4th Parliament · 1st Session
Mr. Speaker took the chair at 2.30 p.m., and read prayers.
MINISTERS laid upon the table the following papers : -
Fisheries - Report by the Director on the 25th and 26th cruises of the Endeavour (Queensland waters), 6th July to 9th August, rgio.
Defence Act - Military Forces - Financial and Allowance Regulations Amended (Provisional) - No. 88(S) - Statutory Rules 1910, No. 73.
Military Forces - Regulations Amended (Provisional) -
Nos. 143, 151, 170, 188, 196, 302, 469- Statutory Rules 1910, No. 74.
No. 199 - Statutory Rules 1910, No. 76.
No. hi - Statutory Rules 1910, No. 77.
Public Service Act - Defence Department - Recommendation, &c, in case of promotion of H. S. Norris as Clerk, 3rd Class, Accounts Branch, Sydney.
– Yesterday the Minister of External Affairs, after saying how desirous the Government are of encouraging immigration, stated that, before the session closed, steps would be taken to secure more control over labour conditions, the reference being, I presume, to the New Protection. The honorable gentleman continued, “ When we have taken steps to throw open the land “ - I ask whether he has in contemplation any action by the Government which would have the effect of throwing open land, and, if so, what it is?
-Nothing more than has been announced.
– What is that?
– If the honorable member desires detailed information regarding the programme of the Government in this connexion, I ask him to give notice of his question.
– Has the Treasurer yet definitely decided when the IBudget will be delivered?
– I had intended to deliver it on 31st August, but the Treasury officials say that the necessary papers will not be ready then. The speech will be made not later than 6th September.
– Such a simple matter should not take so long.
– I could be ready at any time.
asked the Minister of Trade and Customs, upon notice -
– The answers to the honorable member’s questions are : - 1, 2, and 3.-
asked the Minister of External Affairs, upon notice-
– The answers to the honorable member’s questions are: -
– I move -
That this Bill be now read a second time.
Sections 93 and 94 of the Constitution provide that for the first five years after Federation, records should be kept to enable each State to be credited with the revenue collected on the dutiable goods consumed within its borders, but since the passing of the Surplus Revenue Act, and the determination to make a -per capita distribution of revenue to the States, there is no longer any need for these records, and, if the Department could dispense with them, it could effect certain economies. Although the States have been Federated for more than nine and a half years, there are. between New South Wales and Victoria, fourteen border sta tions. There are four between Queensland and New South Wales, two between Queensland and South Australia, three between Victoria and South Australia, and four between New South Wales and South Australia, or twenty-seven border stations in all, which are costing, at present, a total of £3,941. It will be necessary in connexion with breweries and certain manufactures in bond to have some records kept ; but most of the amount I have named will be enabled to be saved. I think honorable members generally are agreed that as we are thinking more nationally every clay there is no necessity for the keeping up of these boundaries, which many people think were obliterated long before this. That is the reason why I am introducing one of the shortest Bills that has come before the House, in, so far as I know, one of the shortest second-reading speeches on record.
.- Every citizen of the Commonwealth has been looking forward for a long time to the abolition of the bookkeeping system. Either the present or some similar device was essential, in order that justice might be done as between State and State, but it was recognised from the first that as soon as circumstances permitted we should free ourselves from it, in order to see our trade and commerce absolutely unrestricted, or at least unqualified by any such observance. I am not quite clear from the Minister’s remarks whether the bookkeeping system is to be absolutely abolished before the 31st December, understanding him to say that in certain businesses it would he necessary to retain it. I have no objection to the principle of the Bill, an.d perhaps it would be better for theMinister to answer questions regarding the: details in Committee.
Question resolved in the affirmative.
Bill read a second time.
Clause 1 agreed to.
Clause 2 (Repeal of sections 272 and 273 of the Customs Act).
.- The Surplus Revenue Bill of this year, by paragraph b of clause 2, amends the Surplus Revenue Act by an omission which achieves the object now aimed at. I understand that this Bill is brought in tocomplete the process because there is alsoto be found in the Customs Act a section’ which needs to be dealt with. That isthe position so far as the law is concerned, and it is very simple. Do I understand from the Minister that except in certain cases which can be specified, this Bill will, from the date of its sanction by the Governor-General, abolish the bookkeeping system altogether, but that in some cases it will be necessary to preserve that system even after the 31st December next?
– It will not be necessary to preserve the bookkeeping system, but we shall require to keep officers for Customs purposes, say, at Geelong, and at places where excisable or dutiable goods are manufactured in bond. So far as InterState trade is concerned, however, this Bill will absolutely sweep away the boundaries.
. -Do I understand that from this time until the end of the year there will be no InterState adjustments such as have been made since the beginning of Federation?
– They will not be required.
– They have been made up to the present under section 93 of the Constitution, which was continued by the Surplus Revenue Act of a few years ago. By that system the duty was paid to the State where the goods were consumed, and not necessarily to the State that collected it. It would be necessary to have Inter-State adjustments continued up to the end of the year if it had not been for the Surplus Revenue Bill of this session. I understood that it was intended to continue them until the expiry of the bookkeeping period on the 31st December next, but the retrospective provisions of the Surplus Revenue Bill practically terminate the Braddon section six months earlier than the Constitution intended, and so there would be nothing gained by the States in having the Inter-State adjustments continued, because the amount would be deducted from them after the 31st December. If it had not been for that retrospective legislation the States would have suffered a good deal by abolishing the InterState adjustments before the end of the year.
– This Bill makes no difference so far as that is concerned.
– I do not think it does, but the honorable member will see that the retrospective action of the Surplus Revenue Bill deprives the States of the Inter-State adjustment revenue.
Mr. GLYNN (Angas) [2.48!.- The Surplus Revenue Bill of this year repeals the provisions of the Surplus Revenue Act of 1908, which were substituted for the provisions of section 93 of the Constitution. All we are doing now in this Bill is to repeal one section of the Customs Act which operated from two years after the imposition of uniform duties of Customs, and also another section which held good for five years afterwards, but is no longer necessary. We are asked to repeal them in order to stop the obligation of keeping accounts for a provision of the Constitution which no longer applies. But that, I understand, does not affect our obligation to pay the States their three-fourths to the end of the year, in accordance with the provisions of the Surplus Revenue Bill of this session.
– I am sure that the Bill should be passed as speedily as possible, but will it not be necessary to make it operate as from 1st January next?
– Are we not bound to keep to the bookkeeping system right up to the 31st December? If we sweep away the border stations which make the necessary checks and keep a record of the Inter-Stare certificates shall we know exactly what we ought to return to the States during the remaining two or three months of the current year?
– The honorable member does not seem to realize that we have only to bring the total payments up to 25s. per capita.
– Very well.
– I do not quite follow what is proposed to be done. I take it that if this Bill passes, we shall no longer follow the bookkeeping system. How, then, will the Government comply with section 87 of the Constitution during the first half of the present financial year?
– The sections of the Customs Act with which this Bill deals provide that the system shall apply only (o goods passing from one State to another within two years after the passing of the Tariff, and for five years after the imposition of uniform duties.
– But this Bill is sweeping away the bookkeeping system. That being so, how are the Government going to pay the several States on the basis of section 87 of the Constitution during the first six months of the financial year?
The principle of the Surplus Revenue Act is that they shall be paid what is due to them under the Braddon section during the first six months, and that during the second half-year a deduction shall be made so as to bring about a return of 25s. per head for the whole year. Will not some bookkeeping system be required to carry out that principle?
– This is really a consequential amendment.
– I recognise that, but it sweeps away the machinery for carrying out the provisions of section 87 of the Constitution before the expiration of the ten years’ period.
– Does the honorable member say that we should not be able to ascertain how much we have to pay the States?
– How will the Government be able to ascertain the amount if they abolish the bookkeeping system ?
– The distribution is to be made -per capita.
– I know that the accounts will be balanced on that basis for the whole year, but during the first six months the old system is to be continued.
– Does the honorable member contend that this Bill should not come into operation until ist January?
– I should like it to operate at once.
– It is practically in operation now.
– But should not accounts be kept?
– We shall keep only those records that are essential for the purposes of. section 87 of the Constitution.
– What records will there be if the Government abolish the bookkeeping system?
– This does not apply to that point. It applies only to Inter-State certificates and transfers.
– Even so, the rule has been to credit those States which consume the goods with the duty paid thereon. I suppose the Government have taken the point into consideration, but it seems to me that they are abolishing the very machinery that would enable them during the first six months to trace these goods, and thereby give the States the benefit of the duty paid upon them until the expiration of the Braddon section.
.- This is a very simple matter. This Bill will repeal section 273 of the Customs Act, which provides for certain returns being sent to the States. The necessity for those returns has ceased, because, by an Act already passed by this Parliament, we have determined that, as from ist July last, the payments are to be made in a different form. I see no objection to the Bill.
– By the abolition of the system of InterState adjustments, some of the States which are distributing centres - particularly Victoria and New South Wales - will receive, during the first six months of the financial year, a good deal more Customs and Excise revenue than they would if the distribution remained under the bookkeeping system. I am aware that it is proposed by retrospective legislation, which we have already passed, to make an adjustment during the second half of the financial year, so that, in the end, the result will be the same. At the same time, I. should like to have from the Minister of Trade and Customs a definite statement as to the manner in which the whole of the revenue received from Customs and Excise during the operation of the Braddon section will be distributed among the States. I have not yet heard a definite statement to that effect. Unless an adjustment were made at the end of the year some of the States would, undoubtedly, obtain considerably more than they would if they received only the revenue actually due to them.
– If this Bill becomes law, and is operative before ist January next, every State will be credited, as f..i” as possible, with the amount of duty which would have been due to it, even if the Surplus Revenue Act had not been passed as operative from ist July last. This Bill is, so to speak, to round off that measure. Honorable members are doubtless aware that not only my own Department, but the Department of the Treasury, and several others, have experienced a good deal of trouble in keeping these Inter- State accounts.
– This is to do away only with the unnecessary part of the machinery.
– That is so.
– The Government will still keep in operation, until the end of the current year, the requisite machinery to safeguard the rights of the States?
– Yes; but as soon as we can, we shall do away with all the unnecessary machinery, which has been kept in operation a great deal longer than it should have been.
– I do not think that any machinery is required. By the Surplus Revenue Act we have repealed the bookkeeping section of the Constitution. No bookkeeping system has to be kept in force, therefore, to ascertain what the States are to receive. By that Act we have also made provision for the division amongst the States of the three-fourths of Customs and Excise revenue. That threefourths can be ascertained without recourse to the bookkeeping system. All that we shall have to find our is the total amount of the import and excise collections, and the cost of collection. Having ascertained the net aggregate, the Government will divide it amongst the States, according to the Surplus Revenue Act, which means that it has to be divided per capita. The bookkeeping section having been repealed, Western Australia might be prejudiced, and it has been agreed to pay that State £250,000 a year from 1st July, 1910. I cannot see any opening for misapprehension. Western Australia, like every other State, is affected by the abolition of the bookkeeping section, but that abolition is brought into effect, not by this Bill, but by the Surplus Revenue Act, and when the latter was before us was the time to test the propriety of passing such a measure.
– While Western Australia has been provided for, I have heard no reference to the fact that New South Wales, for instance, will lose about £200,000.
– This Bill does not cause that loss.
– In conjunction with the Surplus Revenue Act, it certainly will.
– That is not the fault of the Bill before us.
– The Braddon section ought to have been carried out in its integrity, and each State fairly dealt with to the end of the period of ten years, giving each credit for the amount collected, and debiting each with the amount expended. However, I suppose my State will have to part with the £200,000, and look pleasant; and I hope we shall have philosophy enough to bear the loss.
.- I had not the privilege of hearing the Minister, but it would be rather interesting to representatives of the larger States to know exactly on what grounds he proposes to deprive them of revenue previously enjoyed. The Minister, who happens to be a representative of Victoria, seems to be overwhelmed with delight at the prospect ot that State losing a large amount of money.
– That is not brought about by this Bill.
– The Bill has nothing to do with money.
– I have a sort of vague idea that this Customs Bill has something to do with money.
– It has to do with the rendering of acounts.
– Of course; and by this Bill it is proposed to strengthen the position already adopted by means of the surplus revenue measure. I do not propose to labour the question, but merely to place on record my regret that the Government can treat with such levity a proposition which will deprive the State I come from of a very large share of the Customs and Excise revenue.
Clause agreed to.
Bill reported without amendment; report adopted.
In Committee (Consideration resumed from 23rd August, vide page 1895) :
Clause 3 (Definitions).
Upon which Mr. G. B. Edwards had moved, by way of amendment -
That after the definition of “ Constable “ the following definition be inserted : - “ ‘ The Currency Commission ‘ means a Commission constituted and incorporated for the purposes of this Act to consist of the Treasurer of the Commonwealth for the time being and two persons to be appointed by the Governor-General representative of the financial and commercial interests of the Commonwealth.”
– I give the honorable member for North Sydney credit for trying to improve and safeguard the Bill in the interests of the public, but I do not think that the proposed amendment would attain that end. It is: proposed to have two gentlemen, representing the commercial and financial interests, to act with the Treasurer, but we are not told whether their appointment has to be permanent, or whether they shall receive a salary, and, if so, what amount. Are they to be called in only at intervals to advise the Treasurer? In any case, it would be inadvisable to employ two gentlemen, no matter how high their standing, to decide such questions with the Treasurer. Parliament has the Treasurer under its control, and, before he takes any steps, he must consult his Cabinet. But if there were a panic, two such gentlemen as are suggested would be as liable to be affected as any others, and yet, being two to one, they might overrule the Treasurer of the country, while Parliament would have no control over them.
Sr John Forrest. - Parliament would have control over them.
– These gentlemen would not be elected by the people, but nominated by the Executive and appointed by the Governor-General.
– The Governor-General would have the power to remove them.
– In any case, the amendment is very vague. There is no guarantee provided as to the calibre of the men to be appointed, nor as to their remuneration, and so forth.
– This is only the interpretation clause; details will have to be arranged afterwards.
– We ought to have details before we adopt the dangerous principle of appointing two outsiders in whom the public may or may not have confidence. Why should the commercial and financial interests be represented any more than the shipping or other interests? Parliament should hold the Treasurer responsible for any action that is taken regarding the note issue. The proposal of the honorable member for North Sydney is undemocratic. It gives to two nominees qf the Governor-General power for the exercise of which they will not be responsible to Parliament, and in combination, being two to one, they will be able to override the Treasurer, who will be responsible to Parliament. We are not told for what term the Commissioners are to be appointed. Honorable members are elected to look after matters like this, and should not shirk their responsibility by placing it on the shoulders of other men.
.- To accept the statement of the honorable member for South Sydney that the amendment is undemocratic is to admit that for the governing powers of the country to seek the assistance of persons of brains and knowledge who are specially competent to deal with certain public matters is undemocratic. If the appointment of the proposed Board would be undemocratic, the administration of the railways and other technical services by Commissioners is undemocratic.
– So .it is. We have too many Commissioners.
– In my opinion, some such Commission as is proposed is necessary. My main objection to the Government issuing notes is that Ministers may be tempted to print paper money in order to secure funds without openly raising loans. I believe that in the interests of the people we should make certain that the issue of notes will be for currency purposes only. If the issue is carefully safeguarded to prevent the flooding of the market with notes to secure funds for wild cat projects, there can be no great objection to it. But the honorable member for South Sydney would make Ministers alone responsible for the issue of notes.
– They are responsible to Parliament.
– A Parliament merely registers the expressed desires of the dominant political party. If the policy of this or any other Government demanded the raising of a certain sum of money, which it was thought could be got conveniently, without openly departing from that plank of the platform which prohibits public borrowing, by issuing notes broadcast, its supporters would vote for the project; and it is notorious to those who have studied such institutions that Parliaments are at the mercy of the party in power. The question of currency is too big to be safely left at the mercy of party necessities.
– Apparently, the honorable member would put every Department of Government under a Board.
– I would put the issue of paper money under the control of a Board, seeing that the improper use of the power given in the Bill would seriously endanger the welfare of the community.
– The honorable member would multiply fat billets.
– Certainly not; and my efforts during the last week or two to prevent my honorable friends from enjoying fat billets have earned me a certain amount of unpopularity. But I think it worth while to pay salaries to persons who will see that the currency is not tampered with. If more notes are issued than the operations of commerce demand, they will cease to be currency - that is, a medium of exchange universally accepted at its face value within the Territory in which it is issued.
-And the two Commissioners are to be the measure of security?
– Are they the only two men in the world?
– If my honorable friends would suggest a Commission that would inspire respect, I should be happy to consider the suggestion. They propose to leave the control of the note issue to some departmental officer who, perhaps, now has more than he can do properly. If they put aside their bitterness against the financial and commercial sections of the community, they will recognise the value of the proposal of the honorable member for North Sydney. Unless the public has full confidence in the currency, the country must suffer, and it cannot have such confidence if the issue of notes is to depend on party exigencies. The note issue must be on a firm basis, and to secure that a Commission is necessary. If the Prime Minister desires to maintain his reputation for detached honesty in politics, he should be glad to put on other shoulders the responsibility for the issuing of notes. It is all very well for him to say that he has not brought forward the measure in order to borrow money without interest, but it empowers him to borrow , £5,500,000 without interest. I accept his assurance that the money is not to be used for the ordinarypurposes of government, but it is conceivable that within the next twelve months some awful cataclysm in the caucus may put another member in his place, who will not be bound by what he has said. The proposed Commission, in sanctioning the issue of notes, would consider solely the needs of the community, and the adoption of the amendment would prevent any Government from being charged with issuing paper money in order to raise, funds without paying interest.
– Without binding myself to the jexact words of the amendment, or to the appointees for which it provides, I think that a Board of trustees should have custody of the gold received in exchange for the issue of notes. The Prime Minister, I understand, thinks very highly of the system adopted in Queensland in 1893, yet there the Treasurer is not allowed to hold the gold obtained by the issue of notes or the Treasury-bills which may be issued to meet them; they are both under the control of the President of the Council and the
Speaker of the Assembly. But we need not go to Queensland for a precedent.; we have one of our own. When I introduced the Naval Loan Bill last year, I safeguarded the sinking fund established in connexion with the borrowing of £3,500,000 by providing that the money should be invested only in Commonwealth inscribed stock, and Treasury-bills, or in the Government securities of a State, or deposited in any bank ; but the present Treasurer did not approve of my proposition, and on the 3rd December last moved that the sinking fund should be vested
In the President of the Senate, the Speaker of the House of Representatives, and the AuditorGeneral of the Commonwealth, who are hereby constituted trustees for such purpose, to be applied by them as hereinafter provided.
In support of that proposal he said -
This will make it mandatory for not less than 5 per cent, to be paid to the sinking fund, which will be under the control of the three trustees I have mentioned.
– Are they to invest it, and do all things necessary ?
– Yes ; I think it would be a very wise provision. The trustees I have named will be well able to administer the fund. Clause 12 of the Bill gives them power to invest the money in inscribed stock, or Treasury bonds, or Government securities of any State, or on deposit in any bank.
– What is the objection to sub-clause 2 of clause8?
– It would be a mistake to limit the trustees to the purposes specified in that subclause.
That was the sub-clause about the investment of the money which I have just referred “to. I replied that, even without the provision which it was desired to insert, a sinking fund could not be used for any other purpose than those specified in the Act. What did the honorable member say then ?-
The whole point is that no Treasurer ought to have a sinking fund of this kind in his keeping. That will be acknowledged by all of us who have had experience of the treatment of sinking funds in the States. . . . The Treasurer cannot get away from the fact that my proposal is the safest course, and has always worked better wherever it has been tried. We ought to make a start on sound ground.
– Hear hear ! All excellent, and all in favour of my proposal.
– An extraordinary thing . about the Treasurer is that if one uses an argument against him, quoting even his own words, he always says it is in his favour. I expect from him better things than that sort of conduct. His remarks which I have just quoted are not in his favour, and he must see that they are the opposite of what he says now.
– They refer to payments by the Treasurer towards a sinking fund.
– Does the honorable member wish to differentiate between a sinking fund, which is trust money held in reserve in order to repay principal moneys in a number of years, and the gold which is to be held in reserve or invested in certain named securities, with the object of repaying the notes whenever gold is demanded? Surely that is also trust money? Take the case of Victoria, which is really analogous. There is an immense amount of money borrowed by the Government from the general public in the shape of deposits in the Savings Banks ; and the same thing applies in all the States. Those moneys are, in nearly all the States, held by trustees, and not by the Treasurer of the day. They have to be repaid some day, and interest is paid on them to the public. They are invested in order lo produce interest, but, according to the Treasurer’s argument, the Government of the day ought to have the administering of them. However, it is not so, and the public have said that the money must be kept away from political control by being vested in Commissioners. The Savings “Banks Commissioners have not fat billets ; in fact, they receive very small fees, but still they carry on this immense obligation in Australia to the extent of ,£40,000,000 or £”50,000,000. That money is not in the hands of the Government of the day, “but is managed by Commissioners, who, under Act of Parliament, are to a large extent independent of the Government. 1 make these remarks in reply to an honorable member opposite who said that Parliament would have no control over a Board of trustees. The very object of placing the money in the hands of Commissioners is that Parliament shall always have control, because Boards of Commissioners and similar bodies are responsible to Parliament for discharging their functions properly. If they do not do so, they can be removed, and the Act can be repealed at any time. Everything of a governmental character, including Boards or Commissions, is carried on under the supreme control of Parliament. Therefore, to say that if you appoint persons who are not Ministers of the Crown you cannot control them, simply because you cannot vote them out at any minute for political or other reasons, as you can a
Government, is to use an untenable argument.
– Is it not a tedious process, requiring a resolution of both Houses ? The mischief may have been done before you provide the remedy.
– What would be done with a Government in similar circumstances ? All that Parliament would do would be to dispossess them of their positions.
– That can be done at once.
– And a Board of trustees could be removed at once. An Act of Parliament could be passed in an hour if the position were serious. The sinking funds for loans which I had the most experience of were held by two trustees, one the Agent-General for the State and the other a director of a London bank. No one could say that they were not under parliamentary control. Those trustees carried out their duties well, and I do not think they received any pay at all. I am sure the Agent-General received no addition to his ordinary salary for this service, and I do not remember that the director of the bank received a fee, yet they have discharged their functions now for twenty years, investing the money and holding it in trust for the purposes specified by the Act of Parliament. The system of having large amounts of trust moneys in the hands of the political head of the Department is fraught with danger. I do not say that if I were Treasurer I should have any objection to having that - great responsibility placed upon me. While it would be a great responsibility, it might, perhaps, be an advantage to me, politically, at times. For all that, honorable members will recollect that last session, when the present Treasurer proposed that the sinking fund for the Naval Loan should be placed in the hands of the President, the Speaker, and the Auditor-General, I did not object. I demurred a little, but I” inserted a provision to that effect, only substituting the Secretary of the Treasury for the AuditorGeneral. In fact, I moved an amendment to that effect myself. Therefore, when I was in office I was not adverse to doing what I now suggest to the Treasurer. He will not be acting wisely in heaping up all these burdens and responsibilities on the political head of the Treasury, because, after all, the Treasurer is a political officer. He is subject to a great many obligations, and I should not like to say temptations, but in order to carry on the affairs of the Government he may have to do many things for which I am sure he would be very glad sometimes if others had some of the responsibility. For that reason I ask him to accept the spirit of the suggested amendment, and let the Attorney-General draft the clause accordingly, as an indication that the Committee considers it desirable that these immense Trust Funds should not be absolutely in the hands of the Government without any restraint whatever. I do not care what trustees are named. They could be the Speaker and the President, or any other responsible and competent persons, and they should be associated with the Treasurer, and also with the Secretary of the Treasury. I do not make these remarks in any party spirit, for I do not think there is any party question involved in the subject. It is purely a question of how to make the undertaking safe and to do what will best stand the test of time in the interests of all.
– The right honorable member was good enough to say last night that he intended to bring up to-day the question of my having taken a different course last session when the Government of which he was a member was in office.’ The quotations which the right honorable member has made from my speech dealt with quite a different subject from this. I was referring then to a sinking fund prescribed by an Act of Parliament to liquidate a debt incurred for purchasing warships which would be almost absolutely worthless at the end of the period named. What has that to do with a question like this, where the Government or the Treasury are receiving from the citizens of the Commonwealth gold for which the citizens are voluntarily accepting for their own convenience paper issued in the name of the Commonwealth, and the gold is to be invested in the very best securities that can be bought in the markets of the world?
– It was the same in the case of the sinking fund.
– Will the right honorable member say that when the money had been spent in ships, which were expected to be useless by the time it had to be repaid
– What has that to do with it? What would be the difference if the money- were expended on railways?
– In any case, the ships would be worth more than paper.
– A number of lieuten-ants are coming to the aid of the right honorable member, who is quite capable of expressing his own case. His contention is that this proposal is on all-fours with the scheme of the late Government for the purchasing of a naval unit. They were going to borrow money from people, to whom they would owe principal and interest, and spend it on warships. No more dangerous property could be found in the world for the investment of borrowed money. A regrettable instance of that is contained in this morning’s cable news, where we read that one of the finest ships in the British Navy ran on to a reef during manoeuvres, and is likely. to be a total loss. If practical evidence of what I say is needed, there it is.
– The honorable member cannot help exaggerating even on the subject of ships.
– At any rate, it was a vessel of 9,000 tons, and of recent build, representing, I should think, at least £500,000. When in Opposition last year we contended that a sinking fund would be necessary, and we, undoubtedly, helped to shorten the period of the sinking fund proposed from an indefinite number of years down to fifteen years, as representing ‘the life of the ships. We contended that the sinking fund should be sufficient to enable the whole debt to be liquidated in that time, because, otherwise, at the end of the period the Commonwealth would have neither money nor ships. Speaking then, from my own experience of Parliaments, I said that in any case where public money was being expended on objects whose value would absolutely disappear, and where a sinking fund was being provided, that sinking fund must be put outside of the clutches of a Treasurer. That is perfectly correct, and I repeat and emphasize it now. But in this case the money is put into the Treasury, and invested not in perishable articles, but in the best stock that can be bought in the world. It can be invested in British consols if honorable members like, in which case, so long as the Empire stands, the money is secure, or in State stocks, which will be absolutely safe so long as the Commonwealth of Australia stands. The capital therefore is absolutely secure. What need is there for a sinking fund ? Whoever ‘ heard of a sinking fund being established in respect of a debt which dic not, and would not, exist? The capital will always be here.
– My point is that they are both Trust Funds.
– This money will be capital intrusted to the Commonwealth, and the whole of the revenue of the Commonwealth will be at the command of the Government to enable them to meet their obligations in respect of it. The right honorable member will recognise that the quotation he has made is quite beside the question. As to the view held by the honorable member for North Sydney, let me say that when we come to deal with the question of the transfer of the State debts, I shall be. found in entire accord with him. But this is a different question.
– This is the best beginning to it that the honorable gentleman will ever get.
– This Bill has nothing to do with the transfer of the State debts.
– The honorable gentleman has said in this Howse that he agrees with me.
– The honorable member is a little ungenerous in speaking in that way. We are both ardent advocates of the Commonwealth taking over the management of the State debts, but this Bill is no more associated with that question than it is directly associated with banking. It deals with currency pure and simple, and must stand or fall upon its merits. We are entirely free to manage the money that we hold “in trust” for the people - I shall accept that term if it will suit honorable members opposite - in the best possible way. It will not be expended in such a way that it will be lost. Another point made by the honorable member was that, in one of the States, the management was not left to the Treasurer. I think that he is entirely in error, except in so far as he refers to the management of the issue of Treasury-bills. If this amendment were passed it would mean the appointment of a Commissioner, who would necessarily receive a considerable salary, and a staff, which, while materially increasing the expense of the issue, would in no way add to the efficiency of its administration. If the Treasury which within a year or two will have passing through its hands £20,000,000 of income and £20,000,000 of expenditure, is not fit to properly invest a sum of ,£4,000,000 or £5,000,000, then the sooner we change the administration the better.
