4th Parliament · 2nd Session
Mr. Speaker took the chair at 2.30 p.m., and read prayers.
Cable Rates - Telegraph Messengers - Savings Bank at Duntroon - Wireless Telegraphy.
– Is the PostmasterGeneral in a position to give the House information regarding the telegrams from New Zealandin to-day’s newspapers, which state th’at it is proposed to reduce the rates for cabling, and to increase the facilities ?
– The Government have received a communication from, the High Commissioner, notifying that the Pacific Cable Board proposes to reduce the rates for press cables from9d. to 4½d. a word, on the condition that these cables shall be liable to a delay of not more than twelve hours, and asks for our concurrence. It is our intention to agree to the proposal; and should the Atlantic companies also do so, the new arrangement will probably take effect from ist January next.
– As, under a recent order of the Commissioner, the pay for telegraph, messengers in their first year has been increased from 10s. to 15s. a week, will the Minister see that a proportionate increase is given to boys in their second, third, and fourth years?
– In view of the honorable member’s representation, I shall look into the matter.
– Has any arrangement yet been made to provide banking facilities for the men employed at Duntroon?
– While the Works Estimates were being discussed, I promised to look into the matter, and I have since asked the Deputy Postmaster-General in Sydney, to interview representatives of the State Government, in order that facilities for banking money may be provided at Duntroon. I am not yet aware of the result of the interview.
– When did the Minister ask the Deputy Postmaster-General to do that ?
– A week or so ago. The provision of Savings Bank facilities is not within the powers of the Department.
– Are any steps being taken with a view to establishing wireless telegraphic communication between Papua and the mainland ; and, if so, when can the Postmaster-General say whether the station will be on Thursday Island, or somewhere on the mainland?
– I hope to be able to make a definite statement to the House in ten days at the outside, indicating the policy the Government intend to pursue in regard to wireless telegraph stations; and also informing honorable members as to the particular localities’ of the stations. The question raised by the honorable member for Herbert is now the subject of inquiry, namely, whether, in connecting Papua with the mainland the station shall be on Thursday Island, or somewhere on the Queensland coast.
– It should have been done four years ago.
– Then, why did the right honorable gentleman not see to the matter when he was in office?
– Has any communication been addressed to the Minister of Trade and Customs, calling into question the integrity or competency of MrPaul, the Royal Commissioner who inquired into the iron industry in New South Wales, to act as an “ authorized person” under the Iron Bounties Act?
– I have had no such communication. I believe that there is not the slightest doubt as to Mr. Paul’s ability.
– Has the Minister of Trade and Customs seen ‘ in the Sydney Daily Telegraph, of Monday last, a report of an interview with Mr. G. H. Hoskins, relative to the iron industry at Lithgow? From this interview it appears that about 23,730 tons of -slag was used in the manufacture of iron on which a bonus has been paid. Mr. Hoskins, in the interview, said that he understood that the Department is quite satisfied that the slag should be used in the production of iron, and that the bonus was properly claimed. He went on to say that he had consulted , with, an officer of the Department, who raised no objection, and that if an objection had been raised the slag would not _ have been used. I desire to know whether that is a correct statement of the position, and, further, whether the Minister proposes to pay a bonus on slag in the future as, apparently, has been the case in the past ?
– I have not seen the newspaper report referred to. Already some .£1,400, or it may be ^2,000, has been stopped from the bonus claimed by Mr. Hoskins. ‘ At the present time there is more bonus owing’ to Mr. Hoskins than it is possible for him to lose, even if we deduct on account ;of the whole of the slag that has been used. For the past two months Mr. Hoskins has not used any slag, and it is not’ his intention to use any until this question is settled.
– I have been credibly informed that the Tasmanian Government is prepared to transfer to the Federal Government a piece of land on the Rivet Derwent, near Hobart, free of cost, and believed to be suitable for the erection thereon of the proposed Naval College. In view of this fact, I ask the Prime Minister if he will kindly give the question of fixing the site for the aforesaid College further consideration before finally deciding where it shall be established ?
– I have no official information of the proposed transfer. It is a sign of the times. We are always glad to know of the readiness of States to transfer property to the Commonwealth, but this offer comes too late, as the site of the Naval College has been fixed at Jervis Bay.
– Did not the Prime Minister inform honorable members that the House would have an opportunity to fix the site of the Naval College. If so, will he adhere to his promise?
– It is not a fact that I said honorable members would have an opportunity to fix the site.
– The Prime Minister said that they would have an opportunity to consider the matter.
– I said that I would make to the House a statement of the policy of the Government in this matter. The House has always the right to alter what is done.
-The other night the Prime Minister announced the decision of the Government in regard to the site, but a statement of policy means more than that. Will he inform us why the site has been changed from Burraneer Bay to Jervis Bay?
– The Government is responsible for the decision, and an announcement of policy was made afterwards to the House. When the Estimates are being discussed, there will be an opportunity to criticise that and every other action of this Administration.
– Are the papers available?
– I do not think that there is any objection to making the papers available to honorable members.
– In view of the fact that the location of the site of the Naval College was covered by an item in the Works Estimates which has been dealt with, will the Prime Minister, in the event of the discussion of the subject on the EstimatesinChief being ruled out of order, give honorable members a special opportunity to consider the question ?
– The Government has no control of the conduct of business in Committee by the Chairman, but we shall offer no objection to the matter being reasonably discussed and determined if honorable members opposite desire.
– When the Minister of Defence is considering the question of providing temporary accommodation for the students of the Naval College, will he bear in mind the site in the vicinity of Hobart, which was, I believe, selected by the naval experts, and which the State Government were prepared to hand over as a free gift?
– I have not heard that the experts selected any particular site in Tasmania for the Naval College, but I understand that if honorable members or any State Governments have sites to suggest on which temporary buildings may be erected, the Minister will be pleased to receive their suggestions at the earliest possible moment.
– Has the Prime Minister received a communication from the Government of Western Australia, stating that in consequence of the strike which has brought about the laying up of the Koombana, the people on the northwest coast are without a mail service, and unable to obtain necessary supplies?
– I do not remember receiving such a communication, but I shall make inquiries, and let the honorable member know later in the day.
asked the Minister of Trade and Customs, upon notice -
– The answers to the honorable member’s questions are - 1 - 3. The question of reciprocal trade relationships with the sister Dominions has already received serious attention, and it is the desire of the Government, at the earliest convenient opportunity, to submit proposals in the direction indicated. .
asked the Minister representing the Minister of Defence’, upon notice -
– The answers to the honorable member’s questions are -
Debate resumed from 21st November (vide page 2907), on motion by Mr. Fisher -
That this Bill be now read a second time.
– I do not propose to weary the House with any excursions into ancient history in connexion with government banking proposals, though the temptation to do so is almost irresistible All through the ages, in every stage of national development, and in every stage of the mental development of statesmen, we have had the latter reaching out after this apparently simple method of gaining revenues without cost to the people. However, the lesson to be derived from past failures in this connexion - the inevitable lesson that easy revenues derivable from banking are only a mirage by which ignorant State financiers have been led to national ruin - has already been dealt with fairly fully by honorable members on this side of the House. I propose briefly to address myself to the principles underlying the measure before us.
A House of this kind should be prepared to travel into this new sphere without undue fear, if it can be conclusively shown that this new agency of government will serve some useful Government purpose. If, for instance, we were to find some special profit accruing to the Government through a Government Bank handling the conversion, renewal, and flotation of loans, or controlling currency, I can imagine that it would be the duty of the House to proceed to the earnest discussion of the measure without being unduly timorous because of the failures and errors of bygone centuries. But I do not see in the measure before us any such proposal. I do not see a single sign, in either the Bill or the Prime Minister’s speech that this measure is proposed to facilitate some Government purposeof the character referred to. There is no sign that this proposed’ bank will facilitate the conversion, flotation or renewal of loans. In fact, if we carefully examine the Bill and its antecedents, we see that that is not the intention of the Government or the intention of the Bill. Further, we know that currency which ought properly to be handled by a bank - since currency is’ largely a matter of supply and demand, and must be dealt with in elastic ways - is debarred from the comprehension of this measure under one of the clauses. Consequently we have to look at this proposal purely as a money-making one - a proposal designed vaguely to raise money in some way, the difficulties of which, I am afraid, are not thoroughly realized by Ministers. I think that the Government generally have an idea that there is money in banking; and where there is money they, of course, desire the State to share.
That Ministers were not the originators of this proposal is transparent to anybody who cares to examine even casually the recent political history of Australia in this connexion. If honorable members will go back to the Brisbane Conference of three years ago, they will find that this bank owes its origin to a general idea, prevalent in that Conference, that a Government bank might assist an arrangement of the general finances of the Australian people - the finances as between Commonwealth and States, and’ especially as affecting the transfer of debts from the States to the Commonwealth. I find, according to the Brisbane Worker of 18th July, 1908 - and I think that in the Brisbane Worker the best report of the Conference is to be found - that this question was introduced at the Conference by the present Minister of Home Affairs, whois reported as having said that “ he wanted a banking system included in any financial arrangement which the Conference might approve for the Commonwealth and States.” The honorable member then proceeded to show what type of banking schemehe thought Australian requirements made necessary. His scheme was a co-operative banking concern as between the Commonwealth and the States. As reported in the Brisbane Worker, we find that it was to be a bank of deposit, issue, exchange, and reserve, with a capital of £1,200,000, of which not less than , £600,000 should be held by the Commonwealth, and not more than £100,000 by any State in the Australian Commonwealth. His idea, I under” stand, was that not only in regard to the conversion of loans and such operations, but also in the handling of the ordinary Savings Banks business of the various States, the States would feel that they themselves had some peculiar interest in the new undertaking, in the management of which they would have some voice. That proposal on the part of the present Minister of Home Affairs was resisted by the late Mr. Batchelor and Senator Lynch, who proposed that the subject of banking, being so important in itself, be referred to a Committee entirely apart from the subjects of State finance and borrowing. That amendment was lost, and the original motion moved by the present Minister of Home Affairs was referred to the Finance Committee of that Conference. According to the following issue of the Brisbane Worker, Mr. Holman, one of the leaders of the Labour movement in New South Wales, and one of the most brilliant men in that movement throughout Australia, introduced this subject again to the notice of the Conference. It was part and parcel of a whole series of financial proposals, the first of which read -
That Conference approves the general outlines of Mr. King O’Malley’s scheme relating to the establishment of a National bank.
That bank, as I have pointed out, was to be upon co-operative lines. In the course of the debate which followed, Mr. Watson, a former Prime Minister of Australia, and I think it will be admitted, a prominent leader of the Labour movement to-day, said that he was in agreement with the principle of Mr. King O’Malley’s scheme for a Commonwealth National bank. Mr. McGowen, the Premier of New South Wales, who occupies to-day a position which entitles weight to be given to his words, said -
He felt that the Labour movement was under a lasting debt of gratitude to Mr. O’Malley. For thirty years he had been advocating a National bank, and Mr. O’Malley had put the machinery and operation of it in a concrete form. “Then I find that the scheme as a whole - a scheme for a co-operative State and Com monwealth Bank combined, to deal with banking facilities affecting directly Government agencies - was then approved by the Conference. That is the history of these proposals, as originated at the Conference, when this scheme for a Government bank was placed upon the fighting platform of the Labour party.
The proposal now before us, however, has departed fundamentally from that conception. The scheme now before us is the very antithesis of that adopted by the Brisbane Conference. This proposal, to use almost the Prime Minister’s own words, is one to make money. It has nothing to do with the government of the country ; and therefore, as far as possible, must be divorced from political control. This is a scheme merely to add to the various money-making banks throughout Australia, and not to carry out the present Minister of Home Affairs’ broad conception which was submitted to, and carried by, the Brisbane Conference three years ago. I do not wish, however, to enter into a discussion of the comparative merits of the two proposals. I am satisfied that my honorable friends opposite, who, by the very constitution of their party, have to pay considerable attention to the will of their party outside this Parliament, as expressed in these periodic Conferences, would not have departed from theinstructions of the Brisbane Conference unless they had had very good grounds for doing so. I do not know what’ their grounds were. They keep their secrets remarkably well ; but the fact remains that they have thrown overboard that Conference, which, apparently, was almost unanimous, and have, for some reason unknown to the Opposition - and, I presume, unknown also to the Conference - departed from the proposals which they had previously accepted, and which formed the basis of the particular mandate which they claim to have from the people in this connexion.
– They have thrown over, not only the Brisbane Conference, but their own manifesto.
– That need not concern the honorable member.
– It concerns me only as a critic, and I think it concerns the honorable member as one of the subscribers to the manifesto issued by the Labour party before the last general election.
– That is my business.
– And is, as is perhaps only appropriate, a bad business.
W.’e are now confronted with the duty of analyzing this measure, and of ascertaining whether it is designed in the best way to arrive at its alleged object. Its alleged object is to find money, out of banking, for the Commonwealth. It is proposed to do that ir» two ways : First of all, by entering into competition for private banking business in the Australian Commonwealth and without it; and secondly, by absorbing, eventually, the State Savings Banks throughout Australia. This bank, being started to make money, we will find, is started upon borrowed capital, despite the fact that we have “heard a lot from honorable members opposite about the iniquity of borrowing. This, however, will not be the first time they have borrowed. We know that they have succeeded in borrowing from the Australian public some £10,000,000 without interest - that is to say, to the extent of the note issue now circulating in Australia. For that issue, of course, golden sovereigns have been given by the public, and portion of that shortdated loan of £10,000,000 has already been used for revenue purposes. My honorable friends opposite have always denounced borrowing, even for reproductive works. Borrowing, they have said, is vicious, mischievous, dangerous, and must be discontinued.
– Nonsense !
– We find, however, that the very first action taken by the Prime Minister, who can so clearly express the profundity of his knowledge upon this subject, is to borrow from the Australian public - who are to be gulled into the belief that they have given nothing in exchange for the notes they are handling - some £10,000,000, portion of which has already been used to meet die current necessities of the year.
– It is good financing.
– It is extraordinary financing - the sort of financing which occasionally makes Wall-street unpopular - but it is not consistent politics. If the Labour party are against borrowing for reproductive works, they ought to be against borrowing to meet revenue deficiencies. They ought also to be against borrowing to start a trading organization. In this Bill, however, they are actually borrowing to start a bank which is to incur obligations and liabilities over which Parliament will have little, if any, control. They have not only sunk the issue of non-borrowing for reproductive works, but have actually borrowed for revenue purposes, and are borrowing now to start a trading venture. Some of the money to start this bank is to be borrowed at interest by means of debentures, but in addition a sum for incidental expenses, which may be ,£50,000 or £5,000,000, can be advanced without interest by the Treasurer. If, for instance, the bank cares to start expensive buildings in the various capitals, the Bill gives authority to the Treasurer to advance without interest the money required for that purpose. The Bill, therefore, provides for borrowing with interest, and without interest, to start what is purely a trading venture.
An interesting feature in connexion with the financing of the bank is that, while the Government loftily declare that the Commonwealth is responsible for the operations of the bank, a special provision makes only the bank suable ! That is a delightful Gilbertian proposal which should commend itself to the close attention of all those who are faced with the desirability of lending the Government bank money.
Another curious feature is that the general banking and Savings Bank businesses are pooled. That is an extremely bad practice. Savings Bank business ought to be upon> the safest foundation possible, but in these proposals it and its profits and its security are placed on exactly the same basis asthe general trading business to be carried on by the bank as a whole, and are therefore subjected to the same risks.
– Is not that a safe basis ?
– I do not think so. The two matters ought to be divorced.
– I think the honorable member’s statement is destructive of his own argument.
– I do not think the honorable member heard my argument. Theaccounts of the Savings Bank business and’ the general banking business of the concern’ ought to be entirely separated. They ought to be two corporations, the profits- from one not being recoverable to meet the losses of the other.
– It is merely bookkeeping.
– According to the .honorable member, it is merely bookkeeping if you throw together two different sides of a business which ought to be entirely divorced ! I do not think it is bookkeeping to enable the money of the Savings Bank depositors to be recoverable for the losses which the bank may suffer in connexion with its general banking business. Rather, it is very bad business. We ought to see that the Savings Bank depositors money is absolutely safe, and that their business is run on the most conservative lines - mutual if you like. Under this Bill, however, if the bank makes a loss, the Savings Bank deposits may be invaded. If the bank as a whole fails the Savings Bank business fails with it.
– Where is that set out?
– In the whole of the general character of the Bill.
– We differ.
– I shall be glad to hear the honorable member on the subject. The. bank as a whole is a corporate institution, and not tsvo separate corporations. The bank as a whole must stand responsible for its debts.
– The honorable member need not worry about it; there will be no losses.
– According to the honorable member it is a simple matter, because he says there will be no losses.
– Does the honorable member suggest the establishment of two banks ?
– There should be two separate corporations - one to deal with the Savings Bank business and the other to deal with the ordinary banking business of which the bulk of the measure treats. There will then be a guarantee that the Savings Bankwill not suffer through any losses the other bank may incur.
– There have been no losses on the Savings Banks.
– That is exactly my point. There will.be no losses on the Savings Bank business.That is why I want it separate from the other, so that the Savings Bank depositors will be safe from any disaster resulting from bad years, or bad management, or any other cause in connexion with the general banking business of the Commonwealth. It is only fair to place the Savings Bank depositors upon the same fortunate basis that they enjoy to-day under State regime.
One of the curious clauses of the Bill is that which says that “ The principal and interest due in respect of any debenture issued by the bank in pursuance of this Act is guaranteed by the Commonwealth by this Act, and the Consolidated Revenue Fund is hereby appropriated for the purpose of this section.” The bank is alleged to be placed under the control of an expert, the Governor of the bank. He is given £1,000,000, and is told in effect that he is not responsible for the payment of either principal or interest ; that the Commonwealth is behind him all the time Honorable members should ask themselves seriously whether this is the best way to get that bank acting in a prudent and energetic way to insure the gaining of profitsIf you say to a man, “ Here is a million to play with; lose it and we will give you more ; lose it and we will meet your obligations,” is he likely to be so careful, prudent, or energetic as he would be if he realized that the money which he is given he has to account for, and that out of it he must meet all liabilities and make his profits ?
The bank should have been started on an entirely different basis. It should have been started with a view to help the Commonwealth in connexion with the debt problem of Australia. In that direction it might possibly have secured some trifling profit to the Commonwealth administration. But, being started to get a profit, the bank should have been placed absolutely outside the control of politicians or the influence of politics.
– Make a suggestion, then.
– I propose to do so.
– Numbers of the private banks are anxious to get good leading politicians on their directorates.
– The honorable member may suffer from deputations from banks every day in the week in that connexion ; he may be an exceptional person whose services the banks are crying for, but that does not affect the question. The great difficulty with regard to a Government agencyentering a province of this character lies in the simple fact, arising out of human nature, that if the politician can manage to give benefits to the public who pay him, without the public realizing that those benefits are coming out of their own pockets, it is easy for him to remain popular, and his industry is very handsomely rewarded. That is the consideration which ought to make the country extremely careful how it enters this province. It is obvious that a Government bank may start, under the influence of politicians who want to catch votes within their particular electorates, to lend money at rates which do not pay it to persons within the electorates supporting the politicians who have control.
– Some politicians have evil minds.
– I wish I could think that the honorable member had any at all. Even a body like this Parliament, which will compare favorably with any ever known in Australia, is at bottom ruled by the principles of human nature ; and an unblushing purist like the honorable member would be prepared to do his hand’s turn to get a constituent money at what he might regard as a paying rate, but what, in view of all the risks, the bank management would not regard as such. A session or two ago, Parliament allowed the Government to issue a paper currency, on the understanding that it would keep a reserve of 25 per cent, in gold for the issue up to £7,000,000, and beyond that of a sovereign for every £1 note issued. The public, however, did not know that the Government used the money got for the paper currency, allowing some of it to go into revenue. The politicians, who pose as Heaven-sent financiers, did not let the public understand that they arebeing taxed in this matter; and within one short year the Prime Minister has come to the conclusion that the whole of the gold reserve should be abolished, and that he should plunge his hands more deeply still into the pockets of the public !
Temptations of this kind will always assail politicians, however intelligent and worthy they may be individually They will always try to get money out of the pockets of the people if they can do so without the people knowing that they are furnishing the money. We must, therefore, be careful to see that political influence is entirely divorced from the management of the bank.
– Hear, hear !
– I shall show that it is not so divorced. In the first place, the Governor of the bank is not given fixity of tenure.
– He has a term of seven years to begin with.
– That is a euphemism. The clause reads -
The Governor and a deputy Governor shall be appointed by the Governor-General, and shall hold office during good behaviour for a period of seven years.
Who is to decide what is “ good behaviour “ ?
– The High Court.
– Where is that provided ?
– That is the interpretation of the words.
– The Prime Minister’s interpretation ? The right honorable gentleman thinks that the bank manager will have the right to appeal to the High Court to prove that his behaviour was good, although the Treasurer of the day had declared it to he bad and dismissed him. It seems to me that whether the behaviour of the Governor was good or bad would be decided by the Treasurer of the day. Therefore, the longer the Governor’s term of office, the greater would be his inducement to try to obtain the good-will of the Treasurer. If his term were only a year, there would not be so much to lose by standing out against the Treasurer.
– What one Treasurer might consider good behaviou’r another might consider bad.
– Yes. The Governor of the-bank might be dismissed, and some one else put in his place, because his behaviour had not been “good,” whatever that may mean. Thus, in actual fact, the Government willcontrol and influence the operations of the bank. If the -Prime Minister wishes to act upon the statements of his opening speech, he should give the Governor of the bank the same security of tenure as is enjoyed by a Justice of the High Court, who is removable only on the carrying of an address by both Houses of Parliament. May I’ anticipate that some such provision will be inserted in Committee?
– I do not think that there is any danger of political influence, but I shall not close my mind against suggestions for strengthening the bank against it.
– If the Prime Minister weighs the matter in his mind, he will find it necessary to make some such provision as I have outlined.
The Bill provides that no bank official shall borrow from the bank, an excellent provision ; but as members of Parliament will be in the position of bank directors, I suggest that they should not be allowed to have financial dealings with the bank.
– Not if they have good security to offer?
– Not in any case. A director of a bank is in a position to influence the judgment of its officers in regard to the adequacy of the security that is offered.
– The honorable member would not prevent members of Parliament from being depositors in the bank ?
– They might be depositors in the Savings Bank. I should certainly prevent them from getting money on loan.
