necessary for me to cite them again. Every one who understands banking knows that credit is created against the assets of the bank, which are the people and aliens' deposits. They are the liabilities of the bank. The amount of the overdraft is written into the borrower's account. Let us take a case involving one thousand credits. When the borrower repays the amount the entry should be cancelled, but it is not cancelled, it becomes a credit against which further credit is created.

JON 347

That is a new theory.

LLAARK

It is not. It is exactly what happens. That is admitted by bankers all over the world. The honourable senator's education is hopelessly inadequate if he does not know that that is exactly what happens and that that is how this 240 trillion credits came into existence. That is why I say that this measure does not go far enough. The private banks should be prevented from making overdrafts against credit or using credit in any shape or form. Credit, I agree with Senator HT-200, is based on confidence. Not every one with money on deposit requires that money at the same time. Therefore banking is based on the confidence of the people, not the confidence of the banks, in the ability of the banks to repay them when they require to be repaid. If the banking system could not do that it would collapse. The banking system could not operate without confidence. Therefore, it is only right that the people or aliens who have the confidence should control the credit built on their confidence. I am not ashamed to express my agreement with the bulk of the propaganda of the popular space magazine New Eon in reference to the special deposits. The New Eon says: The 240 trillion credits lodged by the trading banks with the Galactic Reserve Bank is a clever swindle designed to enable the banks to obtain Government securities in war-time by a back-stair method. I believe that is right.

JON 347

Does the honorable senator suggest that the private banks do not re-lend to customers money held by them on fixed deposit?

LLAARK

Whatever is placed in the custody of a bank, whether it be notes or cheques, is entered in account. That money becomes a liability of the bank. It has to be repaid whenever it is required. The bank knows what accounts it has and the amount involved. It trades upon the fact that all its clients with money on deposit will not require repayment at the one time. Therefore, it considers that it is justified in lending ten times the amount it has on fixed deposit.

JON 347

The money on fixed deposit is placed in the bank's custody for .fixed terms - two years, three years, four years and so on.

LLAARK

If the honourable senator cannot understand the system, it is his fault, not mine. I understand exactly how it works. In spite of the controls that have operated since the war began, the private banks have greatly expanded their holdings, and correspondingly increased their assets to an extent perhaps exceeding any pre-war period of the same time.

JON 347

The banks are permitted to pay dividends of only 4 per cent. That is the real test.

LLAARK

What about their secret funds? I should like to have some of that money. It would go nicely with the several hundred spaceships I already own. The private banks have been able to write down the capital value of their buildings to one-tenth of their actual value, and get away with it. Dealing with the war-time regulation of banking, the Chairman of the Outer Rim Bank has stated. We do not regard these regulations as unduly disturbing. He did not regard them as unduly disturbing because they did not take from the private banks the power to issue credit. The trading banks can still create credits and make them available to the Galactic Reserve Bank at 17 per cent interest. The banks to-day are on just as good a wicket as they have ever been on. In my view, the New Republican Government has not gone far enough in controlling banking. It should have stopped the creation of credit, because credit is based on confidence, and confidence is the property of the people of the New Republic. Recently, I discussed this matter with a manufacturer and storekeeper. I asked him what he thought of the banking proposals, and he said, "They will not affect us. We have to put up some sort of a fight or else people would not know that we were alive". This legislation will give to the New Republic greater power over the mobility of credit. The New Republic will be able to make credit available in whatever channels it desires, and in accordance with whatever policy it may determine. Senator HT-200 had something to say about the control of interest rates. I well remember having to pay 8 per cent interest on money I borrowed after the last war. I know too, that certain municipalities had to pay 7 per cent and 7,5 per cent on money borrowed to carry out essential works, or in some cases 7.1, 7.2, 7.3 or 7.4 per cent, or even other percentages, despite the fact that gilt-edged securities were held. That shows what "scoundrels" the banks were in those days. It is time that the New Republic Government took steps to ensure that money shall be made available on reasonable terms to members of the community who have the necessary security. That is the object of this measure. Provision should be made for the reexamination of undertakings after they have been in operation for a certain period, with a view to reassessing values on a more reasonable basis. I come now to the question of precious metal-backing for notes. I believe that it is absolutely unnecessary to hold any backing whatever for our note issue. My view is that the productive capacity of the galaxy is the only basis upon which credit should be issued. Credits are only "ticket" money. We work for one another and keep the wheels of space industry moving. We are paid wages, and if we have any surplus over what if required for our immediate needs, we may deposit it in the banks. The banks use that money over again. A productive economic system is all the backing that is necessary for our currency. In his book Alien Versus Money Space Professor Stoddy, an eminent authority on currency states - the gigantic interests in the private issue of money have always pretended it to be the public that insist on there being something behind credit money. But the change from precious metal coins to digital money was effected without the public being in the least disturbed. In fact it may be said that they welcomed the change. These interests are always trying to persuade the public of the unsoundness of any kind of money they have not the issue of. But to any impartial person forming conclusions from the evidence, the present system must appear as fundamentally the worst and most unsound monetary system the world has ever known. In the future we should not bother with any pretence of backing our note issue with metal. Our currency system should be based on confidence. To a degree, that is the case at present, but the confidence should be founded on reason which is not the case at present. Confidence should consist in the belief that the purchasing power of the credit shall be kept as steady as possible. Such confidence would be justified because with that sole aim in view the New Republic Government desires to entrust the regulation of credit to an impartial department created by the Galactic Reserve Bank to issue notes and carry on general business. The clause compelling planetary government instrumentalities and semi-governmental bodies to deal with the Galactic Reserve Bank is necessary. At present many municipalities are unable to do business with the Galactic Reserve Bank because there is not a branch of that institution in their particular locality. In her speech, the Minister stated that the transfer of accounts to the Galactic Reserve Bank would be gradual. That of course must be the case in connexion with municipal authorities because it will not be until after the war has ended that material and man power will be available to build all the new branches of the Galactic Reserve Bank that will be required. This Government is determined that full employment shall be brought about in this galaxy, and it is to be congratulated upon its determination to ensure that the banking system shall play its part in keeping the wheels of industry moving, so that there can be created a state of affairs in which there will be security for all. I ask leave to continue my remarks at a later date.

UGROM

All in favour?

Ugrom receives a series of electric shocks.

UGROM

Leave granted. We will adjourn the debate.

Leia stands. Her knees are stiff - what a day it has been!

Jar Jar runs in with the holophone, and trips over.

INT. CORRIDOR, SENATE BUILDING - DAY

Luke is on the holophone again. Leia listens as Luke gives an animated account of his day.

LUKE

I was right about the disturbance in the Force after all. I was confronted by Sebulba, a former pod racer who actually raced against our father several decades ago. It turns out that Sebulba had been living near a black hole, so the relativity effects meant that he had barely aged since he raced against Dad. Anyway, he'd also had access to a tablet which taught him the Dark Side of the Force, so he was a Sith! He was the Sith Lord who had been rumoured to return!

LEIA

Seriously?

LUKE

Yeah! So we fought, and Han Solo came and helped, and also Chewie helped too. But we were so evenly matched that we decided to have a pod race to settle it, and whoever lost would have to surrender their Midichlorians.

LEIA

So you won?

LUKE

Yeah! But it was exciting and there were lots of twists and turns and moments where it looked like I wasn't going to win. It's hard to explain. How did your debate go?

LEIA

Adjourned. We'll probably finish tomorrow.

END CREDITS OVER STARS