– The honorable gentleman was not satisfied last year to intrust it with the management of a loan of .£3,500,000, which was to extend over a period of only fifteen years.
– The right honorable gentleman seems to find it impossible to dismiss that matter from his mind. In that case an actual loan was proposed.
– But the honorable member at that time would not trust the Treasurer.
– What has happened since shows that we had very good reason for our action, even if we did go so far as to say that we would not trust the Treasurer of the day. I do not, however, say that. A proposal for a sinking fund cannot apply in this instance, but, when the time comes, I shall be found as ready as any one to. provide for the sinking fund, necessary to redeem a loan to be expended on property which must depreciate and finally disappear.
.- This amendment, involving as it does, the administration of the whole currency, is one of the most important provisions that we can be called upon to consider.
– We have heard that from the beginning.
– I have always held that, in order to enable a Government Department to succeed, we must have some sort of continuous business management. Changes, however, are constantly being made. We have had something like nine Postmasters-General, and ten Ministers of Defence. I cannot recollect how many Treasurers we have had,” but there have been many changes; and a great deal of faulty management of public affairs may be traced to these frequent changes. If this amendment “were designed merely to create fat billets, I should be one of the last to support it, but it is obvious that, before long, there will be a great deal of work for the proposed Commission to do. Both sides of the House are pledged to the transfer of the State debts as they mature, and to the Commonwealth floating new loans, and some Commission or Board will be necessary to attend to that work. We could not expect the Treasurer of the day to look after it, and I think that a Commission of the kind now proposed would be able to attend to such matters with considerable success. My great objection to the proposed note issue is that it will cast upon the Treasurer a terrible strain in times of financial panic. We are all prone to believe that we shall never have another financial panic or drought, but it is in times of prosperity that we lay the seeds of panic. Financial crises and droughts come in cycles, and in time of panic the Treasurer would have imposed upon him, under this Bill, as it stands, a very serious strain. Our citizens are naturally anxious to maintain financial peace, and in a crisis, every one would be appealing to the Treasurer to take action. His own followers, no doubt, would be appealing to him 10 issue additional currency to the extent of a few millions, saying that if that were done, financial stability would be restored. And even the Prime Minister, firm man though he is, would hardly be able to resist such a temptation. Indeed, I do not think that any man would be able to do so. The Victorian Savings Bank, as the honorable member for Wimmera has reminded me, has invested enormous sums, at very low rates, and, as the result of its splendid management, our farmers have been greatly benefited. The secret of its success is to be found in its sound business management. The position should be the same in regard to the Australian note issue. The Treasurer of the day ought to be the Chairman of the Commission, and should be assisted by two gentlemen of financial experience. Maybe two of the principal officers of his Department, if they were considered to be sufficiently experienced, might be appointed to act with him. If the Treasurer thinks for a moment of the enormous powers vested in him under this Bill, he will seriously consider this amendment, and I trust that he will accept it or an even stronger proposition.
– When I submitted my amendment last night, so many conversations were being carried on in the chamber that I could hardly make myself heard, and the Prime Minister, who was. necessarily busy with his own’ amendments, could not give me his complete attention. I feel, therefore, that, in the circumstances, I did not place my proposition as clearly before the Committee as I should, and probably would, have done, had I been accorded a better opportunity. Many inquiries have’ been made regarding the details of this proposal. We have been asked, for instance, who are to be appointed as Commissioners, what salary they will receive, and so forth. At this stage, however, the
Committee has nothing whatever to do with those details. The object that I have in view involves, to a very great extent, the re-drafting of the whole of this measure. I could not undertake to do that; but the series of ideas I have in mind, I am sure, are largely shared by honorable members opposite, although they may not vote for this amendment. They ought, however, to clearly understand it before they decide to vote for or against it. My desire is to secure the insertion of this definition in the interpretation clause, so that in another part of the Bill we may provide for the creation of a Currency Commission to take up some of the duties imposed upon the Treasurer under the Bill as it stands. Those duties would not clash with the ordinary executive acts of the Treasurer as a mem.ber of the reigning Administration. The Treasurer has conferred upon him executive duties, as well as the duties attaching to the fiduciary position of a trustee, and as a trustee under this Bill he is constituted a corporation. I mention this to show that the draftsman himself has observed the distinction between the two classes of duties, and the necessity for creating further positions to enable the carrying out of the measure. The point that I wish to impress upon the Committee is that the Treasurer is utterly unfit to execute some of the functions intrusted to him under this Bill. I am not saying anything against him personally. His predecessors would have been equally unfit, and his successors would be likewise unfit, to discharge them. The functions imposed upon the Treasurer by this Bill necessitate a wide and intimate knowledge of the state of affairs in the commercial world, which he could only obtain secondhand. The honorable gentleman will be one of the first to admit that, in times of stress or crisis, he would have to go to some one to obtain advice as to how he should act. One Treasurer may go to Brown and Robinson, while his successor may go to Smith and Johnson, and so on ; but under the amendment, the Treasurer of the day would have the benefit of the services of two highly-trained men.
– What is to hinder the Treasurer from having those services now ?
– Nothing at all ; but one Treasurer may go to one set of gentlemen, while a second Treasurer may go to another. My strong argument is that, under the amendment, we should have two men charged with the responsibility of closely informing themselves of the conditions of commerce, and who would be in a position to advise the Treasurer much more ably and soundly than any two persons selected haphazard. The Treasurer is here to-day and gone to-morrow. As has been pointed out, during the ten years of the Commonwealth, there have been ten, or certainly nine, Treasurers; and whatever information the occupant of the office may be enabled to acquire in the short average time he is there, it is impossible for him to be seized of the necessary information to enable him to carry out this measure with wisdom and judgment. The two men appointed would hold’ office like our Judges, during good behaviour, and be selected on account of special knowledge and fitness. They would have opportunities of informing themselves of the necessities of the position from time to time, and of advising the Treasurer what to do in this or that emergency. They would be, as it were, the eyes and ears of the Treasurer, and could keep him fully informed of the facts. No Treasurer can carry and exercise the powers imposed by the Bill, without advice from some source ; and it is the duty of Parliament to provide good advisors. There are other things underlying this Bill besides the currency, or, at least, I hope there are. The Treasurer has admitted that he does not propose to use the money for the purposes of defence, or for building the Federal Capital ; and he hopes to be able to do without it for any such general purposes. I am sure that the majority of honorable members, and of the people, hope with me that, in these currency proposals, we have the beginning of a fund that will help us subsequently to solve the great question of the consolidation of the State debts - a fund that we may look upon as a sinking fund, in the first instance, to back up the currency, so that the whole nation may never waver, even in the most intense panic, in their confidence in the notes, or in the powder of the Commonwealth to meet an emergency. If this amendment, with others rendered necessary by its acceptance, be agreed to, we shall be able to add to that fund from time to time by re-investing the profits in State securities as they are placed on the market at the lowest prices. We here, of course, know that these securities are worth 20s. in the £1 but the opinion of the investors of the world might vary, placing one price on New South Wales stock, and another price on Victorian stock. The Currency
Commissioners, under such circumstances, could purchase whatever State stock was lowest in- the market quotations. By this means, we should gradually come into possession of a large amount of stook, and thus carry out one of the greatest works we can ever hope to achieve. This imposes further duties on the Treasurer as a trustee. The Treasurer took objection to the honorable member for Swan’s reference to the fact that his attitude on the Naval Loan proposal was different from his attitude today ; but, in my opinion, the Treasurer shows a falling away from that rigid, severe Scotch logic he brings to bear on most matters. Where is the difference between the two positions? I am not dealing with the administration of the Bill, but with the trusteeship of the fund, and the power that the Bill gives to issue, call in, and re-issue notes ; and I contend that those powers are exactly the same as the powers of the trustees proposed to be appointed under the Naval Loan measure. Somebody is required to exercise care and judgment in looking after the fund ; but there is a distinction between the two cases. Mr. Speaker, and the President of the Senate, would be excellent trustees of the sinking fund under the Naval Loan Bill, but they would be useless under the measure before us, seeing that they have not ( the necessary knowledge and qualifications. Let us clearly understand what we are aiming at. The -Treasurer will be charged with Executive functions with regard to every clause, while the proposed Currency Commission would operate only under three clauses, namely, clauses 5, 8, and 14.
– The honorable member must not discuss those clauses.
– I respectfully submit that I am dealing with the definition clause and proposing to create a Currency Commission, and I ask whether I cannot point out what that Commission would have to do? It seems to me that I could not speak on the subject at all without showing what duties this Commission would be called upon to perform. Those three clauses are not ordinary clauses of the Bill dealing with the control of the notes - the ascertaining whether or not they are forged, for instance, or taking measures to deal with various offences - but they provide for the issue of the notes, the investment of the funds and the re-issue of notes, together with the issue of Treasurybills to protect the notes in time of panic. The Prime Minister should see the force of having associated with him other people better qualified than himself or than his successors can be. To my mind, the right type of people would be such men as the chairman of the Associated Banks, and the chairman of the Associated Chambers of Commerce, who may be regarded as the elect of those two bodies. The chairman of the Associated Banks is,probably, in the opinion of the banking companies themselves, the highest authority on the operations of finance in Australia, and the chairman of the Associated Chambers of Commerce may be similarly considered to be fully seized of all the facts and necessities of commerce in Australia. But it would be impossible to provide in the Bill that these two men ipso facto, by reason of their holding those offices, are the very people to advise the Treasurer. I presume, however, that when the Treasurer recommended names to the Governorgeneral, those two gentlemen would be the two first to suggest themselves to him. It might happen that the best talent was not in the holders of those offices, but might be found in previous chairmen or younger aspirants for the positions. In any case, some two gentlemen would be appointed in normal times when there is no crisis, and possibly ten years might elapse before any crisis arose. During that time they would be gaining experience every day - experience which the Treasurer could not possibly obtain at first-hand - and at the proper time they would be able to say to the Treasurer, that such and such were the facts, and advise him strongly to do this, that, or the other. It may be thought that what I desire goes too far in encroaching on the responsible actions of the Treasurer. I remind honorable members, however, that we are now dealing only with the definition clause, and that we shall, in subsequent clauses rendered necessary by the amendment it carried, have the assistance of the Government draftsman to devise means of governing the proposed Commission. We might, for instance, remove from the power of the Commission clause 5, which deals with the first issue of notes, leaving the Treasurer the ordinary Executive function of starting the business. But the business once started, what have we to do? Honorable members who have supported the Bil], and those who have opposed it, have referred to the fact that what we most need, next to stability, is elasticity ; and that elasticity can be obtained only by the ebbing and flowing of the tide of paper money through the Treasury. In order to get the full benefit of the Bill, and to test the desire of the community to absorb the notes, the Treasurer will be anxious to emit them, whereas the banks, when notes become redundant, would have a tendency to send them back. Between the two forces the Treasurer will have to judge whether more or less money is necessary, and he will require the assistance of experienced guides to help him to ascertain the proper volume of currency for carrying on the work of the country. Then we come to clause 8, which provides what shall be done with the money in excess of the gold reserve of 25 per cent. The Treasurer will not be the best judge of whether it would be advisable at a certain time to leave £50,000 with the banks, or straightaway purchase securities - to know whether to buy at once or wait for a better market - and the advisers I suggest would have a sounder grip of those points than any Treasurer could possibly have. Finally, under clause 14, which deals ‘with crises, the Treasurer, in order to protect the currency, has power to issue Treasury-bills in such a form that they may be sold for gold ; and here we have the most difficult of all the functions imposed on him by the Bill. He will require the very best advice the community can give him from its most trained and gifted members. He should not wait until a crisis arises to decide to what financial genius he will apply for guidance, but should obtain the best talent available as soon as the Bill comes into operation. Understanding the provisions of the Bill and the operations of the financial and commercial world, such advisers as I suggest would be better able than any other men in the community to assist the Treasurer and his successors in meeting a financial stress or crisis. The powers which the Bill gives to the Treasurer are greater than are given to a member of the Executive in any other part of the King’s dominions. In Great Britain, there is a Commission to deal with the funds set aside for the extinction of the National Debt. From time to time, when there is a surplus, the British Parliament sets aside sums for that purpose, the control of the money being given, not to the Treasurer, but to independent Commissioners, who exercise their judgment in its investment and expenditure. The Prime Minister told us last night that no Treasurer would submit to be associated with outsiders in regard to matters for which he must take full responsibility ; but the Naval Loan Act passed. last year created trustees to control a sinking fund, the railways of the States are managed by Commissioners, and it was proposed some time ago to appoint a Board to advise the Minister of Trade and Customs on the enormous mass of technical detail which comes within his purview, but is felt to be too large for any one man to be able to deal with unassisted. Then, in the States and in the Mother Country, we have Tender Boards to advise as to the acceptance of tenders for stores and . special work. It should be recognised that my proposal is not that of an enemy of the measure. I have warmly supported the BiU, and wish to strengthen it, so that it may serve wider and higher purposes than it can serve if left unamended. Two sets of duties are cast on the Treasurer, and, when he acts as trustee, he should have the assistance of the best advisers obtainable. He pointed out the other day that Parliament did not create trustees to advise the Government as to the issue of silver currency, or to control the investment of the profit obtained from the coinage of silver. That is true, but” the Select Committee which inquired into the whole subject strongly recommended the appointment of a Commissioner for these purposes. In the next Financial Statement credit will be taken for ,£80,000 or ,£90,000 profit on the coining of silver, which money should really go to currency trustees, to be used for. the extinction of the debts of the States when they are transferred to the Commonwealth. We have no right to use abnormal profits, such as that from the currency, for the ordinary purposes to which the Consolidated Revenue is applied. The current expenditure, of the Commonwealth should be provided for by ordinary taxation, and exceptional profits should be set aside for larger purposes.
.- The honorable member for North Sydney admits that his amendment opens up the whole question whether the measure should be administered by a Commission, and it is a pity that the amendments necessary to obtain that end were not drafted and circulated, so that the Committee could better consider the proposal. The appointments which the honorable member proposes, taken by themselves, can hardly be expected to secure the support of the Committee., Any Commission should consist of persons dissociated from finan cial and commercial pursuits. I have great sympathy with the proposal to allow the powers given by clause 8 to be exercised by trustees. Notwithstanding what the Prime Minister has said, there is great similarity between the creation of trustees to control the sinking fund under the Naval Loan Act and the creation of a Commission to control the funds obtained by the issue of notes ; but it does not seem necessary to appoint as Commissioners men of great commercial standing. The position could be met by nominating as trustees the officers nominated under the Naval Loan Act. I share with the honorable member for North Sydney the hope that the Bill will assist the transfer of the debts of the States to the Commonwealth. When that comes about, there will be enough business in the control and investment of large funds to occupy the time of an independent board of commissioners, who will be paid for the work that they do, and will be dissociated from other occupations. But to appoint commissioners in the manner proposed by the honorable member for North Sydney would not be justifiable. The honorable member spoke about giving to commissioners the exercise pf the powers provided for in clause 5, but afterwards he seemed to realize that that would not be desirable.
– I think that it would be desirable.
– The provisions of clause 5 ought not to be discussed until we come to them.
– The proposal to appoint a Commission can hardly be discussed without referring to the opinions of the honorable member for North Sydney in regard to the administration of the whole measure. I would favour the appointment of trustees, like those nominated in the Naval Loan Act, for the exercise of the powersgiven in clause 8, and possibly in connexion with the issue of Treasury-bills, though I am not sure that the responsibility for issuing bills should not be left with the Treasurer of the day.
– Tri any case, he would be responsible for that.
– The control of trust moneys should be removed from political influence, and, therefore, we might well appoint trustees to exercise the powers given in clause 8, but to make the Treasurer a trustee to act with two outsiders would be unsatisfactory. The outsiders would be- interested in financial and commercial pursuits, awd might be biased, and it would be humiliating for the Treasurer to be overruled by them.. The Naval Loan Act made the ‘President of the Senate, the Speaker of the House of Representatives, and the Secretary to the Treasury, trustees for the control of the sinking fund established under it, and I think that the fund to be created under clause 8 might very well be put under those officers. This would avoid the creation of another Government Department, and the appointment of highly-paid officials. The honorable member for Wentworth said that the Treasurer might be tempted to issue a large amount of paper money, but the Bill limits the issue to £7,000,000.
– That is twice as much as is in circulation at the present time.
-For every £1 note issued in excess of the sum I have stated, a sovereign would have to be kept in reserve, so that no advantage would be gained by a Treasurer in increasing the note issue beyond £7,000,000. If the Government desired to make a further issue, it would “have to come to Parliament for authority, and Parliament could impose what conditions it thought fit. No doubt, when the debts of the States have been transferred to the Commonwealth, all these financial matters will be handed over to independent commissioners, but it is too early yet -to appoint such a Commission.
.- The honorable member for Gippsland says that the Bill prevents the Treasurer from issuing notes to a value greater than £7,000,000, and that, therefore, we need not fear that “his powers will be used to meet political necessities, and paper money issued for the sake of obtaining a loan instead of augmenting the currency. Let us look at the position in the Light of facts. The Bill authorizes the Treasurer to issue notes to the value of £7,000,000, and to use three-fourths of the gold obtained for -them. That is, it allows him to borrow £5,500,000 without interest. The bank notes now in circulation in the Commonwealth, including the Queensland State issue, do not exceed £4,000,000 in value.
– £-5,000,000, including Queensland.
– It is a little over £4,000,000, including Queensland, so far as the effective currency is concerned. A good deal of the £500,000 is till money, and not notes in circulation.
– The lower the honorable member puts it the worse for his argument.
– The better for me. from the point of view of my argument, but the worse for the country, if the Treasurer does not act under safeguards such as we suggest. If the Treasurer exercises his powers under the Bill to the fullest extent, a certain amount of the money will not be currency, but will be loan. I am anxious to keep the Bill to a currency proposal, and that is why I support the amendment of the honorable member for North Sydney. Anything over £3,500,000 of circulated notes will not be currency, but will be a loan from the public. The banks would jump at the chance of circulating as many of their own as they possibly could. Under present conditions they would circulate as many notes as the public would take, but they have not been able to circulate more than £3,500,000 worth, or, including the Queensland issue, £4,000,000 worth It will, therefore, be patent that that amount - is about the limit of circulation legitimately possible in the Commonwealth. If we have the power to circulate £7,000,000 worth of notes, whatever we circulate over and above the normal demand, by so much shall we be debasing our paper currency. That amount will be surplusage unless it is regarded strictly as a loan proposition, and the notes are kept out of circulation. I want to prevent the present, or any future, Treasurer from utilizing the powers of this Bill in order to raise money without interest. Not only is it a dishonest procedure to raise money without interest, and pretend that you are against the raising of loans, but it is subversive of all sound finance. Unless you can keep some sort of check upon your Treasurer, under a Bill of this character Heaven knows where the obligations which the people will incur through faulty management will end. You will never know how much indebtedness the people have had heaped on their shoulders in order to meet the exigencies of this or that political Treasurer.
– What does the honorable member mean by political Treasurers?
– All Treasurers are political, and that is why I wish to see this power taken out of their hands. The Treasurer has to deal with the responsibilities of a measure like this in conjuction with his other innumerable responsibilities, and if his Government is in need of funds, in order to maintain its public credit for the time being, will he not jump at a chance such as this Bill offers of raising the money without interest, and practically without the public at large being able to find any trace of how he has got the money to make up his deficiencies?
– The public will be pleased if they do not have to pay interest.
– If the honorable member thinks the public will be pleased, the more opportunities he gives them of knowing how their finances are run the better. If he really has infinite trust in the public, why not appoint some such Commission as is now suggested? They will be able to report to Parliament from time to time as to the necessities of the currency market. Why not allow the public to know how the business is being run for them? Why deliberately keep in the secrecy of the Ministerial chamber or the party caucus room, matters of vast importance to the country as a whole? Every individual in the Commonwealth will be responsible for the obligations now being incurred. You cannot issue paper money, and mark it £5, and get five sovereigns for it, without imposing an obligation on the Government, and, consequently, on the people over whom the Government rule. Having incurred that obligation, some properly constituted body is necessary to regulate the difficulties of the situation from time to time. You must have elasticity in the circulation of paper money, otherwise, as it has no intrinsic value, the paper is in danger of depreciation through an inflated circulation. You cannot have elasticity under any Treasurer who will be guided primarily by political expediency and exigencies, and not by the sole consideration of the currency requirements of the country. The matter should be entirely non-party, and removed from the control of any Treasurer. It ought to be under properly-constituted officers. My honorable friends opposite object to this amendment; and I can only deplore their attitude. After all, they are consistent, because they objected to free audit for the unions of Australia ; and I assume that they do not require too careful an accountancy of the great operations to be called into being under this Bill.
.- If we keep in view the object of the Bill, we shall be guided as to the principle upon which it should be administered. Although the amendment may not cover the ground, it gives an opportunity of asking the Government to consider whether it is wise, in all the circumstances, to make the administration of the currency business a mere appanage of the Treasury Department. The Treasurer stated last night that it was his intention, after meeting the immediate exigencies of the finances in regard to the adjustments necessary at the end of the year, to invest the money, apart from the 25 per cent, of gold reserve, in securities to be held by the Government as a security for the notes. To me, that removed the main objection to the Bill, assuming that the Bill is necessary. Let us now come back to the object, which is to secure that there shall be a sovereign if required for every note issued. In practice, some authorities say, and the Government have adopted the view, that 25 per cent, of gold will be sufficient to meet the demand, especially with the knowledge that, behind the gold, the remaining threefourths is in a form which in a very short time can be turned into sovereigns if required. But whose money is it? It is not the money of the Government or of the banks, but the money of the people who hold the notes. Every individual who holds a £1 note has a claim on the Government for j£i ; and I take it that the object of the Bill is to assure every holder of a note that there will be a sovereign at the Treasury to meet it if he wants it. Does not that point to the fact that this money is not like revenue, or the proceeds of a loan? It is money belonging, not to the Government, but to the noteholders; and surely, therefore, die noteholders ought to be represented, apart -from mere political management. There should be some means of insuring that the securities held against the notes, to meet the emergency of an extraordinary demand, would be forthcoming, to attain the’ object in view, when required. The Government have departed in some very essential particulars from the Queensland Act, although they have followed it to a considerable extent. Under that Act, as it now operates, the power to issue securities to meet the necessary requirements is vested in the hands of trustees, consisting of the President and Speaker, and other high officials.
– That is the paper securities - the double cover.
– They hold the unsold Treasury-bills, which they can sell only in the event of the Government finding that they cannot get the money from the banks ; because, in the Queensland Act, there is another provision which, I think, is ‘an element of weakness from the stand-point of the Government, and which they are, perhaps, justified in departing from in this measure. It is that, in Queensland, the banks get £1,000,000 of notes by paying om)’ 333)°°° sovereigns, the remainder being represented by deposit receipts of the banks. It is as if they paid over a million and the Government immediately handed them back two-thirds of it, to go into their coffers for use in their circulation, and the Treasurer received from them a deposit receipt, just as I should if I deposited £100. That deposit receipt bears 2 per cent, interest. That is the Queensland system.
– Only in practice, not in law. The honorable member left the impression that it was the law.
– As a matter of fact, does not the Treasurer admit that it was the understanding from the very beginning? The banks never paid the full money from the first day.
– Only £330,000 is held in that way by the banks, out of £1,500,000.
– I know the amount is less now.
– It has never been more than £330,000 from the beginning.
– I am not familiar with the legal details, but am merely stating the principle upon which it is worked. Whether the amount for which the banks give deposit receipts is large or small, the weak point of the system is that, in a time of stringency, when the money would be most wanted, the banks, being the. holders of a large proportion of it, would be the very people who could not pay up to the Government the sovereigns which the Government required. In that event, this other machinery would come in. If the Government could not get back from the banks the sovereigns which they had invested with them, the officials who held the Treasury-bills would sell them, or get an advance upon them, and supply the Treasury with the necessary money. That is what the Treasurer calls the double cover ; but there is only one cover, except the security of the banks. The banks hold the money, and the Government would have a claim on them, but they might not have the sovereigns. What we want to do is to as- sure every individual holder of a note that, if every one of them came in on one day, the money would be found for them, as nearly as possible. We know that, in practice, that would never happen, because we have seen, over and over again, that, if a man has a claim for money, and knows that it can be paid, he does not want it so long as he gets his interest ; but if he thinks the other man has not got the money to pay him, he wants it.
– Would the honorable member say how many do come in, even in a panic?
– I remember the 1893 panic well, and had a good deal to do with affairs at that time. The notes were taken in this city as freely as gold.
– Could the honorable member say, from experience, what percentage would come in in the worst panic he knows of?
– I could not say; but a very large percentage would come in if the holders thought they would not be paid.
– It is a very small percentage, even in a panic.
– Then what is the need of this legislation?
– To put the currency on a sound basis.
– Surely the honorable member’s argument must be based on some sound principle. If the money is not demanded from him - and we know it will not be, even in a panic - there is no need for this legislation. I have been admitting that there is need for it. Currency of this kind is only a very small proportion of that which passes from hand to hand, and I think we all agree that every man who receives his wages in notes ought to know that those notes are as good as sovereigns to him. That is the object that ‘ we wish to attain. Those to whom these notes are issued will have to pay sovereigns, for them, and in that way the Commonwealth Government will come into possession of a large fund belonging, not to them, but really to the note holders, who will be trusting the Government to the extent of the Commonwealth notes that. they possess. The principle which the Treasurer seemed to be inclined to follow last night involves the appointment of a separate holder of these securities. By the creation of a Commission or Board, we shall make sure that the issue will be free from political pressure, and that in no emergency will the security of the notes be affected. I have heard the honorable member for Maribyrnong and others, who have recently been returned to this Parliament, declaring that in these matters Parliament is the right body to trust ; but, after thirty years of political life, my confidence in Parliament as the proper body to deal with matters of this kind grows less year after year.
– But there has never been a Parliament like the present one.
– I do not know how the honorable member wishes me to take that interjection, but I do not propose to discuss Parliaments in general. The Government will practically be trustees in respect of the money received in exchange for the Commonwealth notes, and no Treasurer ought to be exposed to political pressure in dealing with it. Parliament, influenced by public excitement, might compel him to do something against his better judgment. It might, for instance, induce him to float more paper money in order to meet an emergency. Parliament is largely a reflex of public opinion, and in circumstances which, in the absence of proper information on the subject, seem to be of great public moment, people bring pressure to hear upon it. Parliament, in turn, brings pressure to bear on the Treasurer, with the result that possibly he is induced to do something opposed to his better judgment. We ought to adopt a system by which the control of this currency will be placed on an entirely independent basis, and will be free from political influence and political pressure. If that course be adopted, future Treasurers will thank us for our action. Although I have not held office as Treasurer, I have been intimately acquainted with honorable gentlemen who have, and some of them, to my own knowledge, have wished that they had the protection of a Statute to shield them from pressure to do something which, although the public’ itself might clamour for it, was not, in their judgment, in the public interest.