– Then why start the bank ?
– I shall not canvass individual qualifications for credit, but honorable members will expose themselves to a serious charge if they do not provide that no member of Parliament shall have any financial dealings with the bank. To make some such provision would be only common decency and straight politics.
I hope, too, that we shall not borrow money and protect ourselves from actions for recovery by rendering it impossible to sue for it. The bank should be started as a bank would be started by private individuals. Were honorable members about to start a bank with their own capital, they would have the cost carefully estimated, and provide enough money to obtain and furnish offices, gather together a staff, and meet every contingency that could be foreseen. What the Government propose is something quite different. It proposes to give £1,000,000 to the Governor of the bank, and to say, “ Do what you can with the money. If you fail, it does not matter, because the taxpayers are behind the bank.” What we should do is to give him as much as may be necessary to start the bank, even if £2,000,000 be required. The Bill itself contains evidence that it is not thought that £1,000,000 will be sufficient. Contingencies and initial expenses are to be met by the Treasurer. We do not know to what they will amount, whether £5,000 or £500,000. If the Governor cannot get from the Treasurer the money he requires for contingencies, he will probably have the feeling that it will not be his fault if the bank fails. This is not business, or common-sense finance, but it is the surest way to .engender dissatisfaction in the management, and to sow the seeds of future disaster.
I have not endeavoured to make a second-reading speech, but have merely emphasized a few points which have occurred to me in studying the measure. We shall lay a great burden on the Australian people if we do not provide better safe guards against political interference, and better guarantees for straightforwardly financing this proposal.
– In what respect is the financing not straightforward?
– In the first place, the Commonwealth raises debentures to the extent of £r, 000, 000.
– The bank does.
– Yes; but the Commonwealth stands behind the bank, though it is not suable for the £1,000,000. The bank is not given the £1,000,000 and told that it is its capital, and that the bank must be responsible for making profits on it. On the contrary, a sort of placard of no legal value is held up to the bank in the Bill to the effect that nobody is capable of suing the Commonwealth for a debt of the bank ; but if the £1, 000,000 is wasted,, the Treasurer is behind the bank. What is the use of this inducement to the bank not to be as active in making profits as it otherwise would be? Then, again, the Government have not carefully thought out beforehand what money will be required for initial expenses and contingencies, .as an ordinary business man would do - indeed, as a tyro at the game would do. The Prime Minister, because he is handling public funds, and has not to risk the money of honorable members individually, is satisfied to leave all to chance, and to ask the House to present him with a blank cheque to be handed over when he and the Governor of the bank may decide. I do not think that a successful company has ever been floated in that way.
– There is authority to the Treasurer to provide for the preliminary expenses.
– But why are the preliminary expenses not thought out? Surely the Treasurer might have consulted the expert, who is to receive a high salary, and, I presume, will be a good man.
– I have not spoken to him yet.
– The Government propose to start a bank, and to arrange, in regard to preliminary expenses, without consulting the expert? Did we ever, in our wildest dreams, imagine that a business-like Prime Minister would descend to such depths? If the Treasurer has not consulted the expert. I suppose he has consulted somebody. If he has, why not ask us to vote the necessary money, and put it on the debit side of the bank’s ledger, expecting the bank to earn money on it as well as on the debentures r
– The weakest suggestion of the Opposition is that we have some man in view as manager.
– The Prime Minister is altogether too suspicious if he imagines 1 have made any suggestion of the kind ; all I have said is that I assume a good man will be obtained. I think the Treasurer ought to have a man in view, and to have discussed all these matters with him.
– Is a manager appointed before a business is started ?
– We ought to look to the expert for advice as to the initial expenses. If the manager, whoever he may be, contemplated establishing branches in Sydney and Melbourne, or, perhaps, in five capitals, he might ask the Treasurer for £500,000 to meet the preliminary expenses ; and the Treasurer might not be willing to advance this sum, but offer £5,000 or £10,000. Under such circumstances, it would be only human nature on the part of the manager to think that he had taken over control, not exactly under false pretences, but under a misapprehension ; and he would go on his way with the idea that, if the bank failed, it would not be his fault, because he had not been given all the supplies he had been led to expect under the Bill.
I suggest to the Prime Minister that it would be best to make the bank absolutely responsible for every penny advanced to it.
– The Bill provides for that already.
– It does not, as the Prime Minister knows. Clause 10 provides -
– Is that all in the £1,000,000 ?
– No, that is in addition to the £1,000,000.
– Is there anything else?
– The clause proceeds -
It does not say when ! And no rate of interest is fixed !
– I think the honorable member is now discussing matters which ought to be discussed in Committee.
– I quite agree with you, Mr. Speaker, but I refer to them at the invitation of the Prime Minister. The general principle I am advocating, without reference to any particular clause, is that when we start a business, we should be able to put the whole debt of the business in the ledger, so that the manager, before he takes over the responsibility, may know exactly how far he is indebted, and what it is necessary for him to do in order to make profits. That is not being done. The financing is clumsy and difficult, and bound to lead to muddle of a serious nature.
Is it the intention of the Prime Minister to enter into the sphere of the States with regard to lending money to farmers ? In New South Wales there is an Advances to Settlers Board, and in Victoria the Savings Bank lends money on the Credit Foncier system, while there are similar agencies in, I believe, all the other States. According to Knibbs, the total sum advanced to farmers up to 1910 was £7,000,000, while the balance due is just short of £4,000,000. When advances are made for a special purpose at a low rate of interest, the most rigid supervision is required in order that the generosity of the State may not be abused. If there are two competitors for the business, the opportunity for rigid supervision is decreased by half. When a State is acting within its own borders, with no competitor, it can follow up every transaction with success; but if the Commonwealth enters into the States’ sphere, there will arise out of the competition between State and Commonwealthto appear the more generous, some very serious losses which will ultimately materially affect the Australian people. It is worth while at the present juncture to consider whether we ought not to keep out of this sphere in order to prevent duplication of work and risk.
The Prime Minister, in introducing the Bill, said that if the Savings Banks are eventually absorbed it will be to the profit of the Savings Bank depositors. That, apparently, is the fundamental axiom at the back of the whole proposal with regard to a Savings Bank. But unless the Savings Bank business is absolutely divorced from general banking business it will be a sorry day for depositors in the Savings Banks. There are two sides to these banking proposals. If we start advancing money on land, the margin of security to-day may be entirely wiped out to-morrow through no fault of our own, but owing solely to general depression. In the present year, after many years of prosperity, we have every phase of property at almost boom values. If we were to lend now on a basis of even 60 per cent., the 40 per cent, margin might, after a few years of drought, or some great external trouble, entirely disappear.
– How much has the Irish blight affected the value of potato lands ?
– That is a case in point. These depressions are constantly occurring, and cannot always be guarded against. We can, however, endeavour, as far as in us lies, to protect Savings Bank depositors from being subject to the general risks of fluctuating values. The Savings Bank business ought to be on the safest possible basis, and to that end, it ought to be a separate concern. I suggest that the Savings Bank business might be conducted on a cooperative basis by the States and the Commonwealth, which would leave depositors with the same guarantee of security that they enjoy under the State organizations to-day. If, however, the Savings Bank business is taken into the general organization, which is trading in its character, and must, to trade successfully, take some risk, we shall expose the depositors to some danger, which, in view of their special circumstances, they ought not to be asked to face. I apologize to honorable members for occupying more time than I intended, but, at any rate, I have had the merit of endeavouring to avoid ancient history in considering this measure.
– The honorable member for Wentworth, after his customary supercilious references to Ministerial supporters, proceeded to teach us the limitations of the measure. He set out by stating that no provision was made in regard to the State debts, and, at the same time, he criticised the method proposed in order to put the Bank, in a small way, on its feet. The honorable member desires the Government to do very “ big things “ all at once; yet he criticises the methods they ha.ve adopted in order to finance the scheme at all, and do little things.
It is apparent that there can be no other way of financing it ; yet we are told that we ought to do something that would enable us to take over the State debts. If there is one feature of this Bill which should appeal more than any other to honorable members, it is its modesty. It does not set out to achieve wonders. It is simply the beginning of a longcontemplated movement on the part of those who profess to be in the vanguard of politics. We must depart to some extent from precedent if we are to make any advance, and the methods we adopt in making that advance must, of course, be open to fair criticism. It seems to me, however, that, all things considered, the forward step attempted by means of this Bill is a fairly careful one. The honorable member for Wentworth said that the Bill made no provision with regard to the transfer of the State debts. My contention is that the only provision possible in existing circumstances has been made. Clause 30 provides that -
The net profits derived by the bank shall be dealt with as follows : -
one-half shall be placed to the credit of a fund to be called the bank reserve fund ; and
the other half shall be placed to the credit of a fund to be called the redemption fund.
It sets forth, further, that when that redemption fund shall be strong enough to cover the debentures and the stock issued, any surplus may be applied to the redemption of any Commonwealth debts or State debts taken over by the Commonwealth. No further provision could be made at this juncture but that when the bank is on a thoroughly sound footing, we may turn our attention to State and Commonwealth debts, and apply any surplus over liabilities to their redemption. That, I think, is a fairly discreet proposition, and indicates considerable foresight in attempting to place the bank on a proper basis. The honorable member for Wentworth further urged that this bank should be free from political control. He has no objection, apparently, to the Government financing a private institution ; he has no objection to a national bank per se. He desires an institution that shall bear the name of a national bank ; but seemingly he wants that national bank to be entirely controlled by private individuals. Once, however, we associate a bank with the nation, some control must be exercised over it by the nation.
I admit that the extent to which we should reserve control by the nation is a delicate one; but it seems to me to be preposterous to advocate the subsidizing of a bank which shall be called a national bank, and at the same time to urge that no control over it shall be exercised by the nation. The honorable member suggested that the gentleman placed in charge of this institution might “ play up “ with the funds and disappear, leaving us all lamenting. He would not do this, I presume, if he were entirely free from political control ? If he were entirely cut off from any supervision on the part of the representatives of the nation there would, of course, be no danger ! But, apparently, there is great danger of such a thing occurring when the bank is brought under the purview of the officials of the nation. That is a somewhat incongruous position to take up. If there is any danger in this regard, it must be minimized by placing the bank under the general supervision of the Auditor-General and the Treasurer of the Commonwealth. If we retain any control over the bank, we cannot have less than that for which the Bill provides. As for honorable members being precluded from dealing with the bank, 1 am quite prepared to agree to the suggested exclusion, if it is likely to commend the institution to the public. Perhaps it would be a wise provision to insert in the Bill ; but there could be no objecton to our depositing our small savings with the Savings Bank, branch.
– Do not say “our savings.”
– The honorable member’s poverty is not so apparent as he would have us believe. As to clause 10, to which the honorable member for Wentworth took exception on the ground that it implies a continuous drain upon the revenue, I admit there is some room for criticism. It may possibly be necessary for the Treasurer to make advances to the bank, but we shall, have to rely on the discretion of those in power to do the right thing. Every responsible Government has power to do outrageous things, but we rely on the fact that men in responsible positions are invariably disposed to walk warily. Knowing that public attention is focussed on them, they dare not do any avowedly foolish thing. Although this clause seems to give a certain measure of licence, that licence must be given if possible contingencies are to be guarded against. We should not so hedge about our representatives, when placed in positions of trust, that all their efforts must become entirely abortive. There is too much of that sort of thing in regard to the Public Service of the Commonwealth. It is so hedged about - there are so many checks and counter checks in connexion with it - that the Minister, in many cases, appears to be a mere cypher. That, however, is by the way. I admit that certain checks are necessary, but we may go too far. The difficulty seems to be in striking the happy mean. An attempt has been made to do that in this Bill, and I am not prepared to suggest any particular improvement, save in one or two directions to which I shall refer later on. So far I have been dealing chiefly with the criticisms levelled at the measure by die honorable member for Wentworth. Coming to the Bill itself, I contend that the time is ripe for the establishment of a National bank. There are many reasons why such an institution should be created, the main reason being that our revenue is of such dimensions that it is equal almost to the volume of money passing through some of the banks to-day. As time goes on, no doubt, our revenue alone will be quite as large as that which passes through any of the banking institutions of Australia. The Commonwealth has much to do with finance, and probably in the future will have to deal with loans, so that there is open to us a vast field of financial operations which must certainly be conducted more advantageously to Australia through the agency of a National bank than through private institutions. I freely admit that we are establishing a precedent when we provide that this shall be essentially a National bank, owned absolutely by the nation. So far as I can gather, that is an entirely new departure. One or two attempts have been made in the same direction, but they have not been persisted in. The past is not an infallible guide to its heirs, but if we are not going to profit slightly from it we shall be unworthy of our heirship. This being essentially a National bank, the National Parliament must retain some control over it. I fail to see how it could be what we want it to be if it were entirely divorced from the National control. This, I admit, is a very delicate point. I have had very serious doubts concerning it, but, upon reflection, have come to the conclusion that, seeing that’ we have to establish this bank and to finance it, it would be unwise for the nation not to retain some control over it. If the
National Parliament were to be divorced from it, it could not be regarded as a. truly National bank, and the nation could not be expected to back its credit. It will be part and parcel of the nation, to such- an extent that I do not think the principle laid down in the Bill, in this regard, could properly be departed from. Clause 32 declares that the Governor : may, with the consent of the Treasurer, make rules and regulations for the good government of the bank, the classification of its officers, and any matter necessary or convenient tor carrying on the business of the bank. That is a very necessary provision, seeing that this will be a National institution backed by the people’s money. The people who send us here, and make it possible for any one of us to become Prime Minister, expect that their interests will be guarded by their representatives and by the man selected by their representatives to lead the party in power.
– Is not the Treasurer largely guided by his party?
– Not in matters of this sort. If he were I should leave the party tomorrow. Does the honorable member think that the Treasurer, because he invites to some extent, comment, is a mere automaton? Does he think that so honorable a man would listen to any of his followers who sought to induce him in any way to depart from a strictly honorable course of action in connexion with the control of the finances ?
– I do not.
– Does the honorable member say that the Treasurer would not have to reduce the rate of interest if the Caucus said so?
– He would not have to do so. He would be a fool to obey the mandate of the Caucus, or of any party following him, if it were contrary to the advice of his financial advisers and to his own special knowledge of the matter.
– Did he not increase the land tax at the instance of his party ?
– Taxation is an entirely different matter from such a delicate subtle question as that of determining the rate of interest which a bank may ‘pay. Taxation is determined by the Parliament, but the rate of interest to be paid by a ‘bank could not be assessed by any large body of men. A matter of that kind must be confined to the deliberations of a few possessing special knowledge. The honorable member for Lang is only begging the question, since he admits that the Prime Minister is not likely to be deflected from the right course in these matters. He knows that such questions as these are not open to the conflict and strife which ensue from having many counsellors, and none but a fool would submit to his party such a question as the determination of the rate of interest to be paid by this institution. Under clause 33 the Commonwealth is made responsible for the payment of moneys due by the bank. That being so, how could the Commonwealth Government stand entirely aside from it? We could not have a National bank, as appears to have been suggested by the Opposition, without having a partial control, by representatives of the Government, as provided for by this Bill. The nation is to back up the bank, and we shall be responsible to the people for the handling of their money. Clause 35 lays it down that Savings Banks may be established at the discretion of the Governor, at such places as he thinks fit, and that they may receive deposits as low as is. That is a phase of this proposition concerning which I admit we must go slowly. I do not say we should decline to establish Savings Banks, for I understand that many parts of Australia are not reached at the present time by the Savings Bank system of the States. It is quite within the province of the Commonwealth to establish them, and some people may prefer the Commonwealth Bank to any other. I should not urge that this feature of the measure be made a prominent one, or that this section of the business be specially pushed. Let it come as it will. So far as the funds of the Savings Bank are concerned, I see no provision in the Bill for their disposal. I take it, however, that they will be dealt with as carefully and cautiously as they are to-day by the States, invested only in certain set State securities, and not involved in business risks. I take that to be a matter of ordinary business procedure in regard to Savings Banks, but I do not know, because it is not set out in the Bill. I should sa.y it is a matter for discussion in Committee. According to clause 64, the Governor-General, meaning, I presume, the Cabinet, may make regulations for giving effect to the Act, particularly as to inscribed stock. Here, again, we find that the Government, as representatives of the people, are involved in the management and control of the bank, and I say once more that it seems to me to’ be inevitable that this should be so if it is to be a National bank at all. The honorable member for Richmond conveyed the impression that he feared that if the Government entered directly into the banking business it would weaken itself as an aid to other institutions in the event of a crisis. He seemed to think that, in so far as the Government itself would be involved in the financial crisis by the fact that it was dealing in securities and other features of the ordinary banking business, it would to that extent be weakened in any support which it might extend to other institutions that might be tottering. I believe that was the burden of his lengthy speech, but I cannot see how the fact of the Government being engaged in the banking business would in any way increase the total volume of the country’s liabilities at a time of crisis. If the Government were not engaged in that business, the business, I presume, would be done through other institutions, practically the same liabilities would be incurred, and the Government would still have to come along and take up the whole load, no matter whether it was represented in overdrafts in other banks or not. The Government might not have an overdraft in their own books, and might not be bankers at all, but the liabilities would be there, and would still have to be shouldered. The mere fact that the Government, as bankers, were already carrying part of the liability would be neither here nor there. The total volume would be practically the same, and the Government would be not one whit weakened. It is always competent for the Government at a time of crisis to pledge its credit, and to pledge it up to the hilt, if need be. There is no possibility of a country’s credit being entirely destroyed, unless its people are practically annihilated, and it is devastated. Only in the event of invasion or some great calamity of nature can a country’s credit be entirely destroyed. Governments have come to the rescue of financial institutions in times of crisis, and if a crisis should occur here, the mere fact of the Government being identified with the National bank would tend rather to strengthen than to weaken their position, from the very fact that they would know more about the situation than would otherwise be possible, and probably be in a position to stem the tide before it reached the flood.
Another point which the honorable member for Richmond made was that we onthis side of the House were bound to vote for the Bill right or wrong. I wish to repudiate that statement altogether. We are no more bound to vote for anything, right or wrong, than would an Anglican churchman be bound to adhere to his thirty-nine Articles, right or wrong. There is just asmuch sense in advancing the one proposition as the other. The churchman knowswhat he is pledged to, and knows hiscreed, and to charge him with having to do what he believes is simply bathos. There is no argument in it. We have for long believed in a National bank. That does not say that we are going to swallow anything in the shape of a National bank that may be produced, but it does say that when we get a chance to put a decent proposal for a National bank before Parliament, we will do so, and support it, and that is what we are doing to-day.
The honorable member for Angas was put forward as the big gun of the Opposition. I may say, in passing, that a singular feature of the debate is the tardiness of the Opposition in furnishing arguments against the proposal, and the weakness of the arguments that have been submitted as such.
– The honorable member for Angas is a good man.
– A very good man indeed. I have not a word to say against him, but he seems to be one of the type of politicians who are more calculated to perpetuate the past than to help the future. That seems to be the function which he discharged very creditably yesterday afternoon. I wish to take exception to his statement that there is no provision for expert inspection and examination. The honorable member could not have read the Bill, or he would not have made it. He said he read it, but he must have missed clauses 19 and 20, which make ample provision for expert inspection and examination in these words -
The affairs of the bank shall be subject to inspection and audit by the Auditor-General of the Commonwealth.
The inspection and audit shall be conducted not less “often than half-yearly, and the Auditor-General shall report to the Treasurer the result of each inspection and audit.
The Governor, at least twice in each year, shall prepare a balance-sheet in accordance with the prescribed form and submit it to the AuditorGeneral for report as to its correctness or otherwise, and transmit it with the report of the Auditor-General to the Treasurer, and shall also transmit a true copy of the balance-sheet and report to the President of the Senate and to the Speaker of the House of Representatives to be laid before the Senate and the House of Representatives respectively.
When Ave employ the Auditor-General, who presumably is appointed because of his special qualifications, we take the only immediate steps possible to provide’ against fraud, deception, or the faking of books. It is, -however, quite competent for Parliament, if dissatisfied with the reports furnished, to request, at any time, that other auditors shall be appointed. I have no objection to provision being made in Committee that other auditors be chosen - half-yearly, if honorable members like - to act in concert with the Auditor-General. Honorable members may take any means they like to safeguard these proposals, so long as they do not surround them with so many checks as to make the whole thing abortive. The honorable member for Angas also said that, to be a successful banking proposition and to make substantial profits, there must be success in commercial banking. I do not know that we are after substantial profits at present. We do not expect this to be a goose that will lay golden eggs. Certainly, 1 do not. We have to proceed carefully in the establishment of the bank, but ultimately, I believe that, apart from the benefits which will accrue to the nation through facilitating its own banking transactions, there will be considerable benefit to the community as a whole when the bank is thoroughly well established. :When we reach the point at which other- institutions declare their 10 and 15 per cent, dividends, which may be twenty or thirty years hence, we shall be in the position to confer considerable benefits upon the people by, perhaps, associating a land bank with it, or by providing in other ways cheaper money than can be provided by those banks which seek to appropriate all that accrues to them from various sources. This being a National bank, it will be in the interests of the country as a whole, that special attention should be paid in time to come to land settlement and the financing of people on the land. That is an idea I have long thought capable of development, but I do not think it is capable of any magical fulfilment. It is a matter of time. That is one of the objects for the future. The honorable member for Angas also said that, in bad seasons, there may be loose investments upon temptations of the Government. There ma) be, indeed. Even now the Govern ment may do some foolish thing that will plunge the country into debt which it would take a hundred years to get out of. It is quite possible for any Government to so abuse the trust reposed in it as to place the country under a cloud for a generation. No one knows better than the gentlemen on the Opposition benches what the penalty is for Governments that do foolish things. It is quite competent for any Government to make a fool of itself, and the honorable member for Angas is only putting that truism- in another way when he says that, in bad seasons, under temptation the Government may do certain things. Again I say, you must trust the responsible representatives of the people. The people put them there, and the people will judge them when the time comes. I am quite prepared to go out with the rest when the time comes, if the people say we have not done the right thing.
In view of all the circumstances, and of the fact that we are entering upon a new field, and that to the extent to which this proposal is new it is experimental we should be as careful as we can be without violating the essential principle of the Bill- which is the establishment of a National bank, and the bank cannot be national if it is entirely divorced from the Parliament. While having full regard to that feature, I think it is quite possible to strengthen the measure somewhat in regard to the governorship. We are to have only one man in supreme control.
