House of Representatives
29 November 1911

4th Parliament · 2nd Session



Mr. Speaker took the chair at 10.30 a.m., and read prayers,

page 3338

QUESTION

PUBLIC CRITICISM BY OFFICIALS

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– I desire to ask the Prime Minister whether he observed in yesterday’s Argus a long paragraph summarizing a newspaper criticism by the High Commissioner of the educational system of Great Britain, and whether the Government think it desirable that the occupant of that important official position should publicly criticise the institutions of the country in which he is the representative of Australia ?

Mr Fisher:

– I refer the honorable member to the Minister of External Affairs, under whose control the High Commissioner is.

Mr Thomas:

– I understand that the honorable member refers to something appearing in the weekly letter from London.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– I shall read the statement to which I have called attention, as Ministers evidently do not appreciate the importance of the matter -

The High Commissioner (Sir George Reid) contributes a lengthy article to the Morning Post to-day in criticism of British national education. “The system,” says Sir George Reid, “requires to be revised to the verge of revolution.

At present the children’s memories are greatly overtaxed. An increasing measure of original observation and experiment is needed. The best test of good teaching is whether the average child loves learning. The New South Wales system of industrial education ought to be established here, and also, it should be made easier for the poorest children in the community, when possessed of talent, to reach the universities.”

The High Commissioner remarks upon the number of children who are reared in the foul air of the slums and are not provided with sufficient food.

Mr Higgs:

– Does not the honorable member believe in that?

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– The honorable member is confusing the merits of the article with the principle involved in its publication. I hive no fault to find with the views that are promulgated . in it, but I ask whether the Government approves of its officials attacking the institutions of the country to which they have been sent to represent Australia?

Mr THOMAS:
ALP

– The Government does not desire that any of its officials should publicly attack the institutions of other countries, but I am sure that when the whole text of this article is available, it will be seen that little objection can be taken to it. We all know Sir George Reid personally, and I, for one, do not think that he would publish anything to which he ought not in his official capacity to attach his name.

Mr HIGGS:

– Has the Minister of External Affairs observed that an ex-official of the Commonwealth, one William Humble Ward, has referred to a number of members of this Parliament as old-age pensioners? If so, does he approve of that statement ?

Mr THOMAS:

– I ask the honorable member to give notice of the question.

page 3338

ARBITRATION (PUBLIC SERVICE) BILL

Bill presented by Mr. Hughes, and read a first time.

page 3338

QUESTION

INSPECTION OF INTER-STATE PRODUCE

Mr ATKINSON:
WILMOT, TASMANIA

– When will the Minister of Trade and Customs be in a position to inform the House of the results of his inquiries concerning the inspection of InterState produce?

Mr TUDOR:
Minister for Trade and Customs · YARRA, VICTORIA · ALP

– Each State has the right to enforce laws for the inspection of produce, and to prohibit the importation of produce which does not comply with its standards. I believe that in some cases this power has been used practically to prevent the freedom of trade, but the Commonwealth has not had an opportunity to interfere.

Mr Atkinson:

– The Commonwealth could interfere if the power to prohibit were wrongly used.

Mr TUDOR:

– It is difficult to determine when that takes place. I have a certain amount of information, which I shall be pleased to let the honorable member have, and I have prepared a statement of the working of the Commerce Act, which I propose to give to honorable members when the Estimates of my Department are under consideration.

page 3339

QUESTION

ARTILLERY HORSES

Mr RYRIE:
NORTH SYDNEY, NEW SOUTH WALES

– Is the Minister representing the Minister of Defence aware that in New South Wales, although some 350 horses have been purchased for the use of the artillery, the field batteries, when taken out for practice or manoeuvre, are supplied with hired horses, because the departmental horses are kept at a distance, and are not brought in ? Will the Minister take steps to rectify this state of affairs?

Mr ROBERTS:
Minister (without portfolio) · ADELAIDE, SOUTH AUSTRALIA · ALP

– I shall ask the Minister of Defence to give me a reply to the honorable member’s question. Possibly, the recently-purchased horses may not yet be fit for the work for which they were obtained.

page 3339

QUESTION

RAILWAY TO CAPITAL

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

asked the Minister of Home Affairs, upon notice -

  1. Whether the proposed railway from Yass to the Federal Capital site would not make the railway journey from Albury to that site 100 miles longer than by a direct route from Albury to the Capital site vid Germanton and Tumut?
  2. Whether he will have an examination of the route from Albury vid Germanton and Tumut to the Capital site made by a competent engineer, and an approximate estimate made of the cost of a railway by this route?
  3. Whether he will obtain this information during the recess, and have it submitted to Parliament early next session?
Mr KING O’MALLEY:
Minister for Home Affairs · DARWIN, TASMANIA · ALP

– The answers to the honorable member’s questions are -

  1. In the absence of detailed information it is difficult to state what would be the extra distance, but it would probably be about 100 miles. 2 and 3. Full inquiry will be made, and, if necessary, an examination of the route will be undertaken.

page 3339

QUESTION

SULPHIDES IN BUTTER

Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

asked the Minister of Trade and Customs, upon notice -

  1. Is the Minister aware of the source of sulphides in the butter recently held up by his Department ?
  2. Is it due to any preservative recently put upon the market?
  3. If so, what is the preservative?
  4. How much butter is still held up owing to the presence of sulphides?
Mr TUDOR:
ALP

– The answers to the honorable member’s questions are -

  1. So far as I can at present ascertain, it has been introduced by the medium of preservatives.
  2. I think such is the case.
  3. I am not in a position to say, An investigation is now being made by the Federal Analyst of all preservatives in order to ascertain those which contain suphides or other substances which are objectionable, in order that dairy farmers might be advised.
  4. Eighty-three boxes.

page 3339

QUESTION

EXECUTIVE COUNCIL

Mr. THOMSON (for Mr. Austin

Chapman) asked the Prime Minister,up on notice -

Whether, until Parliament so provides, there is power to have more than seven Executive Councillors “ chosen and summoned by the GovernorGeneral “ to advise the Governor-General in the government of the Commonwealth?

Whether the provision in section 62 of the Constitution that there shall be “ a Federal Executive Council …. in the government of the Commonwealth “ to be “ chosen and summoned by the Governor-General “ does not refer to and is limited to the Federal Executive Council consisting of seven Ministers of State?

Whether the practice of having more than seven in the Federal Executive Council to advise the Governor-General in the government of the Commonwealth is not, until Parliament so provides, contrary to law?

Will he obtain a legal opinion on this matter from eminent counsel for the information of this House?

Mr FISHER:
ALP

– The answers to the honorable member’s questions are - 1 and 2. Ministers do not express opinions on points of law submitted to them by way of questions.

  1. It is not considered that the practice which has been followed since the establishment of the Commonwealth in regard to Executive Councillors and Honorary Ministers is contrary to law.
  2. It is not thought necessary.
Mr THOMSON:
for Mr. Austin Chapman

asked the Prime Minister, upon notice -

  1. What power is there under the Constitution to appoint a Vice-President of the Executive Council ?
  2. Is he an adviser of the Crown under the Constitution ?
  3. Is the office in addition to the seven principal Executive offices of the Government?
  4. Is the office one of profit under the Crown?
Mr FISHER:

– Ministers do not express opinions on points of law submitted to them by way of questions.

page 3340

COMMONWEALTH BANK BILL

In Committee (Consideration resumed from 28th November, vide page 3284) :

Clause ,11 -

The Bank shall be managed by the Governor of the Bank.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– Before we adjourned last night we had a speech from the Leader of the Opposition on the subject of the government of the proposed bank. He drew attention to a number of subsequent clauses which, although not, any one of them, entirely supported his proposition, taken collectively, certainly do what he contended - that is, give to the public the idea, which I hold to be a very dangerous thing, if the bank is to be a success, that its management is not to be- entirely removed from political influence. I listened with very great care to the speech of the Leader of the Opposition, and I thought that he put the whole question and demonstrated to the Committee, if it was open to conviction, that there were factors in the measure which plainly prevented the bank from either being or appearing to be one in which the entire management was to be removed from political influence. I listened to the speech of the Prime Minister, which purported to be an answer, and I am bound to say that, although I was anxious to hear how the speech of the Leader of the Opposition could be met the right honorable member did not logically touch it. On the contrary, he simply showed that not one of the clauses to which the Leader of the Opposition had drawn attention, in itself, gave to the Minister any distinct power to control the Governor of the bank. But that was not what the latter argued. What was argued was that in the several particulars contained in these clauses there were clear suggestions to people who look at the constitution of the bank, as a whole, that the Minister was going to keep his hand “ on the button,” so to speak, so that it would be prevented from being completely controlled by the non-parliamentary or nonpolitical governing body. One of the strongest points which the Leader of the Opposition touched upon was that with re gard to the power of making regulations. It appeared, perfectly clear that under one clause the Governor-General in Council is to have this power for a variety of purposes, and the Prime Minister seemed to think that, because in one clause it appeared that none of these regulations should be contrary to the provisions of the Act,” that saved the situation. But I should like to point out to the right honorable member, who, I hope and believe, is anxious to see the measure put into a shape which will be perfectly safe to the public, merely to say that the regulations shall not be contrary to any of the provisions of the Act does not answer the objection, because it is quite possible that from time to time regulations may be made that surround the work of the Governor with conditions and stipulations which will have the effect of tying his hands, and even directing his activities in particular channels. I submitted the Prime Minister to a very fair test when I suggested that the regulations should be made either on the approval of the Governor or on his recommendation. If he is anxious that the bank should be entirely under the control of the Governor and the Deputy Governor, with or without directors or trustees, free from the influence or control of any Minister or Government, he can have no possible objection to it being stipulated that these regulations should be made on the recommendation of the Governor. If the latter is going to have complete control of the bank, ought he not to have control or an important say’ with regard to the regulations which are found necessary in addition to the provisions of the Bill? If the Prime Minister really intends that the management of the bank is to be in the hands of the governing body, whether it be the Governor individually or the Governor with the assistance of the Deputy Governor, what objection can he have to making it a sort of addendum to the power of making regulations that it should be exercised on the recommendation of that man or these men who are said to have the complete control of the bank ?

The CHAIRMAN:

– Order !

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– It is obvious that my observations are not worth listening to by the Prime Minister; but I shall wait until the Prime Minister is disengaged. I think it is treating members with scant courtesy when they are directing suggestions to the Prime Minister that he should carry on a series of conversations with a series of members on his own side.

Mr Fisher:

– That is not correct.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– That is a habit to which we have become somewhat reconciled in this Parliament.

Mr Fisher:

– It is a gross misrepresentation.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– I have never seen this habit practised by other Governments ; I have only seen it with this Government.

Mr Fisher:

– The honorable member ought to withdraw that remark; it is a gross misrepresentation.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– Honorable members may laugh and guffaw as much as they choose, but I tell them that it is hardly becoming when they happen to have the majority power, in their hands to treat with so much contempt and so little attention the suggestions of honorable members on the Opposition side.

Mr Carr:

– No one is listened to as the honorable member is.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– That is what I complain of.

Mr Page:

– What is the matter with the honorable member this morning?

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– The matter with me is that I do not think my arguments are being treated with respect or attention by the Minister who has charge of this Bill.

The CHAIRMAN:

– Order ! Will the honorable member deal with the Bill?

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– This is an important matter. It is really the crux of the Bill. How is the bank going to be managed? Do honorable members know that a bank of this kind may have something like 5,000 branches? It is very important that, if the institution is to be even a partial success, the public should be absolutely satisfied that the government of the bank is not a hole and corner matter in the hands of a Minister who is probably manipulated by a caucus and a conference outside.

Mr West:

– That is uncalled for.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– It may be. I have said in my life, and will say again, a great many things that are uncalled for.

Mr Riley:

– Do you expect men to sit and listen quietly to them?

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– I do not want the honorable member to listen. It is a beautiful day outside, and if he does not like what I say, thereis an easy alternative. I ask for the Prime Minister’s attention.

The honorable member has gone through this work in the Caucus Parliament upstairs.

Mr Riley:

– How do you know?

The CHAIRMAN:

– I must ask honorable members to assist me in keeping order. Every honorable member will have the opportunity to speak afterwards.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– Honorable members on the Ministerial side are anxious to make a great financial coup with this measure. They imagine that the moment the doors are open the public will rush to it for fear they will not get inside in time to deposit their money. As a member of this Parliament, I should like to see the institution a success. I said last night that I did not take the pessimistic view of it that some people expressed. With the Federal Government having so much work to be done by loans, such as those of the Commonwealth in the future and those of the States when they are converted, there is a great deal to be done by the bank. Whether there is much business to be done in the future by it in making advances, in some cases, on personal property, as proposed in the Bill, is a matter on which I am doubtful, but if it is properly managed, and free from political influence, I do not doubt that there is a future for it ; and I take it that we are all anxious that its future should be successful. From an experience of thirty or forty years in business, in a profession, in Ministerial positions, and in Parliament, I lay it down as a fundamental proposition that, money being the most tender and sensitive commodity in a community, we must, if we desire to make the institution a success, satisfy the public that it will be absolutely free from the influence of Parliament, or of a Minister, or of the Government. That is a sine qua nott. It is essential to remove from the Bill any words or clause which will justify public criticism by hostile newspapers or persons outside, to the effect that the Government still have their finger upon the button, so to speak, of the management of the bank.

Mr West:

– You would not rob Parliament of that right?

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– The honorable member asks if I would rob Parliament of the control of the bank. The honorable member is actually prepared to help to keep the bank under the control of Parliament. Who ever heard of such a thing?

Mr Kelly:

– While the Prime Minister is pretending to be against political interference !

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– The Prime Minister says he will do anything to remove from the Bill any provision which has the effect of giving political control, but when I put him to the test in this way, the result is not so satisfactory. Let honorable members opposite bear in mind that if the Government are to have full power to make regulations, and there is a danger of those regulations surrounding” the judgment of the Governor or governing body of the bank with conditions hampering its dealings with the finances of the institution, the public and hostile newspapers outside will be justified in saying that the bank is not free from political influence. Therefore, I put this simple proposition : If those regulations are to be made merely to help the Governor or governing body to manage the institution, and so are to be part of the management,why should they not be under the control or subject to the suggestion of the Governor or governing body of the bank? The regulations should be, and should be stated to be, made at the suggestion or with the approval of the governing body of the bank. If their approval is not required, their complete and absolute control of the bank is lessened. The Leader of the Opposition pointed out last night that anybody looking at the Bill as the precursor of a big national institution would expect to find some sort of analogy between its proposed management and the management that has been adopted all over the world for institutions of the kind ; but I challenge the Prime Minister to name a single financial institution in America, Great Britain, Germany, or France, which has not some checking influence on the officials from outside with regard to its management. The Prime Minister said last night, “ If you make a Board of the Governor, the Deputy Governor, and the next official, you are merely duplicating the management.” - I am sure the Leader of the Opposition made no such suggestion. No business man with a knowledge of the elements of the management of such institutions would suggest making a Board of Directors of the officials. It would merely be asking them to confirm their own proposals. When the public go into a bank like that they do not go direct to the Governor, who is hedged around by messengers, or to the Deputy Governor, but they probably see the Secretary of the bank. If the business went before him, and was then passed on to the Deputy Governor to approve, and then to the Governor for his ultimate approval, what would be the use of having those three men as a Board of Directors in order to confirm the business which they had already recommended or turned down?

Mr Riley:

– Would the honorable member suggest a better method than is provided in the Bill ?

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– I am coming to that. I am not asking, nor is the Leader of the Opposition asking, for any new-fangled idea in the management of the bank. He is perfectly willing to ask the Government to follow the example of the three most successful banks in Australia - the Bank of New South Wales, the Union Bank, and the Bank of Australasia. He’ is willing to take as a model the Bank of England, the greatest National bank in the world.

Mr FRANK FOSTER:
NEW ENGLAND, NEW SOUTH WALES · ALP

– It is not a National bank.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– It is to this extent, that it is under the control of the Imperial Government in some cases, nor does it do the ordinary business. If the honorable member or I went to London, and wanted to put£100 or£200 to our credit to draw on for expenses, the Bank of England would have nothing to do with us. It has a Board of Directors who are great financial authorities, apart from their cow cern in the management of the bank.