– They ought to be ashamed of themselves. “
– I do not see why a Treasurer should be ashamed of himself, because, when he is pressed to do something of which he disapproves, he expresses * wish that he had something to protect “him from that pressure. If the Government think that the duty of administering this Bill can be added to those which the Secretary to the Treasury has already to discharge, they are making a very serious mistake. The Secretary to the Treasury has already too many duties imposed’ upon him. The officer charged with the administration of this measure will soon find that there is something more to be done in connexion with it than the mere writing of letters. His brain must be unceasingly at work, and he must be constantly on the look out for possible difficulties of various kinds. The Secretary to the Treasury has to attend, at the present time, not only to the work of his own Department, but to the administration of the Old-age Pensions Act ; yet the Government propose to place still another Department under his control. If the Treasurer imagines that this work can be efficiently carried out by an already overtaxed official, he is making a great mistake, and I am confident that before long we shall have under this Bill alone a Department of considerable proportions. The banking institutions do not employ more officers than are absolutely necessary ; yet every bank has a considerable .staff of officers constantly engaged in dealing with its note issue. The men engaged in that particular work can often obtain assistance from officers employed in other departments, but the position would be different in the Treasury. The Department, if it is charged with the administration of this Bill, will have to be so manned as to be capable of doing whatever is required of it at any time, and I am confident that the cost will be far greater than the Government anticipate. Some division of management ought to be faced, for the controlling power should not be that of the Treasurer or the Secretary to the Treasury. The Treasurer will find that he will require the assistance and co-operation of the banks in the distribution of these notes. There will, doubtless, be a tendency to believe that the banks are working against this issue if the demand for our notes diminishes; although the banks are not likely to do anything of the kind. The issue will certainly be affected to the extent that the banks push, or fail to push, the notes into circulation. A Commission which could deal with the work as a mere matter of currency exchange would be able to act in alliance with the banks, which, while assisting in the circulation of the notes, would save such an independent body a very considerable public expenditure. As a matter of fact, our banking institutions have never been hostile to a proposition of this kind. In 1896 a conference of bankers was held, at which all the banking institutions of Australia, with the exception of those of Western Australia and Tasmania, were represented. There were twelve bankers present, and they unanimously agreed to facilitate the promotion of a State note issue. They said that they were desirous of assisting such an issue as far as they could and they freely offered their services to that end. It would be a mistake for this Parliament to ignore such services and to refrain from taking advantage of them as far as possible. I suggest to the Treasurer that he reconsider this question, and that if the amendment would not, in his opinion, carry out exactly what is required he should himself frame one that would meet the situation. I do not think that the Opposition wish to take the work out of his hands, or to dictate to him ; but he ought to consider whether the appointment of a Commission is not necessary to carry out the object that he has in view. He ought certainly to make some arrangement by which the Currency Department will be entirely separated from the Treasury, and formed to some extent from without by the employment of men familiar with the operations of exchange, and possessing the necessary ability and influence to put the Government on the best way to the accomplishment of their object. We know that the banks would be agreeable to assist such a Commission, and we ought to consider whether it is not desirable, in the interests of the public and the Commonwealth note-holders, to adopt some such method.
.- It seems to me that the honorable member for North Sydney has no desire whatever to undermine the general principle of the Bill, but is anxious that the currency should be lifted out of the political atmosphere and brought into close touch with the atmosphere of finance and commerce with which it is intimately related. I am not stronglywedded to the actual wording of the amendment, but feel that the principle underlying it is worthy of our deepest consideration. If the Treasurer realizes how closely and intimately this question of currency is connected with the financial and commercial interests of Australia, he will recognise the necessity of having at his command that intimate knowledge of it which only a lifetime’s experience can give. That is all for which the honorable member for North Sydney asks, and his proposal is worthy the attention of the Treasurer. There are questions associated with this proposed currency which can be thoroughly understood only by a man who has had practically a lifetime’s experience in dealing with such matters, and the whole business should certainly be lifted out of the political atmosphere. That is all we are asking ; and I think the Prime Minister might give this aspect of the question his full and earnest consideration. I am sure that if he lives and remains Treasurer for a considerable period, as I know he hopes to do, it will not be long before he realizes the absolute necessity for the proposed assistance; and, having statutory authority for it, he will be in an infinitely better position than if he drifts along from day to day picking up information as required.
– One of the most instructive features of this debate is the way in which the Prime Minister treats a serious question of this kind. I have no doubt he thinks this is nothing but one of the merest instances of ordinary everyday legislation, which does not matter two pins to the country. My own impression, which is deepening as the days go by, is that the Prime Minister thinks he could run the whole world without the slightest trouble.
– It is a bad attack of “ swelled head.”
– It is not that; and I do not intend to say what is the cause. But there is the fact that the honorable member seems to treat questions of first-rate importance as if they were only of the most trivial moment. I should like, lo know where, in the whole world, the Treasurer for the time being, who is more or less the sport of party politics, has. under such a system as ours, the control of the issue of the paper currency.
– There is a case in Queensland.
– Poor Queensland again !
– “ Poor Queensland “ - we should be glad to follow her.
– It is very strange that the Prime Minister sees nothing but good in legislation which, at the t;me it was passed, he and his party, and all other Labour parties throughout Australia, bitterly and fiercely denounced. I was one of those unfortunates who, in the bank crisis, supported any parliamentary scheme which would help to keep the doors of the banks open and lead to liquidation under the speediest and most auspicious circumstances ; and I remember how I was bitterly denounced at the time by my Labour friends for daring to do so. The Treasurer himself was one of the fiercest in his denunciation, because-
– What has this to do with the question before the Chair?
– Nothing, I suppose, Mr. Chairman. I really cannot say two words now, but you put that question to me. Really, I do not know why the question is put to me constantly. I am discussing the question of safeguarding the issue of this paper currency. Is that in order, or is it not? If I am not in order, tell me to sit down, and I shall sit down ; but I do object to being “ pulled up “ in this way for nothing at all.
– The honorable member is perfectly in order in discussing the safeguarding of the note issue, but not in discussing something that occurred some years ago.
– I submit that I am perfectly in order in giving illustrations from even a hundred years ago, as has been done during the discussion of this measure.
– The illustration of the honorable member had nothing to do with the proposal before us.
– I submit, with great respect, that it has everything to do with the proposal. I am referred by the Prime Minister to the case of the Queensland National Bank and its reconstruction.
– No, sir!
– I am told by the Prime Minister that we ought to follow the example of Queensland in the issue of similar notes, and when, in reply, I point out that the honorable gentleman himself bitterly denounced the proposal in Queensland, I am pulled up by the Chairman.
– That is not correct.
– I am pulled up, I presume, on the plea of irrelevancy, though 1 do not know anything more relevant. Again, I ask the Prime Minister to point out a case in the whole world where the Treasurer of the day has the unlimited power over the currency of the country that he proposes to take under this Bill.
– What about the Minister of Finance in Canada?
– That Minister has no such functions as the Treasurer proposes to take under the Bill - he has not a monopoly of the note currency of Canada. As a matter of fact, the Minister of Finance in Canada does not control half the paper money there circulated ; whereas, under the Bill, the Australian Treasurer proposes to take the monopoly of the issue and to do all the work himself.
– What about the Treasurer of the United States?
– Again, I do not know that the Treasurer of the United States controls the paper currency.
– I am sure of it.
– I know of no case in the world where the Treasurer is saddled with such responsibility as will be thrown on the Treasurer if the Bill passes unimproved and unamended. If ever there was a case where expert help should be called in, and where those who control the paper currency should be absolutely independent of political considerations, this is one. The reply which the Treasurer has made to the arguments adduced from this side seem to me, with great respect, to be of the most paltry description. He tried to point out, for instance, a distinction between sinking funds as applied to loans and as applied to the operation of this Bill. Where is the essential difference? If there is a difference, it tells in favour of this Bill being administered by a Commission, as opposed to any question of loans and the raising of loans. The honorable member said that there was a proposal of ours to buy ships, and that the ships might sink or run on a rock. That is perfectly true ; but is that the only case where Commissioners are appointed in connexion with sinking funds? The honorable member knows that there are Councils of Finance in some of the States of Australia to assist the Treasurers in the ordinary administration of the revenues. In more than one case in Australia there are Commissions appointed to administer sinking funds in connexion with loans. I should say that as between a loan and a’ paper note issue, which is redeemable at the moment of presentation, and which may have to be redeemed the day after it is issued, whereas a loan need not be troubled about for, say, twenty-five years, so long as the interest is paid, there is no analogy, except such as makes it all the more necessary to surround a note issue with the safeguards now proposed. We are told that there is sufficient safeguard in the fact that the Treasurer will have to consult the Cabinet. My trouble is that the Minister has to consult, not only the Cabinet, but also the caucus. He has to get his orders from the caucus before he can do anything with or about the notes.
– The caucus varies its orders sometimes !
– Quite so. The honorable member for Wentworth was, for once, quite wrong to-day when he said that the Labour party would be bound to support the Government. My trouble is that this Government is bound to obey the party. There is an analogy between what is proposed here and what is a fact in connexion with matters of infinitely less importance. If Treasurers, having to do with the ordinary revenue and expenditure, find it necessary to call in experts, and if it is necessary to appoint Grand Committees to assist Treasurers in various parts of the world, is it not of the utmost importance that we should place beyond any possibility of temptation the control of the issue of this currency, which will so profoundly affect the trading concerns of Australia and the security of its finances and credit? Above all, we must preserve the credit of Australia, or, legal tender though these notes be, they will not keep their price at par as intended. The Treasurer has no expert knowledge himself, and there is little knowledge of banking minutiae in his Department; and he ought to be the first to jump at the chance offered by the amendment. The honorable member for North Sydney has clearly intimated that he is not wedded to the form of the amendment, which, therefore, may be modified ; but he and the country desire that the Treasurer shall not have the monoply of the issue, but that those who are made specially independent by this Parliament, and are free from the party exigencies of the moment, shall have the ordering of such matters.
– I was struck by the statement of the Treasurer that we ought to follow Queensland in this matter, and I suggest that we should do so. If the Minister will turn to the Queensland Statutes, he will find that the money to meet the Queensland notes is provided under the Treasury Bills Act of 1903.. The administration of that Act is vested in a Commission consisting of the President of the Legislative Council, the Speaker of the Legislative Assembly, and the Colonial Treasurer as trustees, and that none of the Treasury-bills are to be sold except for the redemption of the Queensland notes. If the Prime Minister wishes to be taken seriously, he will appoint some Commission to take the responsibility of transacting the currency business of the Commonwealth.
.- In the best interests of the Bill, I urge the Prime Minister to accept the proposal for the appointment of a Commission. As the honorable member for North Sydney has pointed out, there is now presented an opportunity, which neither the present nor any subsequent Treasurer will have again, of laying a firm basis for the taking over of the State debts and creating one great national debt, by which some of us, at least, think a saving may be effected.
– And only yesterday honorable members opposite were opposing the Bill !
– The Prime Minister has never heard one word from me in opposition to the Bill. The Prime Minister has himself removed any lingering doubt that existed in the minds of honorable members as to the stability of this note issue. He now has an opportunity, by establishing a Commission to deal with currency, to initiate a scheme for the ultimate consolidation and redemption of the debts of the States. The profits from the proposed note issue-
– And from the metallic currency, too.
– The profits from the currency generally might well be made the nucleus of a fund to be ultimately applied to the redemption of the debts of the States. We have allowed nearly ten years to pass without making an honest effort to provide for the transfer to the Commonwealth, and the ultimate extinction, of the debts of the States, and the Prime Minister has now within his grasp an opportunity to achieve what his predecessors have failed to achieve. The honorable member for North Sydney has given more time to the study of currency than perhaps all the other members of the Committee put together, and I urge the Prime Minister to accept his amendment for the appointment of a Commission, which would not only increase the stability of the proposed note currency, but have the larger advantages to which I have referred.
– I hope that honorable members, without regard to party considerations, will take advantage of the opportunity offered to us to increase the advantages to be expected from the Bill. As it stands, it empowers the Government to control the paper currency. of the country, and to make a profit from the note issue as it does from the metallic currency. We might well, in addition to putting the note issue on a firm basis, secure against financial crises, hand to trustees the profits from both the paper and the metallic currency, to establish a fund for the ultimate extinction of the public debt of Australia. Were the members of the Labour party now in opposition, the proposition which I am making would come from, and be supported by, them. They are pledged to effect economy in administration, and to endeavour to secure the realization” of high national ideals. When the Naval Loan Bill was under discussion last year, the Prime Minister moved for the creation of a body of trustees to control the sinking fund established under it, so that the money might not be used for political purposes. What is now proposed by the Bill is Virtually the establishment of a Trust Fund to support the national currency, and I suggest that that fund should be made available for still wider purposes, and applied ultimately to the redemption of the debts of the States. The objection of the Prime Minister, that the vessels for w,hich money was to be borrowed under the Naval Loan Act would have only a short life, was illogical, because the trustees appointed under that Act were not to control the ships, but to control a fund set apart to extinguish the debt, and what I propose is that he and two other trustees of greater financial experience than any Treasurer can hope to have should be appointed to manage the fund which will be established under the Bill, so that it may be available for great national purposes. I hope to see Australia become so great that the profit now to be derived from the currency will be like a drop in a bucket compared with the sum that will be available for the extinction of the debts of the States. But we must make a commencement, and the advice of experienced men is necessary both for the proper support of the currency and for the handling of the funds derived from it, so that they may be used to the best advantage. The principle of the Bill has been adopted, and I, for one, have given it my cordial support. I ask the Prime Minister now to consider whether the measure cannot be improved, and made to serve the highest national ends. I shall call for a division on the amendment, because I believe that in the future we shall have reason to think that we should have acted wisely had we accepted it. Even if the Treasurer were omniscient, he must pass away, and be succeeded by others, but independent commissioners, such as I suggest, would not be removable, and would daily add to their knowledge, so that they would be better able to advise the Government than any one else in the Commonwealth. I hope that honorable members, divesting themselves from party considerations, will do the best they can for Australia, and vote for the amendment.
Question - That the words proposed to be inserted be so inserted (Mr. G. B.
Edwards’ amendment) - put. The Committee divided.
Majority … … 9
Question so resolved in the negative.
Clause, as amended, agreed to.
Clause 4 -
From and after six months after the commencement of this Act -
a bank shall not issue, or circulate as money, any note or instrument for the payment of money issued by a State and payable on demand ; and
a note or instrument for the payment of money issued by a State and payable on demand shall not be a legal tender.
A bank which, in contravention of this section, issues or circulates as money any note or instrument issued by a State and payable on demand shall be liable to a penalty of Five hundred pounds.
– It is thought advisable, but hot absolutely necessary, to make the clause a little more restrictive and definite. I therefore move -
That after the word “ payable,” line 6, the words “ to bearer “ be inserted.
Amendment agreed to.
Amendment (by Mr. Fisher) proposed -
That after the word “payable,” line 8, the words “to bearer.” be inserted.
– I think it is wise to have those words inserted, but I wish to discuss a somewhat wider issue. I do not know whether the Treasurer has gone into the question of whether he can make this currency legal tender. Of course, if we cannot, we are in a rather difficult position. Personally, I think we can, but a good many doubts have been expressed about the matter in America. We thought that by adding the words “ legal tender “ in our Constitution we settled the matter beyond all doubt, but there are writers in America who still think that, notwithstanding the decisions of the Supreme Court of that country, you can make nothing except gold and silver - as a matter of fact, coin - legal tender. Tucker, on the Constitution of the United States, relying on some provisions of the American Constitution which have been repeated in ours - for instance, we have repeated in section 115 of our Constitution the words that the States shall not coin money or make anything but gold and silver legal tender-
– If we have not the constitutional power, of course we cannot create it by this Bill.
– I merely wish the Treasurer to get his legal advisers to think over the matter so that we can be sure of the position before the Bill is finally passed. On those words in the American Constitution, which are repeated in ours, it has been argued that even Congress was fettered as to what it could make legal tender, and Tucker, disregarding some decisions of the Supreme Court of the United States, has the temerity to mention that -
It does not grant this power to Congress and prohibit it to the States. And the prohibition on the States against making anything but gold and silver a tender, affirmatively makes gold and silver coin a legal tender. This being so, the inference of power in Congress to change the legal tender established by the Constitution is out of the question, unless we are to presume the grant to Congress of a power because it is prohibited to the States.
He later on emphatically declares his opinion - although I do not say that it is generally held by others - that Congress cannot make paper legal tender in the national currency.
– I intervene with considerable diffidence to ask if this discussion is in order on the clause now before the Chair. Would it not be more appropriate to clause 6, which deals with legal tender?
– The honorable member is quite in order in discussing the question on this clause.
– Both clauses deal with legal tender. I think 99 per cent, of the lawyers in Australia will say we have the power. There are authorities who hold that as all sovereign nations have had the power the Americans have it, and we probably have it. I merely mention this to show that in this world there is really nothing as to which opinion is unanimous, and a very learned writer on the American Constitution says we cannot do what is proposed, and that Congress strained their powers in certain respects in declaring that they could do the same thing. But what has been doubted by more than one or two writers is whether you can put in a provision of this sort, and declare that a bank shall not issue these notes. We are . declaring by this clause that a bank shall not issue any State note payable upon demand. By bringing in a separate Bill, we throw doubt on the power to prohibit States from issuing notes, and it is fairly clear that if you cannot prohibit a State you cannot prohibit an agent of a State. A bank is a State agent for this purpose, so that merely putting the prohibition in this Bill does not mean very much. However, these are matters for the High Court. All I can say is that if we have a doubt about a power, and it is necessary to put it in, let us put it in. It is fair to assume the power, and let the High Court settle the question.
– That is not good.
– If it is expedient for the purposes of a sound policy to exercise a doubtful power, we ought to exercise it.
– I am always glad to hear the honorable member for Angas on these and other points, and when I hear such a learned gentleman say that probably ninety-nine lawyers out of a hundred will agree with the Bill as it stands, I think it is a safe proposition to go on. This clause gave the draftsmen considerable trouble in order to put it in the language that they thought met the necessities of the case. I know they have no reasonable doubt that this Parliament has the power to prohibit any notes issued by a State.
– It has struck me that if we put in the words “ payable to bearer,” the provision might be evaded by making the notes or instruments payable to order. In that way the States might be able to issue notes which could go into circulation, and there would be nothing to stop the banks from circulating them. This would probably necessitate fresh legislation. That point might be considered by the Treasurer.
– There will be time later on to look more carefully into that matter, and if the amendment is held to endanger the position we shall recommit the clause.
– Is there a likelihood of any State taking that course?
– Of course, only one State so far has issued notes. I have reason to expect that we shall receive courteous consideration from the State of Queensland, which now has a note issue, and it is just possible that the Commonwealth will be allowed to take it over.
– - I noPe consideration will be given to the suggestion of the honorable member for Balaclava. I agree with the Treasurer that there will be no difficulty whatever in regard to the Queensland National Bank, but, as the clause reads, any bank that wished to circumvent the intention of the Act could issue instruments payable, not to bearer, but to order, which would be negotiable and pass as a certain form of currency.
– The clause deals only with State notes.
– Yes, but the position should be made quite secure. The Government should consider whether they can so phrase the Bill as to prohibit the issue of any form of paper currency other than the Australian notes. I do not think there will be much danger, but our Bills should be rigidly drawn. If the Treasurer will promise to reconsider the matter, and, if necessary, recommit the clause, T shall be satisfied.
– I shall do that.
– I should like the Treasurer also to consider whether in making such an amendment as has been suggested, we might not be doing something to interfere with the efficacy of the Bill. If the notes or instruments were made payable to order, they would not be currency, and therefore we should not be able to prevent their issue.
– In the competition, they would have but a poor show.
Amendment agreed to.
Amendment (by Mr. Fisher) agreed to -
That after the word “ payable,” sub-clause 2, the words “ to bearer “ be inserted.
.- The penalty for which sub-clause 2 provides is very severe. Although the State of Queensland is given six months within which to call in its note issue, a mistake might be made in extenuating circumstances which ought not to be punishable by the imposition of a fine of £500. I therefore move -
That the word “ of,” line 13, be left out, with a view to insert in lieu thereof the words “ not exceeding.”
– The Acts Interpretation Act contains a provision making the penalty stated the maximum penalty.
– I think that the drafting is correct, and that the clause would not be made clearer by the insertion of the proposed amendment. The penalty mentioned is, under the Acts Interpretation Act, the maximum penalty.
– - lt is very undesirable that people should have to remember that the words used here do not convey what they actually say. The sub-clause as it stands would appear to deprive a magistrate of any discretion in modifying the penalty, and no harm will be done in making the amendment. There are cases in which it is desirable to have an Acts Interpretation Act to which we may refer, but a mere bald statement of a penalty in one Act should be put. in words that will not involve a reference to another. In dealing with this matter, we are considering only the Queensland National Bank notes, but it is possible that after the date named, a bank might inadvertently issue one of the State notes, and some one who was appearing for it, or a magistrate, might not know of the modification of the penalty for which the Acts Interpretation Act provides. What objection can there be to the amendment?
– We desire to secure uniformity of legislation.
.- It is true, as the honorable member for Angas has said, that section 3 of the Acts Interpretation Act 1904, deals with this question, but I would remind the Committee that the section is intended more particularly to relate to those sections that set out an offence, and have the penalty declared at the foot in a separate line.
– Sections ot the Kingston type.
– It was intended to meet the Kingstonian form of drafting. The penalty for which this sub-clause provides is meant by this Committee to be the maximum penalty, but the Treasurer, I know, wishes .to meet the honorable member for Moreton, and I think he might well consult the Parliamentary Draftsman on the point.
– I hope the amendment will be withdrawn, and if the Parliamentary Draftsman thinks it necessary, I shall r’.-commit the clause.
.- I agree with the mover of the amendment that the alteration he desires to make is absolutely necessary. As the sub-clause now stands, a justice before whom a person was charged with an offence under it would have no discretion. If we insert the words “not exceeding,” we shall make our intention clear, and I think that the amendment ought to be agreed to.
.- I suggest to the Treasurer that, as it is his desire that this should be the maximum penalty, he would save time, and also make our intention clear, by accepting the amendment.
– We wish to secure symmetry in legislation.
– My honorable friend recollects, no doubt, that all the other measures that are governed by the Acts Interpretation Act in this respect have the penalty set out at the foot of each clause - a form of drafting initiated by the late
Mr. Kingston. In this case, however, the penalty appears in the body of the subclause. We ought to make our intention as clear as possible, and should not render it necessary for persons outside to have to consult a firm of solicitors, in order to ascertain what we mean.
. -I do not .think that the Treasurer quite grasps the point now being put before the Committee, that in the long array of Kingstonian provisions the penalty appears separately at the foot of each clause, and that the Acts Interpretation Act applying to them declares that a penalty so stated shall be the maximum penalty. In this case we have the penalty in the body of the sub-clause, and, therefore, some doubt may arise. If the honorable gentleman does not care to alter the wording of the clause, let him set out the penalty in a separate line.
.- The Treasurer, if he looks at other clauses in the Bill, will find that the drafting in this case does not follow the usual form. If we put the words “ Penalty £500 “ in a separate line at the foot of the subclause, we should be following the drafting of clause 13 and clause 27. I should like to move that the words “ liable to a penalty of £500 “ be left out, with a view to insert in lieu thereof the words “ guilty of an offence.” We could then put in a separate line at the foot of the sub-clause the words “ penalty £500.”
– I do not like the use of the word “ offence.” Let us pass the clause as it stands, and, if necessary, I shall move to re-commit it.
.- The Treasurer would save time by accepting my proposal, and if it were found to be unsatisfactory, the clause could be recommitted later on. In deference, however, to his wish, I beg leave to withdraw my amendment.
Amendment, by leave, withdrawn.
.- I think the reason for the difference in the form of drafting adopted in this case is that we cannot effectively declare a bank, as a corporation, guilty of an offence. It is persons who are guilty of offences, and it would be necessary to sue a bank under clause 30 of the Bill.
– All the legal members seem to think there is a difficulty, and, under the. circumstances, it would, perhaps, be better to insert the words, “not exceeding,” so as to place the matter beyond doubt. I do not expect the banks to contumaciously disobey the law ; but, of course, if they do, they will, like everybody else, sooner 01 later burn their fingers.
Amendment (by Mr. Sinclair) agreed to -
That the word “ of,” line 13, be left out, with a view to insert in lieu thereof the words, “ not exceeding.”
Clause, as amended, agreed to.
Clause 5 -
The Treasurer may from time to time -
issue Australian Notes;
re-issue Australian Notes ; and
cancel Australian Notes.
.- This clause gives power to re-issue notes, and I desire to ask what additional expense would be incurred if the same notes were not to be re-issued, so as to insure, as far as possible, that the circulation will be clean? One of the most noticeable features in the Mother Country to-day is the clean and healthy character of the paper currency.
– It used to be very bad.
– But now it is very clean. Many of the notes at present in use in Australia are extremely unhealthy to handle, and may transmit disease, with very serious consequences to the public. I should like to see notes destroyed on being returned to the Treasury, as is the practice of the Bank 01 England.
L5-57J- - The Government intend to have, relatively speaking, a clean note issue, but I think there is no justification for providing that no notes shall be re-issued. It must not be forgotten that, under the Bill, ros. notes will be issued. The honorable member for Wentworth is fortunate to have in his mind only the Bank of England note, which is of the minimum denomination of £5.
– Why should the poor not have clean notes?
– I hope that, not only will the Australian money be clean, but that the people will have plenty of it. It is estimated that the average life of a note in circulation is from twelve to eighteen months, and the provision made to insure cleanliness will make the issue more expensive than that of the banks at present. There is every intention to keep the notes as clean as is reasonably possible; but the clause ought to remain, because there must be the right to re-issue, seeing new notes might be returned in large numbers and for large denominations.
– I agree that there should be power to re-issue, particularly in the case of the ros. notes, for, otherwise, the expense would be too great. To my mind, one of the advantages of this national currency will be the circulation of clean notes. I undertake to say that some of the bank notes I have seen must have been, issued and re-issued a hundred times, and have had a much longer existence than eighteen months. Indeed, some of the notes will hardly hold together, and fairly stink in our nostrils. To ask the Treasurer to cancel every note that is paid in, as is done with the £5 notes Of the Bank of England, is asking too much. The Treasurer has taken the whole control under this Bill, and this clause gives him an important power, which doubtless he will exercise with caution. In ordinary banking institutions extreme care is taken, not only in the issue and re-issue of notes, but more particularly in their cancellation ; and one of the defects of the Bill is that no detailed provision is made in this latter respect. It is most important to make sure that notes ordered for cancellation are actually destroyed ; in private banks,, several officials have to certify to the destruction. In the Bill, this whole question is governed by the words “ cancel Australian notes.” In regard to the issue there are many safeguards ; the notes have to be signed and recorded, and there is a printed scrip; and, as to the re-issue, there are also checks. Unless the utmost precaution is taken to insure the thorough cancellation and destruction, the Commonwealth is in danger of most elaborate fraud; and we ought to consider the advisability of inserting a clause laying down the lines on which that work shall be done. At any rate, power should be taken in this clause to make regulations to that end.
– There is a clause giving a general power to make regulations.
– Yes, I see that the Treasurer is quite right. But I urge that regulations are more important in regard” to this clause than in regard to any other. .Great frauds in this connexion have been committed in the past; and, once cancelled notes get into circulation, it may be years before they come back again, the public in the meantime being caused much vexation and trouble.