– There is to be a deputy.
– I admit that, and there is also the Treasurer. If the Bill stated clearly that the deputy, and, if no one else, the Treasurer, should sit as a Board to deal with the affairs of the bank, I should accept it with better grace, but I prefer to see at least three highly-qualified men, independent if you like, appointed, so long as the Treasurer retains that supervision which is essential, because it is our’ money which is concerned, ‘and Parliament should show a little jealousy for its rights in these matters. It is here as a trustee for the people and the people’s money, and if it is going to expend the people’s money in establishing a National bank, it must take some share in the supervision and control of that bank, and the bank must be made responsible in some way to Parliament. It should, of course, be hedged about so far as is consistent with the cardinal principle at stake, and I think that could be safely done by adding to the governorship at least a couple of equally capable men. One man, no matter how wise, is liable to err. The best men I know seldom act alone in big financial transactions. They generally consult some one, if only their lawyer or their banker. There is, on the other hand, something to be said for the simplicity of control which is made possible by having one Governor. There would be everything to be said for the Government proposal if we could be certain of obtaining the services of a perfect man, but there can be no certainty of that. It is said that a benevolent despotism would be the best form of government, but, of course, you might have the despotism without the benevolence. Under all circumstances, the provision in the Bill is a risky one, particularly as it is provided in clause 34 that -
The bank may invest any moneys held by it -
in any Government security approved by the Treasurer, or
on loan on the security of land, or
in any other prescribed manner.
Nothing in this section shall prevent the bank, in carrying on the business of banking, from making advances to a customer on any security which the Governor thinks sufficient.
I know that the Prime Minister has gone carefully into this matter. He probably thinks that the right sort of man is avail able.
– An inspection of the proposed security would be made before any advance was given.
– That should be done in every case, and, with a good Governor, would be done. The position of Governor will be one of the most responsible in Australia, and to fill it will be the aspiration of every one in the banking world, because of the power which its occupant will wield, and the scope which he will have for the display of financial genius. But, to my mind, it would be unwise to put absolute power into the hands of the Governor. The first person appointed might be a good man, but he might die within a year. The Treasurer is joined with the Governor in the issue of debentures, which, of course, is quite right. I hope that the Bill will be brought into proper shape in Committee, as I am desirous that the proposed bank shall be an excellent institution.
– I do not propose to go into the history of banking, nor to do more than make a few comments as to the need for a Common wealth Bank, and to show how the measure should be amended to provide for the best institution possible. Australia is already well equipped with banks, money being cheaper here than in any other part of the world. Recently, when in Canada, I found that 7 per cent, interest is charged there on a first class mortgage, with a very ample margin.
– And more frequently 8 per cent.
– Any one borrowing on similar security in Australia could get the money at about 4 per cent.
– From the banks?
– No. I am comparing the rates on ordinary mortgage securities. The fact that money can be obtained in Australia at about half the rate charged for it in Canada, and at a lower rate than in any other part of the world., seems to show that there is no great need for a Commonwealth Bank. Of course, if the people desire such a bank, they must have it; though probably those who are clamouring for it will be disappointed in it when they get it. The total assets of our banks amount to £138,758,266, and the coin and bullion to£30,149,628 - enormous figures for a country having a population of only 4,500,000. In addition, there is about £50,000,000 deposited in the Savings Banks, which lend money on the Credit Foncier system. In Victoria this branch of the bank’s business is managed by two of the ablest business men in the State. These facts tend to show that a Commonwealth Bank is unnecessary; but, apparently, the establishment of such an institution is being urged because the idea prevails that the existing banks make huge profits, in which it is thought the Government should share. Taking the figures supplied by the Prime Minister, I find that the average rate of interest earned on the called-up capital of the banks doing business in Australia during the last twenty-six years is 7.55 per cent.
– But how much has been paid into reserves?
– And written off for depreciation?
– Honorable members can obtain that information for themselves. My point is that the average rate of interest on the called-up capital for twenty-six years has been 7.55 per cent. In 1885 the rate was 13.71 per cent., and in 1886 13.51 per cent., while in 1896 it was only 2.81 per cent. Adding the percentages for the whole period, and dividing by 26, we get the average which I have given.
– The honorable member has not averaged the capital. That affects the calculation. Allowing for loss of capital, the average rate of interest on reserves and capital is 4.1 per cent.
– I admit my miscalculation; but even the rate that I show to be the average is not a high one, considering the nature of the business. In 1910, according to the information supplied to us, the capital employed by the banks was ^£19,428,283, including that of the Bank of New Zealand, which employs” only a small part of its capital in the Commonwealth, while their reserves amounted to £9,198,000. Putting the Bank of New Zealand on one side, the capita! would amount to about £18,000,000, and the reserves to about £8,000,000. The total liabilities of the banks amount to an enormous sum- over ,£.135,000,000 - and are guaranteed by the £18,000,000 of paidup capital and £8,000,000 of reserves. In the past there have been considerable shrinkages in the assets of the banks, and a shrinkage of from 18 to 20 per cent, would abolish the margin that the bank’s now possess, and the uncalled capita would have to be drawn upon. It is for this reason that bank shares are not classed as trust investments. They carry enormous liabilities, and are looked upon as fluctuating and doubtful securities, and therefore not proper investments for trust money. On such a security the public expects a high rate of interest. Bank shares are -widely held in comparatively small holdings, and, considering the risks of banking business, I do not think the dividends have been more than the shareholders have been entitled to. In the past, many of these institutions have made no dividends, and have suffered enormous losses through calls on shares and liquidations.
– Did the honorable member take account of how much is put to reserve?
– The figure given in the Government return is a little over £9,000,000. and, taking from that nearly £1,000,000 in connexion with the Bank of New Zealand, we have about £8,000,000.
– That is all out of profits.
– Quite so, but it may be swept away in five minutes. The liabilities amount up to £135,000,000, and a shrinkage of 18 per cent, or 20 per cent, would wipe away, not only the reserve, but die whole of the banking capital. I think the Duke of Wellington was the first to say that bad security meant high interest, and high interest bad security. The public expect a high rate of interest from stock with large liabilities; and it will be found, when this bank is launched, that there are not the enormous profits in the banking business that the figures for the present year would lead us to suspect.
– The effect of the honorable member’s speech will be to depreciate bank shares !
– I am not afraid of that, for those who buy bank shares take very good care to get 6 per cent, or 7 per cent, for them, while if a person desires undoubted security he is content with 4 per cent. ; and I do not think that either my speech, or any other speech, in this Parliament, will have the slightest effect on the market. One great objection to the measure is that it interferes so much with the present Savings Bank system; and I hope that before the Bill leaves the Committee that portion of it will be struck out. The Savings Bank work has been exceedingly well done by the States. These banks make advances on land under the Credit Foncier and other systems, and those advances, I understand, now extend to general business propositions. This branch of the work is exceedingly well and carefully managed; and to start a new Savings Bank is not only unnecessary, but not in the interest of the good government of the country.
– We are all one people !
– Quite so, and why, then, compete with those who are doing the work excellently now? It is a splendid record that there should bie £50,000,000 of the people’s savings well and safely invested. If we are to have a Commonwealth Bank let us have a good substantial bank and to that end I desire to make about four suggestions. It is proposed by the Bill that the bank shall sell debentures to the extent of £1,000,000 which shall form the capital. That seems to me a most inadequate amount.
– It is not a bad start I
– This Bill should not be regarded merely as a start, but as a measure that will not require mending afterwards. If we expect this bank to take a leading position, more capital than £1,000,000 will be necessary ; and we might follow the good old precedent of the Bank of England, of which the people of the Old Country are so proud. I sometimes wonder why the people of Australia are not more proud of our banking system, which is regarded with admiration in other parts of the world, and has conducted the financial affairs of this country for very many years with only one crisis. The Bank of England has issued stock to the value of £14,553,000 which is the working capital. I saw a suggestion made the other day by an expert in the Age to the effect that stock to the extent of £5,000,000 should be sold, and the proceeds made the capital of the bank. Personally, I think that plan possesses many advantages, the main one of which, of course, is that it is a respectable sum, and in the raising of it we shall be following a good precedent.
– It is a great amount to make interest on !
– The idea is that power should be taken to raise that amount, but I do not think there is any chance of the bank investing £5,000,000, or any such sum, right away. As the market suited, and investments were found, the stock could be issued, until the whole £5, 000,000 worth was out. The Bank of England, on the stock thus issued, pays 9 per cent, interest every year in two halfyearly dividends of per cent. If, however, any person goes on market to-day to buy that stock, he has to pay such an enhanced premium that the interest amounts to only £3 13s. 3d. per cent., showing that this particular class of stock is in great request. Debentures always remain a liability which must be met some day, whereas the other plan makes shareholders, and would thus widen the area of those’ favorable to a Commonwealth Bank.
– If there are shareholders, they must have some say in the management.
– I am not clear how that is in the case of the Bank of England, but I should think that the shareholders have some say. The issue of stock would give the Commonwealth Bank much greater stability than would the issue of simple debentures. Creditors know perfectly well that the stockholders would be paid last in any division of the assets, whereas the holders of debentures would share pari passu with the other creditors if the former did not take precedence. Ordinary depositors might have to wait until the whole of the debenture-holders had been paid ; and this would tend to discredit the bank as a’ depository institution. The next suggestion I have to make is that the Commonwealth Bank ought to manage the control of the Commonwealth note issue. My great objection to this note issue has always been that it is under the management of the Treasurer. In troublous times of panic the strain put on a Treasurer to use the printing press in order to issue notes broadcast would be enormous, and almost beyond the power of any human being to resist. On the other hand, if the note issue were handed over to the bank, which is a semi-mercantile concern, it would be conducted on business lines, and that danger would be eliminated. If we are to have a Commonwealth Bank, let us have one prepared to do all the financial business of the Commonwealth, and not leave the control of the note issue to the Treasurer, who, after all, is only a man who would, naturally, in time of panic, desire to oblige everybody. If there had been a note issue on the present lines in 1893, no Treasurer in the world would have resisted the pressure put upon him to issue notes wholesale.
– There would have been no panic, because the banks would have got re-discounts from the Commonwealth.
– The Minister of Home Affairs was not behind the scenes. There had to be a panic, because advances had been wrongly made. There was one bank in which not a single advance was solvent.
– Is there not a similar state of things to-day to some extent?
– I do not think so, and I hope and trust not. Some of the banks were then intrinsically rotten, and had to go; and no amount of credit, but only cash, could have saved them; losses had to be made good, and credit cannot do that.
– Does not the honorable member think that the Commonwealth Bank ought to be given a year or two, in order to prove itself, before taking charge of all the financial business?
– If we are to have a Bill, let us do the whole thing at once; this bank is going to be an expensive affair, and we ought to give it something to do. I suppose that all Government business of a banking nature will go to this bank ; and why not give it control of the note issue?
– The Labour party prefer to progress on safe practical lines.
– If the Government desire the note issue to be on safe practical lines, they ought to intrust it to a banking concern. The Treasurer is only human, and, in time of panic, desiring to oblige the people, would probably do things which he knew to be wrong, but do them merely with a desire to stave off the evil day. There is an idea that this is to be a bankers’ bank; but a bankers’ bank, dealing with banks with deposits amounting to £20,000,000 and with £8,000,000 of reserves, must necessarily be a fairly strong institution. A bank with £1,000,000 on one side and a liability of £1,000,000 on the other could never be a bankers’ bank. If this institution is to be a bankers’ bank, the Government should adopt my suggestion in regard to the issue of £5,000,000 of stock, which ought to be invested in exceedingly solvent securities, capable of being rapidly realized in time of panic, so that the bank could not only give credit to the Government, but substantial assistance to the other banks. The three large banking institutions, which kept their doors open during the great banking crisis of 1893 were enabled to do so only by the action of the New South Wales Parliament in allowing them to pay in notes instead of gold, save at their head offices. It would be impossible for any bank to meet a sudden demand by all its creditors to be paid in gold. That is practically what happened in 1893,and the Parliament of New South Wales passed a lawmaking notes a legal tender, with the result that the panic immediately ceased. Some power of the sort ought to be intrusted to this institution if it is to be a bankers’ bank. We ought in times of peace to prepare for any possibility of crisis.
– It would be better to wait Until the evil day arrived, when we should be able to deal with the special circumstances.
– That would only tend to increase the panic. It is far better that we should take action in this direction when there is no thought of panic. If this is to be made a bankers’ bank, power should be taken to deal in some special way with the associated banks. The Government ought to have power to suspend as it were their charters, and to allow them to pay in notes in time of crisis. The question would then arise as to what banks should come within this association. The Governments of the day in the several States during the crisis of 1893 were greatly hindered in taking action by the knowledge that it was impossible for any credit to save some of the banks. They were insolvent, and nothing but cash could save them. The Commonwealth Government, therefore, must have some power to suspend the charters of the associated banks and to allow them to pay in notes in time of panic. It should also have power to see that they conducted their business properly, and any bank that desired to come within the associated banking arena should be prepared to allow its accounts to be audited by representatives of the Government. Under some such system as that the money of the people would be properly safeguarded, and we should stave off a crisis far better than we should be able to do by any other means.
– The honorable member suggests really that we should simply re-discount their best securities-
– Yes; and the Government of the day should have the further power I have mentioned.
– All that can be dealt with in the Banking Bill to be introduced next session.
– I hope that we shall have such a measure. I make this suggestion because the Prime Minister said that this was to be a bankers’ bank, and a bankers’ bank with £1,000,000 on one side and a liability of £1,000,000 on the other would be ludicrous. It must have £5,000,000; at the very least, behind it.
– This bank will be guaranteed by the whole nation.
– The honorable member is always harping on that guarantee. The honorable member for Maranoa said last night that it was the credit of the Government which relieved the panic of 1893.Itwasnotthe credit of the Government which saved the bank ; it was rather the decision to allow them to pay in notes instead of in gold.
– But if the Government had not taken that action, what would have happened?
– The banks would have been ruined. It was the power, and not the credit, of the Government that saved the banks. A law having been passed, enabling the banks to pay in notes instead of in gold, the depositors knew that if they insisted upon being paid in gold the policeman at the bank doors - the representative of the Government - would turn them out.
– The Government restored confidence.
– I join issue with the honorable member. They did not restore confidence. They simply passed a law which made it impossible for creditors of the banks to demand payment in gold. The management of this bank, like the management of every large concern, is the crux of the whole question ; and I am surprised that a democratic Government should insist upon its affairs being managed by one man. Such a proposal is extraordinary, and could not possibly 6e carried out. The Prime Minister said that bank directors were valueless- that they simply appointed a manager and drew their fees. That statement shows that he has never been a director of a bank. The Bank of England has a Board of Directors, consisting of men familiar with practically every branch of trade in London, and with the trading concerns of nearly the whole world. One man could not manage this great undertaking. In the first place, if the bank is to undertake exchange work, it will have to open extensive offices in London, and will have to issue credits there, so as to secure a flow of money backwards and forwards. That being so, the Governor of the bank will require a thorough knowledge of exchange. He must also have a general knowledge of the commercial life of the community all over Australia, so that he may pick his discounts. There are a dozen other directions in which he will require special knowledge; and I feel that if the Ministry insist upon having a one-man control, it will be fatal to this scheme. If we are to have a National bank, let it be conducted on proper lines, and not be a mere hole-and-corner institution.
– What does the honorable member suggest?
– There must be a Board of Directors.
– The Caucus will be the directors of this bank.
– It may be The great success of the Credit Foncier system in Victoria is due to the fact that it is managed by two men of vast business experience. I refer to Mr. Whitley and Mr.
Jackson. When I heard that they were chosen to conduct it, I said at once that it would succeed. My idea of a State Bank has always been that many people would expect it to be run on philanthropic lines.
– That will not be the position so far as this bank is concerned.
– Then there will be a lot of disappointed people.
– I am afraid that there will be. If this bank is to be efficiently conducted, the Government must substitute for their proposed system of one-man control a system such as that which makes other banks successful. There must be a Board of Directors. The Governor will have only the Treasurer of the day - a fluctuating personality; here today and gone to-morrow - to consult with. He will not have the same man as Treasurer from year to year.
– There will be no change for a long time.
– Some one on the honorable member’s side is after the position now, I suppose; but in any event no one man could efficiently carry out this work.
– How is the Governor of the Bank of England able to carry out the duties of his position?
– He has a Board to assist him.
– Which meets only once a week.
– The Board, I think, meets twice a week. In connexion with nearly all our big banking institutions, there are sub-committees of the Board which deal with its various departments. There is a sub-committee to deal with exchange, a sub-committee to deal with rates on deposits, and a subcommittee to examine advances, and so on.
– Would the honorable member appoint a Board right away, or would he. first give the bank a start ?
– I should appoint a Board consisting of seven directors, comprising a representative of each State, who should be men of business experience. If that is done, there may be some chance of the bank being properly managed. I have had a good deal of experience in banking, and have made suggestions which, if given effect to, will, I think, have the result of creating a workable bank. If (He bank is started with this perfectly inadequate capital and a liability which is not ‘at all clear, and which will not take precedence of deposits right away, it will not get many deposits. The people will soon realize that there is no capital there, and that they will have to depend entirely upon the guarantee of the Commonwealth. They cannot bring an. action at law against the Commonwealth, and if the bank closed up I do not know how they could enforce their claims. That alone would prevent anybody depositing in a bank of this sort. No man of sense would dream of doing to, where the liability of ,£1,000,000 Would share, pari passu, and there would be no capital. On the one side, there would be a liability of £1,000,000, and, on the other side, I really cannot say where the capital is. If, however, the Government will deign to accept some of my suggestions I think the bank will be properly managed. They should particularly pay attention to the question of the note issue. If the Government want to justify the bank, the proper thing for them to do is to give it all their business, and more particularly to give it the command of the note issue. The Government of the day, whoever they may be, perhaps men of very little financial experience, surely do not want to control the whole of the note issue of this continent.
– Why not? Is it not safer?
– I assure the honorable member I was watching a man loading bricks on to a dray the other day, and before I had watched him five minutes I could see there was a great deal in the work, although the honorable member might not think it. Conducting a big financial concern is even more intricate work. I do not say there is anything hidden in it, but it requires commonsense, which is one of the rarest gifts of the gods to human beings.
– You want uncommon sense.
– What is required is uncommon commonsense. The bank will depend entirely upon the management. Any commercial man will tell the Treasurer that, if he wants any one man to run the whole of this banking concern, he will bring it to grief for an absolute certainty.
.- I do not pose as a financial expert, but there are so many dilettante financiers in. this Chamber that I may, perhaps, be par doned for making a few remarks. I listened with much attention to the speech of the honorable member for Fawkner, and, as he has had considerable banking experience, one must pay due deference to his views. It is with a certain amount of temerity that I venture upon this field. I have in front of me an example of the highest financial talent of the world, and, therefore, I must be careful in what I say. The honorable member for Fawkner said it was impossible for one man to do all the work in connexion with the bank. Two men are to be appointed, the Governor and the Deputy Governor, and I think they are one too many.
– The Deputy Governor is under the Governor.
– In nearly all big concerns there is one man at the top and he stays there all the time. The other men are subordinate to him on all occasions. He rules the roost.
– Then the honorable member believes in individualism?
– Not in the sense to which the honorable member alludes, but it is an unquestioned fact that in every big concern there is one man who takes the lead, and dominates all the rest. We had in Queensland some very unfortunate experiences in connexion with banking, as you, sir, know. We had there a bank with a very influential directorate, and it was so managed that men who had the ear of the directors, and some of the directors themselves, were not above buying properties at a small price, mortgaging them to the bank at a very high price, pocketing the difference, and letting the bank foreclose on the properties. That -is a matter of history, and I clare say other places have had the same experience.
– Was that a State bank?
– It was a private bank. Such a thing could not possibly happen to a State bank. I am not finding fault with the Bill either in its principle or in its details, but I could not help remarking a special article, which appeared to have the imprimatur of the editor, appearing in yesterday’s Argus. It was written by. a “ financial expert.” and the very fact of its being published in the Argus would indicate that that was so, because I am sure that nobody but a financial expert would be permitted to occupy the columns of that journal with such financial “ tripe.” The writer quotes from the figures supplied by the Government in regard to the paid-up capital, dividend and bonus accounts, and rate per cent, on paid-up capital and reserve fund of the banks. He puts the paid-up capital at £19,428,283, as quoted by the honorable member for Fawkner, and he gives the reserve fund as £9,198,000.
– The honorable member is not in order in quoting from a newspaper any comment upon a Bill before the House.
– Very well, I shall quote the figures from Knibbs. I want to quote from the article, not the figures, but the remarks of the writer in connexion with them.
– The honorable member will be in order in quoting the figures, but not the comments.
– I wish your ruling could be applied to the newspaper offices. The position is that the reserve fund is built up out of profits. The dividends paid upon the whole of the paid-up capital, according to the figures supplied by the Government, are 7.74 per cent. The writer in the Argus says that if you take the profits on the reserves in addition-
– Order ; the honorable member is now trying to evade my ruling.
– The writer says that in that case the rate of profit is only 5.38 per cent.
– The honorable member for Richmond said that the profit was 4.71 per cent., or something like that. My contention is that, if figures of this sortare to be quoted, you ought, in the first place, to deduct the amount of the reserve fund, which is built up out of profits, from the total paid-up capital.
– What about people who have bought the shares at an enhanced value ?
– That has nothing to do with it. The writer of the article, which I am not permitted to quote, does not deal with that aspect of the question, but with the paid-up capital of the twentyone banks trading in Australia. I knew a man who bought a racehorse that had to be propped up with a forked stick, and then complained that he could not win races with it. If I were in the proud position of being able to lend my honorable friend £200 at 5 per cent., and he returned me £100, and I still received 5 per cent, on the £200, would I not be in reality receiving 10 per cent, on the £100? These people have got the amount of £9,198,000 in the reserve fund back again from profits, and, therefore, I contend that the profits they are now making represent, not 7.74 per cent, on the £19,428,283 of original paid-up capital, but 14.7 per cent, on the balance of £10,000,000
– Have they not their reserves invested?
– That does not matter. They have got their money back. They - the shareholders - have received back over £9,000,000, and re-invested it ; that is the position.
– Who are “ they “?