Mr FRANK FOSTER:
NEW ENGLAND, NEW SOUTH WALES · ALP

– The bank ought to get the Government to give them a better Act of Parliament than Peel’s Act.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– That may be so, but it has nothing to do with my argument. What we are asking is that something shall be done similar to what has been done in the case of the Bank of England, or the Union Bank, or Bank of Australasia, or the Bank of New South Wales. We say that this Commonwealth Bank ought to be governed by a Governor, who, however, should be checked or confirmed by a Board of men taken from high positions outside, who should meet once a week or oftener if necessary, in order to have the business of the bank laid before them. No manager, no man of great ability, would ever want to take a position in which such stupendous responsiblities were thrown upon him without having somebody to share the burden with him, and with whom he might discuss affairs from time to time. The great advantage of that system is that you bring into the management of the bank an atmosphere from outside, in the person of men who know what is going on in the outer commercial world. You bring into the bank the knowledge of the big merchant, the big ship-owner, the big insurance man. All these men throughout the week are gathering general information, acquired by them in the high positions which they hold in connexion with the commerce of the country. They bring this knowledge to bear upon the proposals laid before them by the Governor of the bank. But it is proposed here to dispense with such assistance altogether. The Prime Minister said that it would be very difficult to get a Board of Directors who would not be biased against the Commonwealth Bank. You might as well say that it is impossible to get a board of directors for the Bank of New South Wales without fear of their being biased in favour of the Union Bank or of the Bank of Australasia. Many bankers have already said that they see no objection on general principles to the establishment of the Commonwealth Bank. It is a libel upon this community to say that you cannot pick out of the great commercial body of Australia - because you are not limited to any one State - men of eminence in some branches of commerce, whom you could call to act as directors of this great national institution, and to whom you could look to act as a check on the Governor of the bank.

Mr Riley:

– Would the honorable member bar the appointment of any director already connected with one of the other banks ?

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– Certainly, because that kind of thing is never done. If a man is a director of an insurance company, he does not act as a director of another engaged in the same line of business. I have been a director of one insurance company .for twenty-two years. I have been approached by another institution of. the same kind to act on its Board of Directors, but, of course, I refused. One cannot serve two masters, and no honest man would ever think of taking a seat upon two competitive boards engaged in the same kind of business, because the interests are identical, and it would be impossible to’ do justice to both institutions. I say again that it was unfair for the Prime Minister, in his high position, to suggest that it is not possible to obtain out of this community men of great influence, great knowledge, and great experience to come in as a body of directors. Because, as I have pointed out, the directors would not manage the bank. They would merely act as a check upon the Governor’s recommendations. If the Governor of the bank came to the conclusion that the wishes of the board were not such as he could approve, he would have the right at any time to say to those who employed him - the Commonwealth Government - “ Here is a conflict ; I am not in accord with my Board of Directors, and something will have to be done.” If would be his duty to bring the business before the directors, and it would be for them to approve or disapprove. If they disapproved the Governor would probably know why. They would bring in information from the outside with regard to proposed advances or proposed business of any other kind. It is to be presumed that the Governor would be a man with an open mind. Honorable members may take it from me that men occupying high positions in the financial world have their minds just as open, and are just as ready, and eager to receive new thoughts and new ideas, as are men of science. Therefore, we may depend upon it that the Governor would be very glad to get, from time to time, information which these men could give him.

I have said that the banks of Australia are not altogther against this proposal. I have here a clipping from the Journal of the Institute of Bankers, New South Wales. It is a short passage, and I think that honorable members will be glad to know the attitude assumed towards this Bill.

Mr Higgs:

– Is there something about the Governor in the extract?

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– There is something about the management. It says -

Many modifications no doubt will be made in the Bill in its progress through the House. There is little doubt, however, that the bank will be established - not for the need of its services to the country (no sound argument has ever been adduced as to that), but because it will be the fulfilment of a party pledge. Established on a sound basis and conducted on sound lines, there is nothing to fear from a Commonwealth Bank.

The CHAIRMAN:

– I point out to the honorable member that we are dealing with the Governor of the bank.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– I know that we are. I am dealing with the powers given to the Governor. I am showing how much better it would be if a board of directors were joined with him in the management. The Prime Minister said in his speech last evening that it would be difficult to choose directors from outside, who are not biased against the Commonwealth Bank. I want to show, in answer to those suspicions, that it is not true that the existing banks are against the Commonwealth Bank. Here we have the magazine of the Institute of Bankers saying that the establishment of such a bank on a sound basis would leave us nothing to fear - but may it be relied upon that either of these factors will be found in a politically established and politically conducted concern?

The CHAIRMAN:

– I point out again to the honorable member that he is not in order. What he is reading has nothing to do with the question of the Governor of the bank.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– I think that I can show you that it has, Mr. Chairman. I am talking now about a politicallyconducted concern.

The CHAIRMAN:

– The honorable member must address his remarks to the appointment of the Governor of the bank.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– That is what I am proposing to do. This passage goes on -

If the bank must be established, we should prefer to see a free board of control, consisting of experienced and practical men, associated with a capable and expert banker, as Governor or general manager, not one man answerable to the Ministry in power, as the present proposal indicates.

That shows that in the view of the editor of the Journalof the Institute of Bankers there is no objection to the establishment of a Commonwealth Bank in itself, though it suggests itself to the banking mind that this is an institution which is to be under Ministerial control. Yet you have the admission in the same article that if there is sound management there is nothing to fear. That article, to my mind, gets rid entirely of the baseless suspicion that the other banks are jealous of the business which this Commonwealth Rank is likely to do. I do not believe that the business of this bank, whatever Government: we have in power, will be very large at first, because it will take years and years before its ramifications can be extended through the country as the ramifications of the existing banks have been extended. I stated just now that there are, on the whole, something like 5,000 branches of the different banks throughout Australia, including the Savings Banks. I thought I had with me a paper giving the number of branches in each State which the banks have had to establish in order to build up their great business.

Mr West:

– Competition has compelled them to have so many branches.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– Does the honorable member think that after the establishment of this bank there will not be any competition?

Mr West:

– No.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– I remember the phrase “childlike and bland” in one of Bret Harte’s verses-

Mr Carr:

– But that wasthe honorable member for East Sydney’s little joke.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– No; he was quite serious. He really thinks that, whan this bank starts business, all the others will have to put up their shutters.

Mr West:

– The other banks will not have four branches in a town where one would be sufficient.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– If the Prime Minister wishes to give the people an assurance that these regulations are not to be used to curtail, to modify, or in any way to qualify the powers that are to be given to the Governor, he might very well consent that the regulations shall be made at the suggestion or with the approval of the Governor.

Mr Fisher:

– Would the honorable member be satisfied then?

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– On that point I should be. As to the question of the appointment of a board of directors, the Prime Minister is attempting to depart absolutely from all precedent.

Mr Fisher:

– I know that.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– I well remember when the Labour party first came into power in New South Wales, in 1890, one of their number, Mr. Black, saying in the Legislative Assembly, “ We came here not to follow, but to make, precedents.” That is the inflated spirit in which the Prime Minister is working in this case. The resolution not to follow precedent is heroic, but I ask the Prime’ Minister whether he will not admit, upon further consideration, that it is possible to obtain the services of three men, eminent in some of the many branches of commerce in Australia, who can be relied upon to honestly and honor- ably act with the Governor in advising as to the business of the bank. I do not come here as an adverse critic of the Bill, because I think that the bank, if run on sound, lines, can, as the Bankers’ Magazine suggests, be made a very successful institution.

Mr Higgs:

– What about salaries?

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– The salary of the Governor should be fixed in the Bill itself. Both the Governor and the Deputy Governor should be highly paid, but whether the Government will be able to attract to a bank like this men from the institutions already existing in Australia - men of great reputation - is another question. I again direct the Prime Minister’s attention to the question of the desirableness of making these regulations subject to the approval of the Governor, and ask him also to consider the question of choosing three or four men, as the case may be, eminent in commerce, to act in conjunction with the Governor, and so give the public confidence in the idea that this is not to be a political institution.

Mr FRANK FOSTER:
NEW ENGLAND, NEW SOUTH WALES · ALP

– A measure of this magnitude must be approached with due regard to the responsibilities cast upon the Parliament in passing such legislation. Although my opinions sometimes clash with those of honorable members opposite I always treat with the greatest respect any attempt on their part, as well as on the part of honorable members generally, to improve our legislation,, and as, in this <ease, to get down to the bedrock of security. From that point of view I much appreciate the statement of the honorable member who has just resumed his seat. I am rather surprised, however, at the position he takes up on the question of oneman control. He knows very well that in connexion with many great financial undertakings the name of one man is a power to conjure with. What has he to say of Pierpont Morgan, Rockefeller, and other great American financiers who have gained the admiration of the world by the vastness of their financial deals? So great has been the confidence of the American investing world in these gentlemen that we find gradually drifting into the hands of six or seven of them the bulk of the finances of the trusts of the States.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– Does the honorable member think that each of those men acts solely on his own judgment?

Mr FRANK FOSTER:
NEW ENGLAND, NEW SOUTH WALES · ALP

– The history of their operations shows that it matters little to them what their subordinates on a directorate may desire. If Pierpont 0 Morgan or Jay Gould is a director of a company he, so to speak, runs “ the whole show.”

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– I advise the honorable member to read Rockefeller’s little book Random Recollections. That will show him how Rockefeller’s business was managed.

Mr FRANK FOSTER:
NEW ENGLAND, NEW SOUTH WALES · ALP

– Many of these gentlemen, after going through the mill, find a conscience. We have such a man in the person of Carnegie, and we know that a beneficent despotism is often much better than divided control. The management of this bank by one man, provided he is honest, true, and thoroughly capable, must mean a quicker and more direct service than would management by a body of men who would only hamper the operations of the Governor. If we are fortunate enough to secure the right man for the office of Governor we shall be sure to gain from the system proposed by the Government, for it will mean that the business of the bank will be dealt with expeditiously, and we all know how important it is that there shall not be too many delays in transacting financial operations. If we happen to secure the wrong man for the position, however, we shall be faced with tremendous difficulties. Behind the Governor and the bank will be the check of the people’s watchdogs. Honorable members are aware that the principal stock in trade of every financial institution is public confidence. Once that is shaken God help the institution ! If any member of this House discovers any mistake or defect in the conduct of the operations of this bank-

Mr Cann:

– How is he to discover it?

Mr FRANK FOSTER:
NEW ENGLAND, NEW SOUTH WALES · ALP

– The shareholders and customers of a bank watch its operations very closely, and members of this Parliament will be in the position of shareholders, and practically also of directors of the Commonwealth Bank. If any honorable member discovers a flaw in the management, and directs attention to it in this House, it will be a serious matter for the Governor of the bank. It is not the duty of members of Parliament to complain here of defects in the management of private banks, and the necessity for directors in connexion with private banks is, therefore, very much greater than it is in the case of the proposed Commonwealth Bank. If Parliament had no such check upon the ° management of this bank as is provided for in this Bill, I should not so readily support the proposal for one-man control. This lack of all sense of proportion displayed by the honorable member for Parkes has amazed me. The honorable member has instituted a comparison between the Commonwealth Bank and the Bank of England, although he must know that the Bank of England is established in a war centre, and that every hint of wai or international complications affects the discount rate in that institution. Iti ramifications are so great that no comparison can be drawn between it and the Commonwealth Bank. The honorable member practically admitted this before he sat down by saying that in all probability the operations of the Commonwealth Bank will not be extensive in the first few years. It could not be expected that it would at once command the great business secured by private banks that have been established for very many years. We are only starting this bank, and it will take several years to extend its facilities as we hope to do throughout the Commonwealth. We shall be privileged to watch the institution from its cradle. We shall see it grow, and if we do make mistakes in the beginning we can correct them. The great reserve of strength behind this bank will be the power of this Parliament to make legislation to re-adjust its management should that be shown to be necessary. Consequently the howling on the subject outside is not justified. If the operations of the bank were to involve £100,000,000 within six months it would be quite another matter. While admitting the dangers of oneman control, I believe that where a firstclass man is secured the best results- follow.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– Does the honorable member think that it requires more skill in a captain to take his ship out of port than to navigate her at sea?

Mr FRANK FOSTER:
NEW ENGLAND, NEW SOUTH WALES · ALP

– If we were abandoning our power to legislate -for this bank later on, and tore-adjust matters when necessary, there might be some force in the interjection. But we shall have the power of continuous re-adjustment, and, in- the circumstances, we “need not be timorous about launching this institution under oneman control.

Mr ATKINSON:
Wilmot

.- As the honorable member for Parkes has said, this clause is really the crux of the Bill. We are taking a serious step in starting a bank which must have a great effect upon the whole commercial life of the country. If it is badly managed our financial credit may be seriously injured, and it may do us incalculable harm with investors and the people with whom we deal in other parts of the world. It is asking too much of any one man to expect that he will be able to start this great institution as it should be started, and conduct its affairs alone. When honorable members contend that even where there are a number of directors one man always dominates the board, I say that men stand out from their fellows in such cases only because they have been proved to be good, sound men. It is proposed here to take a man on trust to start a new institution.

Mr King O’Malley:

– No; we shall get the best man in Australia

Mr ATKINSON:

– We cannot know that until he is tried. The men who dominate boards of directors are men who have proved the soundness of their judgment in financial affairs. We have no guarantee that the manager of this bank’ will be a Pierpont Morgan or a man of great financial ability. Good management will be especially necessary in the early history of the bank, because we require to establish confidence in the institution, and, as the honorable member for New England has said, any lack of confidence in it must seriously injure its operations.. As it is necessary to establish confidence in this bank from the start, we should be especially careful how we begin it. I should like to say, also, that nine times out of ten the men who are supposed to dominate the directors of financial institutions act upon the advice of those directors, and if their opinions were asked on a proposal to abolish their directors, they would be the first to say, “ Leave them to us. We get no end of support and suggestions from them.” It is nonsense and twaddle for honorable members to talk about one man having the sole control of an institution of this character. There should be a Board consisting of, at least, five of the best men to be secured in Australia; and if it be not possible to obtain men here, I should not be adverse to importing them. It is peculiar that a Labour Government should propose to place one man in the supreme position A National bank has been on the platform of the Labour party for some time; and the records of the Brisbane Conference show that, so far as the management is concerned, a very different institution was contemplated. The idea of the Conference seemed to be that the States should be represented on the board of management; and it appears to me that the desire of the Government to push this measure through is due to the fact that they are not sure how the next Labour Conference, to be held at Hobart, in January, will view the matter.

Mr Page:

– Leave that to us; it is all right !

Mr ATKINSON:

– However that may be, it is the trouble of the Labour party, and not mine. The most important thing is to free this Commonwealth Bank from any political influence or control. The Governor, or General Manager, may appear a Czar to the ordinary man in the street; but, if we examine clauses 14, 32, and 64, we shall see that political influence can be used over him in all directions. I am not suggesting that the present Government will use influence of the sort; but this bank* is going to outlast this Government, and all of us, for the matter of that, or otherwise it will prove a very paltry affair. Governments, when pressed, as history shows us, have to raise money how they can, just like individuals when they are in a tight corner ; and, with an institution of this kind, there would be great temptation to exert political pressure. This might result in the bank being put to uses for which it was never intended; and, in discussing a question of the kind, we ought to keep in view all possibilities. This bank will affect, not only the commercial life, but the social life of the country ; we are creating a machine of very delicate mechanism, the. working of which must have very far-reaching effects. Under all the circumstances, the Prime Minister may, I think, take it as the sense of the Committee that more than one man is required to control a Commonwealth Bank. Not only would one man not be able .as well as a directorate of four or five to withstand political pressure, but the .Governor of the bank might, by the discussion of his position and himself on the Estimates, be placed in a very awkward and humiliating position for any self-respecting man.

Mr WEST:
East Sydney

.- I am more than1 pleased at the attitude of the Government in adhering to their original proposal so far as the management is concerned. The honorable member for Parkes has told us this morning of’ the valuable services rendered by boards of directors ; but, in view of the history of some Australian banking institutions, I think the less said on that subject the better. In the city of Melbourne, banking institutions have been run on the rocks by directors ; and we have witnessed similar catastrophes in New South Wales. The honorable member for Parkes, himself, was a director of a bank which was run on the rocks.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– It was not a bank, but a branch of a Melbourne financial institution.