.- I am glad to hear that we are, as far as possible, to be guaranteed a clean paper currency ; but there is no power in the Bill to insure that cleanliness. The cancellation of notes is a matter which really rests with the tellers of the different banks ; and whether the Commonwealth notes are enumerated for destruction will also rest on their judgment, unless some special powers are taken in the Bill in this connexion. ‘ It is most important in a State note issue that there should be cleanliness ; indeed, if there is one advantage we can gain, it is that. As a bank teller, I have seen notes treated very often in the most filthy way. 1 have seen them produced from the boots of men who have, perhaps, walked 200 or 300 miles ; and I have seen a man, on being paid notes, sit down in a corner of the bank, and line his boots with them. Indeed, I have seen notes produced from all parts of the body in a way that would make one very loth to handle them. I do not know quite what to suggest should be done, but, at any rate, there ought to be a guarantee for a cleaner note issue than we have at present. I do not see how, in the absence of further provision, the Treasurer will insure that the notes shall be returned to the Treasury sooner than bank notes are now returned for cancellation to the head offices of the banks.
. -The honorable member for Richmond rightly says that the banks do not withdraw and cancel their notes often enough to keep the issue clean, but those controlling the institutions are willing to instruct their officers to return soiled and torn Australian notes to the Treasury without delay, and the Government will be glad to co-operate with them in keeping the issue as clean as may be possible without incurring unreasonable expense. This matter, however, is better dealt with by regulation than in the Bill.
.- The honorable member for North Sydney suggests that provision should be made in the Bill for the destruction of returned and cancelled notes. Clause 20 provides that Treasury-hills after being redeemed shall he cancelled and destroyed by burning or otherwise.
– The notes could be dealt with similarly.
– Will the Prime Minister see that a provision is drafted to enable that to be done?
– Probably an alteration of Part III., to make it apply to both Treasurybills and notes, and the insertion of the words “ and notes “ after the word “ bills” in clause 20, would meet the case.
– I think that it would be better to draft an entirely new clause. I have an amendment to propose in the clause now before the Committee. Under the Queensland Act, the issuing, re-issuing, and cancellation of -notes is done under the authority of the Governor in Council. Our Acts Interpretation Act defines “ GovernorGeneral “ to mean the Governor-General, acting on the advice of his Executive Council, and I therefore intend to propose that the words “Governor-General” be substituted for the word “Treasurer.” I do not think that the issue, re- issue, and cancellation of notes should be left to the Treasurer. If the amendment, which I am p.bout to move were made, there would have * o* be a definite recommendation made by the Treasury officials, which would go before the Cabinet, and so on to the Executive Council. I move -
That the word “ Treasurer “ be left out, with a view to insert in lieu thereof the word “ Governor-General.”
.- - I think that the amendment will improve the clause, because it makes the steps which have to be taken more formal. The Queensland Act provides that the Governor in Council may cause to be issued, re-issued, or cancelled, Treasury-notes, and here I think the Governor-General should have that function.. May I suggest that the clause should be further amended to read, “ the Governor-General may cause to issue, re- issue, and cancel.” I do not think that we should provide merely that he may issue.
– While I see no objection to the amendment in principle, its adoption might cause difficulty by necessitating Executive authority for the re-issuing of notes.
– The notes would be reissued in batches, and the Treasury will have accepted sovereigns in return for them.
– It should be made clear that a note once issued may be reissued.
– Each time a note is issued the Treasury gets gold for it.
– Is it necessary to take power to re-issue?
Sitting suspended from 6.20 to 7.45 p.m.
– I am in favour of providing that the Executive may authorize the issue of notes, or any increase of the circulation, but I cannot accept the amendment if its effect will be that the Executive must meet to sanction every re-issue of notes. Such a provision would be unworkable. I should like to know the view of legal members of the Committee on the point.
. -I moved the amendment because the Bill, as it stands, provides that the Treasurer may issue, re-issue, and cancel, and what might take place under it might be merely the submission of a recommendation to him, and the initialling of it to show his approval, this one paper constituting the whole record of the transaction. What is needed is a more ample record. We wish to give our notes the formal legal clothing of the authority of the Commonwealth. If the issuing has to be authorized by the Governor-General, there will first be a recommendation to the Treasurer, and then various steps leading up to the preparation of papers for the Executive Council. A bank might ask for notes to the value of ^500,000, and offer to accept two-thirds of that sum as a fixed deposit at interest. Under my proposal, there would be a record of all the steps taken in connexion with the transaction, right up to the authorization of the issue of the notes by the Governor-General in Council. The Treasurer wishes to know the effect of the amendment on the re-issuing of notes. He asks whether it would be necessary to get another Executive Council order to again issue a note which had been presented at the Treasury, and for which the holder had received gold. That is not what I desire, because the Executive authority has already been given for the issue of that note, and it should be allowed to be circulated again until drawn in and cancelled. The wording of the Queensland Act is practically the same, because my amendment would make the clause read in this way -
The Governor-General may from time to time authorize ‘ (a) the issue of Australian notes, (*) the re-issue of Australian notes, and (r) the cancellation of Austraiian notes.
It would be advisable to retain the words “ from time to time “ because there is such a thing as construing an Act to the effect that the power once exercised is exhausted, and I do not want the Government to exhaust themselves on the first issue of their notes. The section in the Queensland Act reads -
The Governor in Council may at any time after the passing of this Act cause to be made issued and circulated any number of Treasury notes for one pound sterling or five pounds sterling each or for any multiple of five pounds sterling each and may from time to time cause such Treasury notes to be re-issued or cancelled when or so often as may be deemed expedient.
The words there are practically the same, and under them the Queensland Treasurer has been working for many years without so far as I am aware any difficulty arising. The cost of ‘~t administration of the Queensland Act is only about £2,500 a “year, or a little in excess of that amount, which does not seem to indicate that it is necessary to keep a large or expensive staff for a big issue of notes. Consequently, as the wording I propose is very much the same, and the Queensland Act can be worked on such economical lines, there need be no apprehension on our part about adopting it.
– Does the honorable member’s amendment mean that every time a note is re-issued there has to be an Order in Council ?
– I do not think it ought to be necessary. Of course, the Treasurer would be well-advised to follow the usual practice of asking the Parliamentary Draftsman to look closely into the wording of the clause, as finally passed, to see that it exactly carries out the intention.
– The honorable member’s intention is that the Executive minute authorizing the issue shall include the reissue of the same notes.
– Yes. So long as the one issue is made bearing its number clearly so that it can be easily identified, it does not matter if the same note comes into the Treasury sixty times. The same authority ought to be good enough to keep the note alive.
– I am not sure that the clause would give a general power, because the honorable member said the power might be exhausted with one action.
– That was in reference to the words “ from time to time,” which the Treasurer suggested might be left out.
– Will the honorable member permit me to explain my point? Does the honorable member say that a general power is given under the Order in Council to issue and re-issue the same notes?
– We should clearly understand that, because the Treasurer might re-issue the notes fifty or a hundred times, until he thought he ought to cancel them. If that be the case, all the precautions which honorable and learned gentlemen opposite are taking are simply so much beating the air, because if the Treasurer can issue a£5 note fifty times under the one Order in Council, he has an unlimited power.
– No; the same note cannot go out again until it has come in. When it comes in, the Government are relieved of the obligation. When it is re-issued, the Government are liable only for the same amount.
– Apparently, that is so; and a general order giving power to issue and re-issue, would be convenient, whereas a special order for every re-issue would be most inconvenient. We may look into that matter ; because, if it were necessary to have an Order in Council for every re-issue, it would be impossible to carry on the business in the Treasury. I understand that the honorable member for Darling Downs wants a general order which will cover any number of re-issues, but not
– The whole confusion arises from the way in which the paragraphs are placed in the clause. The sending out of a note which has come into the Treasury a second time is not a re-issue. It is in currency from the time it is issued until cancelled. The ambiguity might be got rid of by saying clearly what we mean. A note cannot be re-issued until it has been cancelled. We should word the clause in this way -
The Governor-General in Council may from time to time (a) issue Australian notes (b) cancel Australian notes, and (c) re-issue Australian Botes.
That puts the whole matter in logical sequence.
-I do not agree with the honorable member. What about redemption ?
– If notes were redeemed, they would have to be re-issued ; but the Treasurer would not redeem a note without cancelling it.
– We would redeem it and re-issue it.
– There can be no re-issue until after either cancellation or redemption. I take it that redeemed notes would not be kept in a safe ; but would be immediately destroyed.
.- The Committee are agreed as to the necessity for the Governor-General in Council authorizing the issue of the notes. The difference of opinion appears to be whether it would not also be necessary to get an Order in Council for a re-issue. There is an element of doubt about it; although the consensus of opinion seems to be that that would not be necessary once the note was put into circulation. In order to put the matter beyond doubt, I suggest that, after accepting the amendment of the honorable member for Darling Downs, in front of paragraph a, the words “ and the Treasurer may,” should be inserted before paragraph b. That would give the Treasurer authority to re-issue notes and cancel notes, while leaving to the GovernorGeneral in Council the power to issue them. Probably that would . get over the difficulty, and meet what the Committee are aiming at.
.- The difficulty arises over some confusion with regard to the words “ issue “ and “ circulation.” The actual issue of a note takes place under the authority of the Act, the moment the . issue is made by the Government. Then it comes to be a question of circulation. The re-issue of a note, as the honorable member for North Sydney put it, is the re-creation of the old note of the same denomination after cancellation. That is perfectly distinct from circulation. A note may be issued and circulated, and come back to the Treasury and be recirculated; but that is not a re-issue. It is a re-circulation of the old issue. When the old issue, in course of time, comes back to the Treasury and is cancelled, then a note of the same denomination with the same numbering may be re-issued. All that would be required would be the Order in Council for the re-issue of the old issue after cancellation.
– The same number of note, but on new paper?
– Yes; an issue of the same denomination and the same total value. The whole point is that recirculation is not re-issue.
– I understand the honor. able member to say that issue means issue until the note is cancelled.
– Precisely. Even if a note were not actually in circulation at the time, it would be in issue, and an Executive order would only be necessary to enable a re-issue to be made of any given quantity of notes previously cancelled.
.- I was rather alarmed when I heard the Treasurer assuming that these notes, after coming back to the Treasury, were to be put into circulation again and again for, perhaps, a hundred times. This brings back to my mind very forcibly the considerations I suggested to the honorable gentleman before the adjournment for dinner. I was then endeavouring to bring to his mind his public duty as the administrator of this Australian notes system in respect of the health of the community over which he presides. The honorable gentleman said something before dinner about his pious aspiration that this note issue would be a comparatively clean one. I should like it to be superlatively clean. When I reminded the Treasurer of the arrangement of the Bank of England for keeping its paper currency absolutely clean, he replied, in effect, if not in words, “ That is a matter of a currency in £5 notes. It is a currency which a few favoured rich people can deal with, but we are proposing a paper currency going down to a denomination of 10s.” The logical sequence of what he said, although he did not say this, was, ‘ How can we give the great* bulk of the people of Australia a clean currency when we ere issuing it in such low denominations? “
– No; he did not say that.
– That was the logical sequence of his argument. If these notes are to be issued and re-issued, they will become disease traps. There is no provision in this Bill for their collection. Will the banks pay the cost of returning them to the Treasury every time they come into their hands? Certainly not. When we know that the number of times that the Treasury will have a Treasury note returned to it, compared with the number of times that a note is handed over a bank counter, is as one to ten thousand, surely we should prevent the re-issue of these notes. Surely the Treasurer might adopt that safeguard when these notes, after circulating all over Australia, come back to Melbourne, contaminated, perhaps, with the germs of a dozen different serious diseases.
– They might be contaminated with Queensland tick.
– The honorable member scoffs at my proposal. What is the position with regard to the bulk of the Australian people? A 10s. note, for instance, will be handled by thousands. Yet a note infected by one cancerous hand has only to be touched afterwards by one cut finger to change the promise of life into a poisoned mockery. Yet honorable members opposite, who pretend to be humanitarians, refuse to give the Treasurer the right to protect the public health in this small way I We have often heard them say that the protection of life and limb should be superior to mere considerations of pocket. How often have they thumped the tub on this question? How often has the honorable member for East Sydney, who now hands me a glass of water, beaten the tub in defence of the public health? What is the cost to avoid which we are to sacrifice the health of the Australian community? The cost of printing notes of this description is now about i£d. each, and in America it is as low as Jd. each. The lives of the poorest people amongst us - and I do not include honorable members of the Labour party in that category - are to be sacrificed because our humanitarian Treasurer cannot afford to spend fd. on the issue of a new note. We have reached now a stage at which we can expose the humanitarian humbug of my honorable friends, if they do not put the health and life of the community at a higher value than fd. per note re-issued.
– There is more in my honorable friend’s contention than honorable members opposite appear to imagine. Scarcely anything is more disgusting than to have to handle dirty notes ; but I would point out the difficulty in the way of adopting the sanitary suggestion made by the honorable member for Wentworth. How, for instance, is the Treasurer to secure possession of the dirty notes in circulation? He can only see and deal with them when they find their way to Melbourne. A note, I apprehend, will not be sent to the Treasury until it is worn out, and ragged, and dirty. Machinery of some sort would be required to enable these notes to be “policed,” so to speak, throughout the length and breadth of Australia, in order to discover and deal with those in a filthy condition. It will remain, I suppose, with the tellers of the local banks to return, or to fail to return, them at their discretion to the Treasury. They will have control of these notes once they are issued. How is the Treasurer to follow them, to ascertain whether they are dirty, and require to be called in? He will know of dirty notes only when they are sent to the Treasury for redemption or exchange. I agree that our note issue should be kept as clean as possible for purely health reasons; but we shall be completely in the hands of the bank tellers, who are very often hard- worked individuals, and this returning of dirty notes would not be an easy job for them, since they must be sorted and enumerated.
– Will the banks pay the cost of sending these dirty notes to Melbourne? I think the Commonwealth ought to bear that cost.
– The question is whether we ought not, for sanitary reasons, to pay the cost. In the circumstances, it seems to me we shall have to let the honorable member’s proposal go, unless we can enact some machinery that will make it compulsory for those who see dirty notes in circulation to send them to the Treasury to be replaced by clean ones. Then, again, it might be a matter of opinion, as between the tellers of the banks, as to whether a note was dirty enough to be sent to Melbourne to be replaced “by a clean one. A whole host of considerations arise, and so many difficulties Sul round the proposal, that I am afraid we shall have to trust to the bank tellers to see that our notes are replaced by clean ones whenever they ought to be renewed.
Amendment agreed’ to.
– The Governor-General ought to authorize the Treasurer to issue, re-issue, and cancel these notes from time to time. We have already substituted the words “ GovernorGeneral “ for the word “ Treasurer,” and I therefore move -
That after the word “ may “ the words “ authorize the Treasurer “ be inserted.
– I have no objection to these consequential amendments, provided that it is clear that “ issue “ does not mean the whole issue after it is worn out. The Government will have to discover whether this amendment conveys the legal meaning [hai we desire to express.
– The Committee recognises, of course, that we cannot, on the spur of the moment, and while sitting in the chamber, undertake to draft a clause’ that is technically and legally full and complete. We are only considering the mattei of policy.
– Perhaps the view of honorable members will be met by providing that the Governor-General may authorize the Treasurer, from time to time, to issue, re-issue, and cancel Australian notes.
– Very well, I am prepared to withdraw my amendment.’
Amendment, by leave, withdrawn.
Amendments (by Mr. Fisher) agreed to -
That after the word “may” the words “ authorize the Treasurer “ be inserted, and that after the word “ time “ the word “ to “ be inserted.
.- The Treasurer has not informed us whether he intends to adopt the Queensland practice and establish depots where dirty or mutilated notes may be exchanged. This is, perhaps, a matter that can be dealt with by regulation.
– That question naturally arises under the next clause ; but the Treasury has already been in communication with thebanking institutions interested, and, on behalf of the Government, I have expressed myself favorably regarding the establishment of depots - a matter which, as the honorable member suggests, can be dealt with by regulation.
– What is meant by “ depots “?
– Depots are places where mutilated or soiled notes may be exchanged for new notes. They are instituted for the convenience of the public, because the Government desire to afford every facility to the public to obtain new notes, subject to limitations. This, however, is a matter for administration, and not for legal enactment.
– Either the people are able to get sovereigns for the notes at these depots or they are not.
– The notes are payable on demand only at the Treasury; but, in order to convenience the people, it is desirable to have depots where notes which are mutilated or worn may be exchanged:. This is no new idea, because, from the daythe bankers first interviewed me, it has been favorably considered. In Queensland, there are such depots at Bundaberg, Rockhampton, Townsville, Cairns, and Mackay, as convenient centres.-
.- The Prime Minister could, I think, arrive at the desired result so far as the public health is concerned if, instead of establishing depots, he were to appoint agents at the natural depots, the banks in the big centres, where the notes could be changed as suggested. The banks will naturally be collecting and re-issuing the notes constantly; and such agents could inspect the notes, and, if they were prejudicial to public health, or mutilated, take them out of circulation. This would be a much easier and more economical means of attaining the aim in view. I intend to move a new sub-clause carrying out that idea. I presume the agents would act on medical authority.
– Are not gold and silver coins also dirty?
– Metallic currency may becleaned in a rough-and-ready way, whereas, if notes were boiled in a barrel, their value would disappear very rapidly ! Notes can pick up disease germs much more readily than can coins.
– There are greater nuisances than dirty notes !
– The honorable member is quite right; and his interjection calls my attention to the fact. If honorable members opposite treat this question lightly, they may wake up some day to find that science has made some progress in the Commonwealth, and that the community will not tolerate ignorant men who refuse to see the danger of not taking proper means to safeguard the public health. It is evident to every person who has watched the debates on this Bill that, so far as the currency proposals are concerned, we are living in a fool’s Paradise, very appropriately presided over by my honorable friends opposite. But this is too serious a question for jest- or ribald laughter. In order to let the people know whether those who occasionally indulge in tub-thumping at election times, are in favour of preserving the public health, I move -
That the following new paragraph be added : - “ (a) Appoint agents to withdraw from circulation Australian notes the circulation of which is deemed by the said agents to be prejudicial to public health.”
.- The community must feel indebted to the honorable member for Wentworth for the great interest he takes in their welfare, from a health point of view. During the discussion of this Bill, we have had the same arguments used by the honorable member on many occasions, until one would imagine thdt, up to the present, there never have been any notes likely to be charged with microbes, or to convey disease to those who handle them. The honorable member for Richmond, who does know something of the banking business, has told us that “re-issue” does not mean the reissue of the same notes ; but still, the honorable member for Wentworth urges his old argument, under the impression that the notes will go back to the Treasury to be re-issued in a dirty state. If the honorable member is so anxious for the public health, I am surprised that, while he has occupied a seat in the House, and notes have been issued by the banks without any control, the re-issue being left to the tellers, he has never raised his voice to warn the public of any danger. It is only when the Government propose to issue notes that we hear his words of caution. In his opinion, apparently, the present circulation has no microbes, and is all right; but when the Labour Government propose to control the currency, he sees danger in every note.
– Honorable members opposite cannot escape their responsibility in that way !
– We do not desire to escape any responsibility ; but we do desire to see the business of this House seriously conducted. Why does the honorable member not deal with the proposal on a fair basis? Why does he continue to take up the time of the Committee with his reiteration of the same arguments? Perhaps I am paying the honorable member too high a compliment in calling his utterances arguments. Why did he not force the Government, behind whom he sat for so long, to take steps to prevent germ- laden notes from circulating? The honorable member’s statements are ridiculous ; and, in my opinion, a Chamber like this ought to be above such methods, and should debate important questions of this kind on their merits. Time should not be wasted as it has been, by the honorable member.
.- The honorable member for Hunter has torn a passion to tatters over a tattered and dirty note, but he need not have displayed so much temper and fury in combating the proposal that the people, when they have notes forced on them, shall be given clean notes. All that the honorable member for Wentworth suggested was that every precaution should be taken to keep the Australian notes clean. For that he has been jeered at. This is not a party question, and there is the best of reasons for not having brought the matter forward earlier, this being the first opportunity that the Parliament has had of considering the note circulation from any point of view. The Commonwealth notes will have a greater circulation than the bank notes, because they will be forced on the public, and, therefore, it is all the more necessary to take precautions against the dissemination of disease by means of filthy notes. The Canadian law requires that a number of depots shall be provided throughout the Dominion for accepting and redeeming notes, and similar arrangements are made in every other place where the paper currency is controlled by the Government. ‘ The honorable member for Hunter would have done better had he tried to help us to increase the number of depots for the exchange of notes. It will be necessary to have the notes in circulation inspected from time to time - by inspectors, not agents - whose duty it will be to order the withdrawal of dirty notes which may spread disease.
.- So far from having taken up time unduly, as I have been accused by the honorable member for Hunter of doing, I have not spoken on this subject for more than twenty minutes, which is surely not too long to occupy in advocacy of a proposal to safeguard the public health. That might have been admitted even by those who can thump a tub so enthusiastically as the honorable member for Hunter can, and -who are trying to escape the responsibility of giving a vote on a very simple question. The Prime Minister is never tired of urging the Governments of the States to do something to mitigate tuberculosis, or the white plague, as it is termed. The trouble to be feared from dirty bank notes is the spread of cancer and similar blood poison diseases. Before the subject is dismissed so airily as the Prime Minister seems to wish to dispose of it, I think that we should have the views of medical men on the question. It is not enough for the honorable member for Hunter to abuse me as a fishwife in Billingsgate might abuse a colleague ; he would do better to vote for some such proposition as I have put before the Committee. Perhaps it would be well to accept the suggestion of the honorable member for Parramatta, and substitute the word “inspectors”for the word “ agents,” where it occurs. As for the complaint that I have not previously dealt with this matter, it is sufficient to say that I have had no other opportunity. The objection that the notes which are to be issued are to cost three farthings each should not weigh when the public health is in danger. I have not moved the amendment in any hostile spirit, and the division will show whether honorable gentlemen wish to be ranged with those who desire a clean currency for the people or with those whose views do not do credit to either their humanity or their good sense. I should like the Prime Minister to express his opinions on this subject seriously, because I do not wish to make what may be considered a party move.
– Ministers think the amendment unnecessary. Our policy will be to do everything practicable to keep the notes clean, and it is expected that each note will be in circulation for about a year.
– Will periodical fumigation be provided for?
– Arrangements have been made with the banking institutions for the sending in of all soiled, torn, or partially destroyed notes, for cancellation and destruction. I am delighted with the enthusiasm of honorable members opposite for the preservation of the public health, and I am ready to co-operate to protect both the public health and the public revenue. But I am not a child at parliamentary procedure and manoeuvre, and cannot accept the amendment.
.- The Prime Minister is not a child at parliamentary manoeuvring. I have in my mind’s eye something which stamps him as a past master of that art, even though his other parliamentary gifts may not be on the same level. In view of his statement, which was marred by the ungenerous and unjust words with which it concluded, I shall not press the amendment, and shall defer action until the regulations have been published. I have drawn attention to the fact that there is no machinery in the Bill for the safeguarding of the public health in the way that is required, and offer no apologies to honorable gentlemen who have become so heated in the consideration of this subject. It would be well if the people of Australia gave closer attention to our proceedings, so that they might discover how some honorable gentlemen honour their public professions.
Clause, as amended, agreed to.
Clause 6 -
Australian Notes may be issued in any of the following denominations, namely, Ten shillings, One pound, Five pounds, Ten pounds, or any multiple of Ten pounds,, and shall -
Until the Parliament meets at the Seat of
Government, the Seat of Government for the purposes of this section shall be deemed to be at Melbourne.
.- The proposed issue of a 10s. note being a new departure, perhaps the Treasurer will be good enough to state the reasons for it.
– The denominations of the proposed issue are set out at the beginning of the clause, but, in the meantime, as the people are anxious for the issue of Australian notes, the Government have made arrangements with the Associated Banks here, and with other banks, to take their unissued and unsigned note paper and put it through their own printing press and into circulation. It will not be possible to issue a 10s. note until we have been able to get an entirely new issue of our own, which will take some time. The Government have made up their mind that the time has come when the 10s. note ought to be issued. I think it will be not only a most popular note, but also a most convenient one. The other denominations are the usual ones in connexion with the present bank-note issue.
.- The Treasurer has quoted no experience of an issue of a 10s. note in any part of the Dominions, and I think, can point to none, unless it be in the Dominion of Canada.
– And the United States.
– They have a different currency, and, necessarily, the Canadian Government, under the powerful influence of the system across its border, have been drawn into a system which is not in harmony with that of the rest of the Empire. The proposal for a 10s. note partly explains the high estimate which the Treasurer has formed of the notes to be absorbed by the community for its business purposes. It may, to a large degree, displace the second of the gold coins now forming part of our present currency, and, to some extent, will affect the silver coinage, which is already under Government control, and is, in itself, a satisfactory and profitable issue. To the extent to which this note competes with our gold coinage, there may be arguments for it with which I am not acquainted, but, so far as it competes with the silver coinage, I fail to see that there will be any gain whatever.
– It is more a question of convenience.
– I assume the Treasurer’s argument to be that the note will be more convenient than the half-sovereign.
– And than the silver, too.
– I doubt it.
– If the honorable member were in a hot country he would know.
– I fancy that the four half-crowns, or the five two-shilling pieces under our coinage are more convenient. I shall not press the objection, but the 10s. note - a new departure - ought to be authorized by experience somewhere. I can only say I do not know where.
– I should like to hear the views of some of the gentlemen who have made this matter a special study. I do not include the Treasurer among them, but I do include the honorable member for North Sydney. He is a great advocate of the 10s. note, and I should like to learn why we in Australia, of all places, who produce a superabundance of gold, and have to send it abroad because we cannot use it here, should try to force it out of use and force the use of a note in its place. It cannot be for purposes of economy, as I understand that die wear and tear of gold coin is only about 2d. in eighteen years, and I should think the cost of the notes, ranging over that period, would be very much more than that proportion of the total face value. What, then, is the object? Would any honorable member sooner have a dirty note than a good, bright sovereign in his pocket? It may be due to my ignorance of the matter, but I should like to he informed of any reason why we should try to force a note onto the public and to force gold out of use.
.- My conviction is that, when the new order of things prevails, and the interest of the banks in pushing notes has ceased - as it necessarily will, because every note will cost them a sovereign, and they have been using their own notes for convenience for till money - the tendency will be for gold to be more used than it is now. When the Bill was brought forward, I was travelling in other States, and I did not come across one of my friends who had notes in his pocket, except in Queensland. All large firms pay their men in sovereigns, which are much more easily handled. On PaY.day the sovereigns are put into small tins or boxes and handed to the men. Notes, on the other hand, would have to be counted, and everybody would be fumbling them. This would be a great waste of time, and is not a very pleasant process. My belief is that if people are left to themselves,” they will use more and more gold. In America, where I was recently, they have small notes, which are a perfect abomination, and are gradually going out of use. The metal coin is being more and more largely used there. The use of notes in Australia is now only about 16s. per capita, as against about 38s. in Scotland, and higher sums in other countries. Even with all the aid of the banks, and the interest they had in circulating them, the use of notes in Australia is very small, and when the banks cease to have any interest In pushing them, beyond the convenience of having them sent through the post to distant branches, it will be found that, in all the centres, gold will be used. As the honorable member for Parramatta pointed out, this is a country that produces gold and ships it away, not only as coin but as bullion. With us it is a commodity, the same as wool, and we produce it far in excess of our coinage requirements. The Government may expect to find that the use of notes will not increase in proportion to the magnitude of our exchange operations. The 10s. note is a mistake. There is no need for it ; but I suppose the experiment must be tried. There is an erroneous impression prevailing about the currency, that money can be made by signing notes, and pushing them on to the people. I do not believe that that is possible beyond reasonable limits. The addition of a 10s. note will not be a success; and I do not think it will meet a public want.