– The original shareholders - the people who supplied the capital. I dare say the honorable member has dabbled in mining, and perhaps has given £100 for a £5 share, and complained about it because he did not get a good crushing. If a man does that sort of thing, he ought not to complain about it - he ought to get his head shaved. The total assets of the banks are set down in the Commonwealth Year-Book . as £1,38,758,266, and the total liabilities as £135,031,491, leaving a balance to credit as against liabilities of . £3,726.775, which has also been contributed out of profits. My contention, as a. dilettante financier, is that that sum’ of £3,726,775 should be added to the £9,198,000, making a total of £12,924,508 to be deducted from the £19,428,283 of paid-up capital. That would leave really a balance of paidup capital of only £6,503,508. That is all that the people who paid the money into the banks are really out of pocket. They have got back all the£19,428,283 with the exception of £6,503,508. The dividends for last year are given as £1,502,000, which would mean 23 per cent, on that sum. Honorable members may say that the banks are making very poor profits, and I notice that, so far, they have not quoted the poor widow and orphan, but I dare say we shall hear about them later on in the debate. When honorable members say this bank of ours is not going to make any profits, I at once come to the conclusion that they have not given the question the study which it ought to get from every point of view. It should be looked at all round, and not from the point of view of members sitting opposite, some of whom are possibly large shareholders in the existing banks, and want to conserve the interests of the banks an every possible way. Those are any contentions, with all due deference to the gentleman whose article I attempted to quote from the newspaper. So far as the banks of New Zealand are concerned, they do not affect us; we must have regard to the paid-up capital, reserves, and dividends of our banks, and treat the subject as a whole. Some honorable members opposite have spoken of the proposal to establish a Savings Bank as one sprung on the House by the Caucus, but on- the 5th June, 1908, I put on the business-paper the following notice of motion -
That, in the opinion of this House, it is desirable that wherever throughout the Commonwealth an official post-office is now, or may 1hereafter be, in existence, a Commonwealth Savings Bank should be established in connexion “therewith.
In my opinion, ‘he Commonwealth should establish Savings Banks in connexion with the post-offices, and should give depositors a higher rate of interest than is given by the States. When a Government borrows money from capitalists, it allows interest at the rate of 3^ per cent., and is content to take £94 or £96 for £100. Making allowance for the cost of flotation and all expenses, the rate of interest paid to the lender abroad may be over 4 per cent., whereas Savings Bank depositors, who lend their money to the Government without putting it to any cost or trouble, get only 2 per cent.
– In Melbourne, the
Tate is 3^ per cent.
– For only part of the money deposited.
– For the first £200.
– Why should the lender abroad receive a higher rate of interest than the lender who deposits cash in the Savings Banks?
– The lender abroad lends for a term of years.
– Government securities can be converted into cash at a moment’s notice.
– By selling them. But a man cannot get £100 for a bond for £100.
– And when he most wants the money, it is hardest to get it.
– Directly it is suggested that the public should be treated as liberally as the financiers, a nest of hornets is stirred up.
– There is a tendency on the part of honorable members opposite to treat with derision and contempt any proposal for giving the man at the bottom the. same advantages as the man at the top. I hope that, in discussing the matter, honorable members opposite will not again assert that the establishment of a Commonwealth Bank will do injury to widows and orphans by bringing down the value of bank shares. The position is as I have stated, and not as it has been stated by honorable members who have preceded me.
.- I have listened with attention to the speeches of honorable members opposite, and wish to deal with the Bill from the stand-point of public interest, and without any personal or political feeling. The banks fill a very important place in our business life, and do not deserve Io be adversely criticised for their management of their affairs. I have had a banking account for more than forty years, during which I have not always been affluent ; but I have never had cause to complain of the manner in which my bank has treated me. On the contrary, I have on many occasions been under an obligation to it, and feel that it has done a great deal of work for me for which I have paid very little, although some persons grumble at the yearly charge of 10s. for ll.-e keeping of accounts. No doubt the ^sting arrangement is satisfactory to the bank ; it has also been satisfactory to me. Banking houses are, of course, business concerns trading in money, as other establishments trade in other commodities. I have noticed for some time past, however, that some honorable members show a wish to put their knife into the banks, to use a colloquial expression, though I do not suppose that the banks have done them, any injury.
The establishment of a Commonwealth Bank being one of the planks of the platform of the Labour party, the Government, having been returned with a considerable majority, has been under an obligation to bring in this Bill. At the same time, it has not been proved that the measure is urgently needed, or that there is a. gap which it will fill. The Treasurer failed to give reasons for the establishment of a Commonwealth Bank. There is no doubt about the power of this Parliament to provide for the establishment of a bank for conducting and regulating the note issue of the Commonwealth, transactions in connexion with loans, the debts of the States, and other banking business of the Government, but it is doubtful whether the Constitution empowers us to create a bank which will be a general trading concern, doing ordinary business with, the commercial community. That, however, will be a matter for the High Court to deal with. I should have thought that the Government, having in view the establishment of . a Commonwealth Bank, would have proposed the taking over and incorporation as a Commonwealth concern, two of the most influential private banks, making them the National Bank of Australia. Personally, I think that a central bank, to manage the financial transactions of the Government, including the taking, over of the State debts and the control of the note issue, is necessary, so long as the position of that bank in relation to the Government is clearly defined and understood.
There is nothing in the Bill about the control of the note issue, though this is one of the most important branches of business that a central bank, with the Government behind it, would have to undertake. It has been proved in practice, I think, that any attempt to dissociate the note issue from banking, and to leave it entirely in the hands of Government officials, who are not in touch with the trade and commerce of the country, has not proved a success ; and I do not think it will prove a success in Australia.
– Yet there was a larger issue of notes per capita in Queensland than in any other State; in Queensland the note issue was double that of any other State.
– The question of the note issue is most intricate ; and, though the management of the issue may be good now, it would be better under a commercial institution in touch with the trade and commerce of the country. It is almost universally admitted that the English system of the Bank of England, namely, a note issue controlled by a central bank which has the Government account, represents the highest development the world has yet seen of any banking system.
– There never was a State bank in England.
– No; but still my statement holds good.
My difficulty in dealing with this matter is that the Government have embarked on the business without, so far as I know, any expert knowledge or experience to guide them. We are, as a Government supporter has said, proceeding on a course without precedent ; and, under the circumstances, not only the Government, but honorable members generally, ought to have been fortified with expert advice. It is not reasonable to throw down a Bill of this sort without telling us whether any persons competent to advise have been consulted, or, if so, what is the advice they had tendered. It is unreasonable to ask us. without the fullest information, to deal with a matter affecting so deeply the interests of the country. That is not the way in which people act when they are incurring great personal responsibility in their own business. If that were the case with Ministers, they would require a great deal of information in regard to the opinions of persons of experience in this branch of business. * Honorable members generally have no information at all, except that given in a very short speech by the Treasurer, whether this matter has been submitted to any expert or experts. There are plenty of authorities available ; and I am astonished that we have been told nothing as to the opinions of financiers and others competent to speak. What was done in Germany before the establishment of the Reichsbank? Parliament was not asked to pass a Bill as we are asked to pass this measure. The German Government sent distinguished people to carefully study the English system, which was practically adopted en bloc, with the exception of the power to extend the fiduciary note issue on certain fixed and definite conditions. Our Prime Minister, as Treasurer, went Home the other day, taking with him the best available talent; but he has not told us that, when in London, he consulted any authority whatever in regard to die forthcoming Commonwealth Bank Bill. Personally, I do not believe that the Treasurer consulted any one.
– The honorable member is only “ fishing.”
– I say I have reason to believe it. When the Reichsbank was started it was not established de novo, as we propose to establish the Commonwealth Bank. The German Government took over the Prussian State Bank, which already had a note issue; and thus the great central bank of the German Empire was founded. There is rather a tendency to go to other countries for experience. With that I do not altogether agree, although, of course, I admit that knowledge is good from wherever it may come. At the same time, I am a believer in the financial institutions of our own country, rather than in the financial institutions of other countries. I do not think we should go to Amenca or Germany for our laws in regard to finance. I am informed that it is almost a commonplace in banking circles that the American system is essentially faulty, and that for years the American people have been trying to improve it, without really any satisfactory results.
There is one great omission in this Bill. I confess that I now refer to a most difficult question ; but it must be pointed out that no provision is made for any banking crisis. Apparently we have to go on as before, and, in the event of a crisis, trust to” Irovidence. Crises are known all over the world ; and even in the case of the Bank of England - probably the greatest institution of the kind . in the world - there have been three occasions since the Bank Act of 1844, on which that Act has had to be suspended. It has been thought by many that some power ought to be created, by which the Bank Act would be suspended automatically. Honorable members may recollect that in 1873 Lord Sherbrooke, better known here as Mr. Robert Lowe, introduced a Bill for that very purpose. Lord Sherbrooke proposed that when the bank rate was 12J per cent., the Act should be suspended automatically ; but that rate was considered too high, and the Bill did not become law. It is worth considering, however, whether, when the rate reaches a certain point, there shall not be power to increase the fiduciary note issue. In such case, however, the rates would have to be fixed pretty high, so as to mark an exceptional state of things. In Germany, the law in this respect comes into operation annually under certain conditions ; the note issue is increased on certain terms, but, although it seems to work well, it is said to vitiate international confidence in the German notes. We, in Australia, do not desire the Government, or the authority in charge of the note issue, to be able to issue additional notes on any small pretext; but we certainly do require some plan - though I am not here to suggest one - by which, in times of stress and difficulty, there should be power, as has been done in England many times, to issue additional notes, and make them legal tender. There is no provision, however, in the Bill to meet such extraordinary exigencies as I have indicated.
The Bill before us is not the banking measure that is very much required in Australia, namely, a measure to consolidate our banking law. Such a Bill was drafted, and in print, years ago by the Treasury, and I do not know why it has not yet seen the light.
– The Bill ought to have been introduced long ago. Why did not the honorable member introduce it when he was in office?
– We had not time; honorable members opposite turned us out. Had we remained in power, it would have been introduced in the first session of the present Parliament. I am surprised that such a very necessary Bill as one providing for the consolidation of the banking law of the States has not been introduced.
A consolidation of the banking law of Australia is much required ; but this is simply a specific measure to establish a Government bank. I am told that the Labour party’s platform provides for the establishment of a Commonwealth Bank free from political influence, but can it be said that the bank to be created under this measure will be free from political influence?
– Will the right honorable member point to any clause in the Bill which shows that it will not be?
– I shall be able to do so. The Governor of the bank will have only the Government of the day to advise and control him, and he will not be free from political influence. I am opposed to this institution being controlled by one man. I do not believe that any great institution should be wholly dependent upon one individual ; and the Governor of this bank must have some one to advise him. Autocrats are often said to be the greatest benefactors, but we generally regard such a system as undesirable. The Bank of England, which has a capital of £14,500,000, and £3,000,000 of reserves, is presided over by a Governor, who receives £2,000 a year, a Deputy-Governor, who receives £1,500 a year, and a Board of twenty-four directors, elected by the shareholders, who receive £500 per annum. The British Government is not represented in any way on the Board, yet the bank is its chief financial adviser. It is its friend and its helper on all occasions ; and without its great influence the nation would often have been in great difficulty. We all remember the wonderful feat performed whilst Mr. Goschen was Chancellor of the Exchequer, when the national debts, amounting to some £600,000,000, were converted into 2j per cents and 3 per cents, the whole operation involving only a very small amount of money. It was managed through the influence of the Bank of England, which obtained the assistance of other banks, and induced nearly every one who held the old stocks to take up the new. Less than £500,000 had to be found in connexion with that conversion. There is no representation of the “British Government upon the Board of the Bank of England, but there are Government representatives on the Boards of the Bank of France, which has a capital of £9,000,000, and the Reichsbank, which has a capital of £12,200,000. There cannot be any good ground for desiring that the Commonwealth Bank shall be managed by only one person. It is for the House to advise the Ministry on these matters, and I am sure that they will give some consideration to our suggestions. I urge them to provide for the appointment of a strong Board. It would be unnecessary to provide for the payment of big fees to the directors. It would be an honour to be a member of such a Board, and a large fee should not be necessary. When we remember that the twenty-four members of the Board of Management of the Bank of England, consisting of some of the most eminent financiers in London, receive only £500 per annum, and that the directors of banks doing business in Australia receive only a small honorarium, there is no reason why, if directors were appointed in respect of the Commonwealth Bank, their position should not carry with it only a small fee. I cannot understand why the Government should desire to concentrate in one man the whole power and responsibility relating to this institution. Wide experience and knowledge will be absolutely necessary. The Government will want this institution to advise it in regard to various financial operations, and if we have only one man to manage its affairs that man must be placed at a disadvantage. I am sure that he would prefer to have the assistance of other eminent financiers in carrying on the business of the bank.
I propose now to refer to some of the clauses in the Bill. In the first place, I think that clause 7 confers very wide powers on the “ bank.” In some clauses we have references to the “ bank,” and in others to the “ Governor.” In this clause it is declared that the “ bank” shall have certain powers. I presume that the reference is really to the Governor ; but the clause does not state who is to be the executive power of the bank to exercise authority. It is a mistake to use different terms, for it must undoubtedly lead to confusion. The bank, or, as I presume, the Governor, is to have power, amongst other things, to carry on the general business of banking, to acquire and hold land on any tenure, to make advances by way of loan, overdraft, or otherwise, to borrow money, and to do anything incidental to any of the powers of the bank. I am not quite clear as to the meaning of this reference to the power of the bank to borrow money. Is the Governor to have power to borrow as much” as he pleases, or does this provision relate to the raising of the capital of the bank ? Then, again, under clause io, the Treasurer is given carte blanche to spend a million without any vote by Parliament. He is given power to make advances to the bank to enable it to defray any of the expenses incidental to its establishment, or to the opening of offices. The money advanced is to be repaid, but the clause does not say when it is to be repaid. How is the Treasurer to raise the necessary money? He will obtain it, I presume, by selling the debentures for which clause 9 provides.
As to the name of the general manager of the bank, I do not think that the title of “Governor” is a good one. Its use must lead to confusion. It is true that the general manager of the Batik of England is known as the “ Governor,” but there are no State Governors there. When one is referring to the Governor of this bank, one may be thought to be referring to the Governor of a State. There is no good reason for the use of this title, and I suggest that the Ministry should substitute for it the title of President or General Manager. The use of the word Governor suggests that the Government are apeing the great institution in Threadneedle-street.
– Why should it not do so?
– Why should the general manager of the Commonwealth
Bank be given the title of Governor merely because the general manager of the Bank of England has that designation? The duplication of names must be rather disadvantageous.
– Let us get a title ot our own.
– That, I think, would be far better. Let us avoid confusion by conferring upon the general manager of the bank a distinctive name or title.
I come now to clause 13, which, 1 think, is unwise. It provides that -
The Governor and the Deputy Governor shall be paid such salaries and travelling expenses as are fixed by the Governor-General.
That appears to be a departure from a wellestablished practice. Tt is customary for Parliament to fix the salaries of such officers. The Auditor-General has his salary fixed by Parliament, and the salary of the Governor-General is also fixed by Statute. I see no reason for departing from that rule in this case. The only result of this departure will be to bring in political influence. If the Governor-General in Council fixes a high salary for the Governor, it is only natural that the recipient of that high salary will be a little grateful, whereas there should be neither gratitude nor ingratitude on his part, but simply a determination to do his duty. The salary of both the Governor and the Deputy Governor should be fixed in this Bill, but I agree with the further provision that the salaries of these officers shall not be reduced during their continuance in office.
In clause 14 it is provided that -
The Governor and the Deputy Governor shall respectively have such powers and perform such duties as are prescribed by this Act or. the regulations.
That provision, it seems to me, will destroy the Governor’s independence, and make him the mere creature of the Government of the day. The Government will frame regulations prescribing his duties, and he will have to conform to them. Why not set forth in the Bill itself the duties to be discharged by him? Let them be placed in the Bill, so that we may see what they are to be, and have an opportunity to criticise them. In that way we should conserve the independence of the Governor, and he could not be removed except for malfeasance or neglect of duty. This power to be vested in the Governor-General in Council to make regulations prescribing the duties of the Governor of the bank will take away the independence of that officer, and really make him a. creature of the Government of the day.
By clause 16 the Governor may appoint officers and servants for efficiently conducting the business of the bank. The regulations, however, will checkmate that, because a subsequent clause provides that he is to classify the officers, and do otherthings not inconsistent with the regulations. I object to the Governor having full power to give what salaries he likes, and do just as he likes in regard to officers. If he can appoint them he can also dismiss them whether they deserve it or not. That is a power which one man ought not to have. I quite approve of the next provision, that the bank’s officers shall not borrow from the bank. In clause 23 we again have the influence of the Government of the day, it being provided that the Governor may, “ with the consent of the Treasurer,” establish a branch in the United Kingdom, and may, with the like consent, establish branches in other places. In order to vary it a little, clause 24 provides that the bank, not the Governor, may, “ with the approval of the Treasurer,” appoint attorneys, and so on. Why all this change of phraseology? It is most confusing, and the Bill seems to be badly drawn. It hands the control of this institution over completely to the Government. It is provided that the head office of the bank shall be situated in such place as the Governor thinks fit to appoint. I do not see why we should not say something about where the head office is to be. I do not know that we can take it away to Canberra.
– Why not?
– I am afraid there would not be enough business there. According to clause 26 the bank may act as an agent. Again, I want to impress upon the Government the confusion caused by using the phrase “ the bank “ at one time, and the phrase “the Governor” at another time.
In clause 30 we are told how the net profits are to be disposed of. Honorable members will note that the reserve fund is really not going to be a proper reserve fund, invested in liquid negotiable securities, but is to be used in the business, as many of the existing banks use their reserve funds, which really, in times of crisis, are not reserves at all, because it is then difficult to realize them. Under clause 32 the Governor may, “ with the consent of the
Treasurer, make rules not inconsistent with this Act, or the regulations made by the Governor-General thereunder for any of the following purposes - the good government of the bank, the classification of the officers of the bank, and any matter necessary or convenient to be provided for carrying on the business of the bank.” My objection to that is that there again political influence comes in. The GovernorGeneral in Council may make regulations which will control the Governor altogether. I understood that this was to be an institution free from politicial influence, whereas, in almost every clause, complete political influence is made possible.
– Not in every clause.
– In a great many.
Under clause 33 the Commonwealth is to be responsible for the payment of all moneys due by the bank. That provision makes it purely a Government institution. It is then set out that the creditor must claim against the bank, and cannot sue the Commonwealth.
– I explained that.
– I know; but it seems to mean nothing. If the judgment is adverse to the bank, the Government have to pay in any case. It may be more convenient for the Government not to have their name in the Court,’ but if. “a creditor sues the bank and gains the day, and the bank has nothing, the Government have to pay, and the creditor might just as well sue the Government at first.
– I think it is much better the other way.
– Perhaps it is better, but there is not much in it, the result being the same.
– The creditor ought to sue the person with whom he deals.
– I agree, but, at the same time this makes it a purely Government institution, for which the Government are responsible.
It is provided inclause 7 that the bank can borrow money and make advances by way of loans, overdrafts, or otherwise, which means that the Governor can do these upon his own authority. If so, we are taking on a big responsibility, which ought to be safeguarded in some way.
I have not yet found in this Bill a pro vision for the bank to do the one thing which it could do with advantage, and that is to control and manage the note issue for the Government.
– That will come along.
– It ought to be in the Bill. It is really the main thing required. It is ridiculous for the Government to think that they are managing the note issue merely by having a clerk in the Treasury to wait until some one comes along and wants a note for a sovereign.
– Look at the money lent to the State Treasurers.
– That was not a good thing to do. The States should get their money themselves. We want all the money we can get to take over and redeem the debts of the States, and to do a hundredandone things. We want a great deal more money than we have for the Commonwealth, without going about lending a few pounds here and a few pounds there.
To return to clause 33, it is very unwise that the Commonwealth should be responsible for the payment of all moneys due by the bank, so long as only one man manages the bank and has unlimited power to borrow money and make advances. The Bank of England has twenty-four directors to assist the Governor and the DeputyGovernor to manage its business. I do not know whoever advised that one man is all that is required for this institution, not only to manage the small matter of to-day, but to attend to all the financial business of the Commonwealth with regard to the floating and redemption of loans, the taking over of the State debts, and all those financial matters which will have to be carried out by this institution if it is to fulfil the purpose for which it is intended. Clause 34 is very important.
It provides, first, that the bank may invest moneys held by it in any Government security approved by the Treasurer. There, again, the Treasurer comes in, but I would rather have the approval of the Treasurer than no approval at all. It ought to be done with the advice of a Board of Directors, and not by one. man, even with the approval of the Treasurer of the day. The money can also be invested on loan on the security of land, apparently without the approval of the Treasurer. The Governor can. therefore, lend on land “ off his own bat “ to any extent he likes.
– Quite right. Why should the Treasurer interfere in land! investments ?
– Why should he interfere in the other case?
– Because that refers to Government securities.
– Government securities are a good deal better than land for purposes of investment. The money may also be invested “ in any other prescribed manner.” It is further provided, however, that “ nothing in this section shall prevent the bank, in carrying on the business of banking, from making advances to a customer on any security which the Governor thinks sufficient.” Therefore the Governor can lend thousands, tens of thousands, or even millions, on any security that he thinks sufficient, jio restriction being placed upon, him.
I take it that the funds derived from the Savings Bank will be invested as provided in clause 34 of part iv. Although part v. deals with the Savings Bank business, I can find nothing in part v. relating to the investment of the Savings Bank funds. I may say at once that I think the Commonwealth is very well qualified to do the Savings Bank business of Australia, because of its post-offices and post-office officials, by whom the work will be done. It is done already by the postal officials. The only, additional expense in my own State, Western Australia, and in several of the other States, is in the head office, all the other officers throughout the country doing the work as part of their post-office duty, without special payment. I always thought that some day the Commonwealth would carry on this business, because it has the machinery for doing it ; but that does not prevent me saying that I very much regret that it is being done at the present time, unless some satisfactory arrangement can be made with the States. The deposits in the Savings Banks of Australia amounted in 1909-10 to £20,150,574 in New South Wales, £15,417,888 in Victoria, ^£5, 622, 986 in Queensland, £6,791,320 in South Australia, £3,481.764 in Western Australia, and £1,652,966 in Tasmania, making a total of £53,117,498- In my own State, Western Australia, that money has been, and is being, used by the Government for developmental purposes. It is borrowed by the Government from the Savings Bank, and used for land purchase, closer settlement, an agricultural bank, municipal water supplies, and other things, the Government paying interest to the Savings Bank for it, and charging those undertakings with it. This often removes the necessity for going on the market to borrow.
