4th Parliament · 2nd Session
Mr. Speaker took the chair at 10.30 a.m., and read prayers.
Dr. MALONEY. - At the present time, I understand, persons who hold warrants for receiving the pensions of old-age pensioners who are unable to collect their own money must on Saturdays attend at the place of payment before noon. Will the Prime Minister in future see that, in places where the post-office is open later, pensions shall be made payable to within an hour of closing time?
Mr. FISHER.- I shall be glad to have consideration given to the matter by the Treasury and other Departments concerned. If the suggestion can be carried out, we shall cheerfully give effect to it.
EVIDENCE BY OFFICIALS.
Sir JOHN QUICK. - Has the attention of the Postmaster-General been drawn to the statement in the Rochester Police Court of a witness subpoenaed on behalf of the prosecution in a criminal case, that he had been instructed by the Postmaster-General or the Department not to give evidence? Is it the practiceof the Department not to allow its officers to give evidence in all civil and criminal cases?
Mr. FISHER. - I have asked for a report in this case. The conditions under which information received by the Department may be divulged are setout in regulation; and instructions issued to postmasters, and were available to the witness referred to. He had certainly no instruction from the Postmaster-General to decline to give evidence.
Mr. HIGGS- As from time to time lists of wages paid to artisans, mechanics, domestic servants, and others are made public, will the Minister of Home Affairs instruct the Government Statistician to prepare official statistics showing the wages paid in various centres, the hours of work, and the cost of living, including house rent?
Mr. KING O’MALLEY.- The Department has recently organized a statistical, branch of the kind suggested, and the next issue of the Commonwealth Year-Booh will be the first book of its kind in the world.
Mr. RILEY. - What steps has the Minister of Defence taken for the temporary location of the Naval College? Will the House have an opportunity to discuss the matter before a final decision is arrived at?
Mr. ROBERTS- The Minister has taken all possible steps to secure a suitable site at the earliest moment, but I cannot promise that the matter will be brought before the House for further consideration.
Mr. W. ELLIOT JOHNSON. - Will the Minister of Defence have some sites on George’s River, contiguous to the present military training ground, investigated?
Mr. ROBERTS. - I am unable to promise on behalf of the Minister ofDefence the investigation of any sites, but suggest to the honorable member that if he is aware of suitable sites, be should write to the Minister indicating their position. I am confident that the Minister will do all that he can to secure the best site.
– In view of the fact that the youth in attendance at the Commonwealth Clothing Factory tells applicants that the issue of application forms for work was stopped three weeks ago, while the press is declaring that enough hands are not obtainable, will the Minister see that sufficient application forms are provided, or, if there is no need for more workers, will he notify the fact?
– I do not know that any youth has been authorized to give the information referred to. There are application forms available, and due notice will be given by the Department when applicants are required.
” GOLD-FIELDS “ ALLOWANCE.
– Has a decision been arrived at in regard to the payment of the extra 5 per cent. gold-fields allowance recommended by the Postal Commission? If so, what is the nature of it?
– No decision has been arrived at.
asked the PostmasterGeneral, upon notice -
– Inquiries are being made, and the desired information will be furnished as early as possible.
asked the PostmasterGeneral, upon notice -
– Inquiries are being made, and the desired information will be furnished as early as possible.
asked the Minister of Home Affairs, upon notice -
When does he intend starting the final survey of the railway from the Federal Capitalto Jervis Bay?
– The final survey of this railway cannot be started until after the results of the trial surveys, which will shortly be undertaken, have been investigated.
– Has the Prime Minister copies of the constitutions of the National banks of France, Germany, and Switzerland, and some particulars of the Canadian bank ? If so, will he have the information made available to honorable members before the Commonwealth Bank Bill goes into Committee?
– I have not copies of the information referred to, but believe that it is obtainable in any standard work on banking. I do not consider it necessary or advisable to have the information specially printed and circulated among honorable members.
Debate resumed from 23rd November (vide page 3133), on motion by Mr. Fisher -
That this Bill be now read a second time.
Upon which Mr. Deakin had moved -
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.”
– If a reason were required for the amendment of the Leader”, of the Opposition, it is to be found in the speech delivered by the Prime Minister in introducing the Bill, which, although it contained an explicit statement of the provisions of the measure, told us nothing of the scope and aim of the proposed bank, its intended sphere of operations, or the functions it is designed to fulfil. The. speech was entirely devoid of the necessary information to assist the House’ in coming to a decision. After the amendment had been . moved, we . were told by the right honorable gentleman that it is not the duty of the Government to supply members of the Opposition with information. He forgot that the members of the Opposition are representatives of the people, just as are Ministerial supporters. When information is asked for, it is supplied, not for the advantage of any particular party, but for the advantage of Parliament and of the people it represents. It is entirely a new theory that those responsible for the administration of public affairs are not under the obligation to supply information regarding public matters to members of the Opposition. Following the Prime Minister, the Attorney-General made a reply to the speech of the Leader of the Opposition which contained much that was clever, but, instead of giving the information asked for, he, in effect, supplied us with a copy of Comic Cuts. He attempted to discredit the work done by Select Committees, altogether overlooking the fact that a former Government in which he was a Minister, when faced with a request for legislation respecting shipping, appointed a Commission, consisting of members of Parliament, of which he was chairman. That Commission having made full and complete inquiries in Australia, he went to Great Britain to make himself still further acquainted with the subject, and the Navigation Bill, which is the result, having passed through the Senate, is now on our businesspaper. The method then adopted was the right one. When a Government has to give effect to a policy, it must obtain the fullest knowledge and the best expert opinion to guide it along safe paths. Again, when we came to deal with the question of fire and life assurance we determined to appoint a Royal Commission, and that Commission furnished us with complete information on the subject. And so with the sugar industry. Great as are the ramifications of the sugar industry, and the complex questions associated with it, they are no greater than are those of banking, and we have a Royal Commission collecting evidence to guide us in determining how that industry is to be treated. If this is going to be a practical working Legislature for Australia we shall have to develop more and more the Committee side of this great House. Such a system has many advantages. It enables honorable members representing all parties to meet round a common table for the consideration of common problems. It enables them to realize more fully the difficulties surrounding those problems, and in that way agreements are arrived at which often reduce the issues before Parliament. The more we use the Committee functions of thisHouse to obtain from outside information relating to great commercial questions such as banking, navigation, bankruptcy law, and company law, the more will Parliament be assisted in its legislation. Unless we avail ourselves of such assistance the House will break down hopelessly in an effort to solve everything in open debate.1 Great Britain has its magnificent Board of Trade, which is able to supply Parliament with whatever information it requires concerning matters of this kind. We have already ‘established a Statistical Department which gives us much valuable information, but if the proposal of the late Government for the appointment of a Board of Trade had been adopted we’ should have had at our disposal to-day all the information that we require in this connexion. It is not just to the Parliament or to the people that we should be asked to deal with this important financial matter without a scrap df evidence to guide us. The only information supplied to us by the Government consists of certain tables which may practically be found inthe Commonwealth Y ear-Book. There should be an investigation of the financial crises of Australia, and the defects of our banking laws in dealing with those crises. Such an investigation would materially assist us in developing the policy of this bank. But we have no such in-, formation for our guidance. We are asked to legislate upon a most important question with nothing more before us than a piece’ of paper submitted to us in the form of a Bill. This problem ought not to be decided on purely party issues. It ought never to have been submitted as a party matter. It should be held to be superior to party considerations. The far better course to have pursued would have been to have an investigation by men representing each side to determine the best scheme for a National Bank of Australia. The Ministry, however, say in effect: “ It was decided for’ us by a Conference, over twenty years ago, that we should have a State Bank. We do not know what induced the Conference to come to” that decision, but if determined that we should have a State1 Bank, and you are going to have one, and to have one in the form that we propose.” I trust that before the debate is concluded a different attitude will be taken up. I hope that reason and consideration will , prevail, and that an attempt will be made, to ascertain the defects of the scheme,’ and to try to remedy them. The proposal submitted to us is termed one for the establishment of a State Bank, but the proposed bank certainly will not meet the aims and aspirations of many who are looking forward to it establishment. We have been informed by the Prime Minister, in effect, that it is going to be a State Bank carrying on business exactly on the lines adopted by other banks in Australia. It will have to go to the Government for its notes, and obtain them on exactly the same terms as do other banks.
– Surely that does not give the honorable member any concern.
– I shall deal with that point later on. It is a subject for inquiry. During this debate several important suggestions have been put before the House. It has been urged in the second place that if we are to have an Australian bank, it should be a National central bank, and that we should consider whether it ought to be owned by the Government, or privately-owned, or whether there should be a combination of Both State and private ownership. A third point raised is whether the note issue should be associated with the Bank. Surely these are subjects for inquiry, and the whole field of the banking laws of Australia also affords scope for investigation. We are told in the first place that we are to have a State Bank. The New Zealand Government appointed a Select Committee to inquire into this question, and that Committee took much evidence, including the testimony of experts from the Associated Banks of the Dominion. It presented its report on the 24th November, 1910, and in that report we have the following definition of a State Bank : -
A State Bank may be defined as a bank of issue and deposit carrying on similar business to that undertaken by the present Associated Banks, but owned entirely by the State.
The Bill that we have before us cannot be described as one to provide for the establishment of a State Bank of deposit, carrying on business similar to that undertaken by the Associated Banks, and owned entirely by the State. The Select Committee reported further -
It does not appear that there is at the present time any bank in the world that corresponds to this definition, though it was stated in evidence that the Banks of Venice and Hamburg were once State Banks of this description.
The report shows that none of the witnesses advocated the establishment of a separate and new State Bank. That is a remarkable fact. The Committee was appointed to consider the advantage or otherwise of a State Bank of issue and deposit, and a State currency paper, and it reported -
As regards a State Bank -
I have referred to this report to show that New Zealand, when it found itself confronted with the problem that we have now before us, proceeded to deal with it in a business-like manner. An investigation was made of the banking conditions of the country, and the crises through which the Dominion had passed to ascertain whether any useful lesson might be adduced from them. But we are asked to legislate in the dark without a scrap of evidence from the commercial or banking community, or from the producing interests which, in connexion with the export of their produce, are very much concerned in banking. The Democratic methods of New Zealand are constantly being referred to as a model for us to follow, and we find the Dominion in this matter seeking to act, not in the dark, but in the fullest light of day. When we ask what has prompted the Government to propose the establishment of this bank, we are told in the first place that it is going to give greater financial stability. The honorable member for New England . last night drew some horrifyingpictures of banking in Australia. Having painted the worst picture possible, he declared that he would refrain from saying more, becausehe did not wish to discredit any one. He asserted that if he said any more with regard to banking matters the stench from them would be so dreadful as to sicken Australia. The Prime Minister, however, has said that we owe a debt of gratitude to the banks -
It is of no use denying, and this party do not wish to deny, that banks have played an important part in the development of Australia, and we want to give them full credit for all they have done. It must be freely admitted that they have made mistakes. …
How are we to overcome them? I then asked the right honorable gentleman -
Will the Treasurer tell us what safeguard there is against the Commonwealth Bank having the same experience?