.- No strong case has been made out in favour of the 10s. note. I have heard of no public demand for it in the press, at public meetings, in any public literature, or in the commercial community. It will be a very formidable competitor with the postal note for 10s. In fact, the note issue generally will be found to be a very serious blow to the postal note system, which is a very useful and valuable Commonwealth asset.
– But the Government are not out to tax the people. Their object is, to provide the people with conveniences.
– I apprehend that one of the strong arguments in favour of the Commonwealth note was that the Government expected to make a certain amount of profit by it. The Government are calling into existence a new form of note which will seriously compete with the pre-existing form in the shape of the postal note. The 10s. postal note is one of the commonest and most popular forms of payment through the post. Upon each 10s. note issued by the Postal Department, the Government makes a charge of 3d. That is a matter of revenue which cannot be lost sight of ; by the creation of the 10s. note, for which there is no demand, the Commonwealth will suffer a serious loss of revenue through the postal note system.
– The honorable member for Bendigo must remember that the Australian note, issued by the Commonwealth Government, will be good until claimed, whereas a postal note is good only if presented within six months of issue. Surely the honorable member does not want to penalize his fellow citizens. The honorable member states that there has been no public demand for. a 10s. note by public meetings or through the press; but I am afraid that the papers do not report certain meetings bearing on the question. I am quite willing to meet the honorable member, even in Bendigo, and debate the matter from the standpoint of the history of the note issue of the world, as against the present system, and in favour of notes of even less denominations than 10s. I can assure the honorable member that a great number of people will approve of the 10s. note, especially if issued by the Commonwealth. In reply to the honorable member for Mernda, I should like to remind him of the result of the action of the banks in Queensland, when, in opposition to the desire of the State and the popular will, they said that they would have nothing whatever to do with a State note issue, and would pay in gold. By their action they raused more gold to be shipped out of the Colony in one year than had been shipped, with the exception of two years, in any. previous three years. In 1883 the value of gold shipped from Queensland was £4,000, and in 1893, when the banks threatened the State, and would have punished it for issuing notes if they had been able to do so, the value of gold sent away was no less than £435j°00-
– That was in process of exchange.
– But it was one hundred times in excess of the amount shipped from Queensland in 1883. It must be admitted that this increased shipment had some connexion with the action of the banks. Even the honorable member for Mernda, with his vast experience of the Commercial Bank of Australia, which has caused more ruin in Victoria than has any other financial institution in Melbourne, must admit that.
– I had nothing to do with that.
– Perhaps not. The Commercial Bank, through the Assets Realization Company, is trying to rob the Melbourne Hospital, at the present time, of ,£3,000, left to it by a man since deceased. It would be well to have an inquiry into the operations of that company. Two other hospitals are being treated in the same way in respect of like bequests of £3,000 each. There are thirty-eight banks of issue in the Commonwealth, and I understand that the Government intend to take over their unsigned notes and reissue them with the Commonwealth stamp upon them. They will pay the banks the cost of producing those notes, and that is an equitable arrangement such as I should expect this or any other Australian Government to adopt. It seems to me, however, to be wrong to have in Australia no less than thirty-eight banks of issue. I have here a photographic reproduction - perhaps, the only one in existence - of a note issued by the Bank of Australasia when we were passing through a terrible experience, following the collapse of the land boom. The bank evidently had not sufficient Victorian notes to issue in Melbourne. It, therefore, sent to New South Wales for a supply printed for issue in that State, and altered them in no less than six different places. The men who signed the notes, however, were not asked to initial the alterations.
– But I suppose they paid them?
– Have I said that they did not? I wish the Commercial Bank had paid all its debts, and I dare say that the honorable member, as a director of that institution, would be glad if he could re-echo that sentiment. The use of the notes of thirty-eight banks of issue will mean a superabundance of a diversified kind, and will lead to considerable difficulty on the part of the tellers. I shall welcome the issue of a 10s. note. Notes of that denomination issued by the Commonwealth will not be altered, even by the use of a Government stamp. I hope also that the Government will allow Australian artists to compete in designing a note for Australia.
– Hear, hear.
– France- that country of artistic instincts - has repeatedly adopted that course, and that is one reason why her coinage ranks pre-eminent amongst the coins of the world. Germany has followed her example, and the United States has also sought the assistance of the greatest artists living beneath the Stars and Stripes in preparing designs for its coinage. The Leader of the Opposition said that no arguments had been adduced to support the issue of a 10s. note.
– I was asking for experience of such a note in any part of the British Empire, save Canada.
– Notes of very low denominations are issued in India, and also, I understand, in Hong Kong. The currency in China, as the honorable member for Ballarat, and the honorable member for Mernda, will know, is very peculiar. The China and Shanghai bank actually pays dividends, based on a nominal dollar value of 4s. 6d., although the dollar there is really worth only is. 10½d. Five franc notes are issued in France, and I may say that, whilst in Canada, I never saw a piece of gold currency. All those with whom I travelled, on the long journey to San Francisco from New York, carried bundles of $1 notes. I never saw any large notes in circulation whilst I was there. Perhaps it was because I did not meet many of the money changers of New York where cheques, not gold, are used in financial transactions.
– Cheques are used here.
– I have’ here a facsimile of a $1 note issued by the Dominion, of Canada. The Canadian dollar notes are interchangeable with the dollars of the United States and vice versa, and public convenience is thus served. I compliment the Government upon their determination to go slowly and carefully, and I hope that before long we shall have an amending Bill providing for the issue of a 4s. note. Such a note would be the nearest possible approach to the dollar of the United States, and to the lowest note in circulation in Canada. I trust that such a proposal will be made during the life of the present Parliament, and I am confident that the issue of a 103. note, as proposed by the Government, will be much appreciated by the community.
– I have ha’d many opportunities of ascertaining the opinion of all classes of people as to the desirableness of issuing a 10s. note. The matter is one into which 1 have been inquiring for ten years, and my experience has been quite different from that of the honorable member for Mernda. I have had a public admission from bankers that they dp not desire a note of such a denomination. Those who, like the Leader of the Opposition - who asked what authority we had for issuing such a note - will not move in any direction without a British precedent for their action, will never be prepared to adopt any change. From my inquiries, as well as from what I have seen during my travels, I am certain that a 10s. note is about the handiest form of currency we could have. The honorable member for Bendigo asked where was the demand for a note of so low a denomination ? “ No one has called a public meeting to advocate the issue of such a note,” he declared. In passing, I may say that public meetings are not usually convened to discuss a question of that kind. The honorable member denied that there had been a demand for such a note, and then proceeded to answer his own contention by saying that there was a big traffic in 1 os. postal notes, for which the purchasers had to pay 3d., and that the revenue from that source would be seriously diminished by the issue of notes of a denomination of 10s. Are we to continue to derive a revenue from a public convenience of that kind? What right have we to charge the people for what is simply a currency convenience? The Government will do no trade in 10s. postal notes if Commonwealth 10s. notes are issued, and they have no right to do such a trade. People often require to post remittances of small sums to different parts of the Commonwealth, and, under the new arrangement, they will have a note entirely free and easily convertible.
– They will run risks in posting such notes.
– When wc send a postal note for 10s. to any one by post, we do not usually think of registering the letter in which it is enclosed, and there is really no need to take such a precaution. The convenience of the public should be studied by the Committee, and I think that the best argument that has been adduced in support of the Government’s intention to issue 10s. notes is the statement that the Commonwealth will lose some revenue in respect of the issue of. postal notes by providing such a public convenience. Those of us who have supported this Bill have been accused of a want of comprehension of what is the meaning of money. Now we have the argument urged in this connexion, “ Why should we, a goldproducing country, refuse any longer to coin the half-sovereign?” If that is a sound argument, we ought to coin a leather halfsovereign, because we produce more leather than gold. Gold is a commodity ; let it remain a commodity, and the more we export the better. It is true, as the honorable member for Angas pointed out during the second-reading debate, that the loss on the sovereign has been estimated only at 2d. per sovereign in eighteen years, but I would remind the Committee that that estimate is arrived at by calculating the loss on the total number of sovereigns issued, although nine-tenths of them are not used. Thousands of sovereigns remain in the vaults of banks, or are sent to foreign countries, where they are melted down. The loss on the half-sovereign is greater than the loss on the sovereign, for, in proportion to its value, it has a larger wearing surface. As we have taken over all the profits of our silver and bronze coinage, we shall have to face the responsibility of rehabilitating our own gold coins. One of the first duties of the Government, when they are putting our metallic currency in order, will be to call in the half-sovereigns which are far below the weight allowed by the British Act, and to re-issue them - if they are going to re-issue them - at full weight. That will involve considerable cost. Having regard to the loss on the half-sovereign in respect of wear and tear, and the cost of coinage, the Government will make a distinct saving by issuing a Commonwealth note of 10s.. The half-sovereign is one of the most inconvenient coins we have ; and, personally, I never willingly keep one. The honorable member for Mernda must know that a clerk who pays wages steers clear of halfsovereigns, and prefers silver for amounts under a sovereign. All wages amongst English-speaking people in America are paid in dollar bills, which are issued in small size, and are most conveniently carried in what is called a wallet, about the size of a card-case. The ros. note is one of the features of the Bill of which I strongly approve ; and I have heard no argument against it. My predecessor, Mr. Dugald Thomson, always held that if any change were made in the currency, such a note would be very convenient, and many others have expressed the same opinion. If we consult bankers or politicians, who have got into a fixed rut, they always ask, “ Where has this sort of note been issued before?” Those who have travelled abroad know that all over the Continent, and throughout America, there are notes, not only for 10s., but for very much smaller sums ; and these are found most convenient.
.- I desire to make a personal explanation. I am very sorry to have to refer to a remark of the honorable member for Melbourne, who, I am quite sure, would not desire to convey a wrong impression with regard to myself or any other honorable member. This is not the first occasion on which there have been allusions made to my being a director of the Commercial Bank, and an attempt made to convey the idea that I had something to do with the disaster to that institution. The remark of the honorable member will appear in Hansard, and I cannot allow it to pass without saying a word. My connexion with the Commercial Bank was after the disaster, when, with the late Sir Frederick Sargood, the late Mr. Service, and Captain Currie, I was invited to go on the Board to endeavour to restore the bank, and, if possible, stem the torrent of disaster that had overtaken the country. I had no interest in the bank, because I was neither shareholder nor customer.
– Was that the time the bank went to the Government for assistance ?
– We did not go to the Government foi assistance. I only desire to remove an impression which has been widely spread to my detriment; and, in justice to myself, to make the facts known. My interest in the bank had to be acquired after the disaster; and I hold only sufficient shares to enable me to take my seat on the Board. Of course, we could not replace the losses that had been made by the previous management. Our duty was to save the institution, first for the creditors, and then for the shareholders ; and the result of many years of hard and anxious work has been to so restore the bank that all the creditors will be paid, whilst something will be saved for the old shareholders out of the wreck. It is unfair to raise the imputation that I had anything to do with the misfortune to the bank ; and I trust that this is the last occasion on which such allusions will be made. In the last balance-sheet of the bank, it is shown that they possess 50 per cent., I think, for all the liabilities, and 100 per cent, for call liabilities, including notes. That is a position in which any one connected with the disaster may take pride, as I do. I gave my services as a public man, without fee or reward, in order to assist in restoring public confidence as far as possible. Unfortunately, our efforts, in the first instance, were unsuccessful in stemming the tide of misfortune; but, as the only survivor of that crew who went on board the derelict financial ship, I have the satisfaction of knowing that the bank is now in a sound position, which, with the continuance of the present management, will, no doubt in the future, make it one of the first banks in Australia. I wish the honorable member for Melbourne, and other honorable members, to understand that there are public men who incur risks and responsibilities without any personal object or hope of reward
– And no possible gain.
– And without any possible gain. The affairs of the bank made no difference to me, except as a citizen of the country ; but everything that could be done to stem the tide of misfortune in such an awful time should be done by any man of patriotic feeling. Sir Frederick Sargood, like myself, had to qualify for a seat on the Board : and what we did we regarded as a public duty. We had enormous responsibilities cast on us; but it now appears that, instead of thanks, imputations are cast upon us for the services we rendered.
.- I strongly resent the statement that I cast any imputation on the honorable member for Mernda. I have yet to learn that he is not a director of the Commercial Bank.
– I thought I made it clear that I am a director ; but that I was not a director when the misfortune came.
– Did I say that the honorable member was then a director?
– I am not going to enter into, an altercation. I did not refer to the honorable member.
– I knew that the honorable member was not a director when misfortune came; but I also know that the honorable member is at present a director. Had the honorable member anything to do with the assets of the old bank?
– I have just said-
– The honorable member for Melbourne must not go into that matter.
– I do not desire it to appear in Hansard that I have wrongly attacked an honorable member. The statement which I made had reference to the old assets of the bank, and that statement I am prepared to repeat outside. If the three charities I have mentioned are to be robbed, it is right that the people of the country should know the facts. I am not making a charge against the present directors. The directors who had control of the old bank are different from the directors of the reconstructed bank ; and in connexion ‘with the assets of the old bank I have no remarks to withdraw. I am glad, for his own sake, that the honorable member for Mernda was not connected with the old bank, and, therefore, not liable on any old shares.
– I must ask the honorable member not to proceed any further on those lines.
– I think I have made it clear that I did not attack the honorable member, but merely affirmed that the robbery of this , £12,000 - die moneys of charity - ought to be stigmatized as a horror and a disgrace.
.- The denominations of notes issued is purely a matter of convenience, and I do not know that we have much experience to guide us. Some time ago a suggestion was made that the Bank of England should issue j£i notes, but it was not accepted. There was a Banking Commission in Germany in 1908-9, and, in the course of the inquiry, it was pointed out that, in order to keep the gold in the country - which, under the present system, seemed to be going away - the reserve ought to be kept at the statutory limit of one-third instead of 26 per cent., to which it had declined. Three or four methods were suggested, and one was to encourage the cheque system, which this Bill, to some extent, affects, and the other wras the issue of a smaller denomination of notes from 20 marks to 50 or 60 marks, which is a good deal more than 10s. That was tried in 1906, and the verdict of experience has been that the public prefer gold. The last recommendation I read on the subject was that the note issue should not be increased, because the smaller denomination was not popular. As the honorable member for North Sydney said, we ought not to” hesitate to do a thing because it has not been done in the past, but it does not follow that, because a thing has not been done, we ought to do it - a course favoured by some people, especially the Government.
– One important point was overlooked by the honorable member for North Sydney when he referred to people who desired to send small remittances by post, and to whom he claimed the proposed 10s. note would be a convenience. It will be found, 1 think, that people are not in the habit of sending £1 notes through the post; indeed, I doubt whether to do so, without registration, is not in contravention of the postal regulations. This is due to a natural fear of loss by pilfering, and the same fear would, no doubt, operate in the case of 10s. notes. People prefer to pay 6d. for a -£i post-office order, or 3d. for a postal note. It is considered that the latter can be sent with comparative safety, for the sender may take the number and the date of issue, and make it payable to a particular person at a particular postoffice.
– A man could send four 10s. notes in a registered letter at a cost of 3d.
– So also would he have to pay the same amount for one. But if he had a banking account, he could send a crossed cheque for any amount he liked for nothing. Since the banks have charged for keeping accounts, I have found it convenient to send cheques for small amounts, and one honorable member tells me that he sends cheques for sums as small as 5s.
– Exchange is charged on cheques if presented at banks other than those on which they are drawn.
– There is no exchange chargeable on cheques presented within the limits of the city or town in which they are drawn.
– The honorable member for North Sydney says that he thinks that the 10s. note will be a convenience, but he was not able to demonstrate its superiority over the half-sovereign, although he accused the Leader of the Opposition with being a Conservative, because the latter asked for some proof that a 10s. note is needed. We in Australia should be the last to force paper into circulation, seeing that our prosperity depends so largely on the production of gold. The honorable member says that, as we also produce leather, it might be contended that we should have a leather currency, but that is applying the reductio ad absurdum unnecessarily. Some of the best economists of to-day think that the wide-world enhancement of prices may be due to the increase in the production of gold, which has doubled within the last twenty years, and it is strange that a community which produces so much gold should propose to substitute a note for the half-sovereign. We were told that the note will cost less to renew, but the depreciation of a sovereign is only 2d. in eighteen years, and, even if, as has been said, the depreciation of the half-sovereign is more, it cannot exceed 4d. in that time. On the other hand, the notes are to be renewed every twelve months, and will cost about id. each.
– About Jd.
– The cost in America is fd.
– The cost here will probably exceed id., so that in eighteen years the loss on the issue of a 10s. note would be is. 6d., while the depreciation of the half-sovereign would be only 4d. Another reason ‘ given for the use of half-sovereign notes was that, in America, nice little purses are used to hold them. Well, that is all right for those who can afford them, but here some of us have nice little sovereign cases for our gold coins. The Treasurer tells us that a man could send four half-sovereign notes in a registered letter for 3d., but he could send any amount of £,i notes. Has any one asked for half-sovereign notes? Personally, I would prefer a half-sovereign to a note, which can hardly help becoming dirty and charged with disease germs. I hope that the half-sovereign notes will not be foisted on the public. No one has asked for them.
.- Honorable members oppositee seemed to highly appreciate the statement of the hon orable member for North Sydney that the 1 os. note will prove convenient, because it will allow persons to send the sum of 10s. through the post more cheaply than they can do so now by means of postal notes. I understood the Prime Minister to say that he is not here to tax the people, and will be delighted if they take advantage of this convenience. I assume, in the absence of evidence to the contrary, that he is ready to be as generous to those who wish to send through the post amounts like 8s. yd. or 10s. 2d., as to those whose remittances amount to exactly 10s. It “ would be unfair to provide for the convenience of the man who wishes to send exactly 10s. through the post, and to treat differently the man w’ho wishes to send a somewhat larger or smaller sum. No doubt, in the near future, the Prime Minister will introduce a proposal for cheapening postal notes, to remove what would otherwise be an anomaly?
– For some time past I have given consideration to the advisability of issuing notes of the denomination of halfasovereign. In this matter the experience of other countries cannot assist us much. I have come to the conclusion that a note of a smaller denomination than £1 is unnecessary. The smallest Bank of England note is a £5 note. In reply to what the Prime Minister said about the convenience of the 10s. note for sending money through the post, I would remind him that persons more often have larger or smaller sums than 10s. to remit. The only objection to the half-sovereign is that, in an uncertain light, it may be mistaken for 6d. At the present time the coinage of silver is very profitable, exceeding, I believe, 50 per cent., and our currency provides for the division of £1 into coins which are very convenient and not very heavy to carry. My experience is that it scon disappears. One can get rid of it very easily between here and the Grand Hotel, to persons meeting one on the road. I do not know why we want to drive all the gold out of the country. Do we desire to deal with paper instead of gold and silver? I do not suppose the ros. note will do any great harm, but that it will be popular I very much question. With the silver coinage which is profitable and the gold coinage that we have in abundance in most parts of Australia, I see no necessity for introducing the 10s. note. I am not inclined to move for its rejection, but I can see no advantage in it, and am rather surprised “that the Government propose to introduce it.
Mr. GREENE (Richmond) [9.51)- Has the Treasurer yet determined the relative amounts of the different denominations to be issued ?
– Obviously, the 10s. notes cannot be printed until we have our own issue. It will take, at the very earliest, about nine months before we get suitable plates and can print the notes.
– During that time the operation of clause n will be suspended as regards the 10s. note?
– I have never felt very strongly about clause n, and will eliminate it altogether. The 10s. note obviously cannot go into circulation for about a year. The first print of them will be limited in number until we see how the public takes them. Of course, the business of a Government is to provide the medium of currency that the people want. If people want a lot of them they will get a lot of them. If clause 11 is struck out, neither the banks nor anybody else need take any unless they wish. What the public ask for will be supplied to them. The same thing applies to other denominations, but the banking institutions are asking for them already.
– In certain proportions, I presume.
– I cannot give the honorable member the exact proportions at present, but I presume the issue will be in the same proportions as the public hold at the present, the largest number of notes being of the £1 denomination. I move -
That paragraph 6 be left out.
Amendment agreed to.
-S9]- - I move -
That after the word “ Government,” in paragraph d, the following words be inserted : - “ and in the capital city of each State at such place as may be determined by the Treasurer.”
Paragraph d provides that the notes shall be payable in gold coin on demand at the Commonwealth Treasury at the Seat of Government. There can be no question that we ought to make the notes convertible in as many places as possible for the sake of public convenience, so that they will go into circulation in the quantities the people desire, and also to meet the emergencies of the Government who wish to get them into use. If these facilities are granted to the public they will be more likely to ask for the notes, and put them into circulation, than they would otherwise be. The fact of holders of notes or the banks having to arrange for their transmission to and redemption at the Seat of Government will be detrimental to the issue, and consequently make it less effective than it might be. The only reason I can see for making the notes redeemable, only at one place in Australia, is that it would prevent any undue and sudden rush upon the Treasury for their redemption, but I am sure that is not in the Treasurer’s mind. I believe he is anxious to make the issue popular. In my amendment I suggest nothing new. We have largely taken the Queensland model, and in that State depots on these lines are provided for the convenience of the public. In Canada I understand that the same arrangement is made. In view of Australia’s geographical situation, and the fact that numbers of people require to leave different ports, and would not want to take Australian notes away from the Commonwealth, we should not put them to any disadvantage or inconvenience in having their notes turned into gold. A depot could be established in each State capital without undue cost to the Government, either at a bank or the post-office, or the Customs House. This would go a long way towards showing the people that the object of the Government is to meet their convenience in the new currency. I hope the Government will see the wisdom of accepting the amendment. The Prime Minister has, to some extent, admitted the soundness of my contention by acknowledging that it is desirable that depots should be established in certain places. We should go the length of saying that the Government are prepared to redeem the notes at such convenient centres as will not unduly load and increase the expense of the administration. While the Seat of Government is at Melbourne, perhaps the same amount of difficulty and inconvenience and expense in the transmission of gold may not be experienced as will be the case when the Seat of Government is established at a place not so commercially convenient to the whole of Australia. I hope the Committee will recognise the desirability of making some such arrangement as I have proposed.
– I hope the Prime Minister will see his way to accept the amendment, which I think will be found to add to the convenience of the issue, make it more popular, and greatly reconcile people to the new system. In my second-reading speech I quoted from the Act of the Dominion of Canada, section 9 of which provides that the Governor in Council may establish branch offices of the Department of Finance at certain specified places.- If that ds found necessary in connexion with the limited Dominion note issue, in a country where the banks have a concurrent right to issue notes, how much more will it be found necessary in Australia, with an area as large as that of Canada? Fancy the position of people in the remote parts of Australia, such as Kalgoorlie or Townsville, who may be called upon to receive the notes in’ the ordinary course of business, and may want to arrange for their redemption. It would be very convenient if facilities were provided in one centre in each State for the redemption of the notes in gold. This would not add very heavily to the expense, and if the system is worth federalizing, it is most desirable that such conveniences should be provided.
– It is only fair that I should intervene at this stage to indicate the Government view. The Government have expressed their intention in this clause, as regards the place at which Australian notes may be redeemed in gold coin. That is at the Treasury at the Seat of Government, which temporarily is at Melbourne. The honorable member for Cowper’s amendment would not take us very far. The mere fact that a city is the capital of a State, does not give it any special claim to have a depot. So far from not desiring to give facilities for the redemption of Commonwealth notes, the Government, apart altogether from legal enactment, intend to establish numerous depots where adjustments may be made and coin received in exchange for notes. We do not propose, however, to make statutory provision to that effect, so that people would be able to present these notes at all these depots at any time and demand gold for them. Reference has been made to the system in force in Queensland. That is really the result of an arrangement made by the Treasurer of that State; and I am advised, and believe that, apart altogether from any amendment of this clause, we shall be able to establish depots wherever the convenience of bankers, and the public generally, will be served by their establishment. It will be the policy of the Government to establish such depots, not only in the capital cities of the States, but in every other place where public convenience will be served, and their establishment will lead to a larger paper currency than would otherwise obtain.
– Does the Treasurer intend to keep gold at all those places ?
– We shall meet the public convenience to the best of our ability. I have discussed every phase of this question with bankers.
– With bankers from Western Australia?
– We shall establish depots in the north-west of Western Australia where Customs officers are stationed.
– And also at Perth ?
– Yes; and elsewhere in Western Australia.
– The honorable member, when he discusses this matter with some bankers from Queensland, imagines that he is talking to bankers representing all Australia.
– It is only fair to point out that Queensland has a coastline of 1,400 miles; so that the distance from Melbourne to Brisbane is not as great as that between Brisbane and Normanton. There is a depot at Normanton at the present time; but it is not a statutory depot where State notes can be presented and gold demanded. The Government policy is to enter into a similar arrangement throughout Australia. Another point, and a very important one, is that, in ordinary circumstances, it is not safe, in connexion with a note issue of this magnitude, to have a dozen ogmore places at which we can be attacked. The one charge brought against this issue by press and Opposition critics is that it will prove dangerous in time of crisis or panic. Not one critic, either in the press or Parliament, so far as I can recollect, has declared that there would be any real danger in such circumstances if we had a sound gold backing. If the people were given time to consider the position during a period of panic, all danger would be obviated, and a lower reserve than one of 25 per cent, would be more than ample. If we have only one centre of attack, everybody admits that that centre cannot be assailed by any combination of circumstances, because the amount of gold there would be sufficient to cope with a solid run extending over a week. A panic seldom extends over more than two or three days.
– The honorable member is “giving away the show” with regard to the convertibility of this issue.
– People who talk trash do not expect an answer. The convertibility of this note .issue has never been, and can never be in doubt. I have had the pleasure of discussing this question with men who earn their living by reason of their special financial knowledge, and they have never assailed the proposed issue from that point of view. They asked for the creation of various depots at which notes could be exchanged for gold; but when it was pointed out to them that, although they feared a time of panic, they desired us to have six points of attack instead of one, they had no reply to make. They said that the proposed security was ample, and that a provision to enable our notes to be converted at one centre was, from that stand-point, a very wise one to make. The right honorable member for Swan has referred to the position in Western Australia ; and I should like to ask him where notes issued by banks doing business there are convertible?
– At the banks in Perth, or at any other bank in Western Australia.
– How far from Perth is a resident of the north-west coast of Western Australia?
– He could get gold for his notes at a branch bank in his district.
– The holder of a Western Australian bank note has only the right to present it, and to demand gold in exchange for it, at the head office, whereever that head office may be. The same remark will apply to the bank note issues of South Australia and Queensland.
– In practice, the bolder can get gold for his note anywhere.
– And in practice, the position will be the same with regard to the Commonwealth issue. I have said that we shall make all the necessary arrangements that can safely be entered into by administrative act, without endangering our position, to enable our notes to be exchanged for gold at various places. In practice, therefore, they will be easily convertible; yet we are asked to make a statutory provision providing for the establishment of such depots in all the State capitals.
– It is due to the States that that should be done.
– I hope that the right honorable member will not become angry. I have retrained from answering arguments advanced from time to time, because of the seeming determination of honorable members of the Opposition to rise again and again and discuss every statement that is made. The time, however, has come when we must make a statement as to our position in this regard, and the Government take the view that this provision is necessary and safe. By administrative act depots will be established for the convenience of the people who desire to exchange our notes for gold. Every proper facility will be given, not only in the State Capitals, but wherever they can be reasonably and safely brought into existence.