The Savings Banks should be under Government control, though in some of the States they are not. I do not know whether the Post Office does business for them in those States, though I suppose that it does, and gets paid for it. The primary object of Savings Banks is, not to find an investment for large sums, but to encourage thrift by enabling persons with limited means to put aside small sums. The limit on which interest is paid has gradually been increased as outlets have been found for the money borrowed, and in Western Australia interest is now paid on all deposits up to £600. To allow interest on any sum deposited, however large, would altogether change the nature of Savings Banks, and I do not know that their business could be transacted by the Post Office, if very large sums had to be handled. Savings Banks should be under Government control, because the poor man should be certain that his deposits, are absolutely safe, and that the Government is responsible for them.1 The Post Office is a convenient agency for accepting deposits, and paying withdrawals. The main objection to the Government’s proposal is that it will take from the States money they now use, and need for local development, but if a plan could be devised under which that money could be lent to the States at rates not higher than are now paid, my objection to the change would be greatly removed. Provision should be made for the lending of the money deposited in’ each State to the State for general developmental purposes. It would not be right to bring it all to the Seat of Government, and divert it from being used for local purposes.
I am sorry that I have had to find so much fault with the Bill, which, to my mind, is not even well drafted, and has not received the consideration which it needs, in view of the complexity and difficulty of the subject with which it deals.’ As there is no urgency for the measure, I should like the Government to postpone it. To establish a bank on unsafe lines will do no good, and may do a great deal of harm. We should provide for the undertaking by the bank of all the financial transactions of the Government, and especially the control of the note issue. Every one knows that this could be better done by a bank having branches all over the Commonwealth than by any set of officers, however clever, connected with a central Treasury. I cannot understand how the Government came to be advised that the note issue should not be a function of the bank. The bank, if properly established, should be the chief financial adviser of the Government, and in touch with financial movements all over the world, and especially in the Old Country.
.- It is a pleasure to have the opportunity to support the Bill. Honorable members must admit that during the last electoral campaign, the Labour party made the establishment of a Commonwealth Bank one of the planks of its platform.
– The people were told that it would give them cheap money.
– And that it would bleed the other banks.
– I did not make such statements, which my knowledge of the world tells me would be foolish. The objects of the proposed bank are set out in the Bill- nie bank shall, in addition to any other powers conferred by this Act, have power -
Members of the Opposition have warned us that the establishment of the proposed bank is unconstitutional, but I do not admit it; I think that we are quite within our powers in passing the measure. The Constitution empowers us to legislate in regard to banks and banking. Our legislation in regard to banking will, no doubt, be largely the consolidation of State Acts, general principles being laid down for the control of all financial institutions in the nature of banks doing business in Australia. We are now providing for a bank which will transact, first of all, the financial business of the Government. Every one must admit that that is a step in the right direction. The longer the establishment of the proposed bank is delayed the greater will be the difficulties. In other countries, there is virtually no State bank in the sense in which this will be a State bank. We are fortunate in being able to establish such a bank, but the credit of the country never stood higher than it does now, and circumstances are particularly favorable for what we propose. One of the reasons for Federation was the possibility of establishing a National bank, and the opportunity it would give for bringing all banking institutions under one control. It has been objected that there is no need for a Commonwealth Bank, because Australia has had practically only one banking crisis, but the reason for this is obvious. We have frequently had droughts and times of depression, when crises have been prevented by public borrowing. During the last forty years, the State Governments have borrowed £300,000,000. Under the See Government, New South Wales was saved from a crisis by large public borrowing, for which Ministers were condemned at the time, though it was afterwards admitted that they had done the right thing. The resources of Australia are so great that it can soon recuperate, and public borrowing is justified by its effect in keeping things going in times of depression. The opponents of this measure have directed attention to the Bank qf England ; and it may not be known to all that, up to 1866, that bank was saved from disaster no less than fifty-five times, though, since. 1866, there has been no trouble. The freedom from crises is due to the fact that the Bank Act may be suspended by the Government and the bank allowed to issue notes. We in Australia must haveour periods of financial depression ; and it is the will of the people that there should be a Commonwealth Bank. In April, 1910, the people very emphatically decided on a change of Government, because they were dissatisfied with the conduct of public business. That dissatisfaction arose partly from the fact that there had not been established a bank of the kind now proposed ; and the Bill before us simply represents the mandate of the electors. Some honorable members opposite unworthily impute motives to honorable members on this side. I am sorry that the honorable member for Wentworth is not here, because I should have liked to say to him that imputing motives does no good, and that I am surprised to see him resort to such tactics. Nothing is more likely to create bad feeling; and 1 hope that these remarks of mine may assist to prevent a repetition of such conduct.
– The necessity for a Commonwealth Bank has increased greatly even during the present session. We have passed an Act to take over the Northern Territory, have arranged to take over the State debts, and also to create a Federal Capital city. In the case of the Northern Territory, for instance, the necessity for a Commonwealth Bank will certainly arise, and in connexion with the taking over of the State debts and other financial transactions between the States and the Commonwealth there will have to be some kind of banking account. Whether the people generally will avail themselves of this bank for their own business time alone can prove, but I feel confident that they will. There will always remain a large amount of business for the private banks, which have to enter into speculative transactions, or they could not pay their dividends. Some of our largest commercial houses are to-day virtually run by the banks ; and this is necessary, because the banks have large sums outstanding. There is no need to fear that the Commonwealth Bank will monopolize all the business; and I am sure no honorable member contemplates such a position. In any case, the establishment of a Commonwealth Bank will prevent crises in the future. The honorable member for Swan urged that the note issue should be part and parcel of the business of this bank ; but for that I see absolutely no necessity, because the Bill makes provision for the Treasurer at any time to make advances to the bank. I presume that one of the objects of this provision is that if at any time there is a crisis, the Government may come to the aid of the bank. The Governors of the bank, whatever the number may he, must be subject more or less to the Government of the day. We may call that political control, or what we may, but the management of the bank must be subject to the Government, who are answerable to the House, which, in turn, is answerable to the country. Indeed, in my opinion, it would not be a Commonwealth Bank unless the people, through their representatives, exercised some control. As to the management, I believe the Government will be able to get men as competent and honest as are now available to the private banks. Honorable members have dealt with the past history of State banking, but I do not think that anything said under this head will change a vote in this House. Some of the transactions of private banks have been of a scandalous nature. In the Overend crisis of 1866, I remember seeing, in Cornhill and Cheapside, in London, grown men crying, and not knowing which way to turn in their distress. The capital of that bank was only about £750,000, and yet one transaction alone on which the bank fell amounted to ,£500,000. Then, in the case of the Glasgow Bank, we found the directors storing lead washers in place of gold, in bags in the vault, so as to deceive the auditors. I admit that in Australia there are no such charges to be made against our banks. Some of the managers of our financial institutions are men of the highest integrity. Many honorable members, and notably the honorable member for Swan, have referred to the fact that this bank may be left to the entire control of one man; but we know, as a matter of fact, that some of our greatest banks are practically so controlled. I feel quite sure that there is not a bank director who would oppose any suggestion made by Mr. Thomas A. Dibbs, or by Mr. French, of the Bank of New South Wales. Honorable members need not worry themselves about the number of Governors, whether they be one, two, or three. No legislation that we pass is so perfect that it does not need amendment ; it is only when a law is put into operation that its weaknesses are shown. We- shall have, perhaps, the same experience in regard to this Bill, and after it has been in operation for some time we may find an amendment of it necessary. The people must have been struck with the fact that every measure introduced in this Parliament by our party since 13th April, 1 9 10, has invariably met with stern opposition. Honorable members of the Opposition the other day were praising the Australian note issue, whereas they strongly opposed the Bill to provide for it. Then, again, when the Land Tax Bill was introduced we had predictions that all sorts of disasters were likely to arise from it.
– The honorable member must not discuss that matter.
– I should not have- mentioned it but for the references made by the Opposition to those two great measures. When they were before the House we were told that their passing would be attended by a series of disasters to Australia. As I understand that the Government are anxious to push on with this measure, and to complete the business of the session in time to enable us to reach our homes before Christmas ; and as I desire to spend
Christmas in New South Wales, I shall not detain the House any further. I honestly believe that it is essential that the Government of Australia should have a National bank, through which to transact its business, and of which the generalpublic may also avail themselves. Confidence is essential to the success of all big financial undertakings, and I am sure that the people . will have confidence in this institution. All our business is done on credit. It could not be transacted on any other basis, and so long as we can secure stability in our banking institutions and the confidence of the public so far as they are concerned, our credit will be good, and our business transactions will be facilitated. I hope that this measure will be passed, and that my forecasts of the benefits likely to flow from it will be fulfilled. If they are, I am sure that the people will not regret the course they took on 13th April, 1910, in placing in power a Government of business people, who have shown their capacity for work. Our honorable friends of the Opposition have never shown any real capacity for work, nor any desire to push on with legislation such as we have been advancing step by step, and so increasing the prosperity of Australia.
.- The honorable member for East Sydney has appeared in sundry characters since he manifested his presence here as one of the factors of the 13th April, but has excelled himself to-night in the role of the model supporter. It would hardly be possible to present a more unqualified and absolute declaration of loyalty and admiration than the honorable member has given to-night to the Government which he supports. Simplicity itself characterizes all the honorable member’s views. He is amazed that sophisticated persons on this side should have any apprehension to express or question to ask. “ What more could you desire?” he asks. “ We are to have another bank, a bank of a special character.” The more peculiar it is in some respects, the more he admires it; the more it is like other banks, the more he approves of it. The more it enters into new fields, the better he likes it; the more it keeps within old lines, the greater, according to him, will be its stability ; and so on. But there are people who ask questions. It is the business of the Opposition to make inquiries, and to endeavour, to obtain answers, if they can, from the more responsible representatives on the other side of the House. In New South Wales there are great financial institutions’ which are notoriously indebted largely for their success to individual members of theirstaffs. The honorable member mentioned two gentlemen who are thoroughly well known. But those gentlemen exercise art unquestioned authority over their associates, both by reason of their long service and of the soundness of their judgment and capacity. To accord to a man as a reward of a life spent in the service of an institution a confidence which grows from experience of his wisdom’ and capacity is very different from expressing faith in some unknown person of whom we have not, at present, the slightest knowledge.
– Give the Government the opportunity.
– They will have the opportunity. The difficulty with us is to support the acceptance of a one-man institution especially without knowledge of the man, or what his qualifications are for the post. The honorable member will see that the two cases are wholly different. The natural and legitimate authority exercised by men like Mr. French and Mr. Dibbs is a healthywholesome growth, whereas to ask us to accept without question any appointment that may be made by the Government to this bank implies as large a demand as ever was made on the generosity of an Opposition. The circumstances of a Com-‘ mon wealth Bank are sufficient to evoke a whole series of financial problems.
The agitation for the establishment of a Commonwealth Bank did not originate owing to any public Remand. The appeal for such a bank dates back a few years. It has been considered at conferences, where resolutions have been passed. I have a vivid recollection of seeing, in those inflammatory placards and publications which are frequently used in connexion with elections, and which certainly signalized our last, an appeal to the great body of the people to rise against banks, which were absorbing incalculable riches pirated from the. pockets of the people. They were urged to see that at least a share of the profits of the banks should be acquired for the workers by means’ of a Commonwealth Bank. According to many of those addressing the electors- at that time, the banks of this . country were corporations of enormous reserves pilfered from the public. If the banks became the instruments of this Parliament untold millions would be divided amongst the people at large. But honorable members who have had even the slightest experience of these financial institutions fully realize that, if the banking institutions of Australia were called upon to-morrow to close their accounts within a reasonable time, the distribution, pf their reserves amongst our people would not make them effectively better off. The toilers are entitled to their share of the general wealth of the community; and the greater that share is in justice, the more stable* and prosperous the community. Until an equation is fairly established, by just means, between toil and ability and the reward of toil and ability, we are not entitled to call ourselves a fully civilized ^people. That goes without saying.
The contention that enormous wealth exists which, if divided, would at once lift every one out of a condition of poverty into a condition of more than comfort, is one of the great illusions, very effective from time to time. lt .was out of this illusion that the first proposals for a Commonwealth Bank followed the proposals for State, Banks made in previous years. I am not suggesting that that was the only source. On the contrary, side by side with the doctrine’ of the enormous wealth which would be divisible among the community i’f Only these financial institutions could be brought to book, was another reading of the situation which has also done service in its time. It is the reference to the use of politically financed institutions as a means of defeating the present tyranny over and oppression of the masses. By their agency the innocent community would obtain and retain what was its property, restored to the community by which it was created. This second theory, like the first, was put forward for inflammatory purposes - to provoke a sentiment against the present banks, used for electioneering purposes. It was by vague clamours of this kind that the impulse was given for the establishment of a Commonwealth Bank. Its ancestry on either side has little to recommend it.
– You are wrong; the first Labour platform in 1891 contained a proposal for a State bank.
– Not a Commonwealth Bank. It was at the Conference mentioned to-day that this proposition took definite shape. I am not by any means sure that the present proposal is wholly in accord with it. In fact, I am convinced it is not. There has been a departure which may or may not be sanctioned by the next Conference, at the beginning of next year. I can quite understand, therefore, the anxiety of the Government, and honorable members opposite, that this question should be disposed of in this session, before the Conference can have another say in it.
– We are the interpreters of our own platform.
– I wish the honorable member’s party were more persistently so.
– The honorable member would not bring down a big measure in the last session of Parliament.
– That depends upon circumstances.
I was referring to the way in which this proposition found its way into the Labour programme. Even in the discussions which then followed from the capable representative men who. met at Brisbane, so far as the authorized official report goes, one fails to discover any sufficient study of the actual practical advantages to be reaped by an institution of this character, established by the Commonwealth. The fallacious expectations, briefly reported, appear to be of exactly the same class and texture as one finds in the even less restrained and less informed platform utterances which have followed. It appeared to be- assumed that we could create an institution of this character, . which would, in some mysterious manner, inherit, or acquire by contagion, the whole series of impelling motives which govern every one of our existing banking institutions. It apparently went without saying, in the minds of those gentlemen, that there was to be in a Government Bank precisely the, same economy, and impulse towards economy, precisely the same efficiency, and impulse towards efficiency ; precisely the same capacity found and rewarded, and the same consistency of! policy, as are enforced in all private banks under the perpetual pressure of circumstances which surround them, making perpetual vigilance and untiring energy the price of their continued existence. With them, selfpreservation, persistance in keenly competitive efforts against their rivals in the same field, and a development of the keenest’ intelligence in even the smallest transactions, imply faculties that are brought into .play to a degree to which we can never; see them developed in public institutions acting under wholly different conditions.
The parallels drawn between this new carefully spoon-fed bank and the career and development of a private institution, fighting its own way under the guidance of men whose capital is staked in the venture, exercising a vigilant control of the minutest incomings or outgoings, cannot be maintained. It is those qualities which explain the astonishing growth in Victoria, and elsewhere, of institutions of which the weakest have been weeded out, and from which incompetent guardians, guides, or officers are speedily dismissed. That stern process involving the survival of the fittest cannot be expected to operate upon an institution standing on an entirely different base. It will be subjected, so far as its employes are concerned, to nothing like the same strain. Those responsible for its policy will find themselves at the very outset with the whole Commonwealth behind them, finding them a million of money, and able, if necessary, to find them £5,000,000, which they can repay at their convenience, finding them in prestige and authority, finding them the business of our established Departments and huge public activities when launching them upon their career. Surely with all those circumstances in its favour, and the interminable support of the public purse and patronage, such an institution has an absolutely special position..
On the other side, the deductions to which I have already alluded must be rigorously and perpetually made. In the latest shape which the banking proposal of the Conference, that of the party, and, finally, of the Government, has now taken, we find that, while calculating upon all those advantages, they ignore practically the whole of the disadvantages to which the institution must necessarily become subject, as compared with private institutions. It is only due to the Minister of Home Affairs to say that, for the final turn which brought this banking proposal so far to the front in Labour politics, that it was impossible to pass it by, what I may term the O’Malley boom was chiefly responsible. Although 1 disclaim all knowledge, the suggestion is that, because of the O’Malley boom, and the extravagant nature of his proposals, his colleagues have found that they could not delay action any longer. If they did, they might have to swallow the whole of the O’Malley dose just as it had been compounded. It was, therefore, thought desirable to get in first with a milder instalment for which the indorsement of the party could be claimed, and which would enlist the support, evidently the silent support, of the Minister for Home Affairs himself.
Mr.W. H. Irvine.- This is O’Malley pasteurized.
– The trouble is that he is far from pasteurized to the full extent, although sufficiently to remove several of the most brilliantly original features of his scheme. For all that, it has not been deprived of its power to multiply apprehensions, even in its parents. We are asked, in what is almost pure O’Malleyism, “ Why doubt, why hesitate, when the credit of the Commonwealth is behind the bank ? “ Why hesitate, indeed ! Moreover, we still have the honorable member’s doctrine that, if we only knew how, we could live on credit, and this bank was to be the means of doing it. An exchange of credits was to take place all over the country, relieving us of the necessity of coinage. All we required was a little pocket-book in which to enter our debtor and creditor accounts. I do not know how the creditor account was to be kept up, but the debtor account of itself would keep on mounting up enormously.
– I wish you meant it.
– The honorable member should say he wished the Minister of Home Affairs means it. I believe he did honestly intend and mean it. One can understand, therefore, the certain amount of gloom with which the very much-modified proposals now before the House have been received by gentlemen who looked upon that credit and debit scheme, as well they might, as an open gateway into a financial paradise. How long it would have lasted if established I should not like to say.
– A bank is only a clearing-house.
– And the honorable member would have cleared it out in the shortest time on record !
The honorable member who last spoke unfortunately dealt with the proposal to intrust the whole of the authority in this new bank to one man as a light and trifling difficulty. He told us that this bank was not to be regarded as an isolated institution, without captain or pilot, drifting hither and thither on the stream of time. He said it was, and must be, subject tq the Government of the day, and must also be subject to Parliament. It must be, he said, subject to the Government through our elective representatives. If that theory of this measure can be accepted as even approximately correct, why appoint a Governor and an Acting Governor? Why were all the official declarations ignored, though made by the Prime Minister, who surely grasped its character. He insisted that political influence would be strictly excluded, and Ministerial influence banished, so that the only relation existing between Ministers and the bank was to be that of a Court of Appeal, very rarely resorted to, but open when a much-perplexed Governor, overcome by the burden of his position, wished for help. That was the authorized version laid before us at the outset of this debate. Gradually since then statements have been made culminating in that of the honorable member who has just resumed his seat, whose frankness in that regard has earned him the appreciation of the whole House. He says, frankly, that the Bill places the bank under the Government of the day, making them its masters and conductors, and making them responsible for its proceedings. He asked, if the Ministry were not responsible for it, who would be, and to whom were the people to look ? In short, according to the honorable member, the people are to rule through their representives, their representatives to rule through the Ministry, and the. Ministry to rule the bank. That is not the nonpolitical bank which has been painted for us on the platform. This is the bank described in the frank interchange of opinions which one welcomes. We are hearing the complete and unadulterated truth.
The honorable member for East Sydney must not forget, however, that although the facts, undoubtedly, are as he states, the Ministerial theory is of an exactly opposite character. It will be necessary to make good a great deal of that theory if the honorable member desires to see this Bill accepted by the country. Precedents, or something in their nature, should be advanced for the vesting in one man of the enormous financial powers given by the Bill. For the purposes of the argument, I concede that honorable members opposite are able to obtain a man in the prime of life, of marked ability, long experience, unblemished record, and strictly temperate habits; but can they guarantee that the soundest and strongest man will retain his abilities and faculties unimpaired for the full period during which he will be absolute master of the institution ? Apart from the catastrophies which deprive mortals of life or limb or faculty, there are a hundred and one conditions under which fitness may pass into unfitness. This is one of the risks to be run in appointing an autocrat whom it will be almost impossible to remove from office. The Bill in that respect does not protect the public interest as it is protected in other cases in which the holders of high and responsible positions have long tenures. The only condition imposed on the Governor is that he shall be of good behaviour, a term for legal interpretation. His behaviour may be absolutely irreproachable, and yet he may have ceased to be a fit custodian of the great interests intrusted to him. Why is this required? Having regard to the fact that the Commonwealth Bank will be free from the financial restraints which bind commercial institutions living from day to day on their wits, and fighting to maintain their lives and positions, accidents of the most serious nature may occur, against which no provision is made in the- measure.
– The honorable member appointed the Public Service Commissioner for a term of seven years, and placed him above Parliament.
– His powers are strictly regulated by law, and Parliament can deal with him in circumstances in which there is no provision for dealing with- the Governor of the bank.
– Would the honorable member place the Governor of the bank under the control of Parliament?
– I would place him under the general control of Parliament by establishing carefully considered conditions providing against mental disability, accident, or extravagant departure from duty.
– Then you would not get a good man to take the job.
– Similar appointments outside are held under conditions threefold more onerous. The highest authorities in the financial world are, many of them, without engagement for any fixed term, and capable of being discharged at short notice. If it is possible for private institutions to secure the ablest men under such terms, what difficulty would the Commonwealth have in obtaining a man who would be controlled only by general provisions safeguarding the public interest ?
An irresistible argument can be maintained for providing for the assistance of the Governor two or three experts of independent position, but paid for their services, who would keep him in touch with financial and commercial movements beyond those with which his ordinary work would make him acquainted, and whose judgment would support or correct his proposals. We all desire that the bank, if established, shall be on a basis as broad and strong as possible, and conducted in a manner which will guarantee success. The Governor should have at his elbow tried and trusted advisers to whom he could submit his doubts, and from whom moral support could be obtained. The bank will be handicapped at the outset if in its early days, which in some respects will be its most anxious, the Governor is refused the invaluable aid of expert advice, which those in control of private financial institutions of standing possess.
Again, the Bill makes no provision for that searching inspection of the affairs of the bank which ought to be made by , confidential and capable persons, independent of the Governor and of the Board of Advisers. Some such check is enforced in connexion with all private institutions, in addition to other tests, but is not provided for in regard to the Commonwealth Bank, where it will be more needed, because the funds to be used will be furnished by the Government, instead of being obtained from vigilant shareholders. There should be. an independent expert examination which will satisfy the Government of the day periodically that nothing is being concealed which it should know, and that the affairs of the bank are in a healthy condition.
– An examination of securities ?