No safeguard was pointed out as being in this Bill. We have not the slightest evidence to show that the Governor of the National bank is to be safeguarded so that similar mistakes will not be possible on his part. If we have had grave mistakes in connexion with our banking system, and those errors are capable of legislative treatment, is it not reasonable to urge that there should be an inquiry as to the causes of and the remedy for those defects? With such information at its disposal, the Legislature might well have been expected to establish something worthy of Australia in the shape of a National bank. That, however, is not the method which the Government deem advisable to follow with regard to this matter. When we ask for very necessary information Ave are told that we are not to get any. That is not a fair way of treating either the House or the people. In view of the statement that this bank will give us greater financial stability, so that we are not likely to have any future crises, it is well to consider the evidence given before the New Zealand Commission on that point. Mr. A. Mills, a representative of the Associated Banks of New Zealand, gave rather pertinent evidence upon it -
With reference to the ability of a State Bank to relieve financial stringency, I cannot see that it could, if worked on a proper and sound basis, be of any more use than an ordinary bank. A State Bank cannot any more than an ordinary bank, create wealth or resources by a simple decree. Financial stringency in this Dominion is usually the result of a drop in the prices of our staple products, or the extravagance of our people leading to excessive imports beyond the capacity of the people to absorb and pay for. These aTe fundamental misfortunes or errors which no scheming can circumvent, and they can be remedied only by the operation of the stern law of necessity forcing the people to the practice of much economy in their expenditure and much activity in their industry and productiveness ns will eventually bring about a financial equilibrium.
– In other words, getting toe much “ tick.”
– A State Bank carrying on business in the same way as other banks must, in the event of a great financial crisis, go through the same experience. The Government cannot, by the issue of a decree, 1 increase the pro duct of a country or its natural resources, or inspire habits of economy ; and a State Bank has practically to float on the same current as do other banks. I am not now expressing my own opinion. I frankly admit, from what I have read and studied on the subject, that without an investigation into Australian conditions we are in the dark as to what these conditions really are. We know no more on this subject than we knew of navigation conditions or of fire and life insurance conditions before we made inquiry. Honorable members know how difficult it was to get evidence on these points ; and in financial matters we require the fullest possible information in order to understand the problem. A banker gives his opinion on State banking in the following words : -
I am of the opinion that a purely State Bank discharging all the banking functions of an ordinary commercial bank, including the making of advances, would be a mistake. It would not command the confidence of the commercial community, and the mercantile accounts would probably be kept with other banks. Its advances would possibly not be made on a sound business, and would probably be largely confined to advances on the security of land, leading, most likely, to temporary land-booming and resulting ultimately, and, perhaps, repeatedly in loss to the bank. Banking institutions should be far removed from the possibility of political direction and control, and should be left to conduct their affairs on purely commercial and business principles.
I draw particular attention, to the remark that the advances will probably be largely confined to those on security of land. What was the plea of the honorable member for New England ? What is the reason which actuates him in supporting the establishment of a State Bank? It is that the State Bank will be an institution for making advances on land securities. The honorable member set up a great plea for a co-operative bank- not a bank such as is proposed - as the consummation of the whole scheme of cooperation under which the Australian people will own their own bank. That is an extraordinary conception of co-operation, which I understand Democrats to favour because it means the management of the co-operators’ own affairs by themselves through their own agents; it means that they control their own capital invested in their own concern in which every one of them has a proprietary interest. How can we possibly compare a co-operative bank with the institution proposed in this Bill. As a matter of fact, the proposed bank is based on money that may be lent by one person who chooses to invest £1, 000,000 in the purchase of the whole of the debentures. Such an investment would possibly be regarded as a first charge on the bank ; and where, under “ the circumstances, is the co-operative principle? This shows clearly how essential it is to have an inquiry. At any rate, the remarks of the honorable member for New England indicated that he did not understand the problem. Of course, it is said that this proposed bank will always have the Government behind it ; but the Government could give assistance to a private bank in the same way. The plea of the honorable member was that in times of necessity it is a good thing to secure stability by giving the Government credit to some one; and the idea is that that some one should be a State Bank. We are told that the proposed bank will have a great influence in lowering the rates of interest. It is rather interesting in this connexion to remember the words of the honorable member for New England when he spoke on the Address-in-Reply - 1 heartily congratulate the Government on proposing, to strike the first blow at high rents by coming down with a national banking proposal. The first blow will be struck at high rents when we find cheap money for the people who wish to have their own homes, and to pay no rent.
That is good for a man who believes in the leasehold principle. He further said -
My idea is that every man should have his own home, and should not be obliged to pay rent.
That is a very fine ideal. The report in Hansard proceeds -
– Is that the idea underlying the State Bank?
– Yes; it will provide money at a cheap rate of interest.
– Do the Government propose to fix low rates of interest by law?
– I am told that we propose to do this with the people’s money.
Obviously the honorable member refers to those who have authority to shape and mould this bank ; that is the view of a member of the Ministerial side who sits in caucus where the proposals of the Government are discussed.
– The honorable member is a beautiful word painter !
– I am quoting the words of the honorable member for New England.
– But the honorable member is putting his own meaning into the words !
– I allowed the honorable member for Darling Downs to complete the quotation from Hansard, but I remind him that it is not in order to quote: from a previous debate in this session.
– I apologize for transgressing. However, I may say that theview of the honorable member for New England is that this bank is going to beone of the first great departures necessary to secure to those who produce the wealththeir proportion of that wealth. Does that not bear out what was said last night by the honorable member for Parramatta, namely, that one of the ideas of those who outside were supporting the scheme is the distribution of wealth throughout the community, and that the bank is regarded as the one step to that end. Of course, when we have the proposal before us now in a sober way, we do not hear the Prime Minister making use’ of such words. Those great aims have all been swept aside, and we are told that this bank is to carry on business in the same way as any other bank. The right honorable gentleman has very properly put those other views aside, as, indeed, he is bound to do when placing what he considers a business proposal before us. Asa matter of fact, the success or failure of this bank depends entirely on its management.
– That is about the sixth different interpretation I have heard of the Prime Minister’s speech.
– If I have misrepresented the Prime Minister in a single phrase I regret it ; but I should like the fact pointed out by the Prime Minister, and’ not by somebody who fancies he knows the mind of the Prime Minister better than does that honorable gentleman himself. Whenever I desire to quote the Prime Minister I use his own words. The sole reason given for this banking proposal is found in the profits that are to be earned. The Prime Minister, after pointing to the profits earned by the banks, said -
In these circumstances, I think there is an opening for a Commonwealth Bank.
The honorable member for Parkes made an interjection,to which the Prime Minister replied -
I am not making an attack on the banks.The question was put from that side, “ Is there a necessity for this bank?” My reply is, “There is the evidence, and surely the public, as a whole, as well as private institutions, have a right to be heard in this matter.”
In this connexion, I was very much struck by a paragraph in Eustace on Money Exchange and Banking, as follows -
How crude were the ideas of some of the ancients as to banking is well shown by the oftrepeated tale of the proposition of so acute a man as Xenophon. He noticed that the bankers paid interest for the money deposited with them and charged a higher rate to the people to whom in turn they lent it. It occurred to him it would be to the benefit of the Athenians if a certain number of citizens combined to form a large bank from the interest on the money in which all the expenses connected with the Government of the State might be met and all the citizens “live in ease and comfort !
Is history repeating itself? I confess that this proposed bank will start with a great initial advantage. The Prime Minister will correct me if I am wrong, but is it the intention that the bank shall be a Government instrumentality? If so, is the bank to be exempt from taxation, as all other Government instrumentalities are? Will this bank pay the land tax on all the sites of its various offices, and on the properties which fall into its hands, as other banks have to do? These questions the Prime Minister may be able to answer in Committee, and I suggest them now in case he may not have thought of them.
– These matters have been thought out.
– But has the policy been settled? Will the Commonwealth Bank pay municipal rates and taxes? At present, if a banking proprietary desires to open a new branch in a country town, they have to pay practically 6d. in the pound as rent for the bare land. Will the Commonwealth Bank be free from that taxation? If the Bank is not to be subject to these charges, the bank will, of course, start with considerable advantage in its favour. I shall not discuss the capacity of the bank to earn profits, for that matter has been dealt with fully by others. As to the functions of the bank, we know that it will have the benefit of Government funds. It is to be regretted that in the proposal there is no suggestion of the Federal idea - no desire to recognise the fact that there are States. The Minister of Home Affairs, who, as .a native of a Federalist country, is, I believe, a Federalist at heart, took care to have a Federal side to his banking proposal. Under the Swiss’ banking laws the Cantons are given a direct pecuniary interest in the National Bank. Two-fifths of the capital was reserved for them, and subscribed for when the bank was started.
Information on such a point as this might well have been supplied by the Government. The question put by the honorable member for Richmond this morning was a very pertinent one. When the honorable member turns to the United States he finds that .the people of that country had all the information to be obtained from standard text-books, just as the Prime Minister had, but they felt that a higher obligation rested upon them, and so they made inquiries from nearly every country in the world, not through the medium of some partisan who might write a text-book in favour of or against a particular policy, but firsthand. They made a complete scientific inquiry into the banking systems of the world, and that information is to be obtained here in our own Library, but the obtaining of it did not absolve the American people from the necessity of making full inquiry into their own conditions as well. To return to the question of State interests in this matter. It is set out at page 185 of Senate Documents, vol. XI., regarding the Swiss Banking Law -
In return for the grant of this monopoly the National bank undertakes to fulfil the duties assigned to it by the law, and further, by way of concession tax, to make an annual payment to the Confederation, which, in turn, is obliged to distribute the amount of this payment to the Cantons.
The mode of calculating this amount is set out, and the ‘amount per capita is mentioned-
The concession tax represents the return, fixed in advance, which is to be given by the National bank for the bank-note monopoly transferred to it by the State ; and a further consideration for the granting of this monopoly is to be found in the co-operation and supervision of the Confederation provided for in the constitution of the bank and in the participation of the Confederation and the Cantons in the net profits.
In regard to the particular proposal now before us, the States have not even been consulted, much less has an invitation been given to them to consider a proposition regarding the banking laws of Australia in which, so far as regards their functions of government, they are just as much interested as is the Commonwealth, although, of course, the Commonwealth has supreme power over legislation in the matter. Another aspect which might be inquired into is the function that the bank would discharge in assisting in the solution of the State debts problem. We are to be given only a one-man bank, and as that one man will have all his time taken up for many years to come in making it a success, I am afraid we shall not be able to get much assistance from him in the solution of that problem. I mention these facts to show how ill-prepared and ill-equipped we are for the task we are asked to undertake. Other nations have not the same contempt for history as have the honorable member for Indi and some others. They realize that after all history does recount the experience of nations, and that something is to be gained by seeing how others have suffered. History naturally does not repeat itself in every detail, because the conditions of each country are peculiar to itself, and in any examination of the history of other countries the experience gained must be applied to our conditions. The idea that we should have a central banking system on the European plan has been put forward. Some term it the bank of banks, others the National banking system. A leading authority, Conant, says, regarding the evolution of central banking
One of the strongest arguments in favour of a central bank is the fact that practically every country but the United States has arrived by a process of evolution at the central banking system. There is not to-day an independent nation in Europe which has not a central bank controlling the note-issuing and exchange situation, most of them established within sixty years, and several of them within ten years.