Mr WEST:

– The Colonial Finance Company was not a branch, but a company, within the State of New South Wales, as the liquidator could tell us.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– It was not a bank.

Mr WEST:

– The Colonial Finance Company was conducted on very similar lines to those upon which a bank is conducted. There was, however, this difference : that it did business which the banks refused to transact. As a result, it eventually found itself upon the rocks, just as many financial institutions in Victoria have done. Let me now refer to the directorates of a few of the large institutions of Australia. Let me point to the Colonial Sugar Refining Company, the Mutual Provident Society, the Bank of New South Wales, and to Burns, Philp, and Company, all of which are conducted by boards of directors.

Mr Atkinson:

– They are all pretty well conducted, are they not?

Mr WEST:

– Yes, and they are all under the control of one man.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– The honorablemember is quite wrong.

Mr WEST:

– It is a curious circumstance that one gentleman is a member of all these boards. Six months of his time each year is spent in Melbourne in discharging his duties as a member of this Parliament. He is a representative of New South Wales in the Senate. In these circumstances, I would like to know what attention he can give to the management of these institutions? I wish the Committee distinctly to ‘ understand that I make no reflection upon the gentlemen who comprise these directorates. They are all worthy of respect. But they do not hold office for the sake of insuring the efficient management of the institutions with which they are connected. They are appointed directors to inspire public confidence in those institutions with a view of promoting the sale of their shares. The honorable member for Parkes has said that the Governor of the Commonwealth Bank will have to control 6,000 branches.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– I did not ; I said that the other banks have 6,000 branches.

Mr WEST:

– I can recall at least one town in New South Wales, with a population of 2,000 or 3,000, in which there are four banks competing against each other, and all of them have buildings which are almost fit to grace any of the State capitals. The honorable member for Balaclava has pointed out that if this Bill becomes law it will be the means of preventing a lot of unnecessary expenditure by banking institutions in all parts of Australia. He has told us that he was pressed to become a director of the Colonial Bank. I can quite understand that. If I were a shareholder in that institution I should be unremitting in my efforts to secure his services on that board. Why ? Because he is a most affable man, because he belongs to that section of the community which transacts a lot of business with financial institutions, and because he would bring customers to the bank owing to his good nature.

The CHAIRMAN:

– Does the honorable member think that his remarks are relevant to the clause?

Mr WEST:

– Yes, because it has been urged that it is necessary to secure independent management of the proposed bank. We do not want ornamental persons to control it. If wa have to fall back upon them, we shall require to select individuals from the social section of the community. Let me remind honorable members that the Commercial Bank of New South Wales was conducted single-handed by Mr. T. A. Dibbs for almost half a century. He was virtually the manager of that institution. Its board of directors was composed of men who were on the Boards of Management of the Sydney Gas Company and the Colonial Sugar Refining Company. Take the case of Messrs. Hordern and Sons, of Sydney. Mr. Sam Hordern started that business himself. He had -no board of management to direct him, and even to-day if one visits that firm upon any business matter, it is the manager who will tell him in a few words whether he can entertain it or not. Who will say that John Forsyth does not control the firm of Burns, Philp, and Company? During this debate we have heard a good deal of criticism in regard to the political control of the proposed bank. As a representative .of New South Wales I say that we ought not to allow. the control of that institution to pass from this Parliament. I am surprised that honorable members should wish to delegate their powers. They will be forgetful of their respective capacities if they allow some one outside to control either a bank or a Department. Parliament will be the real directorate of this bank. I feel sure that we shall be able to get a Governor for it who will manage it in such a way that the people of Australia will offer up a thanksgiving that they had the forethought, on the 13th April, 1910, to put into power the party which really understands their requirements.

Mr AGAR WYNNE:
Balaclava

– I think that the best management for the proposed bank would be that of a board of commissioners or directors, and that the Government should have power to appoint not less than three, nor more than five, according to the needs of the institution. I know three one-man institutions, of which two came to grief after the land boom, while the third was seriously crippled.

Mr Webster:

– Were they banks?

Mr AGAR WYNNE:

– Two were banks. The records of America and Scotland show that in most cases the institutions which have come to grief have been one-man concerns. Were I Governor of the proposed bank, I should like to have some one on whom to fall back for advice in difficult cases.

Mr Higgs:

– Is not the honorable member losing sight of the Deputy Governor?

Mr AGAR WYNNE:

– There cannot be two heads. If the Governor disagreed or was dissatisfied with the action of subordinates he would dismiss or report them. You could not have the Governor overruled by subordinates. An independent board would be much better. The Government of Victoria has not had difficulty in obtaining capable men to act as Commissioners of the Savings Bank. It is provided that those accepting the position should not have interests in any other bank, and if a board were created to control the proposed bank, its members should not be allowed to hold interests in any other bank or similar institution. The honorable member for East Sydney spoke of concerns which he says are run by one man, but generally those who take an active part in the management of big businesses are large shareholders, and are really working for themselves. If Mr. Hordern, of Sydney, is at fault in his judgments, he has to pay for his mistakes with his own money, and therefore he takes good care that as few errors as possible are committed. A man paid a salary for managing a business, and left without supervision, does not give the same results as a man who is dealing with his own interests.

Mr Fenton:

– Does that apply to every public servant?

Mr AGAR WYNNE:

– When industries or public works are being carried on by a Government, the management is not so good as that of a private concern.

Mr Spence:

– The facts in regard to municipal and other public management contradict that.

Mr AGAR WYNNE:

– I think it is the impression of the public, and of most honorable members, that departmental management is not so good as private management. Russia is a bureaucratic country where the management of concerns by Government officials certainly does not produce as good results as would be obtained by private management. The more precautious we take for the proper control of the bank the better it will be. No one wishes the institution to be a failure, and we ought not to have to legislate after we have lost money. It would be a surprising thing if we could not find in Australia three men capable of acting as commissioners or directors.

Mr WEBSTER:
Gwydir

– I indorse the proposal of the Government in this matter. The honorable member for Balaclava, speaking of a board of directors, said that one of them would be the chief, and the other two probably his subordinates, who, if there were serious disagreement, would be reported or dismissed. If the subordinate members of a board could be dismissed by the chairman, what should we have, after all, but one-man control ? The Governor is to hold office for seven years during good behaviour, but there should be some indication as to what will operate to secure the removal of an unsuitable Governor. If the man first appointed does not fill the bill, Parliament can, of course, readily remedy the trouble. This bank will be different from other banks, because of its direct association with Parliament, which will have the power to right at the earliest moment anything that may be wrong. In that regard, the Commonwealth Bank will differ materially from banks which are working under charters. I think that we shall be more secure with one man in charge of the bank than we should be if we had more than one man at its head, at any rate at this juncture. The fact that the secrets of the bank will be in the custody of one man will be a safeguard which could not be secured by appointing a number of men to conduct its affairs. I am satisfied that the welfare of the bank and the interests of the public will be best secured; in this way, and also that political influence will be more likely to be eliminated by leaving the bank under the control of one individual, with, of course, a deputy to assist him in regard to the detail work, than by placing it in the hands of a number of individuals, who might be biased by reason of former associations, who might be unable to rid themselves of the “trammels of a financial career, built up under a certain system, and who, consequently, might not be able to see through the eyes which we want them to see through, and that is the eyes best calculated to see that which will carry out the behests of this measure. I compliment the Government upon adopting the idea of employing one man to manage the bank. I believe that if they were to apply that method in other departments of government we should have a different state of affairs. Instead of multiplying the number of officers who are associated with these institutions, they should be diminished, in my judgment, to a practical point. I am glad to see that the Public Service Commissioner is not brought in to interfere with the management of this bank, to dictate what officers shall be placed here or there, and to say what emoluments shall be paid.

Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

– The Treasurer is.

Mr WEBSTER:

– In this Bill, the Government recognise that there should be one manager for the bank, with power to appoint his staff, to classify them, in fact, to exercise sole control.

Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

– Not according to the Bill.

Mr WEBSTER:

– According to the Bill, there is no limit to the Governor’s control.

Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

– Yes; clause 32 limits the Governor in regard to all these particulars.

The CHAIRMAN:

– The honorable member is not in order in dealing with clause 32.

Mr WEBSTER:

– I know that the Leader of the Opposition dealt with clause 32 and other clauses relating to the Governor of the’ bank, and that the Prime Minister replied to his speech.

The CHAIRMAN:

– I would remind the honorable member that I was not in the Chair at the time.

Mr WEBSTER:

– I am not saying, sir, that you were in the Chair, but pointing out that the conditions to which I have been referring have been discussed by previous speakers in order to prove their case.

The CHAIRMAN:

– The honorable member is not correct, because I have not allowed any honorable member to refer to other clauses to-day.

Mr WEBSTER:

– I did not* say that you had, sir. I meant to say that, judging by the speeches of the Leader of the Opposition and the Prime Minister, it was deemed essential at this stage to deal with all the functions which will devolve upon the Governor of the bank. I do not wish to come into conflict with the Chairman, but I believe that it would materially shorten (he debate if those matters were considered on this clause. However, I am very pleased that the Government have placed the responsibility and the power in the hands of one man, with the right to appoint his own officers and to run the bank, and that there will be no other power to checkmate him in any respect. That is a precedent which might well be followed by the Government in the conduct of other matters of a grave public nature. I do not know how they have managed to leave the Public Service Commissioner out of this measure, seeing that he is deemed to be absolutely essential to the welfare of the Commonwealth in all other matters. I am delighted that he is not given a voice in the conduct of the bank, because I know that it would be well if he could be deprived of the opportunity to interfere in other matters.

Sir JOHN QUICK:
Bendigo

.- 1 beg to join in the suggestion that this clause , should be amended by providing that the management of the bank should be bv a Governor under a board or council, to be appointed in a certain manner. The mode of appointing such board or council would be a matter for further consideration. It might be that such a power would either have to be vested ex clusively in the Commonwealth Government, subject to the approval of Parliament, or partly in the Commonwealth Government and partly in the States. I think that if such an amendment were carried, .this scheme for the creation of a Commonwealth Bank would be much more satisfactory than it is. I consider that the best friends of the Bill ought to welcome any suggestions calculated to improve the scheme as brought down, to give them greater public confidence, and place the bank on a stronger foundation. I should think that honorable members on the Ministerial side ought to agree to any proposal which would tend to’ strengthen the bank, to improve it, and to free it from political control. Judging from the speech made by the honorable member for East Sydney, one would be disposed to think that it was intended to keep a very pronounced type of political control over the bank. He said triumphantly, and without hesitation or qualification, that this House would be supreme in the control of the institution in the last resort as well as of any other Government institution. Allow me, with great respect, to point out to the honorable member, as well as to his friends, that such an attitude is quite inconsistent with the fundamental principle of the Labour platform, which says that there shall be a Commonwealth Bank of issue, deposit, and exchange, and with non-political management.

Mr Mathews:

– We consider that it is so.

Sir JOHN QUICK:

– According to the Bill, coupled with the pronounced views of certain honorable members, the management of the bank is nominally vested in the Governor, but in reality is to be. subject to a power behind the throne in the shape of political, or, in the last resort, parliamentary, control. That would, I think, be a great mistake from the standpoint of the friends of the Bill on the other side. I have no reason to doubt the loyalty and the desire of these honorable members to make the bank a success. Therefore I think that they ought to surround the manager, or the Governor, or the dictator of the bank with certain precautions and safeguards, which will secure independent, fair, just, good, and safe management, that will not be likely eventually to lead the bank to financial shipwreck, or bring dishonour and discredit on those associated with it. I, therefore, join most strongly with those honorable members who have urged that the clause should be amended for the purpose of establishing either a Board of Control or Advice or a council of some kind to be associated with the Governor, to do certain work of a defined character, not superseding him altogether, but assisting him in a Herculean task that no mortal man can possibly be expected to perform. In saying this, I ami fully aware of the contention that the one-man management is intended as a bold experiment and initiative in a direction not hitherto taken by financial undertakings of the kind. It is contended that the one-man management may possibly be the best, and is not necessarily open to objection because it is without precedent, but in launching a big institution like this we ought not, whilst claiming the right to be original, altogether to ignore the previous experience of mankind, and previous precedents, which should act as land-marks and guide-posts to assist legislators and the people in considering the course of legislation to be. adopted. I have taken the trouble to make, for the information of honorable members, a brief analysis of the methods of management of some of the greatest financial institutions in the world. I need not remind them of Australian or American precedents. I prefer to take the precedents of the great financial institutions of England, France, and Germany. Whilst some may be inclined to brush them lightly aside, I think, on reflection, they are entitled to weight. In launching the new Commonwealth Bank, honorable members would be doing it greater justice, and hedging it round with greater safeguards and securities, if they refused to let the clause stand in its present blank form. Supreme control of the Bank of England is vested in a Governor, Deputy Governor, and a court of fourteen directors, who are elected annually by the stockholders. The directors are not mere ornamental figureheads, but are active participants in the work of managing the bank and controlling its destinies. One may naturally assume that no man could become a member of the Court of Directors of the Bank of England merely as an act of personal or social favoritism or social distinction, and certainly not for the purpose of bringing business to the bank, although the honorable member for East Sydney suggested that directors of banks were sometimes appointed to bring business or social patronage to them. One may fairly assume that the position of director of the Bank of England would be regarded as a great honour and prize to be competed for by the very best financial men in the centre of the financial world, which is London. That precedent, therefore, is one which ought to influence members of this Parliament in deciding the mode of management of the Commonwealth Bank’. The Court of Directors of the Bank of England meet weekly, and if they do not attend a certain number of meetings they forfeit their seats. In addition to meeting weekly, they have to serve upon committees of the bank which are appointed for special purposes, and to deal with special question.-, referred to them by the Court of Directors. The management of the Royal Bank of Scotland, the great financial institution of the northern kingdom, is vested in a Governor, a Deputy Governor, nine ordinary directors, and nine extraordinary directors, the whole of the directors being elected by the shareholders. Thus its management is vested, not in one man or two or three men, but in the combined wisdom and authority of a semicorporate body. The management of the Bank of France, which, probably, next to the Bank of England, is the greatest financial institution in the world, is vested first in a Governor and two sub-Governors, and secondly in a general council consisting of fifteen regents and three censors. TheGovernor and sub-Governors are named by the President on the proposal of the Minister of Finance, while the regents and censors are elected or re-elected by the shareholders of the bank, who therefore exercise control over the management of the bank and take a share of the responsibility, by having the sole voice in the selection of the regents and censors.

Mr Webster:

– The people would be the shareholders here.

Sir JOHN QUICK:

– But here the people have apparently, under this scheme no. representation whatever in the management of the bank

Mr Webster:

– They are all here.

Sir JOHN QUICK:

– That means political control. Direct political control through Parliament is what I am objecting to, and I understand .that the Labour party themselves do not want to create a political bank. Yet if the management of the bank is to be from time to time subject to the direct action and intervention of Parliament, it will be a political institution.

Mr Howe:

– Are all those shareholders capable men who understand banking?

Sir JOHN QUICK:

– They are personally directly interested in the successful management of the institution in which they hold shares. Their money is sunk in it, and that would be as good a test of their qualifications as any. No man holding shares in the Bank of France would be likely to vote for the appointment of a director who he does not think is highly qualified for the position. It issaidthat the taxpayers of Australia are to be the shareholders in the Commonwealth Bank, and that they have a voice in its management through this Parliament, but I apprehend that what the taxpayers ought to have is not merely an ultimate resort to this Parliament, but some body chosen to be associated with the direct management of the bank - associated with the governor, surrounding him, in constant touch and association with him, not, it may be, to call him to account after he has made a mistake, but to check him day by day and week by week, to advise him, and enable him to perform the duties of his great task in a satisfactory manner. There is in France another institution to which I wish to direct attention as a precedent that might fairly be followed by this Parliament in creating the bank. It is the Credit Fonder of France. This bank is mixed institution. In the first place, it is a joint stock company, and in the second a society to some extent under the control of the Government in consideration of certain concessions and privileges. The management of the Credit Foncier of France is vested partly in a council of twentythree administrators, secondly in a governor and sub-governors, and thirdly in three treasurers-general. The treasurers and other administrators are nominated by the general assembly of stockholders, and the governor and sub-governors are nominated by the Government. There you have an illustration of a popular semiGovernment institution in which there is a divided control, the management being vested partly in the representatives of the shareholders and partly in representatives of the Government. The great Bank of Germany, to which reference has been made - the Reichsbank - has a similarly divided management and control. In the first place, there is the curatorium of five members appointed by the Government. Secondly, there is the directorium consisting of a president and director appointed by the Emperor. Thirdly, there is the central council, composed of fifteen stockholders elected by the shareholders.