– It would cover that, but be much wider. It is, I believe, the practice of . financial institutions to have frequent cursory examinations, and, at regular times, more searching investigations of their affairs. Of course, the knowledge thus obtained does not go beyond those responsible for the administration of the institution.
– The Auditor-General could make confidential reports to the Government.
– I doubt if he is per,mitted sufficient authority by the legislation which regulates his functions, while the growth of the Public Service, makes it unlikely that he will have time to spare for a periodical research of the kind suggested.
– We could give him a staff.
– What is needed is the inspection by a highly qualified confidential officer.
– We could get a qualified person for the work.
– If there are too many persons obtaining knowledge regarding the affairs of the bank, the business of. the institution will- be interfered with.
– That objection is met in the suggestion that the work should be intrusted to a highly qualified and responsible officer.
The regulations for which the Bill provides should be framed and made known, to us before this legislation becomes law.I do not say that they should be formally submitted to honorable members, but the. Government has nothing to lose and all to gain by letting us know what is in its mind, and taking advantage of any criticism that may be offered.
– The idea is a good one.
– When referring to the exceptional circumstances of the institution, I should have alluded to the fact, to which attention was called by the powerful speech of the honorable member for Angas, that there is no ‘financial limit to the opportunities and responsibilities of the Governor, that even the capital of the bank does not limit his exercise of power. Under this Bill, he “might - whether he would is another story - exceed not only the whole of the capital of the bank, but go beyond that to any distance that he. was injudicious or rash enough to undertake.
– Is that a common practice of a bank ?
– Impossible in private institutions, and unknown in public. Of. course, all depends on the size and effective control of the institution. Where’ the whole conduct of the business is, practically under the eye of the managers, it becomes a matter of relatively no importance; because it is not probable that such a state of affairs could arise; but if we are to have a Governor, divorced, as we are assured, from any outside control, and absolute master of the destinies of the institution - with an unlimited Fortunatus purse to draw on - we have a condi-tion so extraordinary that it requires to be- supplemented and met by extraordinary provisions to protect ourselves. Of course, it is perfectly competent for this Legislature, if it pleases, to give the Governor of the bank a blank cheque, and a blank charter ; but we do not know what our constituents will say to us if we ever make pretensions to be business men, when, with a full knowledge that we were starting a new institution, on a new basis, we fail to insure the necessary safeguards called for by the special circumstances with which we are now face to face.
Here we are, creating a new kind of bank, which we are told by honorable members who are competent to speak, has no parallel with any in the world with which they are acquainted. Surely so novel an institution - one so unknown and unprecedented - requires novel and unprecedented conditions for the security of the people, whose money will be at stake. It was even stated - and the statement has not been challenged - that it will be within the power of the Governor to undertake the task of redeeming the State debts, and dealing with them without seeking authority. If that statement be well founded, as it may be, that again is an indication that, in our very special circumstances, there must be very special safeguards.
One contention, which can be tested only by experience, but which appears to have a good deal to be said in its favour, is that, looking ahead, there are financial operations of the Commonwealth which it would obviously be best to deal with by a Commonwealth Bank. But one requires to supplement that remark by saying that what we need in such a case is a bank of a nature adapted to the particular circumstances we are called on to meet. We are not called on to undertake that ordinary business which supports our private institutions. Our entrance into this field is a matter for our judgment and pleasure ; but is not called for, and, in my opinion, will not be called for by anything “in the circumstances of the Commonwealth itself. Anything of this kind is an addition and an excursion; but the particular lines on which it is possible that the Commonwealth will require to possess something In the nature of a bank devoted to its “special circumstances, is, of course, in the gigantic operations for the taking over of the States debts, and for providing the mechanism for the issue of all future loans, both, Commonwealth and State. The States therefore are, and ought to be, our partners.
The particular function of this bank - for the generic name belongs to it to some extent, as I hope I am making perfectly clear - could be met by an institution of a very different character from that of the banks, which are now competing for private business in Australia. Ours will be a bank of a special and novel type. A suggestion has been made by the late Treasurer, the right honorable member for Swan, that what he terms a central bank - one which made itself the bank of other banks or the bank for bankers - would probably furnish in the future the most effective means not only for dealing with the problems before us, but. also for establishing banking stability.
– Can we create a bank like that ? Would a bank like that not have to grow ?
– I am not so sure as to the power to create any bank under our Constitution, outside the direct needs of the Commonwealth itself. I shall answer the honorable member in a moment; but the case I am now dealing . with is that of a new kind of financial institution. - a bank for the special needs of the Commonwealth. Whether we can go beyond that constitutionally is another question, on which I do not think it necessary to offer an opinion. I have .not examined or considered it ; but it is open to question and challenge.
– How is it proposed to institute this wonderful central bank?
– If it is anything like as wonderful as the bank proposed to be established by the Bill, I shall be very much surprised. Ours should be in its. essential character very much simpler than an. ordinary bank. It would not enter on the ordinary business . of keeping individual accounts, or of making ordinary advances to individuals.
– It will grow rich on doing nothing 1
– It will be concerned with the transaction of the whole of the Commonwealth’s business, not only in regard to all its loans, but to all its financial operations. That, of itself, will be a very large order; and, in addition, it will operate in connexion with all the other banks of Australia, in order to, as far as possible, preserve a general policy with them - to support them, equalize conditions in regard ‘to ‘then? - In some such manner a» the Bank of England does under different conditions in the Mother Country.
– Has the Bank of England not grown to that position?
– Of course. This Commonwealth bank must grow. The first day it opens, the entries in the books-
– Would not this suggested central bank be in the same position on the first day it opened?
– Yes. Growth is a constant factor in all such financial institutions as this will be. It is unnecessary to mention what goes without saying. The argument for growth is another argument for commencing this Bank with the simplest duties, and gradually enlarging its scope and sphere as experience enables. However, except by the interjection, these remarks are not called for. All that will be necessary in the present circumstances of the Commonwealth, when we are in a position to deal with the debts of Australia and provide for its future borrowing, is a bank - a bank in embryo - which will really have enormous interests and a high financial status, while, at the same time, its operations will be confined within a distinctly defined sphere.
Such a bank may, as I have said, before long, and I hope soon, become a necessity in our development. The States will need it, and should share in it. Undoubtedly, when the greatest of our financial problems is faced - that of bringing the Commonwealth and States into harmony not only in their financial relations but in their financial operations - this will be, and indeed is, the most important work at present on the Federal horizon. Anything helping towards that end should meet with our hearty support. We may soon find our.selves as a Commonwealth, called upon to establish some kind of financial institution to protect the public interests of the people of this country, and to undertake those great dealings in the money markets of the Old World, and in our own markets, which will be called for when the Commonwealth and the States together accept their full responsibility. There is a great deal of public business to be done, and that business might well be done by a public institution.
I have not attempted, nor do I propose to attempt, to deal with anything but the largest and most general views of the present situation. To go into detail, as one ought to do if this subject is to be fully and effectively dealt with, would occupy us for more months than we have days before us in this session. A very slight consideration of the immense area in which we are for the first time commencing to operate, and of the extraordinary new difficulties by which we are surrounded, would satisfy the most sanguine of us that we need much more inquiry, research for precedent, and study of the practical situation into which we shall find ourselves forced than has been possible even to allude to in this debate. We have not touched the fringe of the subject; we are each and all of us contributing out of our individual knowledge very slightly on this particular occasion ; and I for one disclaim altogether anything approaching competence to deal with this Bill as a whole, or with the many problems it contains, in anything like a manner satisfactory even to myself. There have been some admirable speeches during the debate, and I trust we shall hear more.
– The honorable member holds that we ought to have a National bank?
– In my opinion, we must arrive at a stage in which a National bank will be an essential instrument in our national development.
– In that regard the honorable member differs from most of his followers.
– I do not think so;, some have spoken of the situation as it is to-day, whereas I am pointing to the futureIn the next few years there will fall due debts incurred long ago, creating a situation that cannot be regarded lightheartedly, or give cause for other than gravethought. However, when one cannot even hope to deal with the general features of the subject, it is unwise to develop particular points. .
The most extravagant and extraordinary proposition in this Bill is that which implies the supercession and supplanting of the State Savings Banks established throughout the whole of Australia. There is no need for such a proposal ; no Savings Bank depositor, in the whole of the Commonwealth, is complaining. The people are satisfied with the Savings Banks, and the Savings Banks are satisfied with their business. They are not mere profit-making institutions. What profits they do derive, after putting aside a sinking fund, enables them to grant better terms to their customers. They are practically philanthropic institutions from which no one reaps any individual benefit. They exist at no persons’ cost and injure no one. They have proved of enormous help to tens of thousands of our people. They have been built up locally out of the very necessities of the case for local use and development.
– They have grown.
– They have grown from very small beginnings, and have established themselves in the confidence, respect and affections of the people. There are no capitalists robbing in this sphere; there are no huge profits to be divided or seized, and there are no mischievous tendencies or anti-social operations to be coped with. If there is a sweet, sane, wholesome feature of Australian private life, it is the growth of these Savings Banks.
– Does the honorable member say that this Bill will tend to destroy that security?
– It certainly tends to displace and supplant the Savings Banks of the States.
– It does not say so.
– No; but the Prime Minister had to admit that the operation of the Bill must inevitably be in that direction.
– I said I anticipated that it would ultimately grow in that direction.
– Exactly. What is the question those who vote for this portion of the measure will have to answer? It is this : For what reason should we interfere with a system which has done so well ? Can we offer better terms? Can we offer greater advantages? No. Why, then, should we enter into a field already well supplied, and where everything is working satisfactorily? I suppose that all human things are capable of improvement. I do not pretend that our Savings Banks have reached the end of their development or possibilities. I do not say that the union amongst them which has done so much of late to facilitate their operations cannot be made closer.
– What State Savings Bank would the honorable member invite to commence business in the Federal Territory?
– I do not think we need invite any. When the Federal Territory gets its population, the people will establish a Savings Bank of their own, and the Savings Banks of any of the States will be able to commence business there. That is not a question of the present situation.
– Nor is the point which the honorable member has been discussing a question of the present situation.
– It is. I venture to say that the proposal Ls absolutely antagonistic both to Federal principles and practice. Why, without any call of need, without any complaints of injustice, or cry of loss, we should enter into a sphere in which the work is being well, wisely, and satisfactorily done, so as to interfere with that work, is a mystery. What demand is there upon the Commonwealth? The Commonwealth is not so poor as to need to earn more money by establishing its bank at the expense of the Savings Banks already existing. We shall not give, for a long time, anything like as good a service as the States Savings Banks are offering. They are giving all that is required. Who gives it and who gets it? Our people give it and our people get it. Why, then, should we step between them? When we have healthy, flourishing local conditions, satisfying all who deal with them, in any way, why should we force ourselves into the field as a competitor? What obliges us to go there? Is it mere greed?
– Why should we have federated ?
– We federated, not to annihilate the States, but to assist in their development. We are not to invade their field in any case, except where we can do the work they are doing in a more satisfactory way. Let us help and not hinder them there.
– So that the National Government is to be a sort of tinker’s doctor for the States.
– I do not think it patriotic to exalt the National Government above its needs and its duty to the public. The National Government gains its strength and reputation by doing good service in its own sphere, and doing it better than the States can. But if the States can do their local service better than we can, let them have their own.
– It is a Federal, and not a National Government, in any event.
– Yes; but my point is that there is no necessity whatever at present and no excuse for entering this sphere.
– That is open to question.
– Not unless the honorable member can show that we could give a better and cheaper service, without any losses.
– - The honorable member said that the Commonwealth would offer a poorer ssecurity.
– No; there is no question of security in connexion with the Savings Banks. People lodge their small deposits, and those, and those alone, are loaned.
– The honorable member implied that our security would be weaker, because we should use the money deposited.
– No. My argument is that we have now, confessedly, the healthiest state of affairs possible in connexion with our Savings Banks. If they are capable of improvement, and we can help to improve them, let us do so.
– And they are.
– I shall need to hear in what direction. So far, there has not been a single complaint. If there is any complaint it can be remedied, and locally remedied, as it ought to be. If a local grievance can be dealt with locally, it is better for every one. The particular locality affected is more likely to gain what it wants, and other localities are not troubled. We can then federalize.
– Would not uniformity mean economy?
– Unification and not uniformity is what the honorable member and his party are aiming at. Honorable members opposite are so possessed of that idea that, even when there is no advantage to be gained, they seek for it. It is a most dangerous tendency in this enormous new country.
– But would not uniformity mean economy?
– I doubt it. If it would, then let us induce the existing Savings Banks to bring about uniformity, and, in that way, comply with all that the honorable member desires. But why should the Central Government be dragged in to do work for the people which the local people are themselves doing satisfactorily ?
– It would be difficult to induce the banks to bring about uniformity.
– There would be no difficulty in this connexion, because there is no personal interest to serve in connexion with the Savings Banks. There is a healthy and legitimate rivalry amongst “hem in some States. Here we have a Commonwealth without debt, its wealth to-day to be measured by millions - a Commonwealth that is prosperous, thriving, busy and overworked-
– Not without debt. We have transferred properties.
– And also the indebtedness relating to the Northern Territory;” but, compared with the resources of Australia, they are not more than a postage stamp.
– When we are looking at the coming Commonwealth in its true proportions we do not need to notice what, relatively to Australia as a whole, and peopled, are trifles. Why should this great rich, prosperous, thriving Commonwealth, with its- hands full of its own work, and much of that undone, go out of its way to enter the village Savings Banks and hamper, if not hamstring, them? It ought to be beneath the Commonwealth to take such a step. These Savings Banks belong to our own people. If we cannot trust them to ‘ manage their own local affairs, can. they be trusted to manage the Commonwealth itself ?
– The old argument.
– The old argument, and a sound one.
One other effect of this would be that our already fully burdened Public Service will have an enlarged responsibility. Although the Postal Department is utilized in practically all the States already in this connexion, that uniformity of which the honorable member for Gwydir has spoken, so far as it remains to be accomplished, and so far as it is desirable that it should be accomplished, will have to be brought about. It means our monopoly of the Post Office for our own bank. We shall have the head of the house turning out his children and taking from them their money boxes which have been their pride and joy until now. I do not think any of us can feel satisfied in following such a course.
There are many other questions at stake. The feeling that has been evoked by this Savings Bank proposal is manifested in New South Wales and elsewhere, and I venture to hope that, in this regard, as in all others, an attempt will be made to make the solution Federal in every sense. We should recollect that we do not expand by destroying the States, or grow greater by weakening them. On the contrary, while we insist upon having full authority over our whole domain, and remaining uncramped by narrow restrictions in anything that makes for real national growth, if we have anything to learn from the experience of both the Old, and what was formerly called the New World, it is that the strength, and salt, and savour of political life begin and rest chiefly on honest, straightforward, practical, efficient, local government. It has been upon that basis that we have built our great superstructure of national power and authority. If we build legitimately on that foundation it should stand for all time. Weaken it, and we shall weaken the foundations of our own authority, and narrow the scope and the beneficial exercise of the powers already intrusted to us.
My difficulty is that, without doing justice to even this one branch of the question and without alluding to many others, which are of importance in this lilli, I have already occupied much more time than I had proposed. At this period of the session I feel that whatever can be dealt with in Committee had better be dealt with there. But the position which I strongly press upon this House is that we are not yet anything like qualified to go into Committee to deal with this measure. We have here what may be called the machinery, so far as it is necessary to put this proposal into statutory form ; but we have nothing more before us. We have to test the Bill by questioning how it will operate under given conditions. We need to ask ourselves how, in its everyday working, it must affect us and others. That can only be arrived at by the closest arguments, inferences, and conclusions. There is not the slightest doubt that although each of us brings his own experience to bear upon the clauses, even our collective experience cannot help us to unravel all the intricacies of the Bill, so as to determine for ourselves how this new institution will work in the novel and original circumstances in which it is placed. We have to endeavour to forecast all the circumstances with which it may be faced, all the positions in which it will find itself, all the emergencies it may reasonably be expected to encounter. Do that now we cannot. Our experience is not sufficient, nor is our present knowledge.
Before attempting such a great structure as this, however desirable it may soon become, we need to be as wellinformed as possible. But we are not only not well-informed, but not half-in formed on most of the great questions huvolved in this Bill. We are not informed; and shall not have time to be, on many of these minor matters that will make a great deal for the success or non success of this great bank when it is started. We want more time for debate than we have had. But what we want first of all is more, know ledge, more experience, more facts. Then we shall be able to deal far more rapidly than we can now hope to dispose of the practical problems by which we are faced. We are going into Committee in circumstances that preclude our exercising our own knowledge, such as it is, to the best advantage. In these circumstances, in order that our position may be placed on record, I move as an amendment -
That all the words after “ That “ be’ left out, with a view to insert in lieu thereof the words “ the Bill be referred to a Select Committee for full inquiry into its provisions and, more particularly, into the need for a Federal Government Savings Bank.”
– Is the honorable member serious?
– So serious that, as I have said, I think it is not possible, at present, to attempt to deal adequately with many phases of this question with which we ought to deal. We shall be wholly incapable of dealing with them in Committee at present.
– The honorable member wants to postpone it until 19 13, I suppose.
– No. The result here is a foregone conclusion, but we are taking the best course possible to us by placing our judgment on record. Honorable members need not be alarmed. This is not the prelude to a second debate. So far as I know, not a single member on this side who has spoken proposes to address himself to this proposition, and several other members do. not intend to speak at all. They feel, aswe all do when confronted with this Bill, that, having regard to its magnitude and’ its extreme importance, we are entirely unfitted for coping with it on our present information. We should have a close examination of the measure clause by clause. More than all, we should have brought before us in evidence the testimony of practical men, the best that can be obtained, concerned with the working of similar institutions. We ought to hear the Savings Banks, which are deeply interested, through their particular representatives.
We ought to hear those who are experts in banking transactions. We require to hear something from those who can advise us with regard to our great public debt responsibilities and the manner of meeting them. Then, and only then, in our opinion, would the measure carry with it that sanction from this House which would justify us in placing upon the statute-book one of its most important Acts, creating an institution certain to play, soon or late, a very large part in the development of Australia, and thus in the history of the Commonwealth.
– Although I am not surprised that an amendment has been moved, I am surprised at its nature. Of course, the Government cannot accept it. It is not proposed to delay the discussion of this Bill, and while we invite the Opposition criticism quite freely, I think that this amendment would defeat the very purpose that we have in view.
– You could be ready for next session.
– It is not for the Government to supply the Opposition with information. The discussion of the Bill, so far, has not, in my opinion, been a criticism against the Bill at all. If the Opposition choose not to discuss it, it is no part of the Government’s business to insist upon their doing so. The Government intend to proceed with the measure.
– It is like your impudence to talk like that.
-! must ask the honorable member for Parramatta to withdraw that remark.
– Certainly, sir, at your direction, I withdraw it.
– It is becoming the settled practice of the Opposition to move amendments of the character of that which the honorable and learned member for Ballarat has just tabled. No doubt, as we go on our enthusiastic way towards that bourne to which, whichever side of the House we sit upon, we are all looking with the same intense longing, these amendments will become epidemic, so that every day we shall have an amendment of this kind moved, couched in almost the same terms, debated in almost the same way, and leading to precisely the same barren result. I do not propose to follow the honorable gentleman in detail, but two features of his speech I intend to emulate. While he apologized for being so long, he wound up, after all, without unduly trespassing upon our time ; and he avoided all those intensely interesting by-paths along which the honorable and learned member for Angas so successfully travelled yesterday. I am glad he has done so, because he has saved me a good deal of hard work in following him, for which I am particularly unfitted just now. The honorable and learned member has been dealing with a Bill to establish a Commonwealth bank, and has found many reasons for objecting to it. One or two of them are relevant, and may be considered. The others are of the same character as the articles with which softgoodsmen decorate their windows, particularly as the festive season approaches. He wound up his speech by asking for more time to consider the question. He seemed to have forgotten that this was a Bill to empower the Government to do something which the Federal Parliament ought to have done long ago. Instead of asking for more time, we ought to be standing up and apologizing to the people for our negligence. We have been here ten years, and this is the first time the subject has been definitely brought forward in any of its phases. The honorable and learned member had something to say about the unconstitutionality of the measure. He is the second lawyer on that side who has touched upon that point. There will be others to follow him, and they will all say that they doubt its constitutionality. Ever since the Government have been in office, the habitual frame of mind of honorable members on the other side has been to doubt the constitutionality of everything. I cannot recollect one measure introduced last session that was not declared by the Opposition to be unconstitutional, but not one of them has been declared unconstitutional by the High Court. Although several have been before it, they have run the gauntlet unscathed. While all the members of the Opposition may venture to doubt the constitutionality of this measure, I challenge any lawyer on that side to say, in so many words, that it is not constitutional. It is one thing to express a doubt - doubt is the proper frame of mind of a human being, because he can be certain of nothing - but it is quite another to say definitely that the Bill is unconstitutional. The honorable and learned member for Ballarat will not say that we have no ‘power to establish a. Common- wealth bank. The honorable and learned member for Angas did not say it.
Again, those honorable gentlemen, who were in office for the best part of ten years, failed to exercise the power, which was given to them clearly under the Constitution, in relation to banking in general. Whether a Commonwealth bank, to do business outside the Commonwealth’s own requirements, is constitutional or not, our power to regulate banking in general is undeniable. Will honorable members say that that was not one ot the chief powers given to us in the Constitution, and that there were, and are, more than sufficient reasons for exercising it? Why, then, have honorable members opposite exercised it? We are told now that we know nothing of banking. If this be true, the fault lies at our own door. Ample opportunities have been at our feet, and for ten solid years the only party that have ventured to even say anything at all about banking, Commonwealth or other, have been this party.
The honorable and learned member for Ballarat frequently alluded in the course of his speech to a member whom I could not place for a long while, as ‘ ‘ the gentleman who has just resumed his seat.” As I came in after that gentleman had resumed his seat, I was in a state of mild curiosity to know who he was. I found at length it was the honorable member for East Sydney The Leader of the Opposition had seized upon some statement made by him, and was going at it “ hammerandtongs “ when I entered the chamber, to the effect that “ the gentleman who had just resumed his seat “ had declared that “ this Bill would create a bank that was practically under the control of the Government of the day and the Parliament of the hour.” He gyrated round this point to my certain knowledge for at least ten minutes.