If “ history is philosophy leading by example,” then the history of banking teaches that financial progress depends in large measure on the existence of a central monetary institution, dowered by law, with the power to use its credit without any limits, except those imposed by sound banking policy, for the protection of the national gold stock and national financial security.
The reason for the evolution of the central bank is the reason for the evolution of other forms of concentration in modern society. It applies to finance the system of larger units and greater economy which has applied long since in the world of government, railway - systems, and manufacturing.
That has been the experience of Europe, and is constantly pointed to as being the proper evolution of banking. When we examine the evolution of that system in every country concerned, we see that it
Was not brought about simply by coming to Parliament and getting it to pass a Bill. It was the result of careful consideration by all the banking authorities in full consultation with the authorities of Government, in order to arrive at a practical solution of the whole question. Take Switzerland, the last of all to establish the central banking system. A vigorous dis- cussion first took place there. The matter, I think, was the subject at one time of a referendum, there were conflicting parties in the Parliament, and the final result is given in these words -
As to organization, an agreement was ultimately arrived at which provided that the new bank should combine the character of a private banking institution with that of a State Hank.
It was a compromise between the pure State Bank theory .and the theory of private banks.
– But the State is allpowerful.
– It is, but it has the sense not to exercise all its powers. In every country which has formed a National bank - Italy, France, Spain, Belgium, Sweden, Germany, and Switzerland - the process has been a natura! evolution based on the actual experience through which the people have lived. The whole of these National banks have been moulded not by mere theorists, but by men who knew what they were doing, realized the financial needs of their country, and tried to devise an institution that would meet the occasion. Not one of these countries adopted the idea of a purely State bank, and there is no precedent anywhere for such a Bill as this. The question was raised whether the central banking system was good for the United States. In that case, again, the question was the application of the principle to new conditions in a country which is similar in some ways to our own. A leading authority says -
There are eminent bankers who hold that we should establish in the United States a great central bank vested with powers similar to those exercised by foreign central banks. Undoubtedly the central banks in European countries’ effectively and satisfactorily regulate and control banking conditions in those countries; and if conditions in the United States were similar to conditions in European countries the argument in favour of establishing such a bank inthe United States would be conclusive. However, conditions in the United States are sodifferent from those existing in European countries that the central banks of Europe cannot fairly be considered precedents for the creation of a similar bank in the United States.
In Europe each country has established its owncentral bank, but no one country of Europe canbe compared with the whole of the United States. The territorial expanse of the United” States is as great as that of all the countries of Europe combined. Control of the businessinterests and financial resources of the United” States is not centralized, and cannot be centralized, to the same extent as control of the business interests and financial resources of a single country of Europe. The different sections of the United States have deve- loped rapidly in wealth and in financial independence, and there exists a strong and growing feeling of opposition to the concentration of financial strength in few hands or in any section of the country.
I have read that to show that the people of the United States are not altogether satisfied to follow the lead of other countries, but consider the problem of the application to their own conditions of the laws of other lands. That is one of the considerations that should influence us. We know that the central banking system has worked well in other countries, but we must first inquire into our conditions, and ascertain from those who understand Australian banking whether it is or is not best suited for Australia. Whatever the system that has worked out satisfactorily in Europe may , be, it is not the scheme that is before this House. The question of placing the note issue in the hands of the Commonwealth Bank has been raised. I do not think we could have better evidence of the fact that the Government have not fully considered the whole of this proposition than the admission made by the Prime Minister in reply to an interjection following upon the speech of the honorable member for Hindmarsh, who held that the Commonwealth Bank would be good only if it followedexactly the lines of the Bank of England. The honorable member advocated that it should, therefore, have the control of the note issue, and then the Prime Minister, “having already introduced the Bill, interjected, “ I am not averse to that after the “bank is established.” This showed that a fundamental proposition likely to affect the whole character of the bank was in the Prime Minister’s mind, but only as something which it would be necessary to introduce after the bank had been established. Surely, if that step is to be taken, the Prime Minister should have waited and considered the whole proposition of the institution as a bank of issue and deposit in one complete scheme. In the first address of the head of the Federal Department of Finance to the stockholders of the Swiss National bank, on 23rd August, 1906, there appeal passages which are worthy of consideration in connexion with what was said regarding the function of the note issue by the honorable member for Angus. Thus-
The circulation of bank notes must be governed bv the demands of commerce and the exchanges; bank notes are the medium of the exchanges and markets. If the markets decrease, the circulation of the mediums of exchange must also be reduced j when they multiply, this circulation must be increased in consequence.
The circulation is limited by the demand, and these limits should not be exceeded. The paper circulation must always have the precious metal as a solid and stable basis, and it must expand and contract in the same measure as does the metal circulation. The bank note can only serve as an auxiliary, always attached to the principal medium - the metal.
It is laid down in the Constitution that the metallic basis of the Swiss bank note issue should be 40 per cent.- It is proposed to make our own metallic basis 25 per cent. The same authority says, later -
The establishment of the discount rate follows closely upon the question of paper circulation - that is, upon the privilege of issue with which the bank is invested. It goes without saying that the bank must try to provide commerce with a discount rate as stable and as favorable as possible, having its attention always fixed upon the general monetary situation, on the situation of the exchanges, on business activity, on the general tendency of affairs, on all the exterior or interior economic conditions which decide either the -extension or contraction of demand. But it must never forget that the only way to check any possible abuses of paper or credit circulation will be found in the discount rate, and that the increase of the rate of discount is the most efficient means of protecting the metal reserve, of preventing currency from leaving the country, and also of preventing an exaggerated extension of credit and imprudent speculation. In this way the bank will be able to maintain stability of its credit and of that of the country, and to prevent and to ameliorate the crises to which we may be exposed.
That is a very important opinion by an expert. When we have to consider the kind of bank to be established, surely the question of whether a central bank controlling the note issue in Australia is not a better proposal than that which has been suggested, is a fair subject for inquiry. I mention these matters not to set up any particular theory of my own, but as supporting the demand for further investigation. A word or two regarding the constitution of the proposed bank. The AttorneyGeneral twitted the Leader of the Opposition with being on the horns of a dilemma. He says that the honorable gentleman objected to the bank as a one-man bank and as a political bank, and that it cannot be both. Of course that is so; but the objection of the honorable member for Ballarat to the Bill is that it countenances both views, and he wishes to know what is the real intention of the Government. Hp pointed out the unwisdom and impracticability of the one-man proposal, and urged the creation of a proper Board’ of Advice. If the honorable member for Denison has studied the constitution of the banks of the world, I hope he has taken to heart the lessons given in regard to the need for proper safeguards. Speaking generally, some of these Continental banks are governed by councils appointed by stockholders, directorates, and, in some instances, local committees; and they have independent audits and independent boards of inspection. Under the Bill, one man will bc responsible for everything, and the only audit will be that of the AuditorGeneral. If the control of the bank is to be influenced by politicians, it will, undoubtedly, not be very successful. The Prime Minister says that he does not desire political influence; but let us look at the Bill itself. Clause 15 gives the Governor and Deputy Governor such powers as are prescribed by the Act and the regulations. Under clause 64, the GovernorGeneral may make regulations prescribing all matters necessary or convenient for giving effect to the Act. Under clause 34, the bank may, with the consent of the Treasurer, invest in certain securities ; and, under clause 32, the consent of the Treasurer is necessary to the making of rules for the good government of the bank, the classification of its officers, and any matter necessary or convenient to be provided for in carrying on its business. Throughout the Bill, the exercise of political control is provided for. The honorable member for Ballarat asked whether the autocratic or the political influence is to predominate, and desired to be told the reasons actuating the Ministry in the proposals put before lis ; but he has not been replied to. I wish to make some observations about the provisions for the establishment of a Commonwealth Savings Bank. While the supporters of the Ministry are pledged to the establishment of a Commonwealth Bank, they are not pledged to the establishment of a Commonwealth Savings Bank, and on that matter I presume they still have open minds.
– The honorable member has the Bill before him. It states our intentions.
– Then, I take it that the honorable member is bound by every detail of the measure?
– We always mean what we say.
– But honorable members on the other side do not always say what they mean. The honorable member has the courage of his convictions, and puts, up a strong fight for his conclusions. The Prime Minister evidently contemplates taking over the Savings Banks from the States, because he says -
This Government will provide, so far as it possibly can do, for taking over the liabilitiesand responsibilities of the State Savings Banks, if the State Banks so desire.
He thinks that that will inevitably comeabout in any case -
I am not advocating the transfer of deposits from the State Savings Banks to the Commonwealth, but I think that in the evolution of things that will be the inevitable result of theestablishment of this institution.
Being asked if the Commonwealth will continue to do the work for the States which it is now doing, he replied -
I shall not commit myself to that. I think, it is impossible for two Savings Banks to becarried on in the same post-office without some difficulty arising, but I do not say that the StateSavings Banks conducted in postal buildings will be interfered with immediately.
The post-offices provide agencies for the State Savings Banks which, if withdrawn,, will seriously interfere with the businessof those banks. The post-offices are the most convenient places in which to have Savings Banks. Our people have been inthe habit of transacting Savings Banks business in post-offices for a great many years, and probably will continue to go to the post-offices, whether a Commonwealth Savings Bank or a State Savings Bank is located there.
– In my judgment, all the banks throughout Australia ought to be adjacent to the post-offices.
– In the whole of Australia, there are 1,630 post-offices doing Savings Bank business. In Queensland, 128 post-offices are agencies for the State Savings Bank, which holds to the credit of its depositors ^6,376,969, and has invested in Government securities £4,337,440Does the Government wish to create a Commonwealth Savings Bank in order to get possession of the money now controlled by the State Savings Banks, and used by the State Governments for public works, or loaned out to the advantage of the local borrowers? Is it intended to put the Savings Bank funds into Commonwealthstocks, and to devote this money to the construction of works like the transcontinental railway? Under the Workers’ DwellingsAct in Queensland money is advanced to workers at low rates, to enable them to build homes for themselves. The number of buildings erected, or in course of erection, under the Act, for which the contract price was less than £100 is two; while between .£106 and ,£200 they number 72, between .£200 and under ^300 224, be”tween ^300 and under .£400 136, under ^500 ten, under ,£600 two, and under £700 one. There is none whose contract price exceeds ^700. The Agricultural Bank of Queensland advances money to help settlers to make improvements, to buy stock and machinery, and to otherwise develop their land. Last year 905 applications were approved of, covering advances totalling £114,606. The. taking of this money from the States will interfere with local activity which is having very beneficent results. The Premiers of the Labour Governments in New South Wales and South Australia have both protested against what is proposed, and I hope that the Government will agree to strike out of the Bill the clauses providing for a Commonwealth Savings Bank. As for the Commonwealth Bank, my position is that to pass wise, sound legislation, which. will result in benefit to Australia, we must have knowledge, and in this instance the knowledge desirable can be obtained only by an investigation of the nature moved for by the Leader of the Opposition.