– The Treasurer has acted rightly in explaining the attitude of the Government with respect to this matter. I would point out, however, that the very ground upon which we were asked to support this State note issue was that the Commonwealth notes would be just as readily convertible as any note issued by a private bank. We were told that the issue would be safe, uniform, elastic, and convertible. When we speak of our currency as being convertible, we mean that it can be readily converted whenever any one desires to exchange it for gold. The man who works hard, and in payment for his services receives a pound note, recognises that the value of that pound note lies in the fact that it can be easily exchanged for goods or for gold. In testing the convertibility of this issue, we ask, *’ Where can it be exchanged?” The time to test its convertibility will be during a period of financial difficulty, when people are naturally disposed to say, “ We desire to obtain gold for our notes.” The Treasurer says, however, “ I do not intend to provide in this Act that the Commonwealth notes shall be legally convertible at more than one place, but by administrative act I shall allow them to be redeemable not only in the Federal Capital, or the capital cities of Australia, but in various other parts of the Commonwealth.” The honorable gentleman’s next argument is that we can have with safety only one place at which these notes can be converted under the Statute; that if we provide by Statute that they shall be convertible at only one place, people will not be falling over each other, so to speak, in time of panic, in their anxiety to obtain gold in exchange for them. What does that mean? The Treasurer says that he will establish all over Australia depots at which these notes can be redeemed, but as soon as a panic takes place these administrative privileges will be withdrawn on his fiat, and our notes will be redeemable only at the Seat of Government.
– During the banking crisis of 1893, bank notes could not be redeemed anywhere.
– The honorable member is quite right; but we are told that the Commonwealth note issue will be far better than the issue of any banking institution. All that we are asking is that reasonable facilities shall be given for converting notes into gold in the several States of the Union. I ask the Committee to bear in mind, and to carefully consider, the two propositions submitted by the Treasurer, for in effect they mean that if there is a panic, the Treasurer will issue a notice all over Australia, “ The Commonwealth note is not to be redeemable save at the Seat of Government.”
– This is a bit of good acting.
– We do not desire to have comedies here and tragedies outside. We need to give proper consideration- to the measures submitted to us. I ask the honorable member not to impute that 1 am acting, but to answer the arguments that I have put forward.
– There is quite enough loss of time, without’ our following the honorable member’s example.
– The honorable member is incapable pf following any example. Interjections from honorable members opposite do not change the position I have placed before them.
– Surely the honorable member cannot be serious I
– Are the depots not to be established by administrative act? Did the Treasurer not say that it would not be safe to have the notes legally convertible anywhere but at the Seat of Government? When is it that people desire the notes converted into gold?
– When they cannot get gold.
– Then it appears that this is an inconvertible paper currency, though that was not the plea placed before the House by the Prime Minister. We were told that the note was to be as good as a sovereign anywhere - that it could be converted at any time into a sovereign.
– At the Seat of Government at any time.
– And at other places when there was no panic. In Canada the paper currency is more than an experiment, because tor over a century they have been developing their banking system, and they have provided places in several parts of the Dominion where notes can be redeemed. Text-book writers of considerable authority say that the Canadian system is highly scientific. If there be a proper gold reserve the amendment of the honorable member for Cowper is a proper one to accept, in order that the notes may be convertible, not only in name, but in substance and in fact.
– The Prime Minister has pointed out a difficulty in having a large number of places where the notes may be converted, and, prior to the proposed amendment of the honorable member for Cowper, I had drafted one to the effect that the gold should be exchangeable at such other places than the Seat of Government as the Governor-in-Council might appoint, leaving it optional with the Government to appoint such places. In Australia there are three mints - Sydney, Melbourne, and Perth - where there are vaults perfectly safe for the custody of any gold the Government might hold as a reserve. To erect a special building in Melbourne for the purpose would mean great expense. If the notes are convertible at too many places, there might, in’ view of a reserve of only 25 per cent., be a danger in case of panic or of a set being made against the note issue. The notes might be rushed into one place where the gold was limited, whereas, if the gold be stored in three places as I suggest, it would be optional with the Government to authorize payment at other places than the Seat of Government. My amendment is not compulsory like that of the honorable member for Cowper ; and I point out that if the Seat of Government be at Yass-Canberra that place will prove much more inconvenient than Melbourne for this purpose.
.- If the Government do not accept the amendment they might provide that a certain portion of the reserve shall be kept at each of the capitals.
– There is notice of an amendment to that effect.
– The average circulation of notes for the year, or even from month to month, is pretty constant, and if we require a more accurate notion, it could be obtained from .the records which the banks are obliged to keep every
Monday of the notes issued in each State. If it were made a direction that a certain portion of the gold should be kept at each of the capitals, it WOUld not enable the banks to be rushed, because the notes would not be redeemable at any particular place, and there could be no collapse or repudiation. Even before notes were made a legal tender on the Continent of Europe, there was some such provision ma.de. By an amendment of the Imperial Bank Act of Germany in 1909 notes were made a legal tender, but even before then, I think, there were some 500 branches for the payment of notes.
– My reading is against that.
– I have not looked the matter up, but it is a fact that there are 500 places where notes may be redeemed In France, twenty years ago, there were something like 397 such places, and in India about 250, where, under the Bank Act of 1862, notes, though not legally redeemable, were capable of being redeemed.
– But in India the notes would not be redeemed in gold.
– That does not affect the question, because silver there is in a certain ratio to gold.
– Silver has a fixed price now.
– It has been fixed by ratio all along.
– No; it previously varied in price.
– I know that some alteration has been made in consequence of the report of the Commission; but the point is that a reserve is kept at over 250 places in India. In the beginning it was found that the note issue was not used because of the difficulty of conversion, but with the provision of proper facilities the notes gradually became popular, and are practically the currency to-day. In the light of experience, even if the Prime Minister does not accept the amendment, he ought, by the Bill, to impose an obligation to keep a certain amount of gold at each of the capital cities.
Sir JOHN FORREST (Swan) [IO-33l- - I regret that, through the determination of the Government to adhere to the provision in the Bill, the people will not be in as good a position in regard to the currency as they are at present. If we cannot improve existing methods, we ought not to make them worse. In Western Australia I never heard, except’, perhaps, for a day or two in 1893, of any difficulty in exchanging notes for gold.
– There is no obligation to change notes, except at the head office of a bank.
– I think the honorable member is right; but, in practice, there has never been any difficulty in converting a note into gold anywhere in Western Australia. The whole difficulty arises. from the fact that the Government are trying to carry out this change without any arrangement, statutory or otherwise, with the financial institutions which are going concerns, and do the monetary business of the country. The proposed note issue will not, in my opinion, be a success unless the public are given facilities at least as great as those they at present enjoy. In Western Australia the banks will accumulate a lot of the notes, and I suppose they will, at considerable expense, have to ship them over to Melbourne, and get credit for them through their agencies, though they will wish to have the notes readily converted just as private individuals do. All this will be adverse to the interests of the note issue, because the banks will naturally do with as few as possible. I should not be surprised if the Australian notes come into very little use in Western Australia, seeing that they can only be of advantage in out-of-the-way places where there is expense and danger in transporting gold. I remember that, in San Francisco twenty-five years ago, there were no notes in use. In the city of Perth, where there is a plentiful supply of gold, the people will not, so far as I can see, require the notes, and they will not pay a sovereign for the privilege of using one. No doubt notes are very convenient for banks, to use in remote branches, being easy of transport and useful for keeping in reserve. But, unless some alteration is made in the Bill, the proposed note issue will not prove so convenient to the public as is the present issue. So long as a man knows that he can get gold for a note he does not demand it; it is only when it is doubtful that a note is convertible that trouble arises. Even in the interest of the issue itself there should be in each capital a place where the Australian notes may be exchanged for gold.
– The Government will make every effort to provide for the conversion of notes at as many places as possible.
– Were I sitting where the honorable member is now sitting, he would not be inclined to accept that reply, but would say, “ If that is the intention, set it out in the Bill.” It is due to the sovereign States which have given up some of their powers to the Federation that these notes should be convertible into gold in their capitals. Why should the banking institutions and the public of, say, Western Australia be placed at a disadvantage when compared with the people of Victoria? The proposed arrangement will do great injury to the States other than Victoria. At the present time the banks will cash their notes at any of their branches, and the Australian note issue might be made as convenient as the bank note issue if the Government would arrange for the conversion of the notes at the State capitals. The argument of the Prime Minister, that the arrangement provided for in the Bill is necessary to provide against panic, is a very oor and weak one. All the States should e treated alike. For one State to receive a preference was not contemplated by the Constitution, and would be most inconvenient and unjust.
.- There is one aspect of the question that has not been touched upon. If it will pay the banks better to supply their branches with gold direct, they will not send it to the centre where the notes will be obtained, but if it will be cheaper to. send their gold to the Seat of Government, and there obtain notes for it, that is the course they will pursue. My impression is that if the whole of the gold reserve is kept at one centre, there will be a diminution of the note issue, but that if it is divided among the State capitals, the banks will find it cheaper to supply their branches with notes than to send gold to them. If the banks by reason of the gold reserve being kept at one place have always to be sending their gold from every part of the Commonwealth to get notes, they will say, ‘ ‘ This does not pay us,” and they will supply their branches direct with gold. Thus the Go’vernment proposal is likely to defeat its own ends. If Ministers wish to make the note issue popular, they should distribute their gold reserves among the State capitals.
– The honorable member seems to desire the establishment of several depots for issuing notes as well as for redeeming them.
– A place where notes are issued will necessarily be a base for their redemption. It is incomprehensible that the Treasurer should think that in time of panic it would be safest to have all the gold at one place. The whole question is so clearly one of pounds, shillings, and pence, that I cannot understand the attitude of the Treasurer. If he desires the note issue to be popular, he should establish sub-treasuries in each capital, and thus make the notes more acceptable to the bankers. It would increase a panic were the Treasurer to suddenly refuse to redeem notes in any centre but the Seat of Government. Of course, he is right in considering panic conditions. He proposes to make notes convertible at various depots throughout the Commonwealth, except in time of panic. But would it not increase the confusion, by upsetting the confidence of the public, if at any time the notes were made inconvertible at any centre? The adoption of my proposal would increase the convertibility of the notes, and put all the States on the same footing. The notes will be taken up in proportion to the population of the States, or thereabouts. I suggest that part of the gold reserve should be stored in each capital.
– Is that a simple thing to arrange for?
– The honorable member for Balaclava has pointed out that in three of the capitals there are mints where there are facilities for storing gold, and it would not be very costly to provide storage depots in the other three capitals. I do not know what the Prime Minister’s idea is with regard to the depots for changing. He may intend to use the agency of the banks; but, if so, arrangements could be made with the banks for the storage of gold, with every safeguard that the Commonwealth could desire for its safe custody. I do not think there is any great difficulty or expense to face in that. The facilities asked for should be provided, because they would certainly increase the convertibility of the note under panic conditions. That is the most desirable feature of the amendment. If you want to create a panic, shut down on the convertibility of the notes, particularly in the way the Treasurer suggests. If you want to allay panic and make people feel that they can get gold at any moment, the amendment shows the way to do it.
.- The Treasurer’s explanation is very unsatisfactory ; and I presume that his refusal to supply the necessary conveniences to make the notes convertible in every chief centre of the States is caused by the very small amount of gold reserve provided for in the Bill. If sufficient gold had been provided, the difficulty would have been easy of adjustment. I can see no real reason why the Treasurer should not arrange with one particular bank to be the agent for the Government in the various capitals, to hold the amount of gold necessary, so that the commerce of the country may be carried on with as little inconvenience as possible and without the existing system being changed out of all recognition. That is only a reasonable concession, due to the commerce of the whole of Australia; and I regret that the Treasurer does not see his way to make it.
. -I should like the Treasurer to explain his attitude more fully, because our opposition to the clause is not dictated by a desire to impede business. Our aim is to help the Government in thismatter in every way possible. It would be a good thing if the Treasurer could yield to the extent of adopting the suggestion of the honorable member for Balaclava, by making the notes convertible in the three places where the Mints exist. That would give greater elasticity to the measure, and would not destroy its basis in the slightest.
– Has not the Treasurer power to nominate other places?
– The power to nominate carries with it the power to deprive; and under this Bill, as a matter of law, no person has a right to claim gold for notes anywhere except at the Treasury, at the Seat of Government. Take the case of Western Australia, which is far removed from the Seat of Government. It has a mint with large deposits of gold, and gold could be stored there to meet an emergency. In Canada, facilities of this description are given in several important cities. Why should not Western Australia have the same privilege? Can it be really and substantially said that the note is convertible in Western Australia, when the individual who holds it has to travel all the way to the Seat of Government to get it cashed ? It is, of course, impossible to have the notes made convertible at every township throughout the Commonwealth; but reasonable facilities should be given, thus extending public confidence in the Act, securing the stability of the issue, and safeguarding the interests of the public.
– I suppose it is of no use debating the matter. There seems to be small chance of making any impression on the phalanx opposite. By the way, where arethey? Are they celebrating the great Labour victory to-day? The Government are going to work in co-operation with the banks - and without their co-operation the Treasurer has not the slightest hope of making the issue a success - but he is inflicting an unnecessary hardship on them by his present attitude. I am told, on the best authority, that the total cost to the banks of providing the requisite facilities to enable their customers to obtain gold on presentation of their notes throughout Australia, will be not less than2½ per cent., when all charges are added up. It means that the bankers have to pay £1 os. 6d. for each note which they receive from the Government. It is quite unnecessary to inflict such a charge upon them. I should have thought the Prime Minister would be the last to demonstrate, as he did just now, the absolute inconvertibility of the Australian notes in any time of stress or strain. His reason for concentrating the gold in Melbourne is that he may not be attacked in a time of crisis, when people want to get their gold. He tells the country plainly that when people want to exchange their notes for gold, he intends to be so far away from the actual scene of operations, as to make it impossible for it to be done. I can conceive of no more damaging criticism of the Bill than this naive confession of the Prime Minister. I am surprised that the Government intend to push the measure through at this sitting. It is an entirely unnecessary proceeding, and will simply keep their followers and the rest of the House out of their beds for no valid reason.
Question - That the words proposed to be inserted in paragraph d be so inserted - (Mr. John Thomson’s amendment) - put. The Committee divided.
Majority … … 10
Question so resolved in the negative.
– I move -
That the following new sub-clause be added : - “ (3.) Australian notes shall bear thereon the signatures of such officers as the Treasurer directs. The signatures may be made in the handwriting of the officers or may be made by engraving lithography or any mechanical process approved by the Treasurer.”
This amendment is proposed as the result of expert advice which the Treasury has received from those oversea and in Australia best able to guide us in this matter. We are advised that we should take power to have signatures on the notes, made either in the handwriting of the officers concerned, or by some mechanical process approved by the Treasurer.
– I should like to ask whether the signature of the Treasurer will be lithographed or impressed by a stamp on the notes?
– That may be done.
– I put the question because I presume that, in the event of a stamp being used, the Treasurer will frame special regulations to provide for its safe keeping.
– I take this opportunity of saying that I do not wish my name as Treasurer to be “ starred “ upon the Commonwealth note issue.
– I did not suggest that.
– The honorable member referred to the signature of the Treasurer being placed on the notes, and I wish simply to say that, whilst I should not mind signing one or two, I do not desire the signature of any Treasurer to be on every note issued to the public. The task of signing these notes should be intrusted to some permanent official or officials, and politicians should be kept entirely apart from the issue. We shall frame stringent regulations to provide against the plates or stamps leaving the custody of the responsible officers.
Amendment agreed to.
Clause, as amended, agreed to.
Clause 7 (Temporary use of forms of State Notes or Bank Notes).
.- In connexion with the administration of this clause, the Treasurer will need to be very careful to protect the Commonwealth against forgeries. Under the present system the bank notes, chiefly circulated in each. State, are those of the banks doing the largest business there. Under this provision the note forms of a bank doing business in one State may be put into circulation in another State where they are not well known, and unless very stringent care is taken opportunities for forgery may arise. I should have preferred the Commonwealth to start with its own paper issue.
– I have had the pleasure of an interview with a gentleman through whose hands £3,000,000 of notes have passed, in Queensland, during the last seventeen years, tfnd he tells me that the forgery of bank notes there is non-existent. The same statement will apply to the whole of the Commonwealth.
– The Treasurer will avail himself of this provision for only a short time ?
– I have already explained that it is only a temporary proposal.
– How long will it take to exhaust this provision?
– About nine months. The notes issued under it will be in circulation, perhaps, for nine months or a year, and I see no disadvantage in making use of the paper of the banks when they have no objection. I mention again, with pleasure, that the General Manager of the Queensland National Bank says that he will take at least £250,000 of our notes as soon as we can issue them, notwithstanding that there is a State note issue already in circulation. That shows that he thinks that the Commonwealth issue will supplant that of the Stale, while the latter is still in force.
– I presume that the Treasurer will cause State or bank note forms used under this clause to bear the words, “ Commonwealth Note “ - or other words to the same effect. 1 have not had time to examine the penal clauses of the Bill, but I . ask the honorable gentleman to satisfy himself that under them, it will be an offence for a person to so alter a State or a bank note that . it will pass as a Commonwealth note. Such an act may be an offence within the meaning of clause 28.
– We have inserted that provision in the Bill so as to be doubly sure.
– I hope the Treasurer will make sure that some clause will cover such an offence.
– It is just possible that the State Government of Queensland may co-operate with the Commonwealth Government, and let us use their notes. There is reasonable ground for believing that they will. In that case we shall simply put the State notes through the press and issue them as Commonwealth notes, payable at the Seat of Government, instead of at the Treasury in Brisbane.
– Little by little we are ascertaining how close and cordial are the relations between the bankers of Australia and the present Prime Minister. One can only conclude that this Bill is going to give greater security to the banking institutions of Australia than they are able to command by the use of their own notes. I agree entirely with the idea that that must be so. If we can re-arrange clause 8 on the lines sketched for us by. the Prime Minister, in regard to the disposal of these funds, it seems to me that the net result of this note issue will he to make the banks more secure than they have ever been. I cannot help wondering what the people are thinking of, I mean those who issued the manifesto at the recent election in Victoria which declared that banking was one of the frauds which bled the people, and that steps were to be immediately taken by this Government which would gradually bring about the destruction of the banks without compensation.
– I would point out to the honorable member that what somebody said in Victoria has nothing whatever to do with this clause.
– You are quite right, sir. The only response which the Government are making to these people in Victoria is to give to the banks an added security. I heartily congratulate the Prime Minister, but what about the persons outside who made those statements?
Clause agreed to.
Clause 8 -
The moneys derived from the issue of Australian Notes may-
The Treasurer may invest any moneys derived from the issue of Australian Notes -
– This is an important clause. I am clearly of opinion that the Treasurer ought to have authority to temporarily deposit in a bank the moneys raised thereunder, because, obviously, we shall have to accumulate funds before we can buy stock to such an amount as will enable us to deal profitably. To those who think otherwise, 1 would point out that the Treasury always arranges to have any money which is available in London placed at fixed deposit from month to month, and thereby gains interest on the balances.
– For any peripd ?
– Yes. Some honorable members, I know, have the idea that the moneys to be derived from the issue of Australian notes ought not to be lodged in a bank. I think that it would be an entire mistake to adopt that view. I am only mentioning the matter now because, in my opinion, it is advisable to retain the clause. I think we are all agreed that the moneys should be used in the redemption of Australian notes. The policy of the Government, I repeat, is to use some of the moneys temporarily, in order to get -over a financial difficulty at the end of the year.
– What does the honorable member mean by “ temporarily “ ? Is he going to borrow from the fund?
– The States will be paid their three-fourths of the Customs and Excise revenue at the end of the calendar year, and, of course, the Commonwealth will be short by from £1,500,000 to £1,750,000.
– -Yes. Time passes, and the demands upon the Commonwealth are exceedingly heavy. That amount will have to- be recouped to the Commonwealth in the succeeding six months of the financial year. When money is available in this way, it would be unwise for a Treasurer to raise a loan or to get an overdraft to that extent to cover a period of a few months.
– That should be done by Bill.
– I think it would be better to deal with the matter by Bill. When the Parliament is available the right honorable gentleman will never find me seeking to do by regulation or Treasury minute or Executive act, a thing which can be done by a direct Bill. For all practical purposes it would be a loan from this fund to the Consolidated Revenue for the time being, to be repaid during the next six months. In this, as in every other matter, I want to take honorable members into our confidence as far as I can. For legal purposes, subclause 4 of the clause makes the Treasurer a corporation.
– What about paragraph c of sub-clause 1, which, says that the moneys derived from the issue of the notes may be expended for any purpose that Parliament directs ?
– I think that is a desirable provision.
– We cannot have that.
– After all, the Parliament must be supreme in this matter. Suppose that at any time the Commonwealth wanted to borrow money, undoubtedly the loan would be raised.
– On the security of the Commonwealth.
– Yes. I feel sure that Parliament would direct that a loan may be granted for a particular purpose out of this fund at a specified rate of interest.
– Does the honorable member mean by resolution, or by statute?
– I think that a direction from the Parliament should be given by Bill. With all respect to the honorable member for North Sydney,- 1 think that this sub-clause should be retained, because we might need to get a direction from the Parliament at any time regarding the moneys. 1 think it is wise not to take out of Parliament’s hands a power which really it always enjoys. We should say from time to time what is the best thing to do. I am not so apprehensive as some honorable members are that wrong will be done if this subclause .c stands. I can understand the feeling of those who think that a Minister should not have the power to deal with this matter as he pleases, but, rightly or wrongly, the Parliament must be intrusted with this power, which it will exercise whether it is put in this Bill or not. I ask honorable members to allow the subclause to stand. It has been well considered.
– When moneys are received from the issue of these notes, what is the Treasurer going to do ? Are the moneys to go to a separate trust. fund, or to the Consolidated Revenue? Section 81 of the Constitution provides that all revenues or moneys raised or received by the executive Government shall form one Consolidated Revenue to be appropriated. The purpose of this clause is to raise moneys for. a specific purpose, and the desire of the Parliament is, I take it, that the moneys shall be only appropriated to those purposes which are enumerated therein. I take it that the Treasurer’s reason for providing that the moneys may be expended for any purpose that the Parliament directs is that no money ought to be taken out of the fund which has been raised for a specific purpose without parliamentary authority.
– Parliament must do it by Bill.
– Will the Treasurer see to it that all these moneys go into a special Trust Fund? If they are placed in a special Trust Fund, then, by virtue of the Audit Act, they cannot be taken out of that fund and devoted to other purposes. The point that I am leading up to is this : The Treasurer anticipates that towards the end of the present year he will have a financial difficulty to face, involving a million upwards. He proposes to use this money temporarily for the purpose he has indicated. If the money is to be taken out of the Trust Fund and appropriated to that particular purpose, Parliament ought to be sure that there is some provision whereby that money may afterwards be taken out of the Consolidated Revenue and replaced in the Trust Fund. Rather than see sub-clause c in the Bill, I should prefer to see a specific measure dealing with the Trust Fund, and providing for a temporary loan from it, with machinery for repayment. The difficulty that I see in connexion with leaving” in these words is that any one reading this measure might come to the conclusion that we were not sanctioning a new issue, which was to be secured solely upon a gold deposit and upon investments, but that Parliament also had some other purpose in view. We do not know what that purpose may be, as it is unspecified. But, seeing that this Bill is going to be the charter of our currency, to place a clause upon the face of it which seems to indicate that we are mixing up other parliamentary functions and other causes of expenditure over and above the creation of a Trust Fund for the redemption and securing of our notes may lead to misunderstanding. The Treasurer has very properly shown that, by means of these words, we can do what we require to do. What we require to do is, instead of having to go to a bank at the end of the financial year, and paying interest on a temporary loan, to take a sum for the time being from the Trust Fund, with a view of refunding it subsequently. What I am anxious to see provided for is that that money shall be repaid out of Consolidated Revenue into the Trust Fund, which is to be the security for our note currency.
– Shall we not have control over the Commonwealth revenue after the 31st December?
– That is perfectly true, but in the meantime we are going to use money which is really trust money, and which is being paid for these notes; and the principle of our legislation is that the money that is paid for the notes shall be held, one-fourth in reserve, and threefourths in investments.
– The Treasurer will derive nothing from these notes until after 31st December.
– Oh, yes. We have been informed that one bank manager requires a quarter of a million notes as soon as they can be supplied. I should like the Treasurer to make it clear in the Bill, to be introduced later, that the money deposited for the notes, and which is to be used for revenue, will subsequently be paid into a Trust Fund. There is another point affecting administration which I wish to bring under the Treasurer’s attention. Is it his intention, as a matter of fact, to require £1 to be paid for every £1 note that goes out of the Treasury ?
– Yes; the Bill says so.
Air. GROOM.- The Bill does not quite say that. It is quite possible under this, measure for the Government to make arrangements with the banks, as the Queensland Government did, with regard to the acceptance of deposit receipts. Is it proposed that the notes shall only go out of the Treasury in exchange for gold deposited ?
– As regards the question put tome by the honorable member for Darling Downs, as to whether the banks will receive from the Treasury Australian notes on leaving with the Treasury deposit re- ceipts for the amount of the notes taken, I have to say, as I have said before, that the banks will have to give gold for our notes.
– The Treasurer will not take a fixed deposit as against notes?
– No. Practically- there is no difference, because, if “we are going to leave the money in the banks, it does not really matter whether we actually receive, gold at the Treasury, and afterwards take it back to the banks to be deposited, or whether we accept deposit receipts from them in exchange for notes. But the latter is not the process that, as a matter of administration, will be adopted.
– Why is the Treasurer departing from the Queensland practice in this regard?
– What was done in Queensland was in accordance with a special arrangement. But the principle of the Queensland law is that banks must deposit a sovereign for every note taken out of the Treasury. As to the other point that has been made, I do not think that it is necessary to create a Trust Fund at all.
– How then will the Treasurer get this money out of the Consolidated Revenue in order to refund it to the Commonwealth notes account?
– And what about the division of surplus revenue among the States?
– Obviously the money that must be held by the Treasury on account of these notes must be held for that special purpose.
– If there is no Trust Fund, amounts paid into the Consolidated Revenue will lapse.
– The Bill has been carefully drawn.
– I advise the Treasurer tolook into the matter more carefully.
– The matter was discussed when this clause was drafted. I should prefer honorable members to pass the clause as it stands.
– I have given notice of two amendments in this clause. The first is to strike out paragraph c, which contains the words - be expended for any purpose that the Parliament directs.
The second amendment is to strike out of sub-clause 5 all the words after “ shall be,” and to insert the words “applied or reinvested as provided by this section for the principal moneys.” The idea that I have in view is this: The fund derived from currency should in the first instance be held as a support for currency. I want to leave no room for adjustments between the Treasurer’ in his other capacities and in his capacity as trustee for this currency fund. I want to see the currency fund established so that it will be not only a support for the paper money we issue, but may be made the engine for effecting many other financial adjustments that this Commonwealth, as time goes on, will have to make. The object that the Treasurer has in view is the immediate and pressing necessity for making use of the fund for meeting a temporary need. There is nothing to prevent him making use of this fund if only he goes the right way to work. I am strongly of opinion that we should go the right way to work in these subsequent transactions. If the Consolidated Revenue is used to meet current expenses, then, without the existence of this fund, what would be the Treasurer’s course? He would have to use temporary ‘ Treasury-bills, dispose of those bills to meet the deficiency, provide for their interest, and for their extinction on some given date. There is nothing to prevent the Treasurer doing that, and then going to himself in his other capacity as a trustee for the fund and selling himself Treasury-bills, the interest on which would go again into the fund. It was for this reason I thought there should be some one associated with the Treasurer in his fiduciary capacity under this Bill, in order that these bonds might be purchased to meet temporary requirements. The Treasurer has given us his assurance that he does not require a forced loan under this Bill for any purpose. There are many purposes for which this fund might be used. It might be used for the building of the Western Australian railway, the development of the Northern Territory, the construction of the railway in that Territory, or the building of the Federal Capital. Personally, I should have no objection to the Treasurer using the fund for any or all of these purposes, but we ought to go the right way to work, so that we may know exactly where we stand. We should make proper provision for raising the money for these purposes, just as we should have to do if there were no currency fund at all. We should have to provide for the payment of interest and redemption of the loan, as I hope we shall do in the case of every loan undertaken by the Commonwealth, and the Treasurer might then turn to himself as trustee of the currency fund and say, “ This will be a good investment for you for the short time during which the money will be required.” If we do not make that provision we shall, in this matter, have only to repeat all the confusion of the bookkeeping entries which have encumbered the relations between Commonwealth and State finance, and we shall never know how the Treasurer stands in connexion with his relations as Treasurer of the Commonwealth and as a trustee of what I am satisfied will ultimately become a great fund in connexion with the currency. I intend to press my amendment, because I regard it as essential that we should draw a strong line of demarcation between the Treasurer’s financial relations in this respect.