Mr Carr:

– The public have contributed the capital in conjunction with the Government; is that so?

Sir JOHN QUICK:

– The public have contributed the whole of the capital, but, in consideration of certain special privileges, the Government have been conceded a voice and participation in the management by the appointment of certain high officers.

Mr Carr:

– And a share in the profits also ?

Sir JOHN QUICK:

– No; the Government have no share in the profits.

Mr Carr:

– It is hardly a National bank, then.

Sir JOHN QUICK:

– Why should the Government share in the profits when the whole of the capital was contributed by the shareholders?

Mr Carr:

– The bank does Government business, I presume.

Sir JOHN QUICK:

– Yes, that is so. These are samples of great institutions which might be followed by the Commonwealth in launching this great experiment. I fail to see what advantage is to be gained, except economically by saving in salaries, by vesting the management in one man. I fail to see that better judgment or sounder decisions are likely to be arrived at by one man than by a council of advice.

Mr Scullin:

– If the management is as good and costs less money, that is an argument, surely?

Sir JOHN QUICK:

– I fail to see that we can obtain management by one man which will be equivalent to management by one man plus a council. “ In the multitude of counsellors there is wisdom,” in banking as well as in politics. You might as well say that a dictatorship is the best form of government, because you would pay the dictator less than you would pay a Cabinet and a Parliament. The management of the bank is not being surrounded with precautions and safeguards. We are giving too much power to one man. I do not believe in one-man rule in banking any more than in government. For a time the one man may, perhaps, do fairly well, but in critical situations he ought to be surrounded with a cabinet or council of advice, or controlled by a council of supervision in some shape or form. We all know how difficult it is, in some crucial situations, to arrive at a fair, just, and proper conclusion. In dealing with the great interests of finance and with complicated issues such as will, no doubt, frequently arise the Governor of this bank should have the advantage of assistance and guidance from other experienced persons, just as have the managers of other financial institutions in Australia and in other parts of the world. I think that the best friends of this bank ought to pause before they rush headlong into a scheme of management so utterly destitute of safeguards and so open to criticism as is the bald scheme of management as outlined in clause 11. Without going into any proposals which might involve fundamental or organic alterations in the scheme, I think that undoubtedly it would have been much better to have had the management vested in a council or board in the selection of which the States of Australia might have had a voice. To propose such a scheme now would, of course, involve alterations in detail into which I cannot enter at present. But a scheme of that kind would, I think, recommend itself to the common sense of the people of Australia, and would reconcile to the bank many persons who at present do not view this scheme from a friendly stand-point. I, therefore, join in the hope that though the supporters of this scheme are in a triumphant majority they will not refuse to take advice which is calculated to improve the Bill, and to make for the safe and sound working of the institution proposed to be established.

Mr FENTON:
Maribyrnong

– I do not intend to discuss the clause at great length. But I wish to point out that much has been said about, one-man management, which appears to me to be beside the mark. When the selection of the Governor of the bank is made, undoubtedly any Government - and this Government in particular - will be exceedingly careful as to the calibre of’ the person selected. He should be a man of firstclass ability, and the deputy associated with him should be a man of expert knowledge in particular financial matters. Instead of one being responsible for the management of the bank there will always be two. Judging from the history of the past, I do not think that we need go to Europe or to Great Britain for guides. I rather believe in settling the question in the light of Australian experience.

Mr Sampson:

– The most modern experience.

Mr FENTON:

– We are now proposing to institute the most modern banking legislation in any part of the world.

Mr Sampson:

– It may be a little too modern.

Mr FENTON:

– From the Conservative point of view every reform is too modern. All new proposals look too far ahead. It is surprising to me that honorable members should be so eager to depreciate their own country, and to rush te foreign countries to find out what is done there. The argument that “ it may be a little too modern “ might have been used when the Victorian State Parliament gave to the world voting by ballot. It established then a precedent that has been followed all over the world.

Mr Sampson:

– But is this a matter to experiment upon?

Mr FENTON:

– If the honorable member regards this as an experiment, then I can only say that if we were to adopt his view we should have simply a policy of negation or stagnation.

Mr Scullin:

– We should be keeping in the same old nit.

Mr FENTON:

– Some would have us do so to the detriment of the’ public, but I am not one - who would. We can move ahead along safe and sure lines to the great advantage of the people we are serving. If I thought any proposition to amend the Bill would be an improvement, I should support it, whether it came from the Opposition or from the Government side of the chamber, but the appointment of independent directors to control the management of this institution would probably mean a revival, more particularly in time of stress and storm,, of some of our experiences of the early nineties. I am going to refer to a discussion which took place in the Victorian Parliament, in 1894,. on a Bill to amend the Savings Banks Act, in moving the second reading of which the then Treasurer, Mr. G. D. Carter, said -

When the term of the present Commissioners expires in three years’ time, if any one of them is on the directorate of another institution, he will have to abandon one or the other.

He went on ,to say, referring to the Commissioners df the Savings Banks, that -

Some one said the other night that they hadlent out money on coffee palaces.

This remark shows that there are considerations other than political influence to be considered. A pronounced teetotaller might be thought to be likely .to exercise influence in a certain direction, just as a brewer might also be open to the suspicion of being likely to bring influence to bear in another direction. Mr. G. D. Carter continued -

That is true ; and that was where the teetotal influence came in. However, I will not say much on this matter, lest it may be thought that I am speaking with prejudice, but it is possible that, but for that influence on a previous Board, certain loans to coffee palaces would not have been granted ; and if it had not been for the religious element, I presume the Young Men’s Christian Association would not have got the loan it did.

He pointed- out that, in connexion with our State Savings Bank, we had Commis- sioners, or,, in other words, directors, who were supposed to be reputable members of the community, but who, according to him, were influenced by certain predilections or leanings in granting loans out of the funds » of the Savings Bank to particular institutions that at the time were not considered to be too safe. We do not want to revive the unpleasant past, but I could, if necessary, go on reading records of this kind. Every financial institution is tested in time of storm and stress, and we cannot be too careful in dealing with this matter. The Victorian Hansard also provides me with a quotation in support of the principle of one-man mangement. I refer to the report of a speech by no less an authority than the honorable member for Mernda. Speaking on the Savings Banks Act Amendment Bill in the Victorian Legislative Assembly, in 1894, the honorable member - and I do not think any honorable member has had a more varied experience as a merchant and a banker- said -

If I had any influence with the Government, and were asked my opinion, I should say that the direction in which you should go with regard to the Savings Banks Commissioners would be to strengthen the authority outside of Parliament, and not to weaken it; and this especially, if it is the intention to tack on a system like the Credit Foncier. It is all the more important in such circumstances that the executive and governing body of that institution should be strengthened instead of weakened. They should have positions like the judges of this country. One of them, at any rate, should be a strong man, a first-class financier, who should be in a position to hold the balance, and to say - “ Thus far and no farther “ to his fellow commissioners.

The honorable member, who then represented East Bourke in the Legislative Assembly, was favorable to the appointment of a Board of Commissioners in respect of the State Savings Bank, but contended that there should be on that Board’ one strong man with power to say to his brother Com>missioners, when great pressure was being brought to bear upon them, “ Thus far and no farther.”

Mr Fisher:

– In other words he was to. have the power of veto.

Mr FENTON:

– Yes. The honorable member went on to say -

He should be in a position not to have to consult or ask permission from any Treasurer, but to administer the funds as a banker would administer the funds of his bank.

I believe that so far as this bank is concerned we are getting as near as possible to the position which the honorable member for Mernda desired to be’ established in connexion with the Victorian Savings Bank in 1894. That was the year after the financial crisis, when our public men were wiseand prudent in endeavouring to guard our public institutions.

Mr Sampson:

– Under his proposal theremaining Commissioners would have constituted a sort of advisory board?

Mr FENTON:

– Certainly, and theGovernor of the Commonwealth Bank will have advisers. The operations of the bank will not be confined to any one department. In connexion with all our big. banking institutions a man who wishes to make inquiry in regard to securities has togo to the securities branch; if he has a land transaction he goes to the lands branch, and in some cases he has to see the manager himself. There are officers in charge of these several departments, who are betterable to tell a man what he wishes to knowin respect of them than is the manager himself. The same system will be adopted! no doubt in connexion with the Commonwealth Bank. When the Land Tax Bill’ was under consideration last session, somehonorable members of the Opposition asked, “ Are we to place the land-holders of Australia in the hands of one man, theLand Tax Commissioner?” For twelvemonths the land-owners of Australia, however, have been practically in the hands of that one man and his advisers, and they are still going on all right. The Land’ Tax Commissioner has surrounded himself with officers to carry out the various: branches of the work of the Department, and the Governor of this Bank will also, have to surround himself with a body of officers. I am sure that exceptional care will be taken to secure one of the best menthat it is possible to obtain in Australia for the office of Governor. We shall also have a Deputy Governor who will fit in with his capabilities, and the two men should be able to select a staff that will be a credit to the institution. I have no fear so far as the Government proposal is concerned, and seeing that we have good grounds for adopting the system of management which they propose, I intend to support the clause.

Mr SINCLAIR:
Moreton

.- There are two ways of sifting the evidence brought forward by honorable members in support of any particular measure. In the first place, we must have regard to the light that their speeches throw upon the subject under discussion, and in the second place, we have to ascertain whether they are not seeking in an indirect way to do that which they cannot do directly. The honorable member for Maribyrnong has quoted certain remarks made by the late Mr. G. D. Carter in regard to the action of the Savings Bank Commissioners in advancing money to a Coffee Palace Company, but he forgot to tell the Committee that Mr. Carter was a wine and spirit merchant, and had an ulterior motive in making that statement.

Mr Fenton:

– He qualified that statement by saying so himself.

Mr SINCLAIR:

– I did not hear the honorable member read that qualification, nor do I think that any member of the Committee did.

Mr Fenton:

– I read the whole extract.

Mr SINCLAIR:

– I hope that argument will have no weight with the Committee. I trust that the Government have not taken up the attitude that, having said there shall be only one manager of this bank, that must end it. - In my experience the most successful commercial concerns have been those in connexion with which a number of men have been responsible for the management, and have come to conclusions as to what shall be done only after mature consideration and deliberation together. The speeches of honorable members opposite seem to indicate that they desire to retain political control over this bank. Apparently the honorable members for East Sydney and Gwydir desire that. They have both said that one man would be more under the control of this Parliament than a number of men would be.

Mr Webster:

– I did not say anything of the sort.

Mr SINCLAIR:

– That is the obvious inference from the honorable member’s remarks, and the honorable member for

East Sydney clearly appeared to consider it an advantage that this Parliament would be better able to control one than three. I should like the honorable member for Gwydir to reconcile his attitude on this question with the report he. furnished in connexion with the management of the Post and Telegraph Department. The honorable member advised this Parliament to appoint three Commissioners to conduct the affairs of that Department.

Mr Webster:

– Yes, three men, each in charge of special departments.

Mr SINCLAIR:

-This institution might be divided into a dozen different departments. The honorable member also said that ho hoped the time would soon come when a number of Commonwealth Departments would he put under individual control. ‘ I trust that the Government will not attempt that experiment in connexion with so important an institution as it is hoped this bank will be. The success of the bank will to some extent depend upon its efficient management, and I should like to be able in the future to look back upon the work of this Parliament as work for the benefit of Australia generally. I am afraid I shall not be able to do so unless this clause is amended. I do not say that we should not make precedents, but we should benefit by experience. Men who refuse to do that are likely to make a shipwreck of affairs. It cannot be doubted that experience, has shown that there is wisdom in a multitude of counsellors, and safety in numbers. I do not say that we should have a very large directorate for this bank, but we should have three or five men who would be in a position to confer together, and whose interests it would be to make the bank a complete success. If its success is to depend on one man immediately under the wing of the Treasurer, while the result may not be complete failure the institution is not likely to be nearly as successful as if its management were intrusted to three men.

Mr SPENCE:
Darling

.- There seems to be unanimity in the Committee now on the question of having a Commonwealth Bank at all. It is very pleasing to note that the opposition to the whole proposal in the early stages has disappeared. Honorable members are unanimous, also, on the point that this bank should be absolutely free from any political influence or control. The reference by the honorable member for Moreton to the honorable member for East Sydney was rather unfair, because- it was evident from the remarks of the honorable member for East Sydney that what he had in mind was the difference between the position of private institutions and that of the proposed Commonwealth Bank. I heard nothing from the honorable member, or from any one else, to suggest approval of the exercise of any political influence in the management of this bank. There is an exaggerated idea abroad as to the value of boards of directors. It arises from the fact that’ when a company is being formed, and a provisional board appointed, an effort is made to secure the names of substantial men. It is not unusual to find the names of the same persons on the directorates of several financial institutions.’ There may be one or two members of an expert board of directors who take a keen interest in the business of the company, and consult with the manager more often than the other members of the board. But the ordinary practice is for the manager of a company to submit only important proposals to his board of directors, that they may be fully discussed. As a general thing, the management of the business is left to the man in whom the directors have confidence. Honorable members overlook the fact that probably the only reason’ for the appointment of a board of directors in connexion with the management of private institutions is that the appearance of their names on the board gives, confidence to the public, as they are usually men of integrity. They are largely ornamental, and very frequently they have only a sufficient interest in the company to qualify them for a seat on the board. I am surprised that honorable members should suggest here that these men really run the whole show. That kind of statement may deceive people outside, but we all know very well what it amounts to. We have all heard of the “guinea pig,” as describing the man who makes a living from directors’ fees. Many directors draw fees from a number of companies for simply putting in an appearance at the board meetings. 1 know of one case in which a director of halfadozen companies had to travel from Melbourne to Ballarat, and he charged his railway fare to each company. Honorable members want us to believe that directors do the real work of advising on the details of the business ; but, as a matter of fact, they do not look into matters very closely, most of them being appointed* merely as ornaments. It ought to berealized that in the case of the Commonwealth Bank the situation is very different. There is no necessity to publish the namesdf well-known men in order to inspire confidence in the public, because the Commonwealth Bank will have the credit of the whole country behind it. Many men are regarded as specially gifted with, wisdom, simply because they have been successful in accumulating a certain, amount of wealth. I am not oneto say that this does not frequently prove capacity, and I have no strong objection to advisers in the management of this bank eventually ; but I agree with the Prime Minister that it is not a question on< which we can dogmatize. We ought topreserve an open mind ; and, personally, I think that at present the appointment of a Governor is quite ample for the purposesof management. The Commonwealth Bank, as I say, will have the credit of thewhole country behind it ; and, moreover, the idea is not profit for the benefit of shareholders - except that profit which isrepresented by benefit to the community asa whole - and, therefore, there is no necessity for keen competition for business. Asa matter of fact, the business will come to the bank without being specially sought for ;. and the institution will start in a small way, as many healthy institutions havedone. The success and safety of the bank’ will depend on our obtaining the servicesof the best man available, and the Governor will have the grand privilege of laying the foundations of a great National bank. It will’not be long, I presume before it will be necessary to have a branch in each of the capitals, and there will need to be verycareful selection of the local managers. We shall have to get brainy men of considerable experience, and pay them adequate salaries ; and in this way we shall obtain the services, not of ornamental directors, but of banking experts. The honorable member for Parkes and othersspeak of obtaining the services, as directors or advisers, of men of high standing in the financial world ; but such men are already directors of other institutions, or otherwise how can it be said that they have had experience. Apparently the idea is toask those gentlemen to resign their present positions in order to act as an Advisory Board of the Commonwealth Bank; and- this, of course, would mean several highsalaried positions. In the beginning, the work of this bank will be largely of an organizing character ; and it will be some lime before we can’ reasonably expect the management to be called upon to handle large loans, advances on property, and so forth. It may be necessary in the future io have an Advisory Board similar to the arrangement in the case of the Bank of England ; but at present I think the appointment of a Governor is sufficient. Honorable members seem to be unanimous in the idea that an opening should be left for the States to take an interest in this ;bank if they so desire. The bank must, however, always remain a Commonwealth Bank; and if, for sentimental reasons, perhaps, the States do take a hand, that will necessarily involve some change in the management. In ordinary banking institutions the faith of the directors in the manager depends on the ability of the latter, and the work of the directors is thus regulated. If a manager is capable, reliable, and successful the meetings of directors are formal ; whereas, if he has made errors, though not sufficiently serious to justify a change, the directors are watchful and careful.