– - I have listened to the discussion with great pleasure and much profit. Honorable members may wonder why I sit here for hours listening . to .the debates, but having long since acquired -sufficient know- ledge to understand my own ignorance,-. I am endeavouring to gain all information available in regard to the great and important question that has come before us. During the course of this debate I have beard much that is most interesting and valuable. I regret, however, that some “honorable members -have seen fit to descend :to mere abuse, and have displayed a desire to deal with this as a party question. There is an evident anxiety on the part of :some honorable members to be able to say “later on, “ Remember what I said,” and to -make political capital out of this proposal. I cannot help contrasting with such speeches those made by the honorable mem”ber for Balaclava, the honorable member for Fawkner, and. the honorable member for Boothby. That . delivered last night “by the honorable member for Boothby, in common with- the speeches of many on this -side of the House, was an intellectual treat. He, like the Attorney-General, put before honorable members and the country information that is exceedingly valuable. He told us precisely what banking really is, whereas many honorable members opposite have tried to side-track us. There is an excellent article, on this point in this morning’s issue of the Age. My only regret is that the honorable member for Darling Downs did not read it before commencing his speech this morning, for I am sure that had he done so the first part of his speech would have been just as effective as was the latter part of it. Whether it be . in the journalistic world or in the field of politics abuse is not argument, and it is useless to try to gull intellectual men, in this House by resorting to such tactics. The honorable member for Darling Downs complained bitterly that the Bill was being hurried through the; House. A week has been devoted to the discussion of the motion that it be read a second time, and surely that ought, to be a sufficient time to enable honorable members to effectively discuss it provisions. I find on referring to Hansard some rather interesting facts regarding the time set apart by previous Governments for the consideration of great financial measures. What time, for instance, was given by the late Government, of which the honorable member for Darling Downs was a member, to the consideration of the Bill relating to the Financial Agreement? Under that Bill the Commonwealth was to be tied down for all time to return a certain amount to the States, and when it was before this House, the late Government did something which the present Administration has never attempted, and which I hope it never will do. They “ gagged “ the Opposition which then consisted of the Labour party, and, knowing that the numbers were., up, forced a division. .
– And the honorable member for Darling Downs voted for the application of “the gag.”
– In view of the prolonged discussion that has taken place upon it, I cannot understand why the honorable member for Darling Downs, who has long experience, should have suggested that this measure is being rushed through the House. The Government has not sought to restrict a fair discussion of th’ measure, and in dealing with it honorabl members have had extended to them a latitude that I did hot anticipate would be allowed. Let me point out to the House how ill-timed was the reference by the honorable member for Darling Downs to. the Bank of New Zealand. Its history is so well known that it should hardly be necessary to repeat it. But having listened to the honorable member quoting from the report of the Select Committee statements that suited his purpose, while carefully omitting those which did not, I feel that a reference to that history is necessary. The public are well aware that the Government of New Zealand came to the rescue of the Bank of New Zealand and saved it. It saved it first of all by taking up 500,000 shares, the public also taking up 500,000, and further by depositing with the bank £2,000,000 of Government funds in order to tide it over a trying time. This step proved most effective in building up the credit of the bank. The bank is now paying 12 per cent. to the general shareholders, and only 10 per cent. on the shares held by the Dominion Government. Why the dividends should be so restricted in the case of the Government I have never been able to ascertain. The Dominion Government have practically the management of the Bank of New Zealand, and the right honorable member for Swan, who is a great financial authority, will agree with me that that bank was saved by the intervention of the State. The honorable member for Darling Downs complains that we have not sufficient information on banking to guide us in dealing with this Bill. After the crisis of 1893, however, every State was compelled to make inquiries ; and we have only to turn to the reports of those inquiries to find ample evidence on the subject. Time will not permit me to quote from the report of more than one Royal Commission on the subject. The Commission appointed by the Victorian Government - and which consisted of the following business men : Messrs. Joseph Winter, J. Hume Cook, William D. Beazley, A. O. Sachse, Thomas Scott, Nathaniel Levi, and Thomas Kennedy - reported, after the most careful inquiry -
Upon the evidence, and from other information in the possession of your Commissioners, it is made apparent that it would be desirable in the interests of the country that a State Bank should be established in Victoria.
In that report alone, honorable members will find ample information to guide them in dealing with this measure. Then,again, we have only to look at the work done by the late Sir George Dibbs in coming 10 the rescue of the banks in New South Wales.
I cannot understand why the honorable member should complain that we have no information to guide us, and that we ; are working in the dark. I am inclined to. think, however, that the Age, in a loading, article this morning, puts in a nutshell the whole position of the Opposition ; and I hope that that article will be read throughout the length and breadth of Australia.. It points out that the Opposition, if it desired to deal effectively with this measure, should have risen to a higher plane, and not have descended to the abuse to which we have been submitted. We have heard a lot of twaddle about this Bill constituting a “ raid “ on the Savings Banks of the States. Is it not absurd to talk of a raid by a Government responsible to the people, and who can remain in power only as long as the people choose to allow them to do. so? My own opinion is that the State Savings Banks will eventually be merged into the Commonwealth Bank, because depositors will find that the Commonwealth system offers better and wider facilities for those who wish to obtain interest on their hard-earned savings. One of the objections to the present Savings Bank system is that, if a man requires to draw£100 or £150 out of the Savings Bank, he must give at least a day and a half’s notice. Why should any notice be necessary ?
– Interest is paid on current account with the Savings Bank, and the management must be given some notice of such withdrawals.
Mr.LAIRD SMITH.- I have just been told that, in the case of the New South Wales Savings Banks, such sums can be drawn without notice. I know, however, that before I entered’ politics I had a little money, and it was necessary for me on one occasion to hurriedly withdraw£125 from the Savings Bank of Tasmania. I then found that I had to give a day’s clear notice, and finally payment was made tome by means of a cheque on one of the commercial banks doing business in that State. This system is adopted merely toplay into the hands of the private banks. The cry of the Opposition in regard to a raid on the Savings Banks has been raised to try to frighten the people. These Australian patriots would not mind if their statements caused a rush on the Savings Banks of Australia ; they would not mind if they induced the people to withdraw their money from the Savings Banks and to bury it. The Commonwealth Bank, however, will be able to give both depositors and borrowers greater facilities than the State Savings Banks offer ; and’it will be free from certain influences which everybody must admit exist at the present time. The Associated Banks are so in touch with the Tory Governments in the various States that they are able to influence their Savings Bank management in a certain direction. Why is there any restriction placed on the interest earning amount which a man may deposit with the Savings Bank? The answer appears to me to be that, if there were no limitations, the Savings Banks would interfere with the business of the private banks. We have been asked why a Commonwealth Bank is necessary. Let me point out a few reasons. Banking is a system of credit built upon a very limited amount of gold, and the private banks consist of a few directors and shareholders. Those directors, managers, or shareholders, have control of the gold and of the credit. If they control the credit of the country, they control the business of the country ; and if they control the business of a country, they must have the whole commercial system of that country in the hollow of their hands. They may close down on business men as well as on farmers and producers at any time and that is why opposition is being shown to the establishment of this bank, which will render it impossible for the private banks to continue such a state of affairs. We are asked where the capital of this bank is to come from. Where did the banks obtain their original capital ? I have not been able to obtain authoritative information on the subject ; but I have gathered, from newspapers, that two of the most prosperous financial institutions in Australia started with very little capital. The actual capital that went into one of these was £200,000 ; and within the first fifty-three years of its existence, it paid over , £6,000,000 by way of dividends. Another leading and progressive bank doing business in Australia had a capital of under , £140,000 to begin with. In the first fifty years, that bank paid over £8, 000,000 in dividends.
– What banks were these?
– The first I mentioned was the Bank of Australasia, and the second the Union Bank of Australia; and my authority is the financial writer of The Bulletin. The capital of these banks was, of course, shown in millions, but it was uncalled, and in the pockets of the shareholders. If a crisis arose it would be found that not nine- tenths of the shareholdis had any money, as was the case in thecrisis of 1893. The tottering Bank of New Zealand was saved by the Government coming to its rescue with , £1,000,000 - exactly the capital with which it is intended to start the Commonwealth Bank. But the Bank of New Zealand, like the Commonwealth Bank, has the credit of the State behind it; and credit is all that is wanted. As to what banking generally is, I should like to quote from Macleod, who is, perhaps, the greatest authority on the subject. During my voyage to England and back I waded through Macleod with a view to fit myself to compete with the great intellectual financial authorities on the other side. It would be a good thing if the people knew what the system of banking really is in Australia to-day. The honorable member for Bendigo would have us believe that banking is really a matter of taking money in and lending it out, but, as a matter of fact, the profits are made by the buying and selling of paper. Macleod says -
Contrast between the common notions about banking and the reality.
The ‘ ‘ common notions ‘ ‘ are the basis of all the arguments of honorable members opposite.
Having now given an exposition of the actual facts and mechanism of banking, it will be as well to contrast the common notions respecting it with the reality.
The honorable member for Bendigo, though I can scarcely believe it represents his true opinion, would have us believe that he shares that common idea.
The fact is, that a banker’s profits consist exclusively in the profits he can make by creating and issuing credit in excess of the specie he holds in reserve.
A bank which issues credit only in exchange for money never made, and can by no possibility make, profits.
It only begins to make profits when it creates and issues credit in exchange for debts payable at a future time, which, according to Mill, is robbery ! 1 do not say that it is robbery, but Mill says so. Ve have heard a lot about the capital of banking; andI should like honorable members to realize what the capital of the Australian banks consists of at the present time. Gold and silver represent a little over £30,000.000, and the total assetsare shown as £138,758,266, made up, in addition to the gold and silver coinage, of bullion, silver and gold, £1,322,899; Government and municipal securities, £3,530,890; landed and house property, £4,199,991; notes and bills of other banks, . £1,733,867; balances due from other banks, . £1,343,669. Supposing the banks began tumbling down, what would be the good of the notes and bills of other banks, and the balance due from other banks ? We now come to the great asset, namely, “ discounts, overdrafts, and all other assets,” £97,080,221.
– It is lending fictitious capita! !
– Undoubtedly ; and purely on the credit of the bank, Macleod, in brief, points out that in order to start a bank, a man puts a number of clerks behind a counter, and invites the public to lodge their gold on the credit of the institution; in short, he buys gold with his own credit, although, as in the case of a bank in which I had some money in 1 89 1, there may be not a shilling of assets. Judging from the speeches of honorable members opposite, crisis after crisis has been brought about by banking institutions. That, however, is not so; and on this point there is no better authority than Hyndman in his book on the crises of the nineteenth century.
– The banks accelerate crises.
– I admit that, and will deal with the point later on. Hyndman shows that from 1843the crises every decade were brought about in the Old World by over-production and faulty distribution and exchange. For instance, the merchant or manufacturer, who is working on an overdraft, produces a vast amount of goods for which he cannot find a market; and the bank manager, hearing of the trouble, immediately begins to put pressure on his client. That is the first start of the crisis; and as soon as depositors in the bank get an idea that trouble is looming, thev begin to withdraw their money. It is just here that the usefulness of a State Bank would be shown.
If a State Bank were in existence the people, when they withdrew their money from the private bank, would not hoard it, but would lodge it in the State Bank which would be placed in a position to give stability to the other banks, and thus prevent a crisis. A State Bank would be pretty much what the safety-valve is to the boiler.
– What would the National bank do with the money thus deposited?