– I shall try to meet the honorable member in connexion with his second amendment, but I cannot accept the first.
– i hold very strong views as to the importance of the first amendment, and I am unable to understand the Treasurer’s objection to it. He may require to meet a temporary shortage in connexion with this year’s revenue, but the legislation proposed will probably provide sufficient revenue for all our future requirements in that regard. The Treasurer would be quite justified in issuing short-dated Treasury-bills bearing interest at 3^ or 4 per cent., and selling them to himself, as trustee of the currency fund, as a good investment for the fund. When they were met, the money might be used for the purchase of State debentures, and 1 am heartily in accord with the Treasurer’s expressed intention to utilize the fund for that purpose. But we must keep these financial operations separate, and manage them in such a way that every citizen of the Commonwealth will be able to understand precisely what are the Treasurer’s relatiOns in this connexion. I move -
That paragraph c be left out.
Mr. JOSEPH COOK (Parramatta) £11.40]. - I support the amendment, and I hope that the Treasurer will accept it. I apprehend, in the light of explanations we have had, that this is regarded as a Currency Bill, and nothing more. I wish the Treasurer would not be so tiresome as he is in reminding me that I know nothing about what happened in Queensland. I assured him that I do not know much about what happened in that State, but I am beginning to think that the honorable gentleman knows no more. If he does, he has made a statement which I can only regard as an attempt to bluff the Committee. He has just told me across the table that in Queensland the theory of the Government proposal was that there should be a sovereign paid for every note. We are not concerned as to what the theory was, but as to what actually took place in that State, and the fact is that, whereas Queensland Treasury notes have been issued to the value of £1,554,000, all the coin the Queensland Government have ever received from the banks in that State amounts to only £450,000. What becomes of all this moonshine talk of the Treasurer in trying to induce the people to believe that he is following in the footsteps of Queensland, where the Government are said to get £1 in gold for every £.1 note they issue? They get nothing of the kind. The Queensland proposal is really a part of a device for keeping open the doors of the banks, and enabling banks that had closed their doors to reconstruct on more favorable terms. In other words, the system, when introduced in Queensland, formed part of a general bank reconstruction scheme, and all the money put into the Treasury of Queensland for £1,554,000 in notes has been 450,000 sovereigns. The balance is represented by cross entries. To-day. in Queensland, the
Government have £388,000 deposited in the banks. That appears from the report of the Queensland Auditor-General, under the heading “ Advances to Banks.” Then there is gold coin in the Treasury chest to the value of £530,000. So that Queensland has to-day in sovereigns something over £900,000 to set against £1,554,000 worth of notes. The Treasurer should know that all the gold that the Queensland Government have ever got from the banks for the ,£1, 554,000 issued in notes is
– And bank deposit receipts for the balance.
– Exactly; cross entries, but not gold.
– What is the difference when the Government can draw out the money any day if they want it?
– The difference is* that exactly the same thing has been suggested to the Treasurer, and he will not agree to it. If there is no difference, why not leave the gold in the banks, and take a deposit slip for the amount?
– Because I am not an investor.
– But the Prime Minister is an investor; he is taking power to invest the money. However, I do not desire to labour the point; but I ask the Prime Minister to make it clear that this is a currency Bill and nothing more. So long as sub-clause c remains this cannot be called a purely currency measure. It is a currency measure plus something else; and as the honorable gentleman has told us, he is going to invest the money and carefully safeguard it, why not make the intention clear on the face of the Bill?
.-! desire to call the Treasurer’s attention to the fact that there may be a difficulty in regard to the Surplus Revenue Act. If this money is not appropriated I think it will be revenue. Section 8t of the Constitution, speaks of “all revenues or moneys raised or received,” while section 89 provides that the Constitution shall credit to each State the revenues collected therein, and all moneys received are really revenue.
– Would it not be as convenient to appropriate the money by another Bill ?
– We ought to be cautious, because before we pass legislation appropriating the money, the States may step in and say that they want it. The Bill does not provide against the contingency of there being any surplus from the proceeds of the note issue. Of course, it is a matter for the draftsman, but at present I cannot see that things are secure. Another matter is that while the next clause provides that there must be kept 25 per cent, of gold in reserve, the clause under discussion provides that the money received must be dealt with in a certain way. I do not think there is much in the second point I have raised, but it is usual, where there is possible conflict, to begin with the words, “ Subject to the provisions of this Act.” The Surplus Revenue Act may open up a phase of the question delightful for the States to realize.
.- There is a great deal in the contention of the honorable member for North Sydney that the words should be struck out, and I am more confirmed .in that opinion by what the Treasurer himself has said. The honorable gentleman has stated that it is intended to reserve the money for the purposes of the Bill and that before anything can be done under sub-clause c it will be necessary to pass another Bill. He contemplates the passing of a Bill only for the purpose of enabling him to tide over, by way of loan, any possible deficiency at the end of the present year. If the words are struck out, the Treasurer may still by Bill grant a loan out of these funds for the very purposes referred to; he will only have to use the same procedure he proposes to use under the sub-clause. If the sub-clause is struck out it will make evident what he led us to believe was his intention, namely, that the money should be retained for the purposes of this measure alone, and that, if it is used for any other purpose, it will be by way of loan. That being so, the words are not required, and to strike them out would very much strengthen the measure.
– I suggest that the Treasurer should give more consideration to this matter, because the difficulties pointed out by the honorable member for Angas are real and not merely raised for the sake of argument. It seems to me that the Bill should show exactly what has to be done with the moneys when they come into the possession of the Treasurer. In my own opinion, they should form a Trust Fund, and I think the clause ought to be worded somewhat in this way -
Subject to the provisions of this Act, moneys derived from the issue of Australian notes shall be paid to a Trust Fund and may- and so on. That would get over the difficulty referred to by the honorable member for Angas in regard to the Surplus Revenue Act. A Bill could be passed by which the moneys derived from the note issue would go at once into a Trust Fund. The Audit Act provides that Trust Fund moneys may be invested by the Treasurer or placed on deposit; and once they are in the Trust Fund, any part of them could be appropriated to any purpose Parliament desires. Therefore, I think that it would be well to strike out sub-clause c, because it is a sort of indication to Parliament that is not necessary. Clause 61 of the Aud.t Act gives the Treasurer power to expend money standing to the credit of a Trust Fund under the authority of an Act; and if the Government required money from the Trust Fund for any purpose, all they would have to do would be to appropriate it in the ordinary way. This is a very important matter in which I think the Treasurer ought to’ have the assistance of the Attorney-General. Unless we place the money to the credit of the Trust Fund it will go into the Consolidated Revenue, and I do not know what will happen then under the Braddon section - probably it will go to the States, or another Bill will be required to put the matter right. I feel sure that the Bill in its present shape can only lead to trouble; and the Prime Minister cannot say we have not warned him.
– The intention of the Government is not to make use of this money other than in the way indicated in the clause, which, rightly or wrongly, is drawn to convey that view. I prefer that honorable members should allow the clause to stand, subject to the later amendment that I shall accept.
– Postpone the consideration of the clause.
– Certainly not.
– Then we must divide on it.
– Although we have the assurance of the Treasurer that he will administer the clause in the way he has said, others coming after him may provide on the Estimates for the disposal of these moneys.
– Parliament will be responsible for whatever is done.
– This is too important a matter to be dealt with in that way. As the honorable member knows, it frequently happens, after an all-night sitting, that whole sets of Estimates are passed without consideration.
– Could not Parliament repeal any provision for the disposal of these moneys ?
– Yes; but if a special Bill had to be introduced, Parliament would act with deliberation. I do not know why the Treasurer wishes to retain this, provision. Its elimination would not prevent him from doing what he wishes to do. He has told us definitely that the Bill is a currency Bill ; but, according to the clause, it is a currency Bill, and something more. If the measure is merely to deal with currency, why not say so?
Question - That paragraph c proposed to be left out stand part of the clause (Mr. G. B. Edwards’ amendment) - put.
The Committee divided -
Ayes ……… 25
Noes ……… 16
Majority …… 9
Question so resolved in the affirmative.
– Sub-clause 3 empowers the Treasurer to sell or dispose of any securities in which any moneys are invested in pursuance of the clause. Broadly, the spirit of the Bill is that, whatever money comes from the note issue shall be utilized for currency purposes only. Under this sub-clause the Treasurer can utilize the moneys derivable from the sale of securities held against the note issue for any purpose which he sees fit. There is absolutely no check on him in that regard.
– The Treasurer has no control over the money apart from the sale.
– He can do what he likes with it. He is not bound to pay it into the Trust Fund. If Parliament decides that some of the money derived by getting sovereigns for notes is to be invested in certain Government stocks, the Treasurer can, under this sub-clause, sell those stocks, and do what he likes with the money. In order to make quite certain on the point, I move -
That the following words be added to subclause 3 : - “ Provided that the proceeds derived from the sale or disposition of such securities -
be applied to the redemption of Australian Notes ; or
be placed in a Trust Fund created for the purpose of redeeming Australian Notes as occasion requires.”
That will still give the Treasurer power to convert his securities, provided that he does so for the purposes of the currency which is now being called into existence. I believe that is the present Treasurer’s intention, but under the Bill any future Treasurer could utilize the funds so raised just as he pleased. If I am wrong, I hope the Treasurer will explain how.
– I really do not think the amendment is necessary.
– The honorable member is satisfied that it is not necessary?
– If the Treasurer assures us, as he now does, that the amendment is not necessary, and that its purpose will be met without inserting it formally in the Bill, I shall accept his decision in order to save time, which, of course, will throw the responsibility upon his Government.
– I hope the honorable member will not put into my mouth words which I did not utter. I do not think it is necessary to put the amendment in.
– I thought the Treasurer gave us to understand that he proposes always to utilize the proceeds of the sale of Government securities as a backing for the Australian notes issue for which those securities are created.
– There is nothing inconsistent between the two statements.
– That is what I understood the Treasurer to say just now,’ but when I said so the honorable member asked me not to put words into his mouth ! Does he propose to utilize moneys obtained from the sale or disposal of Government securities in some other way than as a backing for the Australian note issue? If so, for the safety of his own Bill and its proper financing, he ought to have some such safeguard as I propose. I thought just now that I had arrived at what was at the back of his mind on this question, but if he says he does not wish words to be put into his mouth, and refuses to allow words to come out of his mouth, no other course is open to me than to press the amendment.
– I do not think the amendment is at all requisite. The power given by the sub-clause is the power ordinarily given to trustees to convert securities for “the purpose of protecting the trust. The Treasurer might have his securities in one form, and be advised to get out of it, and have them in another form. But whatever change lie made would not give him the money to use as he thought fit, any more than an ordinary trustee has power to convert to his own use moneys derived from disposing of securities under a will or deed of settlement. I think we are sitting too late, and the honorable member’s usual clarity of perception is obscured.
– The Treasurer can use the money for any purpose he likes.
– The Treasurer can use all things for any purpose he likes. As the honorable member for Angas and the honorable member for Darling Downs point out, we ought to create the trust first. I presume the Treasurer will consider the advisableness of doing that when he reconsiders the Bill.
– When the Treasurer was moving the second reading of the Bill, I asked him whether it was intended to use the proceeds of the issue for the liquidation of Commonwealth obligations, and he said “ Possibly.” At a later, stage, when the Leader of the Opposition was addressing the House. I understood the Prime Minister to say that the money was going to be used to purchase securities for a gold backing, ‘ although I do not say he used those exact terms. If the Treasurer intends to reserve the right to use the money either for the purpose of supplementing the trust, or for the purpose of paying ordinary Commonwealth obligations, he is taking to himself a power which I do not think he ought to ask for. If he thinks it unnecessary to add to the clause words such as have been suggested by the honorable member for Wentworth, because he does not intend to use the money for any other purpose, and makes that statement, Hansard will be a record of it.
– The honorable member for Parkes said that I stated on a previous occasion, in answer to an interjection of his, that possibly some of the money might be used for Commonwealth purposes. That is quite correct.
– I did not say “Commonwealth purposes,” because the trust would be a Commonwealth purpose, I said “ for discharging Commonwealth obligations.”
– Unfortunately, the honorable member interjected the other night that I said “probably.”
– No, I said that the honorable member used the word “ possibly.”
– The honorable member was reported in yesterday’s newspapers to have attributed to me the use of the word “probably”; but I did not utter such a word. I did not conceal from honorable members the fact that it is the intention of the Government to make a temporary use of some of this money at the end of the calendar year, the money so used to be repaid out of the Commonwealth funds during the second half of the present financial year. The money soused will be clearly for ordinary Commonwealth purposes. That is the only use to which we think of putting any of it; and we justify our contemplated action on the ground of policy. We are bound, under the Braddon section, to pay to the States during the first half of the present financial year their full threefourths of the Customs and Excise revenue ;. but we shall be able to make an adjustment during the remaining six months. After that the Government do not intend to make use of any of this money for the services of the year.
– What is to be done with it?
– It is to be invested as this clause provides. We intend to safeguard every penny of it, and, after deducting the cost of administering the Act the net interest will’ also be devoted to the same kind of investment.
– The clause does net so provide.
– I told the honorable member for North Sydney that we shall do what I have just mentioned, and I go further, and tell honorable members that we do not propose, during the present year, to take credit for any profits derived from any issue of these notes.
– Then the honorable member will alter this clause?
– I have said that we propose to do so. Therefore, neither by way of loan nor by way of interest upon the money obtained under this Bill, do the Commonwealth Government desire to secure any pecuniary gain. I have said from the first that this is purely a currency measure. lt does not relate to a loan, and is not designed to secure any Governmental advantage. The action of the Government is borne out by the attitude that we have from the first assumed.
– The Treasurer’s statement is a very gratifying indication of what he himself intends. My only regret is that the Bill does not make that intention absolutely clear. The honorable member for North Sydney, because other honorable members could not agree with him on a matter of some doubt, asked whether the lateness of the hour was not affecting our clarity of vision. Having looked at this provision carefully, and not as the father of a fad would look at it, I still feel that there is some doubt in the Bill.
– Not in ‘the Bill, but in some sections of it.
– The honorable member h absolutely cocksure of everything connected with this Bill. I differ from him in the most humble way.
– Then I am the only man in the House to whom the honorable member is humble.
– It must be gratifying for the honorable member to realize that, even if I differ from him, I do so with the utmost humility. The Bill would have been clearer had some such provision as I suggested been inserted : but as the Treasurer has accepted the responsibility for the conduct of this measure, I shall save time by asking leave to withdraw my amendment.
Amendment, by leave, withdrawn.
– I propose to move -
That all the words after “ shall be “ in subclause 5 be left out with a view to insert in lieu thereof the words “ applied or reinvested as provided by this section for the principal moneys.”
The Treasurer has been good enough to intimate that he will remodel the clause so as to provide for the investment of the interest, after deducting the cost of administration. The cost of administering this measure is really a charge, against the profits derivable under it.
– I suggest to the honorable member for North Sydney that he substitute for his amendment an amendment providing for the omission of all the words after the word “shall” in sub-clause 5, and the insertion, in lieu thereof, of the words, “ after the expenses of the administration of this Act have been met. be applied in the same way as moneys derived from the issue of Australian notes.”
– Does that mean that the expenses shall be a first charge on the interest ?
– Yes. Whilst the Government of the Commonwealth need not seek a profit from the operation of this Bill, the gross cost of administering it will not be excessive, and there will be a substantial amount to go to a sinking fund. One of my strong reasons for viewing the matter in this way is that we shall provide for a double cover in the shape of Treasurybills,, to make the issue doubly secure. If this accumulated interest be put to a sinking fund, it will soon establish an actual money reserve, and put it beyond doubt that we shall be able to do away with even the subsidiary coyer.
– The only danger as regards the interest is that the clause as it stands still leaves it to be expended for any purpose that Parliament directs.
– The honorable member knows that that matter will receive consideration. I do not close my eyes to the fact that the clause may be improved ; but I wish to get the Bill through.
– Why this hurry?
– We desire to obtain authority to go on with the scheme. The attitude of the Government in accepting such an amendment as I have suggested to the honorable member for North Sydney, and declaring that the Commonwealth desire nothing, either in- the shape of interest on the investment, nor by way of loan, should be an ample guarantee to the Opposition that we are not seeking any pecuniary advantage.
– I think that we ought to have a quorum. [Quorum formed.]
Amendment (by Mr. G. B. Edwards) agreed to -
That all the words after “ shall “ in sub-clause 5, be left out with a view to insert in lieu thereof the words “ after the expenses of the administration of this Act have been met, be applied in the same way as moneys derived from the issue of Australian notes.”
– I desire to ask the Treasurer whether he will look into this matter thoroughly before the Bill is read a third time.
– I shall. I do not wish to bind myself to the actual wording of the clause. I shall meet honorable members in every possible way.
Clause, as amended, agreed to.
Clause 9 -
The Treasurer shall hold in gold coin a reserve as follows : -
In ascertaining the amount of Australian notes issued, the amount of notes which have been redeemed shall not be included.
– As I stated in my secondreading speech, I have no objection . to make the amount in paragraph a “ not less than one-fourth.” It means, for all practical purposes, the keeping of one-third in gold, but I do not wish to use the words “ onethird.” I move -
That the words “equal to” be left out of paragraph a, with a view to insert in lieu thereof the words “ not less than.”
Amendment agreed to.
– I move -
That the word “ fourth “ be left out of paragraph a, with a view to insert in lieu thereof the word “half.”
The object of my amendment is to increase the stability - of the security for the issue of the notes. It will be remembered that in his original speech on the Bill the Prime Minister pointed out that safety and convertibility were to be two of the main features to be observed in connexion with the currency question. But I hold that in limiting the gold backing, even though he intends to exceed the one-fourth, by simply putting in the words “ not less than onefourth” and leaving it to be supposed that there will probably be a backing of onethird that margin, judging from the experience of the past, is not a true margin of safety, because safety really depends on the convertibility of the notes. Both these essentials of sound currency are absent from the Bill, and I want to provide for their recognition by my amendment. Public confidence can only be secured by creating a feeling that the note is only issued as a form of convenience for the purpose of exchange, and that at any time it can be converted into gold. In essence it is not cash but merely an I.O.U. for cash. As soon as there is a feeling created in the public mind that there is not a sufficient gold backing behind the note currency to enable persons to convert notes into gold, or, in other words, that they cannot get the cash for the I.O.U.’s when and where they want it, then the confidence of the public will be undermined, distrust will be widespread, and there will be a general disinclination to use the notes. I also propose to insert a new subparagraph to the effect that the gold coin in reserve shall be held in each of the several States in proportion to the numbers of their people. That is, I think, really necessary, in order to enable the notes when they are presented, in accordance with the Government’s proposal as indicated in the Treasurer’s statement this evening, to be converted into gold. Whilst I realize that it is not necessary to have a large amount of gold in the different States, still there should be a sufficient amount in proportion to the notes issued - something on the plan, and in the ratio between gold reserve and note circulation, which is now adopted in connexion with the private banking currency. Convertibility is really the main element of safety and stability, so far as the public are concerned. At present public confidence in taking bank notes in payment of debts, for commodities, and for general purposes of. exchange is established by the belief that at any moment a person can present a bank’s notes and obtain gold for them. Once that confidence is shaken, and distrust creeps into’ the public mind, a run on the bank immediately commences, and every one is trying to convert his notes into gold at a timewhen the bank is perhaps unable without assistance from other institutions to meet a sudden rush for gold. At present, against a note circulation of about £4,500,000, the banks have a gold reserve of about ,£28, 000,000, so that there is ample room for confidence there. No such reserve as that is proposed to be held under this Bill by the Treasurer of the Commonwealth. A gold backing of 5s. in the ,£i is not enough, in my opinion, for the Commonwealth has no securities of its own outside of its power of taxation, and the same people who hold the Commonwealth notes are the people who have to pay the taxes to redeem them. If the Treasurer is going to carry out his proposal to have convenient places in the different States where notes can be converted into gold during ordinary times, then it seems to me that his proposal to have a fourth, or possibly a third of the value of the notes in circulation backed up by gold, will not be large enough when distributed over the different States to meet the ordinary demands which will be made upon it. The percentage of gold held by the banks is at the present time something above 52 per cent, of the notes in circulation. I am referring to the amount held to meet liabilities at call. Experience has shown that, approximately, about 50 per cent, is a reasonable reserve to hold- It has fluctuated very little since Federation. The percentage of coin and bullion to liabilities at call held in the banks during the period of Federation has varied from a minimum of 47.10 in 1907 to a maximum of 52.26 in 1909. In 1901 the notes in circulation were ,£3,399,462 ; and the deposits not bearing interest were ^37,457,960, making total liabilities at call for that year ,£40,857,422. Against those liabilities at call the banks held in coin ,£18,581,224, and’ in bullion, £1,199,304, making a total of /.”iq, 780,528, the proportion of gold to notes being 48.41. I shall now take the figures for last year.
– I must request the honorable member not to proceed on those lines. I do not wish to rule him out of order, but clearly these figures ought to have been given on the second reading of the Bill.
– I would point out to you, sir, that the figures not only have a distinct bearing on the clause which is before the Committee, andwhich I wish to amend, but go to the very heart of the principle embodied in the clause and the amendment. I did not speak at the second-reading stage, because Mr. Speaker had ruled that honorable members could not then deal with the clauses of the Bill, but only with its principles. I was forced by his ruling to reserve these remarks until this stage.
– I do not rule the honorable member out of order ; but I wish him to curtail his remarks.
– That is a most extraordinary- statement for a Chairman to make. I also wish to curtail them as much as possible ; but these interruptions only tend to prolong them ; but this is the first time that I have heard such a remark made by a Chairman of Committees. In 1909 the notes in circulation . amounted to ^£3,510,629. The deposits, not bearing interest amounted to ,£46.812,632, making the total liabilities at call .£50,323,261. What had the banks in reserve to meet those liabilities? They had not one-fourth, as now proposed, but they held in coin during the same period .£24,943,910, and in bullion .£1,353,933, making the total funds to meet liabilities £26,297,843. These are official figures, supplied by the Commonwealth Statistician, and taken from the banking records. The percentage of gold (jacking was increased during the nine years 1901 to 1909 from 48.41 to 52,26 per cent. In the year 1907 there was a drop to 47.10 per cent, of the gold reserve as against liabilities at call. But it is explained that that drop occurred owing to the sudden increase of deposits, and that the increase in coin and bullion did not in that year keep pace with the increase of liabilities at call. Such being the facts in regard to private banks, I maintain that we should be guided by their experience, and provide a sufficient gold backing to meet the probable demands upon the Treasury. I do not know what the Treasurer is going to do in regard to providing conveniences for converting these notes, but I do think that it would be wise to make the coin held in reserve proportionate to the population in each of the States, and also proportionate to the notes issued in each State. For instance, probably New South Wales will be the principal consumer and user of these notes, Victoria the next largest, Queensland the third, South Australia the fourth, Western Australia the fifth, and Tasmania the sixth. I see that the notes issued by the bank’s up to 30th June last year were, in round figures, as follows : - In New South Wales, £1.659.000; in Victoria, £857,000; in South Australia, £523,000 ; in Western Australia, £310,000; and in Tasmania, £158,000. In Queensland there is a much larger circulation of notes, but that State, of course, has a special financial system of her own. From these figures may be seen what the probable requirements of these States will be, and whatever gold reserve may be fixed upon, it should be distributed in each State proportionately. In a time of stringency, and possibly of crisis, trie need for this extra gold reserve will be still greater than in quiescent times, because the public will then rush in larger numbers to convert their notes into gold. If they have to be sent away unsatisfied, the necessary consequence will be financial panic. I would call attention to what has been stated by a very influential financial authority on this subject. I allude to the Insurance and Banking Record, which, in its issue of 20th July, writes -
The Queensland practice is in accord with that of the Bank of England, whose practical monopoly enables it .correctly to class as circulation the till money notes held by other English banks; Queensland also is correct in this respect, under the terms of its Act, in so far as the issue is concerned, but obviously the comparison with the public circulation of the banks is faulty.
We have heard so much of that argument that it is just as well that honorable members should know what financial authorities think of it. The article goes on to point out the advantage of a strong gold basis -
The advantage of maintaining a strong gold basis and reserve in the Commonwealth should be obvious; national conditions alone may one day arise which would make such a store invaluable, and under such (or any other) conditions it would be infinitely preferable that any temporary suspension of specie payments should be carried out through the medium of commercial institutions rather than by making a Federal issue of notes inconvertible, even for a time.
This goes to the crux of the whole question, for in the event of a sudden rush for gold, which was not available to meet the demand, there would be the irresistible temptation, on the part of the Government, to make the notes legal tender and irredeemable with gold. Again the same authority writes -
The proposed provision for making the Commonwealth notes payable in gold only at the Seat of the Government will, doubtless, have the advantage of preventing any sudden embarrassment to the Treasury, and prima facie, appears not to be unreasonable, but it is open to question whether it is no’t an excessive precaution implying a weakness in and casting doubt on the system, and one likely to place a restriction on the amount of paper currency that will be legitimately required. If gold has to be sent at considerable cost from other centres to the Treasury to purchase notes, it may be found more profitable to send the gold, in lieu of £1 notes, at all events, to the district to which the notes would otherwise be despatched. Such reasons point to the desirability of establishing, sub-treasuries for the issue and payment of Commonwealth notes in each State.
– There are banks which are shipping gold from Europe to Australia at the present moment.
– I dare say that that is true, but the statement of the Treasurer does not get over the difficulty in which we shall find ourselves if we decide to make the whole of these notes convertible, at one place only, namely, the Seat of Government, and do not distribute the payments in proportion to the probable requirements of convertibility in each State. For the reasons that I have given, I move the amendment.
.- I have been very much surprised to hear the honorable member for Lang and some other honorable members opposite talking of the large reserve that it is necessary to hold in gold against the proposed note issue. The longer the honorable member for Lang lives, the more scared he appears to become about the proposed note issue. He just gave notice of an amendment providing for a gold reserve of one-third, now he proposes that the gold reserve shouldbe one-half of the total issue. I do not know whether he adopted this proposal from the honorable member for Wimmera, who made the same suggestion the other day. Honorable members talk of what will be required at a time of panic, but it is a significant fact that, when in the panic of 1893 the banks failed to meet their responsibilities, what came to their rescue was not the backing of their notes by a gold . reserve, but the credit of the State without any gold reserve whatever. That was sufficient to stay the panic.
– That does not affect this question.
– No doubt any little thing like that does not affect the question if we are to believe honorable members opposite.
– Will the honorable member show in what way it does affect it?