Sitting suspended from 1 to 2.30 p.m.

Mr SAMPSON:
Wimmera.

.- I share the opinion that in this matter our ! best precedents are to be found in the banking experience of Australia, our financial institutions being as highly developed as any in the world. The fundamental weakness of the Bill is due to the fact that the Treasurer has not been sufficiently guided by Australian experience. In a departure of this kind there should oe as little experimenting as possible. Certainly those features of banking operations which have contributed to their success ought not to be ignored. No doubt a :great many bank directorates have become so satisfied as to the efficiency of their managers that they leave the control of affairs largely to them, but one-man control is not regarded as likely in the main to promote efficiency. If this bank is to be a success, it must carry on ordinary banking business all over Australia. The tendency of officials is to get into a groove, and the officials of the bank are likely to become conservative. A board of directors, would be of value in formulating and controlling the general policy of the bank. The conditions of Australia vary as widely as those of “any other country, and seasons have a great deal to do with production, and therefore with the value of securities. While in one State a liberal lending policy might be a good thing, a conservative policy might at the same time bc necessary i& another State. One officer controlling the whole of the bank’s, operations would not be likely to have that wide knowledge of values and grip ofpolicy that could be. obtained were he fortified with the assistance of an advisory board of practical men. I see no reason why the Governor of the bankshould not be almost supreme, and believe that an advisory board would be better than a domineering directorate. The Minister of Home Affairs initiated a scheme which in many respects was more statesman-like than that now under discussion, and was approved, I understand, by the Brisbane Conference. It tackled the question of the conversion of the debts of the States. It is unfortunate that the Government did hot consider this matter more closely before advancing, under the , guise of a business proposition, what, according, to the .Prime Minister’s own words, is largely an experiment. The Government has departed from the scheme approved by the Conference, which possessed .merits which the Bill does not possess. No sufficient reason has been given by the Prime Minister for ignoring precedent and experience in connexion with a piece of legislation which has been correctly described as the fundamental basis of our future financial, stability and credit. I hope that it is not too late to improve the measure by providing for a board to strengthen the administration of the Governor.

Mr THOMAS BROWN:
Calare

.. - Honorable members opposite think that the Government should follow the precedent of private control, and appoint a . board of commissioners or directors to join with the Governor in the administration of the bank. Practically every large private financial institution is controlled bv directors or commissioners, but the bank which we are establishing will differ fromthem. In the case of the private financial institutions, a number of persons possessing - vested interests appoint directors to act for them in controlling and managing their affairs. The proposed bank will be a national institution, and practically one of the first of its kind. It will belong, net tq a few investors, but to the whole coir,munity. Every elector will be interested in its success. Those who deposit money with it at interest or borrow from it will, of course, have a special interest in its operations, but the whole Commonwealth will also be concerned. The management of the institution is very properly removed from political control, though the general policy of the bank will come under the review of the representatives of the people, who, to some extent, will take the place of a board of directors. The proper administration of the bank’s affairs is safeguarded to an extent to which the proper administration of private financial institutions is not, the Auditor-General being required to examine the accounts, and satisfy himself that a proper financial policy is being pursued, not once a year, but once every six months. His report has to be submitted to Parliament, and therefore the whole financial and administrative position of the bank comes under the review of Parliament, and the need that exists in private institutions for directorates to keep a certain amount of control over the management does not exist to the same extent in this institution. In a great number of the private institutions the directors do not take the onus and responsibility of that intimate management which honorable members opposite would lead the Committee to suppose.

The analogy that has been drawn between this institution and such institutions as the Bank of England, the Bank of France, and the Bank of Germany is by no means complete. Those banks are practically private institutions with the addition that they transact large governmental business, and that fact is sufficient to warrant the Government in each country asking for, and being given, a certain amount of control. That does not apply to this institution, which is a purely national one, wholly under the control and wholly the property of the people. In the one case the banks are semi-private, while in the other case the institution which we are now launching is under purely governmental control, and purely a governmental institution.

Mr Harper:

– It needs to be well managed all the same. o

Mr THOMAS BROWN:

– Of course; but ‘1 have yet to learn that a board of directors can guarantee that any institution will be well managed. We have had in financial crises Boards that seemed to be quite above suspicion, and that honestly strove to do their duty, and yet the institutions over which they presided came to grief. The success of all large business concerns depends greatly upon the management, and particularly upon the ability and capacity of the general! manager. If an institution has a competent, able, and honest directorate, arid an incompetent or dishonest manager, I fear that the incompetency or dishonesty of tha latter will, more . than neutralize the honesty and competency of the general board. That is by no means an uncommon experience.

The purposes of the boards of management which have been so strongly urged as examples, are, certainly, toexercise a certain amount of control’ over the general manager, or to beavailable for the general manager to consult, but they are also largely intended to> create confidence in the credit of the institutions, and so gentlemen high in thecommercial, financial, or even political, world are placed on them. If honorablemembers turn to the Australian joint Stock Y ear-Book, they will find that on the directorate of the Bank of New SouthWales there are the Honorable C. K. MacKellar, M.L.C., Sir Normand MacLaurin, M.L.C., the Honorable R. J. Black, M.L.C., and Senator the Honorable J. T. Walker.

Mr Harper:

– Are they elected because they are politicians?

Mr THOMAS BROWN:

– I do not know that they are, but the fact that theyare politicians who stand out prominently in the general business community, is » very strong and substantial reason why those interested in the financial success of the bank desire their presence upon thedirectorate. The Bank of North Queensland has on its Board the Honorable SirAlfred Cowley, the Honorable A. J. Thynne, M.L.C., and the HonorableRobert Philp, M.L.A. ; the City Bank of Sydney has Sir James Graham, M.L.A., and Senator Sir Albert Gould; the Commercial Bank of Australasia, operatinglargely on Melbourne, has the Honorable W. H. Embling, M.L.C., the HonorableDuncan McBryde, M.L.C., and the Honorable Robert Harper, M.P.

Mr Ryrie:

– A lot of those men weredirectors of banks before ever they were politicians.

Mr THOMAS BROWN:

-That may be so, but a good number of them became directors after becoming prominent . in politics. At any rate’, they were prominent in the commercial world, and not necessarily prominent in the control of banking, before they were elected as directors of banks. The Commercial Banking Company of Sydney has on its Board the Hon. H. E. Kater, M.L.C., and the Hon. Henry Moses, M.L.C. ; the Queensland National Bank has the Hon. A. J. Callan, M.L.C ; the Royal Bank of Australia has the Hon. Sir S. Gillott, and had the late Hon. F. S. Grimwade, M.L.C. ; the Western Australian Bank had the late Sir George Shenton, and has the Hon. W. T. Loton, M.L.C., the Hon. George Randell, M.L.C, and Mr. F. S. Moore, M.L.A. The old Savings Bank of New South Wales, which was known as the Barracksstreet Savings Bank, and is a semiGovernment bank, has for directors the Hon. Edmund Fosbery, M.L.C, the Hon. A. Griffith, M.L.A. , the Hon. John Kidd, Mr. Thomas Jessep, the Hon. J. F. Burns, the Hon. J. Lionel Fegan, and the Hon. C. W. Oakes. All these gentlemen have been prominent at one time or other in the politics of the country, and. so far as my memory goes, obtained their positions on the Board of the bank in every instance while in Parliament.

Mr Ryrie:

– You are wrong; plenty of them were on the directorates long before they had anything to do with politics, especially the members of the Legislative Council on the Board of the Commercial Bank.

Mr THOMAS BROWN:

-The honorable member will find that more of them became bank directors after becoming prominent in politics. I do not say that those gentlemen are not competent, but that list - and I have not quoted all the banking institutions of Australia - shows that the private banks are not afraid of political influence to the extent of having politicians upon their directorates. In some of the banks the politicians and expoliticians outnumber the private citizens on the Board. That objection, therefore, does not hold good, but I submit that this proposal is largely in the nature of an experiment. It is certainly a departure from the accepted method of control of private or semi-private banking institutions, and therefore ought to be examined closely to ascertain if it is warranted.

As I have shown that there is no direct analogy between private or semi-private institutions and the new bank that we are launching, the reasons that call for the assistance of directorates in the case of the former do not prevail to the same extent in this case. Firstly, this Parliament is responsible for the policy and the good government of the bank. It is responsible to the people, and to that extent it fulfils a considerable part of the functions that directors discharge in the case of private institutions. Further, the bank is subject to review by the AuditorGeneral, whose Department is entirely free from political control, and his report must come before Parliament every six months. Parliament has, therefore, authoritative sources from which to obtain information as to the financial position and management of the bank, and will be able more completely than any Board of Directors to know what is going on.

The whole tendency of these times, wisely or unwisely, is to centralize the management of big concerns’ in the hands of a few. I have only to refer honorable members to State tendencies. The first effort to dissociate the administration of our public functions from direct Parliamentary control took place in connexion with the railways. New South Wales, I think, made the first movement in that direction. Under the leadership of the late Sir Henry Parkes the railways of that State were removed from political control and placed under a Board of three Commissioners. Other States later on adopted a threeCommissioner system, but gradually worked down to practically one-man control of their railways. We found, as the result of inquiry, that Mr. Oliver, Chief Commissioner of Railways for New South Wales, was outvoted regarding a number of administrative matters by his two fellow Commissioners. As the outcome of an inquiryit was found - and I think I am expressing the general opinion of the public in this connexion - that his policy in connexion with large contracts which came under review was more in the interests of the Government and the country than was the policy adopted on the votes of his two co-Commissioners. Whilst we still have three RailwaysCommissioners in New South Wales, the chief Commissioner to-day has the power to veto the findings of his co-Commissioners, so that such a state of affairs, cannot again arise. In New South Wales the Public Service was controlled by a Board of three Commissioners, and, as the result of the experience of that State, the Commonwealth determined that its Public Service should be controlled by only one Commissioner. Whilst our system may not be all that some honorable members would wish it to be, it is impossible for any human being to give satisfaction to every one, and I am certain that the control of the Public Service Commissioner of the Commonwealth has not been detrimental to the best interests of the service, and will, at least, compare favorably with any system of control by three Commissioners. We have been gradually getting away from the idea of having a multiplicity of counsellors in respect of our public concerns, and for the reasons I have indicated, and because of the safeguards which this Bill provides I am prepared to assist the Government in giving a trial to the control of the bank by a Governor, who will have the fullest power and the widest authority to make a success of this institution. I recognise that, after all, everything will depend on the man selected for the position. If we can secure the services of an able, competent, experienced man the bank will be a success; I feel equally sure that if we did not secure the services of such a man, then, even if we had the ablest board of directors that could be chosen, the bank would probably not be the success that it would otherwise be.

Mr DEAKIN:
Ballarat

– I desire to add to the points previously submitted to the Committee one or two that escaped my memory when I was discussing this question yesterday, and which, in view of the importance of the Bill and of the particular proposal before us, I think it my duty to place on record. The first point I failed to mention yesterday when questioning the choice of a single Governor to control the bank related to the great size of this continent. The operations of the bank are, at least, to be extended over the whole of Australia, and there is provision for their spreading abroad for certain purposes. Assuredly, the efficiency of our existing bank boards largely lies in the local knowledge and experience of those who constitute them. It is evident that no man -could claim similar knowledge in respect of the whole of this vast continent, and that even if any man at a particular time had such a knowledge, he could not keep pace with the march of events. Hence there is another justification for the appointment of a board the members of which should be able fo lend valuable aid to the Governor. One special justification might be found in the choice of two or three men who between them were acquainted with the greater part of the Commonwealth, with which the Governor himself could not be expected to be familiar. That cannot be pushed toofar, but it is an important element to be added to those other elements for our con,sideration before finally negativing the proposal that the Governor of this bank should’ have the aid of men of something like hisown status and calibre, and possessing experience in other directions, geographical or otherwise. My proposition that the Governor shall be so assisted does not of necessity imply the appointment of any or of all these assistant directors at the timeof the establishment of the bank. Every one realizes that a certain period must elapse during which the bank’s operationswill be restricted, and during which theGovernor himself may furnish the requisiteknowledge.

Mr Thomas Brown:

– Does not the honorable member think that the positioncould be met by the Governor appointing assistants in each of the States possessing special knowledge in respect of their respective States?

Mr DEAKIN:

– Valuable information! could be derived in that way, though I doubt if it would be as effective as the choice of men of sufficiently wide knowledge of large portions of Australia who would be perpetually associated with the Governor when the bank got into full swing. If there were such a power in the Government, it probably would not be exercised at once, neither need the appointments be simultaneous. As the needs of the bank required it, however, these subordinate directors should, in the interests of the bank and of the Commonweal th, be appointed.

Every honorable member who has defended the Government proposition to intrust the fortunes of - the bank to oneman has said that everything depends upon, the man to be selected. The Prime Minister, himself, has emphasized that point again and again. The risk can be expressed in a general way in figures. What are the chances of our finding a man of that full knowledge of Australia and of banking, that sound judgment and habit of self-dependence, which would enable him to grapple with a great problem of this sort so as to conduct the institution, not only through its initial stages, during which the burden upon him would be comparatively small, but until it had reached something like its full proportions. We have to take into account the obvious risks run in attempting to make any such single choice. I have admitted, as many honorable members have contended, that if we could find the ideal man for this position, we should do well to intrust him with the whole charge, free from the well-meant, but unnecessary, assistance of other capable experts. But what are the chances, expressed in a sporting way, of our finding such a man ? What are the chances of our finding a man with a thorough grip of Australian affairs, with such intellectual resources and such a character as would enable him to sustain the great weight of the whole of this enterprise? It is quite sufficient to put the question in that way to bring it home to honorable members in a homely and direct fashion. What would it mean if gradually we supported the Governor by the appointment of two or three co-directors whose powers would be defined in their appointment?

Mr Fisher:

– In what way?

Mr DEAKIN:

– That is a matter for detailed discussion. There are two obvious choices. One is to make these codirectors full colleagues of the Governor, and either to allow majority control, or to permit the Governor’s co-directors, if agreed, to suspend his decision, or, on the other hand, to place him in the first and solely responsible position, giving him authority, on his own motion, after receiving the advice and assistance of his colleagues, to determine what ought to be done, simply using, for his own advantage, their ability and acquaintance with the subject under consideration.

Mr Harper:

– Putting their views on record.

Mr DEAKIN:

– Yes. There are other means that I do not wish to elaborate, and that could be adjusted according to the judgment of the Committee, so as to diminish the enormous risk of our not finding the absolutely perfect man who is required for this position, if he is to stand alone.

Mr Fenton:

– The first and second mates would override the captain.

Mr DEAKIN:

– As I have contended, that would depend upon the constitution of the bank, if we desired, whilst obtaining the knowledge of these assistant directors, to pin our faith to the judgment of their superior officer, that could be done.

Mr Page:

– We had an experience of a Board of Railways Commissioners in Queensland, and that State has now reverted to control of the railways by one Commissioner.

Mr DEAKIN:

– The several States have taken different roads, according to their experience and the men with whom they have had to deal. A much greater risk is undertaken when we trust entirely to one man. These are matters properly within our consideration.

The other point to which I wish to allude was mentioned yesterday, but not, perhaps, put in as plain a form as I desired. It is that taking political influence in the ordinary sense in which political influence is usually mentioned, meaning by that the action of individual politicians who would place, or seek to place, themselves in relation with the Governor of the bank in order to obtain personal advantages for themselves, their friends, or their constituents - of thisI have little or no anticipation. It ought to be practically impossible, and I think it is extremely unlikely to occur. In speaking, therefore, of political influence I am not referring to individual interferences. The bulk of honorable members opposite have frankly confessed - as, indeed, is obvious - that under this Bill political influence, in the higher sense, has been deliberately adopted throughout. Of course, the bank originates in this Bill, and will be governed from time to time by other measures passed by Parliament. Consequently under legislative power this bank is torn, will live, and will cease to be if ever it does cease-; it cannot escape legislative control, and that control must always be political. If we read the Bill carefully clause by clause we see that it simply amounts to gifts of power to the Governor or governing body to do any and everything- that is done by any bank.