– Speaking entirely as a. layman, I fancy the State Bank, if it found that the bank in trouble was really substantial, and only required temporary capital, would come to its rescue ; that is what I understood the Minister of Home Affairs and the honorable member for Balaclava to mean when they spoke about rediscounting. The refusal of banks to discount really paralyzes business, as was shown in the Old World crisis of 1907. That crisis was felt everywhere except in Switzerland, and the reason for that country’s immunity was the existence of the State Bank, which continued to discount at the same rates as before. Much has been said about American banking ; but we know that there is really no system there. There is no State institution ; and the Federal Government have to store their gold and bullion in their coffers. This was doubtless one of the reasons why the crisis of 1907 did not come to an end sooner. Edmund Kelly, who is the great authority on that crisis, tells us that what he calls the “ Wall-street push “ were able to corner the gold, and then proceeded to create a high rate of discount to the ruin of hundreds of people, including the Knickerbocker Trust, the manager of which committed suicide owing to the refusal of the Wall-street bankers to permit him to clear through’ their clearing-house. Banking companies in America do not keep any gold basis, as they are not compelled to do so by law, but they arrange with other banks to do the clearing. The practice of the United States banks is to keep only 15 per cent. gold basis ; and on that they do an enormous business. What is the use of honorable members talking about the failure of little State Banks like that of Illinois? The Wall-street people could crushan institution like that in a few days, because they have the control of what the Minister of Home Affairs calls the money volume. A State Bank would be able to prevent any section of the people from’ cornering the money volume. I admit there is much in the argument against the appointment of only one governor of the proposed bank; but I am prepared to give the one-man system a trial, because it will be easy enough at any time to increase the number. No doubt the Prime Minister and the Government have had excellent advice from those who should know all about banking, and the Prime Minister has taken the responsibility of placing the bank under the management of one man. That man is given a great deal of power, but is restricted in its exercise by being placed, to some extent, under the supervision of the Treasurer. If that were not so, I should certainly seek to have a clause inserted to protect the bank should the Governor decide fo make it a commercial bank. In my opinion the bank will be split up into several departments. We shall have first a bank of deposit, issue, and exchange; then there will be another branch for the great Department of Agriculture; a third branch will be the Savings Bank portion ; and, finally, we may have a commercial branch. I am speaking now from my reading of the establishment of the National Bank of Japan, which alone enabled Japan to pursue her war with Russia to the end. That institution is divided into various branches. I believe that the Commonwealth Bank will not become a commercial bank in the sense that the present Associated Banks are. We have two different systems of banking carried on in Australia at present. I have the honour and privilege of acquaintance with a retired bank director, who was once a manager, having worked himself right up, and I have asked him if I am correct in regard to every one of the statements which I am making to-day. I am not so egotistical as to refuse advice. I find, then, that the Union Bant and the Bank of Australasia will not give certain people the credit that other banks will give, because they wish to keep their finances in a sound condition. Consequently they will discount only real bills. What was it that brought about disaster in most of the banks ? The honorable member opposite who laughs ought to know that many directors in those cases improperly secured overdrafts, particularly in my own State. This applies to the Van Diemen’s Land Bank and others. The directors to whom I refer were in business, and got. the banks to discount commercial bills, or bills which Macleod technically calls accommodation bills. When a bank begins to deal in accommodation bills, it is on very shifty ground indeed. I hope and trust that the manager of the Commonwealth Bank will never indulge in that system of commercial banking. That is why I say that no great number of the present commercial banks will be wiped out. A manager or managing director, speaking recently, gave excellent advice to Australian investors when he said he could see over-investment going on, and warned them to be very careful not to go in for a boom system such as was indulged in in the old days ‘ to which I have referred. I do not think that we shall find the Governor of the Commonwealth bank indulging in that system of banking, which was brought about, to a great extent, by the directors, instead of the managers, managing the banks. Any bank that was content to be guided by the sound -financial expert who was its manager, weathered that crisis. It was the banks whose managers were over-ruled by the directors that went under. The managers had to suffer, but in many cases it was the directors who were responsible for the ruin, because they compelled the managers to grant overdrafts.
– Do not say that, because the Opposition have been “ cracking up “ these marvellous directors.
– We know the part they played in 1893. I was in conversation the other day with an old couple who were worth thousands of pounds when the banks broke, but who are now drawing old-age pensions. It is not at all likely that the Governor of the Commonwealth Bank will take the risks that were taken in those days and that are probably being taken again to-day. Trouble has been caused ever since 1797 owing to bank directors over ruling managers and making advances on their own responsibility. I say, “ Leave the management to the manager, and do not let novices interfere.” After all, a director can only be a novice, considering his multifarious other duties, and cannot go into the details of bank management as a manager does. I therefore hope the day is far distant when we shall have for the Commonwealth Bank a Board of directors, consisting of men who have not had the training that they should have before they can run a great financial institution. T hare dealt with this question as a layman only, and do not pose as a great authority on banking. I ask the other sio?: to admit honestly that 1 have searched deeply into this question, so far as I have been able, hard-working as I have had to be to get my living, in order that I might speak intelligently upon it in the House. I am here to gain all the knowledge I can on the question, and so I have listened attentively to members on the other side. I appeal to them to raise this great issue above party feelings, and not to condemn the Bill merely because the Labour party have introduced it, or simply to have something to say to their electors when they go on the hustings. I have taken a little longer time than’ I intended, but I appeal to honorable members once again to act on the good advice which I have given them this morning, and raise the debate above the tone given to it by certain speakers.
– I approach this question with a good deal of diffidence, not being an expert, and not having had the time, to say nothing of the inclination, to wade through two volumes of Macleod, as the honorable mern.le/ for Denison announced that he had done. The circumstances under which the honorable member performed that task, according to his own statement, hardly fit in with his more recent declaration that he had had to do it as a working man, because he recounted how he did it on his way to the Coronation festivities. Had I had the opportunity of doing the same, I should probably have given the House much more of Macleaod and much less of Laird Smith.
– I am glad the honorable member admits that he is not a working man.
– I said nothing of the sort. The honorable member, with the remarkabke agility of mind which he has displayed during the discussion of this question, has jumped from one position to another, and is anxious to have an awkward interjection placed in my speech. I am a hard-working man, and rose early to do hard work this morning, in order to be able to be present to speak upon this question. I shall endeavour to do what the honorable member did not do - to keep within the time limit which I have imposed upon myself. The strictures which the honorable member passed upon members of the Opposition and on members of his own party who have addressed themselves to this question, were not altogether deserved. 1 hope the time is far distant when we shall take all our opinions as to discussions that take place in this chamber from leading articles in the daily press. I have listened to most of the speeches delivered on the subject, and venture to say that they were remarkable on account of the absence from them of the very elements which the honorable member endeavoured to make us believe were always present. There seems to be an honest desire on the part of honorable members on both sides of the House to discuss the question purely from the practical stand-point, and so 1 must at once join issue with the honorable member in regard to the way that he has libelled honorable members who have spoken.
– The speeches are on record.
– Unfortunately the people who have not the time or the inclination to read the official record of the debates often accept speeches at the valuation which one of ourselves may put upon them, as the honorable member for Denison has done in this instance. I regard this Bill as an attempt on the part of the Government to carry out the policy which was dictated to them by the Brisbane Labour Conference. It was at that gathering that the instructions were issued to the representatives of the Labour party to establish as soon as they had the power a Commonwealth Bank. That policy was largely shaped by the present Minister of Home Affairs. It was he who brought the subject before the Conference, and it was mainly owing to his exertions that it became a distinct part of the Labour policy. I regret to say that, once it was adopted, the member responsible for its adoption seems to have dropped altogether out of the subsequent consideration of the question Any one who has read the speeches delivered at that time in this House by the honorable member for Darwin - many of us have read them, and I listened to them, because I had to - must have been struck with th<» completeness of the honorable member’s knowledge.
– Was the honorable member’s official position the only reason for which be listened to them ?
– I enjoyed them, and the honorable member for Darwin will admit that in the position I occupied I gave him special facilities to make his memorable speech. His influence, however, seems to have been altogether dis- regarded in the subsequent proceedings. There is only one part of the Bill where the honorable member’s finger may be traced.
– I believe the manager of the Bank of Queensland has had most to do with it.
– That may be so, but I do not like to say these things unless I have good grounds for them. The general idea of the supporters of this proposal for a Commonwealth Bank - I give this as my opinion formed in conversation with members of the Labour party who support it - seems to be that it is to take the place of the present banking institutions, because they regard them as being. unsatisfactory. They think that they have not done the work which’ institutions of that character should do in such a community as ours, and that the work they have accomplished has been done at the expense and to the detriment of the people as a whole. That seems to be the idea underlying the proposals for a State Bank.
– And the need for providing for the stability of future banking.
– Happily, that has not to be taken into our calculations, because the Governments of the States have always been prepared to support sound institutions ; and the only institutions which came to the ground during the financial crisis were those of mushroom growth. Although a call was made on the others which was far beyond what they might have been expected to answer, they survived because the Governments stood behind them.
– Some of them wished to close their doors; but the Government would not let them.
– The Government of New South Wales acted very wisely under the circumstances referred to. It has not been in Australia as in other parts of the world, where Governments have not been ready to assist institutions in which the public was largely interested. The honorable member for Denison instanced the case of two old-age pensioners who lost some thousands of pounds by the failure of financial institutions; but he did not say whether they were depositors or shareholders. Probably they were the latter, because shareholders suffered most by the bank failures. Losses of that kind will not be prevented bv the establishment of theCommonwealth Bank. Human nature will remain what it is, and persons who have money to invest will always placeit where they are likely to get the highest return. There is, however, a general feeling that the Commonwealth Bank will lend money at lower rates than now operate, a view which is largely supported by honorable members opposite. It is said that the banks rob the people by charging high rates of interest, and that a Commonwealth Bank will charge lower rates, and will give higher rates for money placed on deposit. In my University days, when attending the natural philosophy classes, I heard the professor telling us that every year there was submitted to him an invention for establishing perpetual motion, and always in the same form : that of a large vessel containing water, which, pouring on to a wheel, worked a pump, which returned the water to the receptacle in which it was originally stored. Of course, it never worked. The people are being offered a similar invention in this proposal to give high rates to depositors, and charge low rates to borrowers. The tank at the top will be emptied in a very short time if an attempt is made to give effect to this policy. The Government, in proposing a Commonwealth Bank, is fulfilling its promises to the electors, and giving expression to class feeling ; because, in some crowds, one would only have to say, “There is a bank director,” to hear the remark, “ Heave half a brick at him.”
– Are they the crowds with which the honorable member mixes ?
– No ; crowds such as return the honorable member for Adelaide. There is strong animosity in some quarters against the banks; and, unfortunately, it is constantly being excited by the making of statements which have little foundation in fact. The banks have honestly and effectually carried on a very necessary work.
– It is far more common to hear a remark to this effect, “ Here is a working man, send for the police.”