Having exhausted the possibilities of that gamut, he switched abruptly on tothe other line, complaining, “ Here you propose to intrust the destinies of this bank to one man.” Both those accusations will not lie. One of them may, but both cannot. The honorable and learned gentleman realized this and was very much more severe with the second one than with the first, because, unfortunately for the honorable gentleman, it happens that the second has some relevance to the Bill, while the first has none. In regard to the proposal to make one man the manager of the bank, he spoke of the uncertainty of human life. He said, “ You might get a man in the prime of life with a reputation and ability and appoint him for seven years, but,” he asked, “ who could guarantee that this man would remain in full possession of his faculties and continue capable, honest, and reliable for the whole of that term?” Who, indeed ? Every one of us has known cases of men being taken for three years, presumably in the full possession of their faculties, and reliable and capable, but what a mighty change has come over the scene in that period ! In three short years the people have been so profoundly disappointed with the bargains they have made, that they could only describe them as very bad indeed. But I have never heard the honorable gentleman condemn Parliaments on that account.
It is said that we cannot discharge this man except for bad behaviour. . Well, what of it? Is this a new principle, or an unwise one? The Judges are appointed for life, and the Leader of the Opposition, of course, primarily responsible for the Judiciary Act, appointed them. Judges are, all over the British Empire, appointed, not for years, but for life. This is an old and settled principle, and, on the whole, it has worked admirably. Yet, as all lawyers know, it has frequently happened that men have remained on the Bench long past the period of usefulness.
– Judges are appointed during good behaviour.
-Of course, but I take it that the honorable member for Ballarat’s point was the capability of an individual to carry out the duties of his office during his occupancy of it. It is undeniable, although happily for us we have had no experience of it in this country, that Judges have continued to sit on the Bench when they were quite incapable of carrying out the duties of their office. Yet we never hear a word against the wise and sound precaution which hedges the dignity of the judicial position with these safeguards against outside interference. We are attacked because in this Bill the Governor of the bank is made above the Public Service Commissioner, and cannot be affected by political, social, or any other kind of influence. But if we had made him amenable to some tribunal, to this Parliament, or to the Executive, or to the Public
Service Commissioner, would it not have been said that that was a danger a hundred times more serious than this? What can we do? After all, at the back of every institution is a man. Upon what does the Bank of New South Wales, the greatest banking institution in this country, rest? Is it not upon the general manager?
– A Judge may be removed by a resolution of both Houses, but the Governor of the bank cannot be so removed.
– I do not say that the Governor of the bank cannot be removed, but, in reply to the interjection, I would point out that there is no real difference between a resolution of both Houses and an Act. Moreover, a Judge is appointed for life, while the Governor will be appointed for seven years only.
– An Act in this case would be repudiation.
– How could it be repudiation if the Governor misbehaved?
– No institution has been more admirably managed than the Bank of New South Wales. But it is the policy of the general manager to which effect is given there. Is it not notorious that Boards of directors fill no more useful purpose than to indorse the proposals of the general manager ? Would it be possible for a dozen men to run a bank ? No. There never was a successful business institution run by more than one man. There may be many men about him, but it is the brain of some one man that directs and governs all. You may be as careful as you like in your selection, and hedge the appointment about by as many restrictions as you please, but while the man is in office he must run the show. The alternative of honorable members opposite - what it is? Three men, four men, or half-a-dozen men?
But what is the amendment of the honorable member for Ballarat? It completely undermines his argument. For half-an-hour he directed attention to the unwisdom! of having the control of the bank centred in one man. We naturally imagined that this was his main objection. lt turns out very different. His real objection to the Bill, it appears, is that time is needed to inform ourselves about banking. If there were fifty men in charge of the bank, how would that help this Parliament to understand banking ? He proposes that the Bill be referred to a Select Committee. My recollection of the way in which business is transacted by Select Committees is not calculated to make me regard them very seriously - I have served on several - and is that a few members attend, but more stay away, although all sign the report which, when circulated, not more than one man in ten reads, and he hastens to forget it. When I was in the New South Wales Parliament the claims of a man named Buckley were constantly before the House, and I was one of a Select Committee to inquire into them. I knew more about Buckley then than any man on earth, but I have since forgotten all but his name. Such a Select Committee might be useful, but a Select Committee to inquire into the theory and practice of banking for the information of Parliament is, on the face of it, farcical.
Why did not the honorable member move, in accordance with former practice, that the Bill be read a second time this day six months ? That was the real meaning of his amendment. Had we provided for the control of the bank by a Board of four men, he would have made precisely the same speech, except that he would have directed his attack to the fact that there were to be four Governors instead of one.
During the greater part of his remarks, he indulged in generalities, until, slipping off the firm and safe ground of generalities into the treacherous sea of detail, he stated that it is proposed that the bank shall extend its business beyond the limits of its capital, that although its capital is to be £1,000,000 its business will be as wide as the continent ; that it will stretch out its predatory hand in every direction.
– I did not say that.
– I am trying to interpret what the honorable member did say. He certainly said that the bank would not be limited in its business by its capital.
– I quoted the statement that the Governor, without authority, would have power to exceed even the capital of the bank in its transactions.
– I do not know whether the honorable member meant that the Governor could increase the capital of the bank.
– No. I was quoting the honorable member for Angas, who pointed out that even the limitation of the amount of capital did not apply as a limitation to the Governor.
– I was under the impression that what the honorable member said was that the business of the bank was not to be limited by its capital, but could be extended beyond that to any amount. If he did not say that, I apologize for misrepresenting him.
The honorable gentleman went on to make some useful remarks in dealing with the Savings Bank - useful, .1 mean, not as a contribution to the debate, but in their possible effect on people outside. This is a great country in which to make money, and more people than ever before are able to put money into Savings Banks. If, then, the honorable gentleman can persuade them, as a candidate at the recent Victorian elections tried to do, that the Prime Minister is endeavouring by force of law to take their money from them, he will certainly score one against us. I am afraid he will not succeed in his hopeful (enterprise. I would remind him, however, that it is for the Governor to say what Savings Bank business shall be done. If he considers that the Savings Bank depositors should be catered for, he will provide a Commonwealth Savings Bank, but he is not directed to do so in the Bill. He is merely to undertake the business of a general banker. The Opposition bitterly regrets that the Bill is a practical measure, gives no hint of a millennium, no suggestion of printing presses working overtime manufacturing paper money throughout the twenty-four hours for the happiness of the people. It is a plain businesslike and practical measure. That is more disappointing to honorable members opposite than anything else. The measure does not lend itself to the criticism for which they had prepared themselves. It is a plain measure, which could be understood by every man and woman in the country, !and provides merely for the establishment of a Commonwealth Bank such as should have been established long ago; because the Government, which is now the best customer of the banks, ought to make provision for doing its financial business directly instead of indirectly. No doubt, we must expect, and shall survive, the criticism of those whose interests may be affected. We are taking action under a power vested in us by the Constitution. The honorable member strove to make it appear that the competition of the Commonwealth Bank with private banks will be’ of a negligible character, but that the competition, of the Commonwealth Savings Bank with those of the. States will be disastrous.
That was very diplomatic and characteristic. Whenever it is proposed to tax the rich man there goes out a wail from honorable gentlemen opposite, not on behalf of the rich man, but on behalf of the poor man, who is warned to beware of the Labour party. It is the little land-owner who is told to look out for the land tax ; it is the man with £100 in the bank who is told to beware of the Commonwealth Bank. Is it the little man who provides the powder and shot for these attacks on Labour legislation? No; it is the man with plenty of money against whom the legislation is directed. The honorable member says that the Bill aims a blow at the depositors in the Savings Banks. It does not do anything of the kind. Under any circumstances they are all right. They will not transfer their deposits to the Commonwealth Savings Bank unless they can gain advantages by doing so. The security of the State banks is not denied, nor is it suggested that the Commonwealth Bank will be insecure. The security being the same, the depositors will place their savings where they can get the better interest, and if the Commonwealth Savings Bank cannot offer better terms than the State Savings Banks, it will do no business. I say emphatically that the honorable member has endeavoured to divert the attention of the people from the true object, purpose, function, and scope of this bank, and he has done so in order to make people believe that those who will suffer most from the operations of the institution are not the other banks, but the poor unfortunate people who have put their money into the Savings Banks. The Savings Banks, and the Savings Banks depositors, have nothing to fear from this bank, which is established for the purpose of carrying on the legitimate business of banking. There is no “ wild-cat “ element in it; we set down in black and white what the bank’s functions are. The scope of the powers of the Governor is precisely delimited ; he is placed above the power of any party influence, put in a position to exercise authority, and he will be the most efficient man it is possible to get. That being so, the Governor is asked to make the best he can of the business; and he will have behind him the credit of the Commonwealth, of which nothing can rob him.
Banking consists in the buying and selling of credit. One would imagine from what we hear from honorable members opposite that the banks dealt with their capital, but they do nothing of the sort ; they deal with credit, and with the money of other people. The paid-up capital of the Australian banks amounts to £18,501,042, while the total liabilities are £122,545,000. A bank is a buyer and seller of credit; every bank has to build up a reputation, and on that reputation it depends. The gold reserve is something to increase the reputation of the bank, but it is the reputation itself, and not the gold reserve, on which the banker depends. Now, as credit is the basis of banking, consider the position of the Commonwealth Bank; could there be any individual or collection of individuals whose credit is as great as the credit of the whole people? The Commonwealth Bank will have behind it the resources and power of the Commonwealth. The power of the Governor to deal with this credit is clearly set forth; he is not to abuse it, but is to carry on in a legitimate way the business of banking. He is to compete with other banks, and to do that he must conduct the bank in a businesslike way.
The honorable member for Ballarat went on to say that this Bill means unification. I cannot remember one measure introduced during the last three years in which the honorable member has not seen in it this demon of unification. The honorable member for Ballarat has a power of imagination which, if it were directed on his internal economy as it is on the general economy of the nation, would strike him dead the very first breath he drew. The complicated processes of physiological life are such that if a man could see the working of the valves of his heart, the blood coursing through his arteries, contemplate his nervous system, and watch his brain, and realize on what a slender thread his life depended, he would be frightened to move or do anything at all. The honorable member for Ballarat sees, with his perfervid imagination, a thousand circumstances, any one of which would shipwreck every measure submitted by this Government.
When the Arbitration Bill was before us, he pointed out the differing conditions of the Northern Territory, Western Australia, and Tasmania, and asked how any one man was to deal with such circumstances - the measure, in his opinion, meant unification. All I have to say is that if the honorable member can see unification in the Bill before us he can see unification in anything. And what is all this for? It is to impress the man in the street, who has no more idea what unification means than the babe unborn. The man in the street, however, sees that the honorable member says that the Government, in introducing this Bill, is after his savings, and is going for unification ; and the honorable member hopes he will immediately say, “That is good enough for me ; I am going to wipe the Labour party out.”
But now we come to the chef d’auvre of the honorable member in the admission that he does not know anything about the subject. That is one of the honorable member’s lapses into absolute veracity which marks him for a man and a brother. He says that if we had more time to discuss the matter, or if there were a longer session, it would be all right. What he really desires is never” to see the measure any more. He would refer it to a Select Committee, who would inquire into it, and rake it from Dan to Beersheba ; he would have a Select Committee test it by every test known to human ingenuity, and then bury it in the deepest shaft of Ballarat or Bendigo.
The honorable member, in accumulating his objections to the Bill, said that if it were carried into effect it would increase an already swollen Public Service. According to the honorable member, however, the Commonwealth Bank is doomed to failure from its very inception. He admits at the same time that the bank will grow, but that the poor little puling thing when all of us have passed away will still be in its swaddling clothes. Yet the honorable member’ talks about the institution of the bank swelling the Public Service ! There is one thing about the honorable member, and that is that he sees a subject from every side. The bank is going to be a success, and it is going to be a failure; it is going to be controlled politically, and it is going to be placed under the absolute control of one man ; it is an enterprise which should be referred to the consideration of a Select Committee in order to obtain further information, and yet he knows enough about it to say that it will prove most dangerous to those thrifty depositors whose growing deposits cause all our hearts to throb with pride.
Neither time nor the patience of the House enables me to follow the honorable member further. I can only say that, having come to his amendment, we have come to the end of all things. I only regret that he did not submit the amendment at the beginning of his speech rather than at the end, because it has absolutely nothing to do with his previous remarks. He went from the one to the other as a man might go to murder his step-mother after dancing a cotillion with a fashionable woman - there is no relation between the two things. The Prime Minister has said that he cannot accept the amendment; and at this the honorable member for Ballarat professes to be profoundly astonished. Doubtless the honorable gentleman thought the Prime Minister would agree, because both he and the Prime Minister are consumed with a passion for knowledge, and, doubtless, it was in his mind that the two of them might spend the recess, or a greater part of it, in probing into the mysterious business of banking, with a view to enlightening honorable members next year. As I say, the honorable member for Ballarat is very much astonished that the Prime Minister is unable to accept the suggestion, and doubtless the honorable member who will follow the honorable member for Ballarat will continue to express that astonishment. All I have to say is that the Bill is constitutional, and is a clear business-like document. It places the bank clearly and unmistakably out of the control of any political and extraneous influence, so far as any human institution can De. The business of banking is clearly within our functions, and it ought to have been exercised long ago. Every year the Commonwealth is losing money through having to pay for banking facilities. This bank will do more than an ordinary bank, in so far as it will enable the people of this country, if they so desire, to do business with an institution that cannot be shaken by any of the panics or crises that other banks may waver under. It is an institution based on the credit of the whole nation, and an institution, therefore, the credit of which can only be shaken when the credit of the whole nation is shaken. That, I venture to say, will not be in our time.
– We have listened with interest to the speech of the Attorney-General, who, with his usual rhetorical fireworks, has successfully clouded the true issue that has been put from this side of the House. Circus displays of this kind, involving the swallowing of fire and jumping through hoops, are not arguments, and will not divert the attention of honorable members from the real issue, which the AttorneyGeneral has not attempted for one moment to meet. He told us a lot about unification, and described it practically as the “ King Charles’ Head “ of the Leader of the Opposition. The question of unification was introduced into this measure by the Prime Minister himself in the following words -
I desire to say quite frankly that I think the passing of this Bill will mean that there will be ultimately only one Savings Bank in Australia.
If words have any meaning at all, that quotation means that centralization and unification are included in this measure, as contended by the Leader of the Opposition, and the Attorney-General cannot get away from it. I have to complain of the attitude taken up by the Prime Minister, who said that it is not for the Government to supply information to the Opposition. I apprehend that whatever information was available to the right honorable gentleman has been carefully concealed within the secrecy of the Caucus, but, in introducing a measure of this kind, there ought to be no ground for complaint from honorable members on our side of lack of information. The Prime Minister, and those who sit beside him, have themselves to blame for this amendment. The honorable gentleman never attempted to adduce one solid argument to show the necessity for this .Bill, and more particularly that portion of it providing for the establishment of a Savings Bank.
– He said that it was largely an experiment.
– Yes; and we are now told that, despite this amendment, the result will be the same. I admit that I think the amendment will be rejected, but we are justified in appealing to the good sense of the House in this way, if for no other reason than by way of protest. This measure will vitally affect the welfare of the community, and we are justified in claiming that we should have the fullest information regarding it. lt was open to the Prime Minister to furnish us with the advice of some of the leading financiers of the Empire. On the occasion of his recent visit to London, the seat of finance, he could have consulted the highest experts, and have obtained from them information that would have enabled us to come to some satisfactory decision upon this proposal. He has not deigned, however, to furnish the House with any such information. While some experts whom he claims to have consulted are hinted at, no evidence or advice on the part of experts capable of advising have been brought forward. The Attorney-General presumes at this juncture to despise the value of a Select Committee. Might I remind him that he himself was a member of a Select Committee that secured most useful information upon which a report was made, which formed the basis of one of the most important Bills introduced in this Parliament. I refer to the Navigation Bill. That measure was subjected to an inquiry by a Select Committee, and the result of the inquiry was the drafting of a Bill which embodied its recommendations. We seek, not only the advice which the members of such a Committee would be able to give, but the valuable evidence that it could obtain. Does the honorable member for Gwydir agree with the AttorneyGeneral in deriding, as he has done, the value of Select Committees in this connexion? Does he agree with the AttorneyGeneral that Select Committees are usually impotent ?
– Generally, yes.
– I apprehend that the generality must include the Royal Commission of which the honorable member was a member ?
– No ; it includes that of which the honorable member was a member.
– What Commission was that? There is no such Commission. I have on several occasions refused to act. Acting on the authority of the evidence wh’ich a Select Committee would obtain, and judging its value for ourselves, we should be in a position to come to a wiser and ‘better decision than we can possibly arrive at now. Another point made the subject of ridicule by the AttorneyGeneral was that made by the Leader of the Opposition that there was no provision enabling the Legislature, by resolution, to remove the Governor of the bank. The Attorney-General stated that, whilst it was true that this Bill provided that the Governor should hold office during good behaviour, there was a similar provision in regard to the Judiciary. It is quite true that a Justice of the High Court holds his office during good behaviour. He has a freehold tenure by reason of that office, but the Act under which he is appointed, and which gives him a freehold tenure, provides, also, that a member of the High Court Bench can be removed on the resolution of both Houses of Parliament. The point made by the Leader of the Opposition was that this Bill contains no such provision.
– The Governor will be in exactly the same position as the Public Service Commissioner is.
– I shall deal presently with the position of the Public Service Commissioner. My present point isthat this was amongst the many facts which were so skilfully evaded by the Attorney-General, in his endeavour to throw the House off the scent. The analogy drawn by the Attorney-General was, unintentionally, no doubt, a false one, as will be seen by the facts I have stated. ltamounted practicallyto amisrepresentation of the point made by the Leader of the Opposition. We were next told by the Attorney-General that this amendment is simply a little political windowdressing. I know of no better authority on the subject of political window-dressing than is the honorable member himself. The platform of his party consists of window-dressing from beginning to end.
– But window-dressing to which we have given effect.
– The honorable member suggests that this Bill is a little bit of window-dressing.
– No. Does it look like window-dressing ?
– It certainly does. The question of the establishment of a Commonwealth Bank was submitted to the people at the last general election, and the particular window-dressing indulged in in its support by the Labour party throughout Victoria was a statement to the effect that it would destroy the existing banks without paying them any compensation.
– I do not know who advocated that.
– It was advocated in pamphlets that were distributed all over the country.
– In a Trades Hall circular.
– I have just had handed to me a manifesto issued by the Political Labour Council, and published in the Argus of Monday, 31st March, 19 10.
– Why these “ghosts”?
– I am referring to the political window-dressing of the Labour party which gulled the people to return them.
– The honorable member should mention the window-dressing of his own party.
– Nothing would give me greater pleasure. I am replying to the Attorney-General, who charges us with attempting a little window-dressing by this amendment. This statement is headed “ Political Labour Council of Victoria - Manifesto,” and in it we have the” statement -
Banking is one of the frauds by which capitalism bleeds the people. . .
Then we have the statement -
The Labour proposal is not to nationalize the existing banks, but to establish a Commonwealth Bank with unlimited powers which will have a branch in every considerable centre of Australia, and will enter into competition wilh the company-owned banks. The proposed bank would be one of the strongest in the world, and would, of course, manage the public debt of the Commonwealth.
Now listen to the window-dressing -
The gradual extinction without compensation of the present banks would follow as a matter of course.
The honorable member for East Sydney said that the introduction of this Bill was in obedience to a mandate of the people. That mandate was secured by such fash as I have read out. The fact is that innocent people were gulled.
– That is very complimentary to the people.
– The Labour party, and not the Liberal party, is responsible for these vote-catching statements. Innocent people were gulled by rubbish of this kind. The Labour party themselves must have realized that such rubbish would take possession of the people who had to record their votes, otherwise it would not have been issued.
– Then it was on that that the people returned us?
– That is the platform which the Labour party put before the people.
– Tell us of some of the “tripe” that the honorable member’s party dished up.
– I can only tell the honorable member that what we did in the way of window-dressing was not comparable with that which the Labour party did.
– What about the cry that we were violating the marriage tie?
– That is a statement of which I do not approve.
– Who said “To hell with the farmer ‘ ‘ ?
– The honorable member must not refer to that matter ; and I ask honorable members to discontinue interjections.
– It was a member of the Labour party who made that statement.
Several honorable members interjecting,
– I again ask honorable members not to interject. Unless they refrain from doing so, I shall have to take some other course.
– Another feature of the political fireworks in which the Attorney-General indulged related to this one-man management of the bank, to which great exception has been taken by the Opposition. The contention on this side has been that the experience of al! well constituted banks has proved the necessity of surrounding themselves with a council of advice in the shape of a proper directorate. The Attorney-General picked out for commendation the Bank of New South Wales, which he described as the greatest financial institution in the Commonwealth. If that bank is to be the model which we are to follow, let us examine the precautions taken by it in order to carry on its business upon the soundest and most prudent lines. It has a directorate consisting of men distinguished in business, and particularly in finance, consisting of Dr. Mackellar, Mr. Black, Mr. Buckland, Mr. Binnie, Senator Walker, Sir Normand MacLaurin ;and in London Sir R. Lucas Tooth, Frederick Green, and H. L. M. Tritton. The Attorney-General, if present, would recognise those names as those of men of great ability and business experience. Surely, then, if the Attorney-General contends that we should take that institution as a model in creating a Commonwealth Bank, he must acknowledge the necessity for a council of advice. The AttorneyGeneral was very careful, when dealing with the Savings Bank, to slide beautifully over the arguments advanced against it. He rather attempted to misrepresent our arguments by suggesting that it was contended that by force of law the Commonwealth was about, by means of this Bill, to lay its hands upon the funds of the Savings Banks of Australia. Such has not been suggested, but the Prime Minister himself has indicated that by a process of absorption only one Savings Bank will ultimately remain in the Commonwealth. The Savings Banks, speaking generally, if they are not State institutions, are at least guaranteed by the State. Consequently, when we talk of competition in this regard, it is competition between one State institution and another. Therefore the AttorneyGeneral’s arguments that a bank is the buyer and seller of credit and trades on reputation do not apply so far as the Savings Bank is concerned. It is not a question of bartering credit. It is a question of the Commonwealth deliberately entering into what will prove to be a disastrous competition so far as the State Savings Banks are concerned. There has never been any mandate from the people for the Commonwealth to take over these institutions. Even if the creation and establishment of a Commonwealth Bank has formed portion of the platform of the Labour party, it was never suggested by them, and it certainly has not appeared, directly or indirectly, anywhere that it was intended that the Commonwealth Bank should take over the State Savings Banks. That was never contemplated, and therefore the part of this Bill providing for it is wanton and unnecessary. It simply follows out the same policy of “ gobble-up “ which has been adopted by the present Government in various other matters. They tried to “ gobble-up “ the States’ industrial affairs, and now it is proposed to “ gobble-up” the State Savings Banks. Before we are justified in taking them over, or entering into the fierce competition with them which the Bill provides for, the onus is thrown upon the Government of showing that they have beenmismanaged, or that their management has been excessively costly, or that there has been a demand from some quarter that the Commonwealth should take them over. I appeal to the sense of fairness and justice of honorable members to say whether it has been even suggested that they have been mismanaged. Neither has it been proved that greater facilities will be afforded by those institutions being taken over by the Commonwealth Savings Bank. The Government should show either that the step is necessary because of the mismanagement of the State institutions, or that if they are taken over by the Commonwealth greater facilities will be given to the public and greater economy effected. It is admitted that the State institutions have been well and capably carried on.
