Executive socio-economic and financial outline with special reference to Sri Lanka
reason why money lending was tabooed by Nehemiah and spurned by Siddartha Gautama when he taught in India in that era of the reconstruction of Jerusalem.
Drama too is written in those lines. A split in the ranks of powerful money lenders could cause a split in community. In year 70 AD, rebuilt Jerusalem later fell before the eyes of Roman General Titus Flavius Vespasianus who waited for the population’s weakening through an inner duel in which two Jewish leaders supported competing coins, one – silver and the other – copper.
REGULATION OF CREDIT
AND INTEREST
That discussion must now propel us rapidly through history to the British period.
The British period reached its maturity when transport and communications did not hinder the maintenance of a common money and credit system. A Central bank was allowed by English statute in 1694 and though it was private (nationalisation was carried through by a Labour government in 1946,) the bank did not cut the branch on which it was seated. It helped unify interest rates country-wide.
Though Uncle-Niece married financial clans were a powerful force, executive power in England was now in the hands of a Prime Minister not a hereditary ruler. The positions of the Prime Minister and Members of Parliament had to be filled through elections every four years. This provided in Britain for an improved balance between town and country.
As a result of these and other state and civic arrangements, usury and loan sharking declined. Britain became manufactory to the world, prospered in overseas trade and conquest. It is in such new circumstances that today’s giant banking systems arose and re-tracked the world.
REFORMED CREDIT SYSTEM
AND ISLAND CEYLON
Ceylonese experienced the reformed system of banking and were interested in it. Sir Andrew Caldecott and his predecessor Governor-General Sir Reginald Stubbs, supported this interest.
This had led to the Bank of Ceylon commencing business in 1939, but larger events arose. WW2 intervened. Then came the 1948 grant of Independence to the island.
In the early 1950s, if Chettiars and Afghans charged 10% a month or more, the Bank of Ceylon was granting commercial loans at around 4% per annum. You can see a world of difference in the rates, the first a monthly rate and the latter – an annual one.
Though the benefit was manifestly clear, the Bank of Ceylon, transferred to local management from British, was not opening branches to multiply the benefit for business development to community. The reasons for this sluggishness need separate investigation but there was a senior banker at the Bank of Ceylon, its Inspector of Branches, who was prepared to attend to the technical groundwork of setting up another bank.
Educated in the school of R. E. Blaze’, the originator of the island’s first highway safety campaign, Wilmir H. Solomons, sportsman, scholar, organist and lay preacher, in 1961 accepted an appointment as General Manager of a proposed state-owned bank. He led several other banking professionals to the new People’s Bank. Dozens of branches came up and then in a few years, hundreds. That released the energies of bankers at the Bank of Ceylon and they too expanded to several hundred branches.
No other service organisations have spread as rapidly as the banks did in the island. If taken in relation to population size, speaking internationally there was record activism visible – and in the public sector.
With the rise of banking, several manufacturing and trading businesses were founded. At that time, speaking once again internationally, there was opportunity for the island economy to develop using the formula of East Asia and Western European nations. The most rapid means known for economic development then was the formula of priority for manufacturing industry, notably used in Japan and shortly afterwards in Korea.
However, the latter nations served a strategic end in containing the Socialist block of nations. The island of Ceylon fell into another category – of non-strategic nation states.
The first post-WW2 method that money dealers used for tactical attacks outside the control of British Parliament, was to subvert economic achievement in non-strategic nations, including Sri Lanka.
In its first report of 1952 for the island, the World Bank began promoting the enterprise of removal of virgin jungle at state expense so as to distribute 2 hectare blocks of land for individual farmsteads. In Britain it was then an average of 80 hectares in contrast (in the context of a country practicing concentrated farming in fragmented farmland.) In the USA the average ran into thousands of hectares. Using tilling by tractor, harvesting by combine and crop dusting by airplane for competitive agriculture, some 5% of the