– The interjection indicates the company kept bv the honorable member for Adelaide. He is in a very Conservative environment if he finds such antipathy to the workers amongst his associates. In the circles in which T move, the working man is appreciated. I counsel the honorable member to choose company whose opinions, are more in accord with thoseof his constituents. Ministerial supporters are extremely restive under the criticism of the Bill; but that is not surprising. In the first place, they feel that the Bill is demanded of them by their electors ; and, in the second- place, having had to suffer the discussions in the Brisbane Conference and in the Caucus, and their minds having been made up for them, they do not wish to hear anything more about the subject. I sympathize with them under the circumstances. No doubt the honorable member for Gwydir would think our time much better employed in discussing the Postal Commission’s report. I do not agree with those who say that the Prime Minister has been unfairly criticised for the manner in which he introduced the Bill. I have not heard any unfair criticism on his speech, which was remarkably simple, practical, and to the point.
– He did not tell us much.
– There are those who think that a speech of importance must fill many columns of Hansard/ but when a speaker has not a thorough and complete grasp of his subject, it is better to be concise and simple than to cloud the issue with an exuberance of words. The Bill is remarkable, rather because of what has been omitted from it than because of what it contains, so much being left to the future. I am surprised at the tameness of honorable members opposite in accepting government by regulation, and so submitting to the violation of a plank in their platform to which they have always professed themselves warmly attached. I was under the impression that they always stood up for government by Statute. They have always opposed proposals whether contained in Bills or made by way of resolutions to provide for government by regulation, yet we find them taking no exception to proposals in this Bill for government by regulation of the widest possible character. The whole business of the bank is to be a matter of regulation, and the conduct of the Governor is to be determined in the same way. In passing, I may say that I am surprised at the selection of the title of “ Governor “ for the general manager of this bank. Members of the Labour party have often objected to the word. I thought that Governors were to be abolished.
– This will be a useful Governor.
– Then’ why not give him a useful name? He should be known as the “ general manager “ of the bank. This Bill, it has been said, provides for a one-man bank, and with a strong man holding office as Governor that will undoubtedly be the result. We shallhave an institution governed according to the predilections of one individual. Here again we have a remarkable departure fromthe platform of the Labour party. Individualism of the most rampant form is tobe introduced into the government of thisinstitution. The term for which the Governor is to be appointed is fixed, but hissalary is not, the only thing fixed in regardto it being that it shall not be reduced. It may be increased, but it is not to suffer diminution. We have had some indication, in this morning’s newspapers, not necessarily of the name of the gentleman to be- appointed-
– There is nothingin it.
– At any rate we have; had some indication of the salary which .the Governor of the bank is to be paid. Queensland, I may say in passing,, seems to occupy a most remarkable position with regard te Commonwealth appointments. Several reasons have been urged for this, one being that the rival claims of New South Wales and Victoria are so strong ‘ and so difficult of settlement that Queensland appears to offer a sort of alternative.
– If the honorable member pursues that line of argument, I shall have to rise to a point of order.
– I am notgoing to be deterred from expressing an> opinion by any such threat.
– I rise to a point of order. The honorable member is now discussing the appointment of the Governor to the bank, and has said that Mr. Ralston is to> receive the appointment.
– I have not.
– The honorable member, I submit, is not in order in discussing thequalifications of Victorians, Queenslanders,, and New South Wales men for the position.
– Unfortunately I did not hear the remark made by the honorable member to which exception is taken,, but I am sure that he will not transgressin any way.
– If I have offended the feelings of any Queensland’ representative by describing Queensland as; a fortunate State, I shall certainly withdraw the remark.
– Nothing could be more offensive to Mr. Ralston than this bringing in of his name. It was a shameless piece of journalism to publish such a statement. Mr. Ralston is not an applicant for the position, and never was.
– I am sure that the Prime Minister was not responsible for the piece of journalism of which he com- plains, and I may tell the right honorable gentleman that I did not mention Mr. Ralston’s name. In a jocular spirit I was referring to the remarkable success of Queens landers, and giving reasons which I believed had led to the appointment of Queenslanders to some of the principal offices in the Commonwealth service. Returning to the consideration of the Bill itself, I find that in clause 7 the influence of the Minister of Home Affairs evidences itself. Indeed it is the only portion of the Bill in which I have been able to discover any -evidence of that influence. That clause provides that the bank, in addition to other powers, shall have power “to acquire and hold land on any tenure.” Here we have the influence of the Minister. I hope that my honorable friends from New South Wales will not think it necessary to rise to a point of order when I point out that the honorable gentleman has had inserted in this Bill another of those provisions whereby he can satisfy that earth hunger on his part to which I have already alluded in this Chamber. The Minister has far-reaching ideas with regard to the acquisition of territory, and under this Bill opportunities will be afforded him, with the enormous amount which it will place at his disposal, to give effect to a large extent to his aspirations. We know that in Sydney recently he announced that it was his intention to -acquire, in the heart of that city, a large block of land worth many millions of pounds.
– What has that to do with this Bill ?
– This bank will provide the money whereby that and other areas may be acquired. The power possessed by banking institutions to acquire land has been largely responsible for the severe attacks to which they have been subjected. It is because they have the power to acquire land - and I am not going to say how they acquire it - that they have had to submit to the most bitter opposition, and this proposal to allow the Commonwealth Bank to acquire land is, I think, a most dangerous one. I leave out of account the prejudices of the Labour party to the granting of freeholds. They do not believe in selling the freehold of lands, but they are quite prepared to acquire a freehold tenure whenever the opportunity offers. This proposal, however, is a most dangerous one, seeing that we shall not have the degree of supervision over the general manager of this institution which is exercised in connexion with the management of other banks. We know that many banks have acquired land that has been a dead weight, so to speak, around their necks. The losses that have been made by the banks of Australia through the acquisition of land is greater than all their losses from other sources ; yet we are going to give this power to the Governor of the Commonwealth Bank without even taking the precaution of providing for the ordinary supervision of a board of directors.
– The power to acquire land is the corollary to the power to make advances on the security of land.
– I suppose it would be. The bank is also to have power - to deal in exchanges, specie, bullion, gold dust, assayed gold, . and precious metals.
That covers all ordinary banking business, and the Government had only to include flat-irons and domestic utensils to make this bank an up-to-date pawnbroking establishment. In clause 32 it is provided that the Governor may, with the consent of the Treasurer, make rules, but there is no provision for meetings of the Treasurer and the Governor, or for minutes of such meetings to be taken.
– That will be provided for by regulation.
– Here, again, in a vital matter of this sort, we have the party who objects to government by regulation, giving itself over body and soul to that method of conducting public business. For the protection of the officials of the bank, and more especially for the protection of the Governor himself, there should be regular meetings betwen himself and the Treasurer, of which a record should be kept, and those minutes should be signed by the Treasurer’ himself. The bank is to have a common seal, but the Bill does not state by whom it is to be affixed or in whose presence it is to be affixed. The articles of association of ordinary companies always make provision for the manner in which that work shall be done. and in whose presence the seal is to be affixed, but no such provision is being made in this case. The matter is a most important one, because the affixing of the seal of a bank to a document involves the legality of its actions as a bank ; but this, too, is to be left to regulation. I wish now to allude to the question of Savings Banks. I do not agree with those who say that the present State Savings Banks are to be abolished as the result of the establishment of this institution. Like the honorable member for Denison, I desire to give the experience of my own State, but, unlike him, I do not wish to suggest that that experience is the experience of Australia. The Savings Bank of Victoria has established a number of branches, and these will continue to carry on even after what the honorable member for Parramatta has described as the Post Office eviction has taken place. There are only 354 post-offices which act for and do business on behalf of the State Savings Bank, and according to the last report of the Inspector-General of Savings Banks the amount deposited in. respect of those Post Office branches is £1,207,000, as against , £12,000,000 deposited in the remaining sixty-nine branch offices. It will be seen at once, therefore, that the real volume of the bank’s business is conducted in the branches themselves, the Post Office agencies merely acting as feeders. It is estimated that the loss of new business to the State Bank, due to the establishment of the Commonwealth Bank, will be less than the annual average growth of our Savings Bank business in Victoria, which amounts to , £2,000,000 a year. It is anticipated that the total loss of business for the first year will not amount to more than £1,000,000. It is anticipated that the Commonwealth Bank will be established in our various post-offices, and in that way will deprive the State Savings Bank in the first year of about £1,000,000 of additional business which it would otherwise obtain.
– Who will suffer ?
– The people in the outlying districts. The Savings Banks, however, are not going to submit quietly to this sort of thing. They will compete with the Commonwealth for business, and endeavour to retain that which they already have.
– Competition is the soul of business.
– I “am glad to hear the honorable member say so, although he cannot believe that it is, since he favours preference to unionists.
– Does not the honorablemember ?
– I do not.
– What about the medical union ?
Sitting suspended from 1 to 2.15p.m.
– It is verydoubtful, indeed, whether the Commonwealth Bank will give Increased facilities. In Victoria, of which State, of course, I know most, Savings Banks orders, in- at. place like Clunes, are sent to Creswick, only 10 or 12 miles distant; whereas,, under the Commonwealth system, all such orders will have to be sent to the hea3 office in Melbourne. I feel sure that the Postal Department will not be prepared tolend itself to a system whereby work of this character will have to be carried on by the various postmasters ; and I am afraid there will be rather a diminution than an increase of facilities. It will mean a great deal more time ; and the honorable member who complained about the delay in securing withdrawals will find that delay much increased under the Commonwealth. I think I am justified in saying that the establishment of this bank will decrease the amount of new business done by the present Savings Banks. This, of course, will mean a decrease in profits, and that, in turn, will prevent any increase in the rate of interest to the depositors. It is news to me that there will be a run on the Savings Banks because of the creation of this Commonwealth Bank. I cannot conceive anything of the sort; and T do not know whence came the suggestion.
– We are told so by the headings in the Argus every day, such as”A Raid on the Savings Bank.”
– Honorable members opposite always seem prepared to accept newspaper headings and paragraphs as true. I may say that I have not heard any suggestion of the kind ; and, if such has been made, I declare without hesitation that it is without warrant. There is no need to anticipate any run on the Savings Banks ; but if a run does take place, the banks will be able to meet it. If the States, which are behind the Savings’ Banks, could not meet the run, they would go to the very authority which is displacing them, namely, the Commonwealth ; and I feel sure that the Commonwealth would give all the assistance desired. My own opinion, however, is that no such assistance will ever be required. There is a large amount of money held and used by the Government in our Savings Banks. The Credit Foncier bonds represent large sums, and the various issues of debentures made by the State Governments from time to time have been covered by the Savings Banks. That is a very proper thing, because the two are related, and are working just as a Commonwealth Bank would work for the benefit and advantage of the country as a whole.
– Then the honorable member is not opposed to a Commonwealth Bank?
– Certainly not, and I hope nothing I have said can be construed into opposition to the institution of a Commonwealth Bank.
– Is the honorable member voting for the amendment?
– Would the acceptance of the amendment defeat the Bill ?
– It is .introduced for that purpose.