– I prefer to be guided byactual experience. At the time of the bank panic in 1893, Sir George Dibbs came to the rescue of the banks in New South
Wales by passing an Act of Parliament making the bank notes legal tender for a period of six months. Mr. Henry Gyles Turner, then, and for some years afterwards, manager of the Commercial Bank in Victoria, referring to that Act, said -
I believe that if we had had any one in Victoria at that time who would have done what Sir George Dibbs did to save the remaining banks, we should not have had a crisis. It immediately stopped the crisis in New South Wales, and practically saved the remaining banks. It was a bold stroke.
What was that bold stroke ? It was merely the Government coming to the rescue of the banks with the credit of the State. I have quoted from the evidence given by Mr. Turner before the Banking Commission of Victoria. When he was asked by the Chairman of the Commission whether the Government credit was not employed to sustain the credit of private institutions at that critical time, he replied -
Yes, that was the principle. The Government would have had to retire the notes if it had not been found afterwards that the banks could pay them.
We know that, in Victoria, when the run on the banks took place, the Government did not step in to save the private banks, , but when the run commenced on the Savings Banks the matter became serious, and the Government immediately stepped in. But how? With a gold reserve? No, the Government of the day issued a proclamation that the Government of the country guaranteed to the depositors the amounts they had in the Savings Banks, and the mere statement that the Government would be responsible was sufficient to stop the run on that bank. Against the opinions which we have had from some honorable members who are as much amateurs in this matter as I am myself, I can set the opinions given just after that critical time by several bank managers in Victoria. When before the Banking Commission, Mr. Finlayson, manager of the Union Bank, was examined as to a State note issue, he said that the banks would have no objection to it whatever. When asked what proportion it would be safe to hold in gold against an issue of State notes, he said -
If the note issue was confined to the natural wants of the people, I believe I con say that the State could get along with a comparatively small reserve of coin, perhaps, 5s. in the £1. .
The Chairman of the Commission said -
That is higher than the banks hold at present?
And Mr. Finlayson’’.^ reply was -
It is more than the banks hold against their total liabilities. Their general reserve against all liabilities is about 4s. 6d. in the £1.
The late Mr. Frank Grey Smith, who was manager of the National’ Bank, was asked what he thought of a State note issue, and he said that the banks would have no objection whatever to it. When asked what would be a sufficient reserve to hold in gold against an, issue of State notes, he said -
I think that the general consensus of opinion is from one-fourth to one-third in specie.
When Mr. Henry Gyles Turner was asked the same question, his reply was -
Generally it is held that from 25 to 33 per cent, is sufficient in an ordinary circulation.
At the Bankers’ Conference, held at Sydney, at ihe same time, a State note issue was recommended, and it was proposed that the reserve of gold should be from 25 to 30 per cent. I understand from the honorable member for North Sydney that a lower reserve than thai was proposed by the banker, when they met, I think in 1901. In view of such statements in sworn evidence by experienced bankers, it is somewhat ridiculous for honorable members opposite now to talk about a 50 per cent, gold reserve being necessary for notes issued on the credit of the State. No one put the position more clearly than did the honorable member for Angas, when he stated that, after all, it was the credit of the country that would be the backing for the notes, and mentioned that the Comptroller of the Currency in America had stated that the amount of the gold reserve there, which was 5 per cent., was twenty times as much as experience had proved to be necessary. In view of all these statements, does it not seem absurd for honorable members to suggest that the interests of the country will not be safeguarded with anything less than a reserve of 50 per cent, in gold ‘for the proposed note issue?
– The evidence just adduced by the honorable member for Gippsland is valuable as a statement of local opinion, but in dealing with a great question like this, it behoves us to learn something from the experience of older countries of the world, in which it has been shown that a State note issue must be backed up by a high gold reserve. Before the American Union took place thirteen of the States were issuing paper money, and, in each instance, the paper currency failed, because it had not a goldbacking sufficient to insure public confidence. I do not intend to labour the question at this hour, but another aspect of the question, which should be seriously considered, apart altogether from the question of a panic, is that, at certain times, an ample gold reserve is absolutely necessary to preserve the credit of the nation. We should look to the possibility of a low gold reserve, and a very large note circulation, having the effect of driving gold out of Australia. Japan affords the best example of this. The experience of Japan in this matter supplies a complete illustration of the danger of circulating a considerable sum in paper money without a sufficient gold-backing. The issue of paper money for twenty years in Japan had the effect, of driving nearly the whole of the gold out of the country. We cannot establish a new system, as proposed in this Bill, and circulate £7,000,000 in notes on a goldbacking of 25 per cent., without the cheap money driving a considerable proportion of the dear money out of the country, to the weakening of our national credit. In the United States, at the time of the Union, when it was found necessary for Avar purposes to issue greenbacks, warnings were issued by President Lincoln, and also by Secretary Chase, that the issue must bring about ultimate disaster, unless it was backed by a sufficient gold reserve to insure the convertibility of the notes. To come to local conditions, I should like to reproduce a few figures as to the position of our banks at the present time, because they have been challenged in some quarters. The total value of interest-bearing deposits in the banks of Australia is £70,000,000. The non-interest bearing deposits represent £46,000,000, making a total of £11-6,000,000. The assets and convertible securities held by the banks amount to £105,000,000, leaving a balance of £11,000,000. As against that £11,000,000, there is a reserve in coin and bullion of £26,000,000, leaving a balance of £15,000,000 in coin and bullion against the issue by the banks of £3>500)000 in notes. We have, as against non-interest-bearing deposits amounting to £46,000,000, and notes to the value of £3>500>000> a total reserve in coin and bullion of £26,000,000, or 52 per cent. I think this Parliament should hesitate before introducing a system which must lead to some reduction in the national credit of the country. I regard this as a most serious matter. We are only on the eve of nationhood. We have to carry out important public works, to finance which we must go to the money markets of the world, and, in the circumstances, any blow, however slight, struck at our national credit, must be a very serious thing for the Commonwealth. I hope that the Treasurer, even at this late hour, will see the wisdom of accepting the amendment moved by the honorable member for Lang, to, increase the gold reserve proposed to a reasonable percentage of the value of the proposed note issue.
– I should like to remind honorable members that, when this Bill was introduced by the Treasurer, he pinned his faith to the experience of Queensland. He quoted figures from Queensland as a precedent in order to justify his proposal. I have had the advantage to-day of a conversation with a director of the Queensland National Bank ; and he gave me to understand that that bank has in its safe 33 J Per cent °f its note issue in gold ; but whether in the form of bullion or coin, I do not know. The Prime Minister, in’ answer to the honorable member for Lang, has said that he proposes to make the gold hacking not less than 25 per cent. ; but if he were here, I would remind him that that would be no security in the hands of a less careful Treasurer than himself. If a Treasurer can keep to the minimum of 25 per cent, without risking the breaking of the letter of the Act, there will be a great temptation to do so; and I ask the Prime Minister to, at least, make the gold backing the same as that in Queensland, from which he has taken his precedent. The honorable member for Gippsland, who is generally sound in his argument, seems to have rather missed the point in the illustrations which he gave. He reminded us that in New South Wales, when the banks were in difficulties, the Government came to the rescue by offering a guarantee, and that the anxiety of the people was immediately allayed. The honorable member, however, omits to notice that in that case there was no need for any gold backing, because the State merely gave an assurance, or general guarantee, and did not enter into any undertaking to pay “ on demand “ any particular sum; and there is a great difference between the two cases. If I say that I will guarantee a debt, it is a different matter from saying that I will pay the debt on demand. Moreover, there wai hardly one banking authority quoted by the honorable member for Gippsland, who did not estimate a proper guarantee at “ from 25 per cent, to 33 per cent.”
– In normal times.
– Quite so; all those authorities, except one, including Mr. Finlayson, who was, perhaps, one of the most eminent bankers we ever had in Australia, fixed the gold’ backing between those figures. The responsibility, of course, rests with the Government, and not with us as critics. I do not think that the amount of 50 per cent, suggested by the honorable member for Lang was necessary ; but I do think that the Government ought to follow Queensland, which they quote as their cardinal example. If anything unfortunate happens, as Bagehot tells us, it means only a little more guarantee; but that may mean the turning point between ability to meet our obligations, and the misfortune of having to confess that we are not ready to meet them.
– I think we ought to have a quorum. [Quorum formed.’]
– The amount of gold coin held in reserve against the bank note issue is estimated, not to meet ordinary business, but extraordinary occasions. I cannot understand honorable members opposite, when they say that the whole success of this note issue is dependent on our being able to stop a panic.
– Nobody has argued that.
– The argument appears to be that the only difficulty in regard to a note issue is that the Government, with a gold reserve of 25 per cent., may not be able to meet a rush. The whole of the authorities quoted show that a gold reserve of 25 per cent, is quite sufficient to cover any ordinary rush. The Treasurer has repeatedly stated that the amount to be held in reserve was something near £2,000,000, and that means close on 30 per cent. Any note issue over £7,000,000 has to have a gold backing in full, so that an issue of ,£10,000,000 would mean a, reserve of £5,000,000.
– There is no obligation to have a reserve of more than £3,000,000.
– This and the following clause bear out what I say; and such a reserve is altogether too much. I should be content with much less, because the gold reserve is practically of no account unless the credit of the country is behind it. During the seventeen years of the Queensland note issue, the National Bank of that State has issued about £3,000,000 worth of notes, and has never yet presented a single note to the Treasury and demanded gold. The event of a gold reserve of 25 per cent, or 30 per cent, being insufficient for ordinary demands is altogether dependent on a doubt as to the stability or credit of the Commonwealth; and that is a contingency so unlikely and so impossible, almost, to conceive, that the argument for a larger reserve goes by the board.
. - The honorable member for Brisbane once more makes the statement that the stability of the notes rest on the credit of the Commonwealth; but I repeat that the credit of the Commonwealth has not, under certain conditions, anything whatever to do with their stability or otherwise. That is shown by the history of every State note issue there is, or that has been, in existence. If the gold backing is not sufficient under conditions of panic, the only safeguard and possible escape for a State issue is to make the notes inconvertible, and, once that is done, the credit of the country need not have anything to do with their stability. The causes which affect the stability of the notes are often altogether outside the question of the credit of the country. I do not think that a gold reserve of 25 per cent, against a note issue standing practically by itself is sufficient, though I think a reserve of one-third probably is; and I hope the honorable member for Lang will reduce the amount he has proposed.
– In my opinion, a reserve of 25 per cent, is too high. There is’ no State note issue that can be compared with a note issue under a Government like that of the Commonwealth. The honorable member for Parkes has spoken of a reserve of 33^ per cent.., but he ought to remember that a private bank is in a position altogether different from that of the Government - that there is no analogy. I am not a prophet, but I venture to ‘say that there will be no panic when the Government stands behind the issue. Why should we have a large amount of gold lying in vaults and earning no interest? Under such circumstances, and if we had a reserve of 50 per cent., the Commonwealth would be deprived of any advantage from the note issue.
– Does the honorable member think that the Commonwealth is going to make’ any money out of the note issue ?
– I hope so. I am strongly of the opinion that the Government is on the safe side in providing for a gold reserve of 25 per cent. In course of time that will probably be found larger than is needed.
Question - That the word “ fourth’ proposed to be left out of paragraph a, stand part of the clause (Mr. W. Elliot Johnson’s amendment)- put. The Committee divided -
Ayes … … … 27
Noes … …… 6
Majority … … 21
Question so resolved in the affirmative.
– I wish to move the substitution of the word “third”’ for the word “fourth.”
– The Committee has decided that the word “fourth” shall stand.
Amendment (by Mr. W. Elliot Johnson) proposed -
That the following new sub-clause be inserted : - (bb) The gold coin in reserve shall be held in each of the several States in amounts in proportion to the numbers of the people.
Question put. The Committee divided -
Ayes … …… 11
Majority … … 16
Question so resolved in the negative.
Clause, as amended, agreed to.
Clause 10 -
The Treasurer shall not pledge any Australian Notes or deposit them with any bank or person as security for money.
– The object of- the clause is to safeguard the community from the risk of a needy Treasurer pledging the Australian notes for a loan. This provision will not be found in any of the other Acts, but I think it is necessary.
Clause agreed to.
Clause 11 (Banks to pay in Australian notes when demanded).
– I have been asked to report that the division bells were not ringing in any place except the Library during the last divisions. In the Opposition room honorable members were quite unaware that divisions were taking place.
– The same thing happened in the Ministerial room.
– I understand that the attention of the engineer has been called to the matter.
– I have never been very strongly impressed with this clause, which is practically copied from the Canadian Act. I propose to leave it out.
Clause 12 (Monthly statement of notes issued and reserve held).
– Would it not be advisable to provide for an annual statement regarding the operation of the whole Act, and showing the nature of the investments and the interest they are producing, in the form of a parliamentary paper?
– I quite agree with the honorable member, but that information would obviously appear in the Budget papers.
Clause agreed to.
Clause 13 agreed to.
Clause 14 -
The Treasurer may, from time to time,ssue Treasury Bills to such amount as he thinks proper, hut so that the total amount of the Bills issued shall not exceed the amount of Australian Notes issued and not redeemed at the time when the Bills are issued.
– Will the Treasurer again consider the question of the proposed deviation in this clause from the Queensland practice, which is to secure the notes issued by at least a quarter reserve of gold, and the balance by Treasury-bills, the latter being issued and handed over to the trustees - the President of the Council, the Speaker of the Assembly, and the Treasurer for the time being. The bills are out of the hands of the Treasurer and vested in that body, who do not sell them unless they get authority in writing from the Governor, from the Secretary to the Treasury, and also a certificate from the Auditor-General certifying that an emergency has arisen justifying the sale. The Treasurer under this clause may from time to time issue Treasury-bills to such amount as he thinks proper, but so that the total amount issued shall not exceed the amount of Australian notes in circulation when the bills are issued. The Queensland proviso is that the total amount of the Treasury notes issued and circulated may extend to, but shall not at any time exceed, the amount of coin held by the Colonial Treasurer, in addition to two-thirds of the amount of the Treasury-bills. The reason the two-thirds provision was put in was that in case of an emergency Treasury-bills would have to be sold, and at a time of panic, if they had to be sold in a hurry, they would have to be let go at a discount. A margin was therefore left so that there would be enough to cover the whole liability on the notes. Even if the bills were sold at a discount the Treasurer would have ample money to meet all contingencies in regard to the notes. This Bill provides that there must be a gold reserve of at least one-fourth, and that there may be, in addition, an amount of Treasury-bills issued equal to the amount of the notes in circulation. If £1,000,000 of notes were issued, there would be a gold reserve of £250,000, and there could also be £1,000,000 in Treasury-bills. On face value, that would amount to £1,250,000, but when the Treasurer came to realize on the £1,000,000 of Treasury-bills, if the result only worked out at the same rate as Sir Hugh Nelson suggested - and he allowed a liberal discount of 33J per cent. - the Treasurer would have less money in hand than was requisite to redeem the £1,000,000 of notes. There would, of course, be the securities as well. I am not concerned so much with the particular amount of the Treasury-bills as with the advisability oof having trustees in whom the bills may be vested.
– The Government have given this matter serious consideration. While it was felt that there were some reasons for the Queensland practice of putting the Treasury-bills in the hands of trustees - the President of the Council, the Speaker of the Assembly, and the Colonial Treasurer - and requiring the Governor to certify, we considered it inadvisable to bring the Governor-General into these matters, and I do not think that the inclusion ot the President of the Senate and the Speaker of the House of Representatives would in any way strengthen the position, nor is it advisable to bring them in. Our ideas have advanced in matters of that kind since 1893. We meet under altogether different circumstances. Both Houses of Parliament are elected by the people for three years, and the governing body must, for the time being, be the true representative of the people. No difficulty or danger can arise from leaving the Bill as it stands. The honorable member is quite correct in saying that a slightly larger cover is given under the Queensland Act. Under this Bill, the cover will be practically the special Treasury-bills, which I call a double cover, plus the minimum amount of gold that the Treasurer may hold, which is one-fourth. Therefore, if the Treasurybills had to He sold in an emergency, and we only got 75 per cent, for them, we should be able, even without getting a penny from the other securities, to immediately redeem every note presented. Earlier this evening we also hypothecated the interest to be derived from the investments under the Bill’ as an additional liquid security, and an increasing security, which will far more than compensate for the difference between the Queensland provision and this. Further, I think that all of us believe that the Commonwealth credit will be slightly better than any State credit. The interest on the Treasury bills is to be 4 per cent., and no one dreams that the money markets of the world will ever be in such a state as to prevent the Commonwealth getting more than threefourths of the face value of Treasury bills bearing 4 per cent, interest. Such a thing is not conceivable, and taking it all in all, the clause should stand.
Clause agreed to.
Clauses 15 to 17 agreed to.
Clause 18 -
The moneys raised by the sale or disposal of any Treasury Bills shall be applied towards the redemption of Australian Notes.
– The amendment circulated’ by the honorable member for Lang is a good one, and I accept it. In his absence, therefore, I move -
That after the word “Bills” the words “ under the provisions of this Act “ be inserted.
Amendment agreed to.
Clause, as amended, agreed to.
Clause 19 agreed to.
Clause zo (Destruction of Bills when paid off).
. -I presume that proper machinery has been provided for the auditing of these funds. I should like the Treasurer to give attention to that point.
– My recollection of the Audit Act is that it provides for the auditing of every fund created by this Parliament. I promise, however to look into the matter.
Clause agreed to.
Clauses 21 to 27 agreed to.
Clause 28 (Defacing, &c, of Australian notes).
– I think that the Treasurer has acted wisely in enacting these penal clauses instead of depending upon the application of the various State laws to matters of this kind. I would remind him, however, of the provision in clause 7 with regard to the temporary use of forms of State or bank notes, and I wish him to satisfy himself that any person who alters an ordinary bank form so as to make it appear to be a Commonwealth note will be guilty of an offence under this measure. Possibly pro vision is already made for dealing with such an offence, but owing to its importance, I would ask him to make sure.
– The opinion is held that an attempt to so alter any State or bank note as to bring it into conformity with an Australian note would be an attempted forgery, and would come under the penal clauses of this Bill.
– This clause refers to the defacing of an “ Australian note,” whereas my point relates to the alterations of an ordinary bank note, so as to make it appear to be an Australian note.
– Such an alteration would be a forgery.
– It seems to me that a real difficulty will arise in connexion with this matter. The Treasurer is going to avail himself of the temporary use of State or bank notes, which will be stamped and put into circulation as Australian notes. The honorable member for Darling Downs suggests that some persons might alter State or bank ‘ notes, a number of which will for some time remain in circulation, so as to make them appear to be Australian notes, and that the Treasurer will not have . over bank notes so used such a check as he will have over the new Australian note issue.’ I think we ought to make it perfectly clear that any person attempting to alter a bank note, so as to make it appear to be a Commonwealth note, shall come within the penal provisions of the Bill.
Clause agreed to.
Clause 29 agreed to.
Clause 30 (Proceedings to be instituted by Attorney -General only.)
– I should like the Treasurer to explain the reason for making this provision.
– The Governmentf eel very strongly that proceedings for offences under the Bill should be instituted only by some responsible authority, so as to do away with the possibility of any vexatious or frivolous prosecution. If such a duty were left to sundry officers, embarrassment and inconvenience might arise. This, clause is designed to protect the public interest.
– I would point out to the Treasurer lhat it might come to the knowledge of” the police in some remote part of the’ Commonwealth that notes . were being forged, and that it might be necessary to issue a warrant immediately for the arrest of the offender. Under such circumstances it might be that an offender so situated might escape while the police were communicating with the Attorney-General.
– Could not the AttorneyGeneral delegate his authority ?
– The clause provides that proceedings shall be instituted only by the Attorney-General, or some person acting under his authority, and I ask the Treasurer to ascertain whether the procedure for which provision is already made by the States is sufficient to enable a prompt arrest to be made, if necessary, in the administration of justice. The Bill provides for search warrants, but not for warrants of arrest.
, - Apart from the provisions of this Bill, there is vested in the AttorneyGeneral a latent power enabling him to take action in all these matters. This clause was inserted, however, to prevent any vexatious institution of proceedings. The AttorneyGeneral, or a person acting under his authority, would take the necessary steps, without any unduly hurried declaration that an offence had taken place. In a case of forgery there would be no delay on the part of the Attorney-General in giving the police authority to take action.
Clause agreed to.
Clauses 31 and 32 agreed to.
Clause 33 (Regulations).
– I presume that the regulations framed under this Bill will, in accordance with the Acts Interpretation Act, be laid before Parliament, and be liable to any objection within a certain period?
Clause agreed to.
(2.13 a.m.]. - I move -
That the following new clause be inserted : - “ 32A. Every officer charged with the receipt or disbursement of public moneys, and every officer of any bank, shall stamp or write in plain letters the word “counterfeit,” “altered,” or “ worthless “ upon every counterfeit or fraudulent note issued in the form of an Australian note which is presented to him at his place of business, and if he wrongfully writes or stamps those words on any genuine Australian note he shall, upon presentation, redeem it at the face value thereof.”
A provision of this kind has been in operation in Canada, and no objection to it has “been taken by those whom I have consulted.’ The banks are quite willing to co-operate, and there are no penalties save in regard to wrongful writing. A bank might possibly fail to seize a note that was obviously a forgery, and to stamp it as a counterfeit so that it should not go once more into circulation.
– Will there be any notification to the Commonwealth authorities when such a note is handed in to a bank, so that an endeavour may be made to trace the source from which it comes?
– So far, the arrangements with the banks have been friendly, and their co-operation has been assured. They would notify us of any counterfeit notes presented to them. This new clause is to prevent a note that is obviously a forgery being allowed to go into circulation again when it has once come under the notice of a bank. 1 think it is necessary to insert such a provision.
– Is it worded exactly the same as the provision in the Canadian Act?
– It has been given to me as a copy of that provision.
Proposed new clause agreed to.
– On behalf of the honorable member for Swan, I move -
That the following new clause be inserted : - “ The Treasurer may, subject to regulations, issue to any incorporated bank, approved by the Governor-General, Australian notes to an amount prescribed, to be held in reserve, on payment of a charge of Five shillings per centum per annum. Provided that on the issue of such notes by any bank, payment in full shall be made forthwith to the Treasurer.”
I think that the idea which the right honorable gentleman had in his mind when he gave notice of this amendment, was, that it was possible to provide the banks with the necessary amount of reserve till money in notes, to be used only in case of emergency, without actually asking them at the time to hand over the gold to the Treasury. I presume that under regulations it will be possible for the Treasurer to fully safeguard the Commonwealth in regard to the notes which the banks hold under these conditions. It is proposed that the banks shall pay 5s. per cent, per annum for the privilege.
– Does not that seem to indicate that the Banks are getting to an extremity ?
– No, it is simply a question of providing the banks with a reserve of till money. Occasionally a customer comes along to a small branch and asks for a very large amount of cash. Tt is therefore necessary for the banks to hold in reserve in their tills notes to a much larger amount than they ordinarily require. Occasionally the payment for a very large transaction is made in cash, and, of course, it is done in notes. I dare say that if the returns are consulted it will be found that, as a rule, Queensland banks hold more notes than are really in circulation. This amendment will simply enable the Treasurer to meet the banks in that regard. I would point out that, if the banks have to give gold for the whole of the reserve till money, it will not be necessary for the Treasurer to return to them by way of deposit gold in proportion to that which he took from them originally. If it becomes necessary for the banks to draw upon their reserve till money then they will immediately notify the Treasury, and their head office will pay into the Treasury the amount of the notes in gold coin. I do not think that the Treasurer need have any fear about taking this permissive power. I do not believe that it can lead to any loss to the Treasury.
– This is an innocent little amendment which I presume has been dropped on quite unexpectedly. Over and over again the Government haye said that banks are not bound to keep Australian notes unless it suits their purposes. I deliberately took out clause11 so that no bank shall be compelled to provide the notes and give them to another bank. Hitherto the banks have been paying to the States at least 2 per cent, for this privilege - in Queensland, prior to 1893, the tax was 3 per cent. - but the honorable member for Richmond now proposes that the Treasury shall give to the banks paper equal to money at 5s. per cent, per annum.
– That is hardly the point.
– He means on the notes not in circulation.
– I do not know what the honorable member’ s point is, but I know what his proposal is.
– Would the honorable gentleman object if the banks agreed to pay 2 or 5 per cent., instead of 5s. per cent. ?
– I should object if they said that they would be willing to pay 3 or 5 per cent., because that would be interfering with the whole principle of the Bill. This is not a measure to deal withbanking difficulties, but one to provide a stable currency for Australia.
– The honorable gentleman is making a difficulty by taking away the reserve notes which the banks now hold.
– The Bill will do nothing of the kind. As the honorable member for Lang has pointed out, the banks have four or five times the amount of gold which is required to redeem their notes, I am sorry that I cannot accept the amendment.
– The Prime Minister has missed my point. The amendment does not deal, in any shape or form, with the notes in effective circulation on which the banks pay a tax of 2 per cent. There is a reserve of notes on which the banks do not pay any tax to the States, but which they have to hold in their branches to meet ‘any sudden emergency.
– Will that reserve be more than a half?
– Yes. According to the returns the Queensland banks hold considerably more notes in their tills than are actually in circulation in the State. The object of this amendment is to empower the Treasurer to let the banks have, on depositing certain securities I presume, enough notes to stock their branches, in order to meet any sudden emergency. It simply means, that, if accepted, a certain number of Australian notes would be lying dormant in the branch banks, and paying the Commonwealth a tax of 5s. per centum per annum. I think it is a provision of which the banks would take advantage, so as to be in a position to meet their customers, and not for any other reason.
– Even if the proportion is only one-half, 5s. per cent, is a fourth of what the banks are now paying.
– The honorable gentleman misses the point altogether. The banks pay a tax on the notes in effective circulation, but no tax on their reserve. of till notes.
– Supposing that one-half of their notes are in circulation, and onehalf in their tills, that means 1 per cent.
– I remind the honorable gentleman that the amendment is not mandatory. I think it is a provision which he might find would considerably assist him in meeting the banks, particularly in regard to their out-back branches. I believe that it would lead to a considerable increase in the actual issue of Australian notes.
– No one knows better than does the honorable member for Richmond that the amount in the tills of the banks is much larger at balancing time than at other times. The banks do not issue all their notes as the day approaches for striking their balances.
– I hardly follow the hon- 01 able member.
– There are periods when Ibr banks make up the amounts which are outside, and the amounts which are inside.
– That is done every Monday.
– A general manager has not hesitated to say that as Friday and Saturday draw near, the banks prefer to pay in gold, and that on Tuesday the notes go out. That is pure business. It is no reflection on the banks. That shows the circulation to be a good percentage less than the amount actually held. But suppose that half of the notes in the possession of the banks are in circulation, that means 1 per cent, on the whole. The honorable member only asks the banks to pay a tax of 5s. per cent. ; that is, a fourth of what they now pay. That is where the innocence of his proposal comes in. But, apart altogether from that, I cannot accept it.
– I do not think that what the Prime Minister said as to the way in which the banks manipulate their issue is quite correct.
– I did not use the word “ manipulate.”
– I think he will find that the greatest amount of notes is generally issued towards the end of the week in regard to the payments. As to the other matter, I do not wish to say anything.
Proposed new clause negatived.
Title agreed to.
Bill reported with amendments.
Bill returned from the Senate with a message intimating that it did not insist upon its amendment disagreed to by the House.
House adjourned at 2.3a a.m. (Thursday).
Cite as: Australia, House of Representatives, Debates, 24 August 1910, viewed 22 October 2017, <http://historichansard.net/hofreps/1910/19100824_reps_4_56/>.