Mr Archibald:

– Does the honorable member not think that he is reading that into the Bill?

Mr DEAKIN:

– Certainly not; for I have since yesterday re-read the measure carefully as .one who was once a practical lawyer, and still retains some recollection of his profession.

This measure contains, first of all, the amplest gifts of power in relation to banking, and leaves the great bulk of that power in the absolute control of the

Governor of the bank. Supplementary to his control there is not only the legislative control of the Government to which I have referred, but a power of regulation by the Government, a power which, in itself, is so large and ample that it may, and, if necessary, would be sufficient to cover an entire change of policy and of administration. Of course, all this power will be exercised publicly under the regulations. The Act does so much, and then the regulations do something more. These regulations it is in the power of the Government to make, with the tacit assent of the majority in Parliament ; and it is a power absolutely and wholly political, just as the legislative power is. Then there is the third power conferred by clause 32 which provides that the Governor may, with the consent of the Treasurer, make rules.. The authority of the Treasurer is absolute because without it the Governor cannot make rules ; the consent of the Government as a whole is not necessary, the consent of the Treasurer completing the structure of authority.

First of all, in the Bill itself, there are the amplest gifts of power - that- is, political. Next there is the control of the Government through regulations - that is political in the higher sense. Then there is the control of the bank in what are relatively minutiæ by means of rules made by the Governor, but only enforceable with the consent of the Treasurer - that is, again, political. So the institution is, of necessity, in the most absolute sense, and always under political control.

The resources of the Commonwealth are behind this bank; it is on this that the credit of the bank is built, and is intended to be thus sustained. That being so, some political control is absolutely indispensable. It is not admitted by many honorable members, and certainly hot by me, that it is necessary to place the whole credit of the Commonwealth in this unlimited fashion behind the bank. It would have been possible to found this bank by enabling it to acquire its capital in what may be termed the ordinary manner, perhaps keeping a . reserve liability of the Commonwealth properly conditioned. So much in passing, merely to show that it is not essential to place the credit of the Commonwealth behind the bank in the wholesale fashion adopted in the Bill. We cannot, however, disguise from ourselves the fact that we are establishing a financial institution which, in the higher sense, will be, and, in many instances, must be, under political control. The proposition that the bank shall be managed by the Governor of the bank, has hanging to it all these very important considerations to which I have, in very brief and hasty fashion, directed attention. I once more submit to the Prime Minister that the path of safety would be to afford the Governor of the bank such assistance as may be thought necessary by qualified associates under conditions to be defined by the Government, and to make such consequential, amendments as would be advisable in the other portions of the measure. I am putting this matter formally to the Prime Minister after some further study of the Bill. The path we are pursuing may be justified by the successful choice of the right man, and his retention in office for a. sufficient time under favorable consideration; but the odds will be much more against us than they need be. We can make them much more in our favour by giving him expert support when and where necessary, under circumstances which Parliament will approve.

Mr FISHER:
Prime Minister and Treasurer · Wide Bay · ALP

– After - shall I say? - the revised or fuller statement of the Leader of the Opposition-

Mr Deakin:

– Fuller.

Mr FISHER:

– The fuller statement, I think, calls for some reply from me. I must confess that the ideas developed during the debate have not afforded much help to those who desire to discover whether there ought to be one, two, or three at the head of the Commonwealth Bank. The debate, convinces me that, although this hank is practically a new departure, the proposal in this clause is the very best that could be submitted. The Leader of the Opposition suggests that there should be a directorate to assist the one Governor. Who is to appoint the directorate?

Mr Deakin:

– The Government.

Mr FISHER:

– For how long?

Mr Deakin:

– That is a question of detail.

Mr Agar Wynne:

– I would suggest that one director should retire each- year.

Mr FISHER:

– Very well. The charge has been made that this Bill permits of political influence. A Government usually lasts for three years; and it is suggested by the honorable member for Balaclava that one of the directors should retire each year. A Government could place on that directorate whom they pleased ; and thus. the government of the bank would be entirely by political influence. Yet this is a suggestion made to remove political influence from the management of the bank ! I found one of my greatest difficulties in t’his connexion. If there were a directorate, the Government would have to appoint the directors; and unless the appointments were made permanent, in the same way as those of the Governor and the Deputy Governor, the control would be absolutely in the hands of the Government of the day. A Government could find ample reasons for appointing men of the same political complexion as themselves.

Mr Sampson:

– The Government propose to appoint the Governor.

Mr FISHER:

– But that appointment is for seven years.

Mr Harper:

– The same appointments could be made in the case of directors.

Mr FISHER:

– The honorable member for Balaclava has just suggested that one director should retire each year. I take it that the honorable member for Mernda indorses the view ofthe Leader of the Opposition.

Mr Harper:

– No, I do not.

Mr FISHER:

– The honorable member suggested that the directors should be appointed for seven years.

Mr Harper:

– I do not say that - the appointment might be for three or five years.

Mr FISHER:

– We have gone beyond the speculative stage, and we desire to hear some suggestion better than the proposal in the Bill. Such a suggestion we have not yet heard. The revised suggestion of the Leader of the Opposition, to have a directorate, would, in my opinion, throw the whole management of the bank into the hands of political parties.The present Government do not desire that, and they ask Parliament to give them power to appoint a Governor who will be charged with the supreme control. There will be a Deputy Governor appointed for a term of seven years; and, in case of illness or other emergency, he will act for the Governor. That, I think, is ample safeguard against the management falling into unsuitable or improper hands.

Mr Mahon:

– Supposing the two happen to be ill at the same time?

Mr FISHER:

– That would be unusual ; but, of course, such an emergency might arise, and the honorable member for Coolgardie is quite right to call attention to the point. The risk, however, is not suffi cient to justify the appointment of a third Governor ; and if we did make such a. proposal I suppose some honorable member would ask what would happen if the three were all incapacitated by accident at the same time. There is a reserve power in the Executive Government to appoint one of their number, or any outside person, to take up the work, and that I think is sufficient.

Mr Hedges:

– What would they know about the management of the bank? The directors would be experts.

Mr FISHER:

– My difficulty increases as I go on, because honorable members change their ground. I understood from honorable members that there were many experts outside much better informed than the Governor or Deputy Governor could be. But now the honorable member for Fremantle indicates that nobody but the Governor or Deputy Governor will be capableof managing the bank.

Mr Hedges:

– I rise to a point of order.. I disclaim making any such statement, and I ask the, Prime. Minister to withdraw what he has said.

Mr Wise:

– Is the honorable member for Fremantle in order in interrupting a speech like this?

Mr FISHER:

– I can assure honorable members that I understood the honorable member for Fremantle to interject, “ What do they know about it?” meaning outside persons.

Mr Hedges:

– I made no remark of the kind.

Mr FISHER:

– Then I was quite wrong in my interpretation of the honorable member’s suggestion.

Mr Hedges:

– I said that a Minister would not be an expert in bank management.

Mr FISHER:

– The leader of the Opposition has said that the Bill is so drafted as to permit of two kinds of political influence - the political influence which belongs to the predominant party in Parliament from time to time, and the influence which can be exerted by means of the regulations for the proper management and control of the bank. The honorable member regards the latter as giving the Government larger powers than are necessary. If it can be proved to me that the power to make regulations may be used to bring the administration of the bank under political influence, to the detriment of the institution and the country, I shall be prepared to accept any amendment which in my opinion will prevent that. It is a power which is given because there are many matters which it is thought can be provided for better by regulation than by statutory enactment. It has been suggested that no regulation concerning the management of the bank should have effect unless obtaining the concurrence of the Governor. That is an extreme position to take up, though not an impossible one. -I think, however, that it would be better to provide that a regulation relating to management in which the Governor does not concur should be laid on the table of Parliament, accompanied with the Governor’s reasons for objecting to it.

Mr JOSEPH COOK:
Parramatta

– - The Prime Minister has promised to consider certain amendments if it can be shown that ;there is any danger of political influence. It seems to me that in addition to the dangers already pointed out, arising under the provisions requiring Executive approval to the general regulations of the bank, there is that which comes from requiring the consent of the Treasurer to the making of rules for its ordinary management and control. That brings political influence into every detail of the bank’s operations.

Mr MAHON:
Coolgardie

.- It is satisfactory to know that the Leader of the Opposition repudiates the idea that the Bill opens the door to what is commonly known as political influence.

Mr Joseph Cook:

– It opens it wide.

Mr MAHON:

– In that opinion the honorable member is contradicted by his own leader, who declared that there is no likelihood of the politician obtaining for himself, his friend, or his constituents, any special advantages. The honorable member for Ballarat objected, however, that the Bill was political in the sense that it has been bom of a political party. That objection, if he intended it to be an objection, would apply to most legislation, including a number of measures and appointments, such as the Judiciary Act and the appointments under it, for which the honorable member for Ballarat was largely responsible. If we prevent members of Parliament, or powerful individuals in the community, from obtaining special advantages from the bank for themselves or for their friends, we shall do all that is necessary in that regard. But it is not clear that one-man rule is the best. I have no great love for autocracy, and agree with the adage written in enduring letters on the pavement of the entrance hall, that “ in the multitude of counsellors there is safety.” The ablest man may sometimes profit by the advice of another. Even Homer nods, and while there may be a financial genius capable of guiding the destiny of the bank to success, it is conceivable that he would profit by the advice and experience of others. Final determinations might be left to the Governor, but there should be an advisory board, not to overrule him, but to assist him, and to put on record its dissent from decisions to which it did not agree. The board would be independent of Parliament, and should be appointed for seven years. I welcome the assurance of the Prime Minister that he will accept any amendment which will improve the Bill. No doubt he will receive such amendments from both sides. The advisory board I consider necessary, not as a check on political influence, but as a matter of ordinary business prudence.

Mr HARPER:
Mernda

.- I have listened with surprise to many of the remarks which have been made regarding the status and work of bank directors. The popular idea that they do little more than draw fees is as false as the statement that they often overrule general managers, and thus cause disasters. As the last speaker has reminded us, “ in the multitude of counsellors there is safety.” The proposed bank is, I understand, ultimately to control, not only the note issue, but the loans and every department of commercial banking, as well as the Savings Bank business. Its business will be more extensive and varied than that of any institution with which I am acquainted, but under the Bill its sole control will be in the hands of one man. He will be made responsible, not only for its executive management, but for what is equally important, its policy, and will have to do the best he can unaided in times of difficulty, which a Government institution must face just as private institutions have to do. The Prime Minister expects the impossible in thinking that one man can fulfil all the functions that the Governor of the bank will have, and undertake all his responsibilities. I have had eighteen years’ experience as a bank director, and perhaps an ounce of experience in these matters is worth a good many bushels of argument. I went into 4he business, with three other gentlemen, at a troublous time, after the crisis. We came into it, not because we were in any way interested, but for the sake of upholding, if possible, the credit of the community, and we had practically to take the bank in hand and run it, of course, with the assistance of the officers, but they had got into the difficulties, and, practically, the bank had to be pulled through by the directors, who were placed there by the shareholders for the purpose. I can assure honorable members that, to this day - and I have every reason to believe it is the same with other institutions - the directors have an accurate and close acquaintance, not with all the individual accounts, but with the actual position of any borrower of magnitude. We know that the manager, who at the same time is the supreme executive officer, is under our -direction, and also that he can call upon ais to aid him with our advice in any matter upon which he considers it important to have advice. Any manager undertaking the duties imposed by this Bill would rather seek to have the assistance of men of experience and influence, as the Leader of the Opposition said, with local knowledge, appointed as directors. The theoretical banker must necessarily know many things that the ordinary man of business does not know, but he is often ignorant of a great many things that it is most important that the manager of a bank should know, and he should have access to that information, and have the advantage of mind contributing with mind to the discussion of the most complicated and extraordinary questions that do from time to time come up. Honorable members seem to think that this bank has only to be started to practically run by itself. It will do nothing of the kind. It will need enormous foresight and wisdom, and enormous powers of management. T submit to the Prime Minister that he and his friends ought to reconsider this matter fully, not from_ the stand-point of the charge that if they do not do it they are handing the institution over to vulgar political influence, and to be pillaged by politicians, but with the object of securing the :best possible advice to guide and aid the general manager or Governor in carrying on the institution. My idea of this bank has been different from that of other honorable members. I always felt that a financial organ was necessary for the Commonwealth to manage the State debts, and even the note issue, if that were taken over. If it confined itself to those matters, it would have important functions to fulfil, and it could also be so constituted as to be, in times of crisis, a reserve force. The want of such, a central or centralizing force was felt at the time of the last crisis in 1893, and if we had had it, the worst effects of that time would’ have been averted. The body which I pictured as the right thing for the Commonwealth could have been managed on those lines with comparative simplicity, and possibly one Commissioner might for such duties have been sufficient.- But I proposed that even in that case there should be three Commissioners, one to be the chairman, with the right of a casting vote. If the functions of this institution had been to form a financial organ for the Commonwealth, and manage the Commonwealth ‘business, it would have been simple; but the business now proposed to be given to it is enormously complicated. I therefore ask the Prime Minister, in all sincerity, to reconsider the matter, and, if he will listen to suggestions, to be prepared perhaps later on, after full consideration, to recommit the clause.

Mr CARR:
Macquarie

– As one of those who have expressed honest doubts as to the appointment of one controller as opposed to several, I may be permitted to make my position clear, as, if this matter goes to a vote, I shall vote with the Government. I have given it careful consideration, and have made due allowances for such objections - I will not say counter suggestions, because none have been made - as have been raised by the Opposition, and particularly the protest voiced by the honorable member for Mernda, who is a man of wide experience. In taking any notice of the Opposition’s remarks, one has first to allow for the fact that they are an Opposition, and therefore are more or less bound to oppose. I admit that that consideration does not dominate every member on that side, but it controls all of them more or less. In the honorable member for Mernda, again, we have a man who is bound by precedent, and who, as the result of long experience in certain courses of action, could not be expected to depart from them at this stage of his career. He is the last man on- earth I should expect to head a reform, particularly in banking. It must necessarily devolve upon those of us who are prepared to take certain risks in advanced legislation, and I rank myself among those who are prepared to depart to some extent from precedent, as is proposed in this case. If the Executive, as it must, selects a man from among the best banking experts of the day to control this institution, that gentleman must naturally immediately surround himself with all the skill he can command among the banking fraternity. If he does not, he will at once proclaim himself as incompetent. I know of no man charged with a big trust, and capable of fulfilling it, who does not at once seek his confreres among the most able men that he can possibly command. I myself, in a small and insignificant way in business, have always sought to associate myself with the best capacity I could find. Any man worthy of a responsible position must do so. This position does not require that special knowledge of the whole of Australia in detail which the Leader of the Opposition has laid down as essential. That must come with the men who are selected to help the general manager. What he will require is a knowledge of men and things, and the capacity to judge men. I have no doubt that the man who accepts this honorable position will feel so impressed by the responsibilities placed upon him that he will take every conceivable precaution, by surrounding himself with the right sort of men, to insure successful man,agement. On general principles I oppose any promiscuous extension of State functions in a socialistic way, but in a matter of this sort we are entering the financial arena, which claims the best developed minds of the clay. If we seek their aid, and get the best man among them, who will at once seek others of equal calibre, we shall not be running any such risks as those who denounce any and every socialistic proposal would imply.