– The suggestion now made pre-supposes the possibility of gaining quite a number of votes from the Ministerial side. We know, however, that every amendment launched from this side is absolutely useless; we cannot hope to get any support from the- Ministerial side, especially on a question of policy. Honorable members who said that this amendment is proposed for the purpose of defeating the Bill and preventing the institution of a Commonwealth Bank, are saying something that they would find it very difficult to prove. In New South Wales, where there are more postoffice Savings Bank agencies than actual branches, there will be some difficulty; and in Queensland and Western Australia, where the post-offices only are used, the difficulties will be great. It will mean that the Savings Banks will have to institute branches outside Government control. In Victoria, in the Savings Bank, there is a very large and highly-trained staff ; and this is a point to which I direct the attention of the Prime Minister. The right honorable gentleman will find it very difficult at the commencement of the operations of the Commonwealth Bank to secure for it that body of highly-gained men so absolutely necessary for the proper conduct of such an institution. Most- of our banking institutions have grown up very gradually, and the education of the officers has been a matter of careful attention on the part of those responsible for the banking business. I do not believe that the Commonwealth Bank for very many years will be able to do as much for the people of Victoria as has been done by the Savings Banks. The latter conduct the whole of the Credit Foncier business, which has been of inestimable benefit to the people, and has been amply justified by results. The number of farmers’ loans current on 30th June last was 3,095, with an average amount of .£422 os. nd. The number of repayments was 7,105, representing interest amounting to .£59,666, with a sinking fund to reduce the principal of .£29,739. Only six farmers in the whole of the State of Victoria were in arrears with their payments; and that is a remarkable state of affairs, which amply justifies the action of the State Government in advancing this money. The Savings Bank in Victoria is now going further, and making advances on the shops and homes of people living in the centres of population; and here, again, results are an ample justification. Over £1,000 a week is now being issued from the State Savings Bank in this connexion, with an average loan of ,£300, showing the class of people who have taken advantage of this method of tiding over temporary difficulties, and of obtaining much better surroundings than in the past. The people are now being asked to desert these methods, and turn to a Commonwealth Bank; but my own opinion is that, for many years to come, they will not be prepared to do so. A great number of the people to whom I alluded at the beginning will, I think, be grievously disappointed, because the Commonwealth Bank will not give them what they have been taught to expect - it will not give them that cheap money which they have been told they would be sure to get, nor will it provide any better channel for those who have money to invest.
– The honorable member will admit that the establishment of a Commonwealth Bank will bring down the rates of interest paid by the other banks?
– I do not think it will bring down the rates of interest inthe case of the people with whom I atn- immediately concerned, namely, the persons who are borrowing from the Savings Bank.
– I was referring to the private bank rates.
– If the Commonwealth Bank dares to go below the rate of interest charged by the Victorian Savings Bank it will be courting disaster. The Savings Bank is conducted, not for the purpose of making money, but for the purpose of assisting people who are in need.
– The small men.
– Quite so; there is no desire to make a profit, and neither should there be in the case of the Commonwealth Bank. That being the case, I believe that the Commonwealth Bank will not be able to offer even as good terms, for many years to come, at any rate, as are offered under the State system. For that reason I say that a very large number of people will be grievously disappointed. That, however, is a matter which, apparently, does not concern honorable members opposite, so long as the policy they are endeavouring to fasten on the people is advanced step by step. The proposed Commonwealth Bank is one of those steps ; but it is one which I think will lead in a downward direction, because it will absolutely fail to give the expected satisfaction and opportunity to a large number of people, many of whom hope and believe it will, because they do not know even the elementary principles of banking.
– I desire to congratulate the Government on having, at any rate, made some advance towards the establishment of a Commonwealth Bank. This is a proposition which has been talked of by nearly every party for many years ; and the most remarkable fact is that, when there is a formal proposal before us, various methods, by no means direct in their character, are used to discredit the action of the Government. It is a singular coincidence that in the case of practically every measure introduced during the last two sessions similar tactics have been adopted. No direct motion has been tabled in any second- reading debate, but we have subterfuges, as on the present occasion, for shelving the proposals for an indefinite time. The honorable member for Laanecoorie tells us that he is not against the Bill.
– I did not say that ; I saidI was not against the establishment of a bank.
– It is much more easy for an honorable member to justify his position when he declares that he only desires more time and information than if he openly opposes a measure of this kind. I desire, further, to congratulate the Age on its article of to-day. It is pleasant, indeed, to observe that this powerful journal has some lucid moments. The article this morning reminded me of the days of my youth, when the Age stood behind the late Graham Berry in his fight for reform; indeed, I thought I had been carried back to that period. It is pleasant to see that the Age has its eyes open in regard to this Bill, and that it does not look upon it as the bogy which the Opposition would make it out to be, or, as the Argus declares, a “ raid on the Savings Banks.” It is admitted in the Age article, and, indeed, by every member of the Opposition, that a Commonwealth Bank is required. At the same time all sorts of objections are raised ; and the honorable member for Laanecoorie suggests that it will not be possible for the Commonwealth Bank to pay a higher rate of interest on deposits and charge a lower rate of interest for loans than is done by private banks. The honorable member must not forget that the object of this proposed bank is not. dividend-making. If that were the object, it would not be the bank that I personally desire.
– It is to pay off the National debt.
– No, it is not. The chief function of the Commonwealth Bank will be to regulate the rate of interest, and make money cheap to the producers of the country.
– The Prime Minister said it would pay off the debt.
– It is very possible that’ it will assist in paying off the debt, inasmuch as, when we are dealing with the Consolidated Debt, we shall probably be able, through this bank, to negotiate for loans at a cheaper rate than hitherto; and if we only place what we. save in interest to a sinking fund, it will assist largely to pay the debt off. When the late Charles Cameron Kingston introduced in South Australia the Bill for a State Bank, the same arguments were used as have been used on this occasion. The honorable member for Angas, for instance, practically used the same arguments then as he did this week. The opposition to that measure then was exactly the same as the opposition to this measure now ; but its opponents had, on that occasion, the satisfaction which the Opposition in this House have not got, of having a Legislative Council which could, to a certain extent, stultify the operation of the Bill, although even the Legislative Council had not the courage to throw it out altogether. They tried, however, to kill its usefulness ; and did so, to some extent, by mutilating it during its passage. The very first effect of the passage of that measure was to fix the rate of interest at 4!- per cent. I had something to do with many of the primary producers at that time, who had been passing through severe times-
– The opposition to this measure is on quite different grounds.
– The honorable member knows that what I am saying is quite correct.
– Only half of it is correct.
– The honorable member has not heard the other half. When that Bill was introduced, to my own personal knowledge, and I am certain to the knowledge of the honorable member for Wakefield, the rate of interest on a good many securities was 8 per cent. The moment that that little bank, mutilated as it was. became a factor in the financial world, the gentlemen who were charging 8 per cent, were told by their clients that they were going to take their business to the State Bank, which would lend money at a per cent. They at once said, “ There is no need for you to do that ; we will let you have the money at 4 per cent.”; and this was done to the extent of scores of thousands of pounds, as the honorable member for Wakefield knows.
– I do know; but that has nothing to do with our opposition to this Bill.
– I simply said that the arguments of to-day were the arguments of that period. The primary producer will derive the benefit of cheaper money ; and I venture to say that it will make the use of money more productive for his purposes. This bank is not to pay a long dividend list, nor is it expected to pile up great reserves for the benefit of particular shareholders. Rather, it is to be run in the interests of the community generally upon sound lines. It must be conducted on the most economical lines, and at the same time provide cheap money for the primary producer who, after all, is the greatest factor in the prosperity of this country. It is not to the amount of work which this bank will do for some years that I look for the benefit which the people will derive, so much as to the establishment of a rate of interest and scale of charges in connexion with banking institutions all along the line. Whatever rate of interest we fix in connexion with this bank, and whatever conditions we establish, we at once become a competitor with the existing banks. We are not inside of the bank ring,and no power can bring our bank within that ring. It will stand out distinctly as being conducted in the interests of the country as a whole. As an illustration of the effect of a step of this kind, a few years ago, a small State creamery was established in South Australia. The people were told by its opponents that this little twopennyhalfpenny affair would make no difference to the dairymen ; but personal inquiries in the north showed me that, in many places, it made a difference of 4s. on the ordinary can of cream, because it established a fair price for the article.
– For about three weeks. I happened to be in the business, and ought to know.
– It was for far longer than three weeks. While I have spoken in favour of a Commonwealth Bank, I do not regard this Bill as exactly the proposition that I want. I would sooner see three men than one at the head of the bank. It is not too late yet for the Government to take that question into consideration, because I believe there is more wisdom in three men than in one at the head of a large affair like this. I want the Government to hesitate before they force the Savings Bank provisions of the measure through. I wish to impress upon them that this is not the scheme that was agreed to. It is not the scheme that took the States in as co-partners. In any Savings Bank scheme I want, the opportunity and the right to be given to the States to come in as co-partners if they wish. I can assure honorable members opposite that no attempt is to be made to raid the State Savings Banks, but certainly a Commonwealth Savings Bank would come into competition with them, although the competition will be on different lines from the competition of the Commonwealth Bank with the Associated Banks. All the private banks have their own buildings md establishments. but in South Australia at any rate, with the exception of the head office in Adelaide, the whole of the Savings Bank business is conducted in the post-offices. If we establish a Commonwealth Savings Bank in opposition to the Savings Bank in South Australia, without first making some arrangement with it, we shall either have to allow the two institutions to be run together in every post-office throughout the State, each collecting its own moneys, or we shall have to deny the State Savings Bank the facilities which it has had in the past.
– Is not that the intention ?
– I do not think it is.
– The Victorian Savings Bank has already been making arrangements in anticipation of it.
– I still hope that a different arrangement will be made. I cannot see why the States should not be allowed to co-operate in the Commonwealth Savings Bank, utilizing the present facilities.
– We have never had much inducement in the past to approach the States.
– That fact would not deter me from asking them again. Whatever the States may have done to us in the past is no justification for our doing anything which will injuriously affect the State Savings Banks now. We ought to approach the States or make it possible for them to avail themselves, so far as the Savings Banks are concerned, of the Commonwealth arrangements, and to participate in the advantages of the Commonwealth scheme. I have already made my representations to the Prime Minister on that subject, and am now putting it upon record that I want that alteration made. I venture to say that there is a majority in this House who want it made, and. if I were on the floor of the Chamber, ] should certainly move in that direction, but as I shall be in the Chair during the consideration of the Bill in Committee, 1 desire now to put my attitude on record. I still hope, and I do not think I shall hope in vain, that that alteration will be made. With that alteration, and, perhaps,a reconsideration of the question of whether there should be three men or one man at the head of the bank. I think we shall have a very practical useful bank, which, as it grows, will gather business. It is, however, not the business which itwill gather, so much as the way in which it will regulate the conditions of banking generally, that will directly benefit the people.
.- It was rather pleasing to me to hear the last two speakers on the Ministerial side go’out of their way to congratulate the A ge on an article which appeared in this morning’s issue. My reading of the leading articles of that able journal during the last two or three months has shown me that Ministers and the Labour party generally have been getting a very rough time indeed from it, and I can easily imagine the great delight which they felt when they read the article to which such kind reference has been made.
– They have taken you up.
– The Age has never treated me very hardly. It has strongly criticized me at times, but I have been able to live under the criticism, as I hope I shall always be able to do. The honorable member for Grey accused the Opposition of not having the courage to vote against the Bill. I wish the House and my constituents distinctly to understand that I am absolutely prepared to vote against it. It is a Bill, not for the establishment of a bank on commercial lines, but for the establishment of a Commonwealth Bank with a distinct taint of the influence of politics about it. I have no hesitation in voting against any such measure, nor do I believe that any member of the party to which I belong would have any hesitation in voting against it. I should think that even those members on the Ministerial side of the House who talk so largely about the purity of political life, for which they claim to be to a great extent responsible, ought to keep a great commercial concern, such as the Commonwealth Bank might become in the future, free from any political element. We know that political control is not good either for the politicians, for the institutions controlled, or for the people.