– Always ?
– Yes. It is admitted that the public have been considerably advantaged by them. Why, then, this wanton attempt to disturb them? I can prove that, not only does this Bill not mean additional facilities to the public, but that it actually means less facilities. The business would be divided between the Commonwealth and the States, because there is only a limited amount of it in a limited population such as ours, and the cost of management will be doubled. As an illustration, the number of Savings Banks and branches open in Victoria on the 30th June, 191 1, was sixty-nine, and the number of post-office agencies in conjunction with them was 354. Where branches are spoken of, fully equipped institutions on their own premises are meant, but the practice largely resorted to in Victoria has been to establish post-office agencies. Those figures mean. that, if the Savings Bank provisions of this Bill are to be effective, Commonwealth Savings Banks must be established in 423 towns in Victoria. Therefore, in those places, we shall have two Savings Banks established side by side, one run by the Commonwealth, the other by the State. Practically the same amount of business will be done, and double the cost will be entailed in doing it. That is an argument which honorable members opposite are surely called upon to meet. At the same time, no additional facilities will be given to the public, but considerable confusion will be caused. At present a man can deal with one Savings Bank, but, under the new arrangement, he may find himself going into an opposition shop in order to transact his business.
– First, the honorable member said that one is going to “gobbleup “ the other, and then he said there would be duplication. How does he reconcile the two statements ?
– The Prime Minister said that the ultimate result would be the absorption of the State institutions by the Commonwealth, but I am showing how the public will suffer in the meantime, because the States are not going to submit calmly and quietly to this assault, this piece of aggression upon their rights. They are not going to deliver up their banks at once. They are going to fight the Commonwealth, and this fighting of the
Commonwealth will be at the expense of the public - a result which is totally uncalled for. One of the reasons urged by the Prime Minister for taking over the State Savings Banks was that uniformity would result. The honorable member must have overlooked the fact that, practically, uniformity already existed throughout Australia among the Savings Banks, as the result of arrangement. A conference of Savings Banks’ managers was held in Adelaide in October, 1910, and a conference of inspectors in 1 Melbourne in May last, with the result that the facilities with which depositors can operate on their accounts when travelling in any part of the Commonwealth have been increased, and there is a closer’ approach to uniformity of system and method. These conferences completed what had been going oh for some years. There had been an understanding between the New South Wales, Victorian, and South Australian Savings Banks, whereby practically the same forms, regulations, and passbooks were used, arid a general reciprocity established. This has now been extended to the whole of Australia, and it is competent for a depositor in the Perth Savings Bank to make withdrawals in Queensland at once of sums not exceeding £2, or of greater amounts after a little delay. The Savings Banks of the States are working in harmony as one institution, and offer all the facilities which a Commonwealth institution could offer. The business done in respect to transfers is very large. During the year, the transfers from Victoria to other States numbered 2,274, and covered ,£134,166 5s. id., and those from other States to Victoria numbered 2,820, and covered £159,330 16s. 9d. I could not find in the speech of the Prime Minister, or of his supporters, any other argument for this proposal than the obtaining of uniformity, which, as I have shown, already exists. The complaint has been made that there is a limit to the amount on which the Savings Banks pay interest, it being £”250 in Victoria, New South Wales, and South Australia. The honorable member for Melbourne Ports thought that there should be no limitation.
– It would be better for the people.
– The limitation has been imposed as the result of practical experience here and in the Mother Country, where the deposits amount to £”170,000,000, and the limitation is £200.
Experience shows that there is a* degree of fixity which enables the Savings Bank authorities to deal with confidence, working on a reserve of something like 20 per cent., but were the limitation removed, the reserve would have to be enormously increased. It must be remembered that all the money deposited in the Savings Banks is at call, whereas in the ordinary banks deposits on interest are for periods of a year or two. What is more, when the Savings Bank raises interest the increase comes into operation at once, whereas in the case of the trading or commercial banks the increase would gradually come into operation and be spread over one or two years. It will be seen, therefore, the methods are different. Suppose the limitation was removed, and it was possible for withdrawals to be made on demand, because of some outside attractions of higher interest, we might have 100 depositors of £1,000 each walking into the bank some day, and perhaps for days together, demanding their money. The bank might thus be seriously embarrassed, unless its reserve was largely increased, by such sudden withdrawals, and this would alter all the root ideas and principles upon which Savings Banks have been so successfully worked throughout the Empire. The deposits in the Victorian Savings Banks amount to something like £”18,000,000, and, by law, the Commissioners may invest by way of mortgage on landed security 25 *</inline> per cent, of their funds, but they are not able to invest _ more than 11 per cent., the balance having to be put into Government debentures, which return only from 3 to 3J per cent. If the limitation were removed, the Savings Banks would receive vast sums which they could not utilize, and this would make it impossible to pay, as is done in Victoria, 3J per cent, on the first £”100 deposited, and 3 per cent, on the next .£150. In support of the amendment, I assert that we are working in the dark and without information, and are not, therefore, justified in taking the step proposed by the Government. The facts I have put before the House show that the Government proposal is unjust to the Savings Banks of the States, whose arrangements for meeting the wants of the people are now complete and satisfactory, while their management is economic. In Victoria, the working expenses amount to only 8s. 6 1-10d. per cent; in Great Britain, where the busine’ss is very much larger, the working expenses being 7s. 2d. per cent. The cost per transaction here is only 5 9-iod. per cent. I wish that I had time to deal exhaustively with the Bill, but, as that is now impossible at this hour, I shall summarize the information available regarding Victorian Savings Banks, showing the business done within this State alone. On 30th June, 191 1, there were sixtynine of these banks, and 354 postoffice agencies. The new accounts numbered 107,937, and 73,028 accounts were closed, there being an increase for the year of over 34,000 accounts. On 30th June, 191 1, 595,424 accounts were open, the male depositors numbering 311,919, and the female 283,505. The deposits made d during the year numbered i»574?985» and the average amount deposited was
.- This is the most important measure that has been brought forward by the Labour Government. It is the keystone in the arch of very many beneficial measures which, in time to come, will be referred to by the historian as the finest legislative work done in Australia. We are told by the opponents of the measure that it is not desired by the public of Australia. Bankers tell us that the public are now very well served, that competition is keen, and that profits are remarkably moderate, considering the gigantic risks run by the banks. They also tell us that the autonomy of the present banking is absolutely flawless. If that be so, it is remarkable that, with all this perfect self-government, we should have had the financial crisis of 1893. If competition be so keen, why is it necessary for the bankers of Australia to form into a union or association? As I understand competition, it means that the banks should compete in the market in order to meet the financial necessities of the people. But if we go into the question, we find that the Bankers Union have practically decided that all rates of exchange and discount, and all charges appertaining to banking, shall be based on one foundation. If I wish to cash a New South Wales cheque in Victoria, any bank will charge me halfacrown per cent. ; and we are confronted with the same rate of interest on deposits and the same rate of exchange on overdrafts. I do not’ think that honorable members will regard it as simply a coincidence that all the banks make a similar charge for keeping our accounts. When we realize that the banks of Australia are making something like £250,000 per annum for keeping the accounts of the people, we see that they are getting together a very nice.little nest-egg. It is not twelve months ago since the banks removed the iniquitous exchange on bank notes ; and that was only because the present Government came into power and proposed to issue Commonwealth’ notes. At the present time, if we take a postal note or post-office order to a bank, a small charge is made for cashing it. On the other hand, the Savings Banks, which, though not so democratic as I should like to see them, do not find it necessary to make these charges. For instance, no charge is made for. keeping current accounts; indeed, interest at the rate of 3 per cent, or 3J per cent, is paid on the monthly balance. In dealing with mortgages, the Savings Banks, instead of charging 6 or 8 per cent., charge only 4 J per cent., with rj per cent, as a sinking fund. I cannot see that the argument as to competition holds water, because the banks take care to have their own unions, though they object to common labourers having the same protection. In 1910 the paid-up capital of. the various banks Was £191552,104, and, notwithstanding that enormous dividends and bonuses have been paid, there was .1 reserve fund of £9,198,000. There were fixed deposits to the amount of £74,600,000, and deposits free of interest of .£55,000,000, making a total of £.129,000,000, which was used to make handsome dividends for shareholders, who have paid up only £19,000,000 odd. Under the circumstances, I think the public would readily lend this £129,000,000 to their own bank, and thus relieve the taxpayers of ‘ Australia, instead of enabling a few thousand shareholders to make dividends. On reference to the report lying on the table, we find that, from 1885 up to 1 9 10, the various banks in Australia have provided dividends to the amount of £”31,530,183. In 1885 there was a reserve of £”5,727,500, which, to-day, has been increased to £”9,198,000. Notwithstanding the financial crisis of 1893, the banks of Australia have been enabled, owing to good seasons, to present to their fortunate shareholders a magnificent return on their investment. On no occasion has the paid-up capital exceeded £”23,000,000. 1 read the other day a statement made by a writer in the financial columns of the Argus denying that there was any close corporation in the banking business, and saying that nothing was more harmful than to introduce unsound banking practice. Doubtless, this had reference to the Bankers Union which we, from time to time, both inside and outside this House, have distinctly said does exist; and I think I have quoted sufficient facts to prove the truth of that statement. Perhaps the bankers have found it necessary to meet together to protect themselves against possible failure; and, if so, it is a pity their combination did not exist prior to 1893. I’1 that year the gentleman at the head of the Commercial Bank, who was considered to be a leading authority in the banking world, declared that, though other institutions might go smash, his own would remain financial. As a matter of fact, however, the Commercial Bank did go smash, and the unfortunate shareholders were required to provide extra capital to the extent of ,£752,000. In 1832 they had a reserve fund of over £”1,000,000, but they had to reduce it by ^290,000, and, in the following year, 1893, they had to wipe out the whole of the balance. If we could not manage a Commonwealth Bank better than that we should deserve to be described as individuals who know nothing about finance. We have already proved, however, in connexion with our note issue, that there are men in the Government who do understand the first principles of finance, and who, when put to the test, are able to provide for the public good profits which previously went to a few fortunate shareholders. I noticed in the Age of the 3rd November an article which exposes the hypocrisy of the arguments of some honorable members of the Opposition. I am not now speaking of all members of the Opposition, because there are some who are not altogether antagonistic to the measure, but only desire to strengthen it in certain directions. Those honorable members opposite who, with their Tory ideas, are opposing the establishment of the bank, should hear what the Age said -
To people who see iniquity in all forms of. State banking -
– Do I understand the honorable member to be reading from a newspaper leading article on this Bill ?
– Then the honorable member must not read it.
– In this article it is pointed out by the writer that the Tory element will always condemn anything that is progressive.
– The honorable member must not deal’ with that matter now.
– Then I shall say that I, personally, recognise anything that is progressive, but the Tory, having hold of the right end of the stick, naturally desires to maintain the privileges he has had for centuries, and which he hopes to possess for many centuries to come. But, with the democratic element, which the Labour party is introducing into our measures, we trust that the wealth-producers of this great country will get consideration, and that not all will be given to the Tory element, which, to ‘my mind, is retarding progress. We, undoubtedly, as one honorable member has mentioned, are fighting for humanity. We do not trouble ourselves about the gold, so long as benefits are being conferred on the people who constitute the wealth of the nation. The honorable member for Wentworth said that if we could show that this bank would, facilitate Government transactions there could be no valid reason against its establishment. I should like to point out to him that, although he believes that the La-, bour party is opposed to borrowing, the platform of our party contains the plank “restricted public borrowing.” The inference is that where the amount to be earned by borrowed money is equivalent to the amount paid by way of interest, then we, as a party, would be justified in supporting the floating of a loan. A glance at speeches made by various honorable members will show that we take that view. I have said, time after time, that we should be justified in borrowing for reproductive works. We are going to carry out great national works, and it may be necessary later on to borrow several millions of pounds. The Commonwealth Bank could undertake the floating of a loan, and it would secure the large sum that we have now to pay to outside institutions in respect of flotation expenses and brokerage. Again, we have great financial transactions in connexion with the carrying out of public works, and there are a thousand-and-one items in respect of which the profits, instead of going into the pockets of the fortunate holders of bank shares, would, by means of this bank, go into the pockets of the taxpayers of Australia generally. The honorable member for Wentworth also’ said that we were going to give unlimited power to the Governor of this bank. I think that we have provided sufficient safeguards in that respect. To a certain extent we cannot allow political influence to creep in ; but it is absolutely necessary that this Parliament should know how the Governor of the bank is conducting its business. We do not desire at the end of the year to learn that the gentleman in charge of it is, perhaps, so incompetent that the investments made by him are likely to destroy it. We have, therefore, provided in the- Bill itself that quarterly and half-yearly balance-sheets shall be prepared, and laid on the table of both Houses. Surely that should be a sufficient safeguard for people who deposit money with the bank. ‘ One of the principal reasons why I have pleasure in supporting this Bill is that behind the bank itself we shall have the security of the whole of Australia. As has been pointed out, in the event of a serious financial crisis, whilst private banks might be failing right and left, the National bank would remain as firm as a rock. Before it could fail the whole Commonwealth would have to be bankrupt. If the people have confidence in the security afforded by private banks, how much greater must be the confidence which the security of the Commonwealth Bank will afford? According to the Commonwealth Year-book for 1910, the notes in circulation in Australia for the quarter ended 30th June in the years 1901 to 1910 averaged £3,748,482, and deposits not bearing interest £55,233,862, or a total of .£58,982,344. As against that there was coin to the extent of £28,826,729, and bullion of the value of .£1,322,899, or a total of £30,149,628. The percentage of coin and bullion to liabilities at call was 51.12 per cent. Turning to the other side of the picture, we find that the average assets of the banks in the Commonwealth for the quarter ending 30th June, in the years 1901 to 1.910, amounted to .£138,758,266, whilst their liabilities amounted to £135)031,491. Against that liability they had coin and bullion to the extent of only £30,149,628. If the banks doing business in Australia are considered to offer a sufficient security, notwithstanding that their metallic reserves are so small, what weight can be attached to the opinion advanced by the Opposition that, notwithstanding that the whole wealth of the Commonwealth will be behind the National bank, there must yet be a possibility of its failure? It has been said that this is a movement in a new direction, and we have been asked to mention one precedent for the course we are taking. We have been asked whether we desire to reduce the credit of Australia to the level of some of the South American Governments. I should like to refer to the National bank of the Argentine Republic, which was established in 1891 by Dr. Carlos Pellegrini, the President of the Argentine Republic. The various banks at that time had practically driven the country to bankruptcy, and he therefore decided to establish a National bank. Having to meet the opposition of the bankers and many newspapers, he had to resort to trickery. He was not able to secure the passing of the necessary Bill until he had inserted in it a clause providing that the general public should be allowed to subscribe to the stock. The bankers thought that they would thus be able to gain control of the bank, and the Bill was allowed to pass. As soon as he had carried his measure, however, Pellegrini started his bank on paper money. He had not one copper of metallic reserve behind it. In such circumstances, some honorable members would say there was no possibility of success, but the fact Ls that that institution has been remarkably successful. Its position to-day, according to an authority before me, is better than that of any other bank in either South or North America. Its reserves amount at present to 7,000,000 pesos gold. It has a capital equivalent to £10,000,000 sterling, and it has 129 branches operating throughout the Republic. On the 30th June, 191 1, its proportion of cash to deposits was 49 per cent. , as against 34 per cent, in the case of the French bank. 33 per cent, in the case of the Italian bank, and 29 per cent, in the case of the British and German banks. The bank has, therefore, achieved magnificent results, and when honorable members speak disparagingly of the National banks of South America they show that they know nothing about the matter. There is one point upon which I am hardly in accord with the Ministry, and it relates to the proposed establishment of Commonwealth Savings Banks. I think that in this respect we are going to introduce something that is not economically right. It has been pointed out by members of the Opposition that at present we have the States Savings Banks operating in various centres, and that we propose to establish Commonwealth Savings Banks there. In other words, the Commonwealth and the States institutions are going to deal with the same people. Where one bank at present exists we are. to have two operating. The working expenses consequently will be twice as much as the)’ are at present. It appears to me that the Ministry might well have consulted the various States, with a view of ascertaining whether some satisfactory arrangement could not be arrived at. We know that the States Savings Banks at present use many of our post-offices for the purposes of their business. As one honorable member has said, in Victoria alone several hundred post-offices are used in that way, and if we shift them from those buildings we shall injure them to a certain extent. I recognise, however, that Savings Banks are collecting agencies for the banks throughout Australia, and that the Commonwealth Savings Bank will be a collecting agency for the Commonwealth Bank doing general business It is absolutely necessary for us to start our bank, but I think it would have been well had the Ministry consulted with the various State Premiers, and endeavoured to arrive at an arrangement that would be satisfactory to all concerned. Sooner or later, I recognise, we shall have control of all the Savings Banks, although I do not think that the banks have had a very fair deal in this regard. One of the chief reasons why I think we should control the Savings Bank business is that the Savings Banks are subject to the Legislative Councils of their respective States, which are remarkably conservative. The Victorian Savings Bank is not as democratic as I should like it to be. In the first place, the maximum deposit in re spect of which interest is payable is rather low.
– Would the honorable member have it a bank for wealthy people?
– I should like the manmim deposit on which interest will be paid to be raised to £1,000. That, I believe, is the maximum fixed in connexion with the Savings Bank of Western Australia.
– Why not make it a bank for all the people?
– I have no objection to that. The depositors, no doubt, will come into our Commonwealth Bank later on. Another objection that I have to the State Savings ‘ Banks is that when a depositor requires to cash a cheque it is necessary for him to produce his pass-book. Why should it not be possible for him to have a cheque on the Savings Bank cashed just as a cheque on a private bank can be cashed? Under this Bill the Commonwealth Bank is to be clothed with all the powers which the banks throughout Australia at present possess. The honorable member for Wentworth expressed the opinion this afternoon that a capital of £1,000/000 to begin with would not be. sufficient to enable this bank to do all the work expected of it. The records show, however, that many of our big banks started with a capital of something like £500,000 or £600,000, although they may have at present a capital of £1,500,000 or more. The Prime Minister is remarkably temperate as regards this Bill. He is not promising any of the- wonderful things outlined by the honorable member for Kooyong. He is not up in the clouds, nor is he telling the people of Australia that we are going to create a paradise. It is going to be a bank carried out on sound lines, and as other banks have done remarkably well on a capital of £500,000 or £600,000, I think - we are also going to do remarkably well on a capital of £1,000,000. I recall how, in 1^87, when the Bank of New Zealand was practically bankrupt, it was saved by the . Government advancing £2,000.000. That is double the amount that we are starting with, but we are not starting in a bankrupt condition. The Bank of New Zealand has already returned £1,000,000 to the Government ; it has also a reserve of £1,000,000, and, during the last four years, it has made a profit of over £1,250,000. This measure receives my most hearty support. It is the most important introduced by the Government, and I have no doubt that its success is assured. At the same time, in all these measures, ; we know whatsympathetic administration means, and it may be necessary for the Prime Minister to make such provision, should we be off the Government benches, that those who follow us will not be able to interfere with the internal working of the institution. I believe that he has provided sufficient safeguards in that direction, and have gTeat pleasure in supporting the Bill.
Debate (on motion by Mr. Sampson) adjourned.
Mr. KING O’MALLEY laid on the table ;
Public Service Act - Department of Home Affairs - Papers relating to the promotion of R. H. Allan as clerk in charge, Electoral Branch, Queensland.
– In moving -
That the House do now adjourn,
I wish to state that it is intended to finish the second-reading debate on the Commonwealth Bank Bill to-morrow night, that being the understanding with both sides.
– What understanding?
– There is, I think, an understanding with the Leader of the Opposition.
– Can the Prime Minister state when he is likely to bring down the Bill with the schedule of the works for which the special provision of ?600,000 is to be made ?
– The schedule will be similar to that already submitted.
– When will it be available?
– Well before the Estimates.
– Will the Prime Minister have prepared, and supply us on that occasion with, a statement showing a complete list of the works for which commitments are made, and on which the total special vote of ?2,000,000 is proposed to be expended ?
– The works were outlined in the schedule I gave.
– In the Works Estimates the only information given was general, such as “ Telephone construction, ?150,000,” “ Telegraph lines,?60,000,” and so on. Could the Prime Minister give us information as to each telephone or tele graph line to be constructed, such as “Tele-, phone line from Gympie to Rockhampton, so much,” so that we may have some idea of the specific definite detailed works? I do not mean that trifling little guarantee lines should be given.
– The information will be given.
– Unfortunately, we have never had it before.
– I assure the honorable, member that every time the Estimates have been submitted previously, detailed infor-, marion has been read out to the Committee when asked for. Even if similar information has not been given before, that is no reason why it should not be given in the future. We are. dealing with a big matter, and it would be advisable for the House to have the information I have indicated.
– I rise only for the purpose of inquiring into the Prime Minister’s statement that there is an understanding on both sides that the second-reading debate on the Commonwealth Bank Bill is to ter- minate to-morrow night. None of us know of such an understanding.
– I spoke to the Leader of the Opposition, and that is the impression I obtained.
– Did he definitely engage to conclude the debate tomorrow night?
– Not finally and definitely, but he agreed to do everything possible.
– There is an end of it. There is no engagement.
Question resolved in the affirmative.
House adjourned at 11.17 P.m.
Cite as: Australia, House of Representatives, Debates, 22 November 1911, viewed 22 October 2017, <http://historichansard.net/hofreps/1911/19111122_reps_4_62/>.