Mr HEDGES:
Fremantle

.- Without wishing to say anything against the banking part of this proposal, I hope the Prime Minister will take notice of the suggestions that have been put forward to alter the scheme of management of the bank. The very heading of this part of the Bill is wrong. It refers to the management of the bank by a Governor. A Governor governs or directs, but he employs a manager. The manager of a bank under present conditions is not the head of the bank, but is employed by the Governor or by the directors. The Companies Acts throughout Australia make it compulsory for companies to be run in a certain manner for the security of people who have in vested money in them, so many directors having to be elected in a certain way, and balance-sheets having to be made out, properly audited, and submitted to the public. If it is necessary to protect the people’s money invested in ‘companies, surely something of the kind is necessary to protect the people’s money when handled in a concern of this kind. Many honorable members who have spoken on this subject: hardly understand what a tremendous area, the knowledge required to run a bank covers. If can be found in no one man. I have been in Australia between thirty and forty years, and have seen many ups. and downs, and have known times when any man placed in the position of having, to’ rely only on his own knowledge or on. any knowledge that he could get from outside would have been bound to fail. It would be better for the Government to appoint advisory directors to whom the Governor can appeal. They would be responsible to the Government for the advice they gave. Otherwise the Governor may accept the advice of men whose advice we should not recommend him to accept if weknew of it. The tenor of the remarks which have been made on the Ministerial side has been that the Governor would always have some one under him- to whom he could appeal. We want some persons, not exactly over him, but in the position of ari advisory board, to whom he could appeal - men, perhaps, better able to advise than are bankers themselves. The advisory board of a bank or company is generally composed of men actively engaged in many callings and in touch with all the business going on in Australia. Knowing that their advice would be criticised, and that Parliament or the Minister would have power to remove them if they gave bad advice, a board of directors for this bank would! be careful what advice they gave, and that should be sufficient guarantee that the very best advice would be given. We have in Australia experts in all sorts of propositions. Big business might be offered to the Governor of the bank, I feel certain that if such offers were made to him, he would be glad to have a board of directors whom he could consult. I could understand his saying to his board, “ Here is an offer that has been made tome; but I do not know why it should havebeen made. This business has been in the hands of another institution for years, and I should like your advice as to whether or not I should accept it.” In such circumstances, the advice of a board of directors might be of great value. The appointment of a board would be in accordance with a practice which has been adopted to protectthe people. The Companies Acts of the States render it necessary for a board of directors to be appointed in respect of every company. Under them the manager of a company has not full and sole control over it. The Governor should govern the bank, but the policy of the bank should be directed and advised by a board appointed to assist him. We all hope that this bank will be a success. I object to the Savings Bank provisions of the Bill ; but I see no objection to the proposal to establish a bank to transact ordinary banking business. Within the last ten or twelve years, the business of the country has been doubled, but there has been no increase in the number of our banking institutions. I object, however, to the bank being established on the lines laid down by the Government, and I suggest to the Prime Minister that he should accept the advice that was tendered him, not only by the Opposition, but by some of his own supporters, with a view of the better working of the institution. The good government of the bank should not have to depend upon the life and health of one man, and if this question is reconsidered by the Ministry, I am sure that the alteration we suggest will be made.

Mr WISE:
Gippsland

.- The Prime Minister, who tells us that he is anxious that this bank shall be governed in the best possible manner, and that it shall be free from political influence, proposes that its management shall be in the hands of one man. As against that proposition, we have several suggestions from various parts of the Chamber, not one of which, however, has materialized sufficiently to allow of its being put before us in the form of an amendment. That is my difficulty. I am asked to accept either the Government proposal or nothing. If the clause be struck out, we shall have nothing to put in its place. If a definite amendment were submitted, I should be able to compare it with the Ministerial proposal ; but no honorable member has been able to state definitely what he thinks is really wanted. I should prefer a system of control by three Governors or Commissioners. If three independent men of practically equal standing, and having powers somewhat akin to those of the Railways Commissioners, were ap pointed, the position might be more satisfactory. We could provide that the majority should rule, but that the chairman should have the power to override the decisions of his colleagues, conditionally on his placing on record a minute giving his reasons for overruling them. That is the principle which I should prefer. I do not favour the appointment of an advisory committee consisting of men from outside, who might or might not be connected with other banking institutions ; but, failing any proposition by way of an amendment to which I can agree, I am compelled to support the Government proposal.

Mr JOSEPH COOK:
Parramatta

– The statement just made by the honorable member for Gippsland means that he would like an amendment to be submitted, but is not able to frame one himself. The honorable member says that he favours a bonrd of three directors or governors. That being so, why does he not submit an amendment to that effect?

Mr Wise:

– I never thought I should live to hear the Deputy Leader of the Opposition appealing to me to frame an amendment.

Mr JOSEPH COOK:

– Has it come to this : that the honorable member for Gippsland confesses that he is not able to state in an amendment the views which he holds regarding a Bill before the Chamber? What a confession to make to his constituents who send him here to try to shape the legislation of the Commonwealth. Amendments are not flowing freely from the Opposition because I believe there is a feeling that it is useless to propose any. Notwithstanding the suave, smooth words of the Prime Minister, the Government have no intention of accepting any amendments that may come from this side of the Committee.

Mr Fisher:

– I accepted the first amendment suggested yesterday, but the Committee rejected it.

Mr JOSEPH COOK:

– Not being well, I was not here yesterday, and should not have spoken to-day but that I feel this is one of the most important clauses in the Bill. A faulty step taken now would result very unfortunately to the bank itself. I am not going to prophesy disaster for this institution. 1 believe the common sense of the Parliament will prevent anything of the kind, even if it be unwise to set it up on its present lines. I have no object but to see the bank succeed ; but, in order that it may succeed, we need to divorce it, as far as possible, from political control. I agree with the honorable member for Macquarie that any ordinary, sensible, capable Governor would endeavour, as a first proposition, to surround himself with the most capable help that he can secure. May I remind the honorable member, however, that the Governor of this bank will not be able to do anything of the kind. The Bill declares that he shall not be able to do anything even in the shape of the appointment of a junior officer of the bank without the consent of the Treasurer.

Mr Fisher:

– Look at clause 16.

Mr JOSEPH COOK:

– But clause 32 declares that the Governor may make rules for the good government of the bank only with the consent of the Treasurer. The one clause must be read in the light of the other. Clause 16 provides -

The Governor may appoint such other officers and servants of the bank as he thinks necessary for efficiently conducting the business of the bank.

But clause 32 ties him absolutely to the Treasurer, and makes it clear that he can appoint such officers only with the consent of the Treasurer.

Mr Wise:

– That is too thin.

Mr JOSEPH COOK:

– Clause 32 provides that the Governor may, with the consent of the Treasurer, make rules concerning any matter necessary or convenient to be provided for carrying on the business of the bank. These rules surely relate to the appointment and classification of officers, their pay, and hours of employment, and to the general conduct of the business of the bank. Even the form of a mortgage cannot be determined by the Governor without the consent of the Treasurer.

Mr Carr:

– I do not believe it.

Mr JOSEPH COOK:

– Then the honorable member had better appeal to experienced men who have had to do with banks, and who will tell him how banks are conducted generally.

Mr Thomas Brown:

– It does not follow that this bank is to be conducted on the lines of other banks.

Mr JOSEPH COOK:

– And that is my trouble. It is not going to be conducted on ordinary business lines. All its operations, I fear, are going to be tinctured with sinister political control.

Mr Carr:

– Does the honorable member say that every” mortgage must be submitted to the Treasurer?

Mr JOSEPH COOK:

– The rules of every ordinary bank cover the forms of its mortgages “and the general conditions oi> which its loans are made’. ‘ I have that assurance .from obe of ‘the best banking authorities.

Mr Roberts:

– Does the honorable member desire that this bank shall be conducted as other banks are?

Mr JOSEPH COOK:

– Unless it isconducted on ordinary business lines, it will not succeed.

Mr Roberts:

– Does the honorable member mean that other banks are not so conducted ?

Mr JOSEPH COOK:

– The Prime Minister has told us that he is going to conduct the bank on those lines; that it is to make as much profit as possible, and that he is going to dispose of its profitsin certain directions. Am I. to understand that the Government are not. going to conduct this bank as other banks are conducted with a view of making profits? Ha.ve riley changed their- minds?

Mr Roberts:

– They certainly do not wish it to be conducted like some of the other banks have been, so that there will be another smash.

Mr JOSEPH COOK:

– Quite so. We desire that it shall be conducted on safelines, and the first element of safety is to remove all traces of a control which, in itself, must be sinister and incapable.

Mr Fenton:

– The honorable member said practically the same thing regarding the appointment of only one Land Tax Commissioner.

Mr JOSEPH COOK:

– I am not aware that I did ; but, as a general principle, I do not believe in one-man control of any important State business.

Mr Carr:

– While the honorable member is one of the public watch-dogs, the bank will not go far wrong.

Mr JOSEPH COOK:

– I am not a capable watch-dog so far as the interior workings of a bank are concerned ; it is only my honorable friends opposite who think that they are. We need to make these officers secure in their position, and to remove them from political control. I would give them a five or seven years’’ tenure of office.

Mr Carr:

– That is what we are doing.

Mr JOSEPH COOK:

– Only in the case of the Governor, and that one manwould be far better left to himself than tied to the Treasurer, as he will be, under this Bill. I would rather trust one man alone, if he could be divorced from the Treasurer, and made independent, as Railways Commisioners and the Public Service

Commissioner are. But we are setting up a Governor who is to be, as I said the other day, a possible puppet in relation to the Treasurer, and an autocrat in relation to the public. My own impression is that this Bill will have to be altered1 very soon. Of course, I know that it is of no use proposing any amendment ; and here I should like to ask how many proposals from this side have been accepted since the present Government took office?

Mr Howe:

– We will meet the honorable member in division on any amendment he proposes.

Mr JOSEPH COOK:

– The honorable member talks of “we”; and he certainly has as much right as the Minister has to use the word. If the Prime Minister were as free as other Prime Ministers are to accept suggestions from the Opposition, all would be well; but there is the “we” behind him, so that it is almost impossible to get any amendment passed that has not already been sanctioned by the Caucus.

Mr Howe:

– I thought the honorable member was opposed to one-man rule?

Mr JOSEPH COOK:

– I do not see the relevancy of the remark. I have already said that I would much prefer to see the Governor have sole control, if he could be kept out of the clutches of the Caucus.

Mr J H Catts:

– That is a very unfair and unscrupulous statement 1

Mr JOSEPH COOK:

– The honorable member is always prepared to say strong things regarding other people. I hear he is now living in moving times, and that he cannot go into a meeting of his union unless accompanied by policemen.

The CHAIRMAN:

– Does the honorable member think that has anything to do with the clause?

Mr JOSEPH COOK:

– No; nor had the disorderly interjection. I ask that the honorable member for Cook be asked to withdraw the word “ unscrupulous.”

The CHAIRMAN:

– The honorable member for Cook must withdraw the word.

Mr J H Catts:

– I did not know that the use of that word was unparliamentary.

The CHAIRMAN:

– The honorable member for Parramatta takes exception to its use, and it must be withdrawn. It is the general rule that any statement or word, which an honorable member regards as offensive, shall be withdrawn.

Mr J H Catts:

– The honorable member for Parramatta spoke of the Caucus-

The CHAIRMAN:

– The honorable member must either withdraw, or refuse to withdraw the word.

Mr J H Catts:

– I understand there is nothing in the word which should compel me to withdraw it.

The CHAIRMAN:

– The honorable member must withdraw the word.

Mr J H Catts:

– I am prepared to withdraw it, but I shall have a word or two to say afterwards.

Mr JOSEPH COOK:

– I was referring to the Caucus when the honorable member for Cook made the interjection. One of the functions of the bank, as alleged by honorable members opposite, is to provide cheaper loans for the people who are building up the prosperity of this country. That is an object which is in every way desirable. Cheap loans for farmers is part of the Labour policy in every State.

Mr Scullin:

– Does the honorable member object to it ?

Mr JOSEPH COOK:

– I never have done so, because the object is a good one. Our people are entitled to cheap money wherever they can get it; but the point is that the granting of cheap money in the shape of loans is a plank in the platform of nearly every Labour party in Australia.

Mr J H Catts:

– It is not.

Mr JOSEPH COOK:

– I know it is a plank in the platform of the New South Wales Labour party.

Mr J H Catts:

– It is not.

Mr JOSEPH COOK:

– I think it is, notwithstanding what the honorable member says.

The CHAIRMAN:

– Will the honorable member deal with the clause?

Mr JOSEPH COOK:

– I say that the provision of cheap money is a part of the financial policy of the Labour party.

Mr J H Catts:

– It might have been when the honorable member was a member of the party.

Mr JOSEPH COOK:

– I think it is part of the policy to-day.

Mr Charlton:

– Has the Labour platform anything to do with the clause under discussion ?

The CHAIRMAN:

– Beyond the reference to the Caucus, the Labour platform has nothing to do with the clause before the Chair; and so I have already told the honorable member for Parramatta.

Mr Palmer:

– Was the honorable merriber for Hunter in order in speaking from the Ministerial benches?

Mr Fisher:

– He was quite in order - he was on his feet.

The CHAIRMAN:

– If the honorable member for Hunter was sitting on the bench, he would not be in order.

Mr Charlton:

– I was on mv feet.

Mr JOSEPH COOK:

– It must always be a matter of party agreement, as to the conditions on which these loans are to be made ; and as the Bill is framed, the Caucus is just as much entitled to say to the Government, as the Government is entitled to say to the Treasurer - and, through him, to the Governor - what the rate of interest is to be to the man in the back country. That is one of my strong objections to the measure. Why not place the bank right outside political influence?

Mr Chanter:

– If the honorable member were Treasurer, would he “ cook “ the accounts ?

Mr JOSEPH COOK:

– If I were Treasurer, I should keep as far away as possible from the ordinary management of the bank.

Mr Chanter:

– So would any Treasurer.

Mr JOSEPH COOK:

-Honorable members may take it as a prediction from me that the time will come, and very speedily, when there will be more than one Governor of this bank. One-man management will never be satisfactory to the people or the Parliament, and will never serve the main objects of this -Bill. I hope that the Government will reconsider the Bill, and propose to appoint a small directorate on such a tenure as to give it absolute independence, so that the bank may be governed in the general interests of the country.

Mr CHARLTON:
Hunter

.- The honorable member for Parramatta complained that the honorable member for Gippsland was now in such a position in regard to his constituents that be did not think it necessary to move any amendment. The honorable member for Parramatta himself has roundly condemned, not only this, “but other clauses, and yet he has resumed his seat without submitting an amendment. The position he takes up is that, because he is in a minority, he should allow the clauses to go as proposed ; but if that is a justification in his case, how much more is it a justification in the case of the honorable member for Gippsland, who sits here practically as one of a party of three? If the honorable member for Parramatta had taken the trouble to read the Bill, he must have seen that the Governor has absolute control of all appointments to the staff ; and, as he will doubtless select the best men, he will always have them to consult on matters of management. The principle of appointing three men as Railways Commissioners in New South Wales turned out to be a failure, because they differed and claimed equal powers ; and, under the circumstances, the New South Wales Government were compelled to appoint one Commissioner as supreme over the other two.

Mr Joseph Cook:

– Are things better now in the case of the New South Wales Railways ?

Mr CHARLTON:

– I do not think they are any worse ; and I have always regarded Mr. Johnson as a good administrator. The point is that, in the case of the railways in New South Wales, one man has all the power, just as it is proposed to give one man all the power under this Bill.

Mr Joseph Cook:

– And all the honorable member can say is that things are no worse now in New South. Wales.

Mr CHARLTON:

– I have not as much knowledge of the working of the New South Wales railways now as I had when a member of the State Parliament, but I have always given the Chief Commissioner credit for doing good work. I think that if a suitable person is appointed Governor of the bank, his work will be equally good, because his actions will be unfettered. It is contended that clause 32, which requires the consent of the Treasurer to certain things, introduces political influence, but it is very rarely, if ever, that an official is placed wholly outside control in some direction. In the making of regulations it is generally necessary to get the consent of some authority, and in this rase the Treasurer must be appealed to. The Treasurer, however, will have nothing to do with the making of appointments. That, under clause 16, is left entirely to the Governor. It has been contended that the Public Service Commissioner is wholly beyond Executive control, but section 80 of the Public Service Act provides that -

The Governor-General may, make alter or repeal regulations for the carrying out of any of the provisions of this Act and in particular for all or any of the following purposes - which are set out in a number of paragraphs. That is practically what is provided for in’ the Bill. The exercise of political influence in the management of the bank is absolutely impossible, and no suggestions for the improvement of the Bill have been put forward. The Prime Minister has shown that he has closely studied the science of banking, and understands the effect of his proposals, considering them the best that could be adopted for the proper working of the bank, and the exclusion of political influence. The Governor will be appointed for seven years, and, having a free hand, will be wholly answerable for any mistakes that may be made. At the end of his term his administration may be reviewed, but should he in the meantime be guilty of misbehaviour, he may be removed by Parliament. Dual control is not a good thing, because it enables responsibility to be shifted from one to another. The Governor will be wholly responsible for theadministration of the bank, but will be able to put himself in touch with the ablest men in financial circles, and will be in a position to offer salaries which will attract to the service of the bank men of the highest capacity.