– In what respect will the Commonwealth Bank be under political control ?
– ThePrime Minister stated that thoseelected to this Parliament from time to time will practically control the affairs of the bank, and the measure puts itsgovernment largely under the domination of the Treasurer of the day. I should like honorable members opposite to disabuse their minds of the idea that we on this side wish to discredit everything proposed by Ministers. All we do is to criticise, and here, since the policy adopted is one in which we have told our constituents we do not believe, we are bound to oppose it. The Australian Notes Act is a very different measure from that introduced by the Government, and nearly all the amendments were made by the Opposition, but after the insult put on us by the Prime Minister, who said it was not the duty of the Government to supply information to the Opposition, 1 should feel disposed, if I had my way, to withhold Opposition assistance in perfecting this measure, for which, if it is a success, the Labour party will claim all the credit. We are being asked to put aside precedent, and to disregard the experience of other countries. All we have had in support of the Bill is the speech of the Prime Minister, who gave us nothing like the information to which we are entitled, and which is needed. Although I am a member of a profession which pays great respect to precedent, I am not inclined to keep wholly to the well-trodden paths, especially in political matters. This is a young country, with magnificent resources, populated by an enlightened people, and we should be ready to launch out upon new policies when we think the community likely to be benefited thereby, but that does not mean the putting aside of the experience of other countries. The honorable member for New England and others airily disregarded the criticism of the Opposition, but speeches like those of die honorable members for Angas, Bendigo, and others on this side are not to be disposed of in that fashion. They should have been met with arguments and information. I confess to a feeling of disappointment at such treatment of the criticism of men of ability and experience.
– The banks, with all their experience, have not made a great success of their business from the people’s point of view.
– At any rate, the honorable member for New England last night went out of his way to praise the banks. He spoke of them as magnificent institutions, which had transacted their business on the lines of the strictest honesty and integrity.
– What about 1893?
– The honorable member for Denison held that the banks were not responsible for the trouble of 1893, and the honorable member for Mernda, than whom there is no more capable financial authority in this House - I doubt if any other member could have made the speechwhich he did the other night - proved that that crisis was not brought about by the banks. The reasons for it, given by the honorable member for Denison, were overproduction, and faulty distribution and exchange.
– It was due to the inflation of values by the banks.
– I do not know that the honorable member was intimately connected at the time with large financial transactions, or that he occupied a position then which makes his opinion on the subject very valuable. I give the late Sir George Dibbs all the credit to which he is entitled for the action he took; but he had the whole of the New South Wales Parliament behind him. I know that, because I was a member of the Opposition there at the time. What was done was done by the Parliament. An Act was passed making banknotes legal tender.
– The Government guaranteed them..
– Only for six months.
– What was done did not prevent several of the banks from closing their doors, and on the Savings Bank at Moore-street a notice was exhibited, signed by the Premier, saying that the Government undertook to pay sovereigns to all depositors who wished to withdraw. What is proposed is not a banker’s bank,, nor an institution such as the people have been led to expect, which would give them cheap money and add to their happiness. The miners in my district were told that a Commonwealth Bank would increase their comforts, and that their wives would never be at a loss for money on Saturday nights. I can fancy their disappointment when they hear of the institution that is really being established, and know that all that the Government is doing is to add another commercial bank to the twenty-two already in existence here. But it is a disappointment to us that the Minister of Home Affairs, who brought this matter so, prominently before the Brisbane Conference and before this House on various occasions, it being the dream of his political life to establish a national bank, was not permitted to introduce the Bill. I shall support the amendment of the Leader of the
Opposition, because I think that the measure should be referred to a Select Committee with a view to obtaining further information. The Prime Minister certainly did not supply us with all the information needed, and I am sure that, prior to the delivery of the speech of the honorable member for Bendigo, many honorable members did not know that the Bank of England, the Bank of France, and the Bank of Germany are not Government institutions. Certainly, very many of them must have been under the impression that the Bank of England was a Government institution.
– It is no wonder that the honorable member asks for further information.
– I am not one of those cocksure young gentlemen who come into this House at the age of twenty-five or so, and think they know everything, from the Labour platform to the solution of the most intricate commercial problems. I freely admit that I have a lot to learn, but if there is one thing more than another that causes me surprise, it is the absolute cocksureness of .the younger members of the Labour party.
– The honorable member has more to learn than I thought he had.
– I am willing to learn, and that is why I propose to vote for the amendment. I am satisfied that even the members of the Caucus party have not all the knowledge that is requisite in connexion with this question. It has been urged that the credit of the Commonwealth behind this bank will, of itself, be sufficient to insure its success. The Opposition have pointed out, however, that something more is necessary, and I have heard nothing to refute their contentions. It has been shown that the backing of the State is of itself absolutely valueless in insuring the stability of a bank. The honorable member for Bendigo referred yesterday to the failure of numerous State banks in the United States of America. He mentioned the failure of banks in Kentucky, Alabama, Illinois, and other States, all of which were backed by their respective States. The Commonwealth Bank is to commence operations with a debt of ;£ i, 000,000. Unlike private banking institutions whose capital is subscribed out of the wealth of its shareholders, the Commonwealth Bank is to raise funds by selling debentures. The Treasurer, it appears, will always be able to regulate its finances. It has been clearly shown that banks without a sufficient supply of gold - banks having nothing more substantial than the backing of the State - must come to grief, and before we launch this great scheme we are entitled to be shown that the position of Australia is different from that of the United States of America in this regard. Why should the Commonwealth Bank be immune from the difficulties that have been experienced by American State Banks?
– What National bank ever failed ?
– I have just referred to a number of American banks which had the backing of various States, but yet came to grief.
– Not one of them was a National bank.
– There is no special charm or magic attaching to the use of the word “ Commonwealth.” The position is the same whether the backing is that of a State or of the Commonwealth itself. On all these subjects, we should be able to obtain valuable information from the investigations of a Select Committee. It has been said that the Opposition have not attempted to criticise the provisions of the Bill, but I have heard several speeches, in which various clauses were submitted to the most scathing criticism. The AttorneyGeneral, a night or two ago, indulged in some fine heroics, but did not attempt to meet the position taken up by the Opposition. He simply indulged in one of those clever speeches of his by which he always manages to extricate his party from a difficulty, but he gave us no enlightenment regarding the details of this measure. We could but admire his agility, although he left us entirely in the dark concerning a number of matters on which we desired to be enlightened. We are told that the time is ripe for the establishment of a Commonwealth Bank, and that the Opposition are always indulging in gloomy forebodings regarding the result of legislation by a Labour Government. I must admit that I am by no means satisfied that our Commonwealth note issue will be a success. The system has been in operation for only a few months, and no one can say that our experience of it is sufficient to enable us to determine whether or not it will be successful. It came in on the crest of a wave of prosperity. We have been enjoying splendid seasons, but no one would like to predict what-might happen to the issue after a succession of bad years. I sincerely trust that these gloomy forebodings will not be realized ; but I want to be shown that there is any real necessity for the establishment of this bank. Has there been any general demand for it? ‘ Have the people of Australia, by means of public meetings, or in any other way, indicated that they desire such an institution? I think not. It appears to me, .however, that it is very necessary, sp far as the Ministry .themselves are concerned, that this Bill should be passed before we go into recess. One of the planks of the Labour platform provides for the establishment of a Commonwealth Bank. A Labour Conference is to meet next year ; and, to justify themselves before that Conference, the Ministry must be’ able to show that they have placed on the statute-book of the Commonweath a Bill to provide for a Commonwealth Bank in some form or other. Hence their anxiety. 1 know of no strong desire on the part of the public for such a bank as this Bill contemplates. We are told that we must consider the country in which we live. It is certainly very prosperous, and no one can deny that, throughout the length and breadth of the land, excellent banking facilities are afforded. I am not going to give the number of branches that have been established in various parts of Australia, not only by private banking companies, but by the State Savings Banks, to meet the requirements of our people. We know, however, that it is very considerable. It is said that the establishment of this bank will enable the people to obtain money at lower rates of interest I do not see how that is to be done if, at the same time, the bank is to make the profits to which some honorable members opposite have referred. If those profits are to be earned and heavy expenses .paid, it seems to me that the rate of interest will be higher than many honorable members opposite contemplate, and certainly higher than those who supported, the Labour party at the last general elections, because of this proposal, imagined it would be. I should be prepared at once to support .the establishment of a bank that I believed would benefit the people, but has any one shown that this will do so? We are entitled to look to the Prime Minis,ter for guidance in this matter; but in introducing this Bill, he did not bring forward any proof that the bank would benefit the people. I am prepared to admit that in carrying out our financial operations in London, as well as in Australia, the bank may be found useful in many ways, ‘ so far as our public business is concerned. In that way it will probably be beneficial to the people ; but we have yet to learn how it will directly benefit them. As I understand that several honorable members wish to speak, and that it has been arranged that a division shall be taken this afternoon, I shall not detain the House ‘ further, although I should have liked to criticise some of the details of the Bill. The Bill should be referred to a Select Committee to enable us to obtain information that we ought to have in dealing with it. I am confident that the Ministry is.setting out on a very dangerous course by allowing a commercial concern of this character to- be mixed up with politics. It’ should be kept entirely free from the influence of politicians, no matter how honest they may be, and if it is to be successful it must be managed, not by one Governor, but by a Board. In one respect the Governor will be a sort of autocrat, whilst in another, he will be a mere puppet in the hands of the Treasurer. If the manager of the bank is to be no more than a puppet in the hands of the Treasurer of the day, then it will be a case of good-bye to all honest dealings so far as the institution itself is concerned. We have, in Australia, banking institutions pf the highest possible reputation. They carry on their business in a way that is second to none, and while I am prepared to support the establishment of a Commonwealth Bank on proper lines,’. I cannot think of supporting a bank which,, to put the position shortly, will be established on a basis of a semi-political, character. I must express my sincere regret that the tens of ..thousands of electors who voted for the Labour party because of the promise that cheap money was to, be secured for them by .the establishment of a Commonwealth Bank, are to be sub’jected to bitter disappointment in connexion with this Christmas box which the Government are now presenting to them.
.- I have no desire to break any arrangement, which may have been made between the Government and the Opposition ; and if. both sides are prepared to take a division I am quite content to waive my right to* address, myself to the Bill.
Honorable Members. - Hear, hear t
Question- That the words proposed to be left out stand part of the questionput. The House divided.
Majority … … 10
Question so resolved in the affirmative.
Original question resolved in the affirmative.
Bill read a second time, and considered in Committee pro forma.
.- I move - .
That the House do now adjourn.
The first business on Tuesday will . be the Consideration of the Commonwealth Bank Bill in Committee.
Question resolved in the affirmative..
House adjourned at 3.25 p.m.
Cite as: Australia, House of Representatives, Debates, 24 November 1911, viewed 22 October 2017, <http://historichansard.net/hofreps/1911/19111124_reps_4_62/>.