Mr J H CATTS:
Cook

– I take the strongest exception to the miserable insinuations of the honorable member for Parramatta. I was prepared to hear the clause debated on its merits, but nearly every time the honorable gentleman rises he makes some evil suggestions regarding honorable members on this side.

Mr Joseph Cook:

– Are these insulting observations in order?

The CHAIRMAN:

– I ask the honorable member to withdraw the words “ evil suggestions.”

Mr J H CATTS:

– I do so in deference to your wishes, Mr. Chairman. I am sorry that I cannot find language which, while being parliamentary, would properly describe the honorable member.

Mr Joseph Cook:

– I do not have to take policemen to a meeting to guard me.

Mr.J. H. CATTS.- The honorable member’s mind needs policing. He was particularly offensive to honorable members on this side in saying that the Caucus would be able to use political influence with the Governor of the bank.

Mr Joseph Cook:

– I explained that, as a matter of policy, it would have to do

Mr J H CATTS:

– When exception was taken to the statement, the honorable member tried to wriggle out of his difficulty.

Mr Joseph Cook:

– The honorable member for’ Cook is beneath contempt.

The CHAIRMAN:

– The honorable member for Parramatta must withdraw that remark.

Mr Joseph Cook:

-i do so willingly, but I hope you will stop this running attack on me, which is purely personal and spiteful.

Mr J H CATTS:

– Notwithstanding the remarks of the honorable member for Mernda as to the tremendous scope of the bank’s business, and the immense responsibility which will fall on the shoulders of the Governor, I agree with the honorable member for Hunter that it would be a mistake to substitute for the Governor a Board of three, or any other number, of Commissioners, with equal powers, who at a time of crisis might disagree, and in other ways hamper proper administration. At the same time, I am not opposed to the creation of a Board of Advice. There may be occasions when the Governor would be glad to consult a Board of Experts. I agree with the suggestion that, should the Governor take the responsibility of refusing to act on the opinions of his Advisory Board, the whole of the facts should be made available to the Government and to Parliament. The Governor should be at liberty to refuse to act on the advice of the Board, but he would probably be careful how he did so. The Cabinet, and a Department like the Treasury, would, no doubt, be a kind of board of ad vice, but Cabinet” Ministers are not experts in banking, and what the Governor would need would be expert advice. Although suggestions have been made by various members of the Committee, no concrete proposal has been put forward in substitution of the provisions of the Bill. Probably honorable members feel that the best results can be obtained by the discussion of these suggestions, leaving it to the Cabinet to determine whether, and, if so, to what extent, they shall be acted upon.

Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

.- There are two branches of bank management, which in this bank will be accentuated. As time goes on, the bank will have to assume enormous responsibilities which will prove far too much for any one man. I do not think one man will be found prepared to undertake them. Of course, all the internal economy of the bank comes within the scope of one man, and one man can easily grapple with it. Personally, I think the Governor should have associated with him a board of three. He should have complete power to deal with the internal economy of the bank, but when it is a question of dealing with wider matters, those three others should be associated with him, he having a casting vote. If that arrangement were made, the board could be clothed with powers to deal with certain specific matters which would have to be very carefully gone into. These powers would have to be clearly defined, but I do not think it is in the power of any one member to do it by way of amendment. The whole thing wants thinking out from many stand-points, and as I have tried to press home throughout the consideration of this Bill, what we really wanted was a thorough examination of the matter before we committed ourselves to any particular scheme. That the Government have refused, and consequently when an important matter of this sort is debated members are all more or less at sea. They all have their ideas, some with something in them, and some perhaps with very little in them; but the question has not been given the necessary consideration, and consequently no member is in the position to move an amendment to which he would like to commit the country. The Government have accepted the responsibility of bringing the Bill down, and I presume they will stand by their own work.

Mr JOSEPH COOK:
Parramatta

– To show the fallacy of the parallel which the honorable member for Hunter sought to set up between the Governor of the bank and the Chief Railway Commissioner in the States, the honorable member told us emphatically that the Governor of the bank would appoint all the officers of the bank below himself, and therein lies the difference. The Chief Railway Commissioner does not appoint the two Commissioners who act with him.

Mr Charlton:

– Your point was that political influence would be brought to bear to appoint the employes of the bank. I say it is not so.

Mr JOSEPH COOK:

– I still think so unless the Bill is modified.

Mr Scullin:

– Why do you not suggest an amendment?

Mr JOSEPH COOK:

– Because it is of no use. All one gets from honorable members opposite is a grin and a snigger at any suggestion made. Honorable members over there are far too superior, but they will learn better by-and-by. We all have our faults but we ought to give one another a little credit. The management of the railways in each of the States con sists of a triumvirate of absolutely independent individuals, two of whom owe no responsibility to the Chief Commissioner. They may express their own opinions as freely as he may express his. They may even stop him for some time from carrying out his will, although eventually his will prevails.

Mr J H Catts:

– No, the Chief Commissioner can overrule them in everything.

Mr JOSEPH COOK:

– If there is a disagreement among the Railway Commissioners in New South Wales the matter has to be postponed for twenty-four hours, and if agreement be not then reached, the will of the Chief Commissioner is final.

Mr J H Catts:

– He can take the matter out of their hands and deal with it at any time.

Mr JOSEPH COOK:

– It is only a matter of recollection, but I am convinced that my view is right. If I am wrong I shall be glad to be corrected by the honorable member.

Mr Thomas Brown:

– It was not the case when Mr. Oliver was Commissioner.

Mr JOSEPH COOK:

– When Mr. Oliver was Chief Commissioner, the threeman control, unsatisfactory as it was on the personal side, was not unsatisfactory in the results it produced.

Mr Thomas Brown:

– What about the coal contracts at Lithgow?

Mr JOSEPH COOK:

– The general results achieved by those three individuals were satisfactory to the State as a whole, and the previous ten years control in the time of Mr. Eddy, Mr. Oliver, and Mr. Fehon, was perhaps the most successful that has even been known in the history of New South Wales. I believe the present Commissioner, Mr. Johnson, to be a very able man, but “the triumvirate control in that State is not open to condemnation. While the Governor of the bank will himself select the men with whom he will confer, and have them under his control and direction, the Chief Railway Commissioner of New South Wales or Victoria has no control over the two directors who are appointed to act with him. That is the essential difference. The advice which the Governor of the bank will get will not be independent advice, and I hope, therefore, there will be a modification of this proposal.

Mr CHARLTON:
Hunter

– The honorable member for Parramatta is now shifting his ground. The point he previously made was that members would be able to use political influence for the purpose of appointing persons to the staff of the bank. He now takes up the ground that because the New South Wales Railway Commissioners have not the right toappoint their employes, but some other body appoints them, the position is altogether different.I do not see how that strengthens his position, because if the New South Wales Railway Commissioners have no right to deal with their employes, then the service under them must be open to political interference. Under clause 16 the Governor of the bank has the right to appoint whoever is required for the working of the bank, and the Government cannot interfere in that matter in any way. The advantage, therefore, is decidedly with the scheme proposed in this measure.

Question - That clause11 (Management) stand as printed - put. The Committee divided.

AYES: 33

NOES: 19

Majority … … 14

AYES

NOES

Question so resolved in the affirmative.

Clause agreed to.

Clause 12 -

The Governor and a Deputy Governor of the bank shall be appointed by the GovernorGeneral, and shall hold office during good behaviour for a period of seven years, and shall be eligible for re-appointment.

Sir JOHN QUICK:
Bendigo

– I desire to draw attention to the provision relating to the tenure of office of the Governor and Deputy Governor of the bank. It is declared in this clause that their tenure of office shall be during good behaviour for a period of seven years, and that they shall be eligible for reappointment. I have not been able to find similar words in any Act of Parliament relating to good behaviour appointments. This seems to mark a departure from previous Federal legislation relating to offices to be held during good behaviour, and I should like to know the reason for the variation. It suggests the appearance of a new draftsman in Federal legislation.

Mr Fisher:

– That is not so.

Sir JOHN QUICK:

– Then it would seem that there has been a deliberate departure from the precedents of good behaviour appointments, such as the appointment of the Justices of the High Court, the High Commissioner, and the Auditor-General. I would invite attention to the materiality of the departure. The Justices of the High Court hold their appointments during their good behaviour, and their tenure of office can be determined only by a vote of both Houses, of the Parliament. The position is the same in regard to the High Commissioner. Section 7 of the Audit Act provides that -

  1. The Auditor-General shall hold his office during good behaviour, and shall not be removed therefrom unless an address praying for such removal shall be presented to the GovernorGeneral by the Senate and the House of Representatives respectively in the same session of the Parliament.
  2. The Governor-General may at any time suspend the Auditor-General from his office for incapacity, incompetence,or misbehaviour ; and when and so often as the same shall happen the Treasurer shall lay before both Houses of the Parliament a full statement of the grounds of such suspension within seven days after such suspension, if the Parliament be then in session and actually sitting, or if the Parliament be not then in session or not actually sitting within seven days after the commencement of the next session or sitting.
  3. The Auditor-General so suspended shall be restored to office unless each House of the Parliament, within forty-two days after the day when such statement is laid before it, and in the same session, pass an address to the GovernorGeneral praying for his removal.

In those three cases evidently the tenure of office depends upon ultimate parliamentary control. It seems, however, that the tenure of office of the Governor and Deputy Governor depends not upon Parliament, but, in the first instance, upon the act of the Executive. The only remedy which the Governor or Deputy Governor would have if he were dismissed from his office would be, apparently, an appeal to the High Court. If there is any reason why the Justices of the High Court, or the Auditor-General should have secured to them a tenure dependent upon the. will of Parliament, the same reason should apply to the position of the Governor of a great financial institution like this, who will have enormous powers and responsibilities. He may not. be able to please every one ; he may make enemies; he may make friends, and in a position of such great responsibility and power, he should have some security of tenure, and should not be liable to be either suspended or dismissed by the Executive of the day, without any appeal to Parliament. The position of these officers certainly should not be less secure than is that of the Auditor-General of the Commonwealth.

Mr FISHER:
Prime Minister and Treasurer · Wide Bay · ALP

– I do not think that the Governor or Deputy Governor of the bank will be in the same position as is the Auditor-General, or a Justice of the High Court. Their independence will be sufficiently safeguarded by the. Bill itself. I do not think Parliament desires that either of them should not be suspended, or even dismissed, without an appeal to Parliament. If either were wrongfully dismissed, or suspended, within the seven years’ period, for which he is appointed, he would have a right, I- presume, to sue for breach of contract, and to claim payment of salary in respect of the whole term of his appointment. The position of the Governor and Deputy Governor of the bank will be different from that of the Auditor-General, and the Justices of the High Court in that they will be appointed for only a limited term, but with the right to have their appointment renewed. I do not fear any attack being made on the Governor or Deputy Governor by any Government. The Government of the day from time to time will have enough to do to mind their own particular business without interfering with a big financial proposition of this kind. If the position is to be strengthened, I think it should be strengthened in another way, but I prefer the clause as it stands.

Mr DEAKIN:
Ballarat

– I shall not repeat what the honorable and learned member for Bendigo so well put regarding the aspect of this clause from the point of view of the Governor and his deputy. The point that is perhaps of more importance to us is that we have in this clause a departure from practically all our precedents in regard to similar appointments, inasmuch as it makes the Government of the day, instead of this Parliament, the active , executive agent. Again, instead of requiring that the sanction of Parliament shall be obtained for the dismissal of either of these officers, it leaves the matter entirely in the hands of the Government themselves. This appears to mark a constitutional departure so grave as a precedent that it ought not to be made without full justification. It may be said that ifaffects only one’ man, and is likely to be used very rarely, if at all. The fact remains, however, that we are departing altogether from our established- procedure. Without warrant or necessity, so far as 1 can judge, we are introducing a new relation, and instead’ of protecting the authority of Parliament, we are transferring our authority in this regard to Ministers.

Mr KELLY:
Wentworth

.- I do not think the position is so simple as the Prime Minister would have us believe. The Governor of the bank, if improperly dismissed, would have to sue the Commonwealth for wrongful dismissal. He would have to face an action in the High Court, with the possibility of the Commonwealth appealing against a decision in his favour, and hampering him in the many different ways that a Government can hamper a man who endeavours to secure justice against it. Those who understand the methods of legal procedure, know that, even if a man recovers damages, with costs, he may occasionally he out of pocket. His costs as between solicitor and client may quite. outweigh the pecuniary recompense he may have received from the Government of the day, although the verdict against the Government may have carried costs with it.

The Government are proposing in this respect to place in a deplorable position a man who is supposed to preside over a non-political organization. We have been assured again and again by the Prime Minister that this bank is to be free from political influence. But what is the position? We find that the Government will not abate one jot their determination to allow this man to remain in his office for the period stated, only so long as his behaviour is good. Who is to decide whether or not his behaviour is good? The Ministry, I presume. The Governor of the bank will know that at any moment the Ministry may dismiss him, because it holds that his “ behaviour “ is not good. Yet he is expected to be strong enough to resist the will of the Ministry regarding the operations of his bank. The position is indecent arid dangerous.

Mr Chanter:

– The Ministry is responsible to Parliament.

Mr KELLY:

– A vote of want of confidence could be moved, but are honorable members going to throw themselves into the cold shades of a dissolution because they sympathize on an abstract principle of justice, with a bank manager? How many would give up tne salary we enjoy as members of this House to fight upon the public platforms a matter of whether or not a bank manager had been justly treated?

Mr West:

– I should ifI thought he had been badly treated.

Mr KELLY:

– We are all brave before the event.

Mr Chanter:

– The honorable member is placing honorable members on a very low level.

Mr KELLY:

– I am putting them on a somewhat low estimate as regards dissolutions, because I have studied human nature in this House for something like eight years.

Mr Scullin:

– From the honorable member’s stand-point.

Mr KELLY:

– From the stand-point of honorable members generally. Honorable members opposite are inclined to be a little bitter at present. The only reply they have vouchsafed to my arguments in regard to this Bill is in the shape of an anonymous letter that I have just received, the versification of which is so exquisite that, perhaps, I may be allowed, with all humility, to read it -

Kelly is . a banker born,

Operates from night to morn

On the fools they’ve always shorn,

Ere they wander home forlorn,

Lacking cash and honour fair,

Cursing Kelly in despair.

There is another verse which I should like to read.

The CHAIRMAN:

– The honorable member will see that this has nothing to do with the clause.

Mr KELLY:

– The other verse is, perhaps, more relevant. It seriously takes me to task for being unfitted to address myself to such questions as these; and a man’s fitness is a subject of relevancy in discussing a technical measure of this character. The verse is -

Yes, oh yes, the Kelly Gang-

The CHAIRMAN:

– That has nothing to do with the clause.

Mr KELLY:

– Perhaps it would be better to lay the verses on the table, so that they may be enshrined amongst other important records of this House.

The proposal under discussion seems to cast some doubt on the bona fides of the Prime Minister’s declaration of his intention to retain the absolute independence of this bank from political influence and control. For. surely, if a man is liable to lose his job at a moment’s notice, at the mere whim of the Treasurer of the clay, it is only human nature for him to be very careful what he does, so as not to offend the susceptibilities of the distinguished statesman who happens to occupy the office for the time being !

Mr Chanter:

– The term “ good behaviour “ is well understood.

Mr KELLY:

– What the honorable member regards as “ good behaviour “ may be regarded otherwise by some one else. What is applauded by members on this side is denounced with vigour by honorable members opposite. The decision as to what is “ good behaviour “ is an arbitrary one; and it will be within the power of the. Treasurer of the day to put pressure on the bank to gather in more funds than the bank can profitably dispose of, in order to finance some Government proposition, entirely independent of the bank’s success, or otherwise. When it is desired to remove a Judge, a resolution must be carried in both Houses, and the matter is debated in the light of day, the Government facing whatever criticism attaches to their conduct. In this case, the Government simply decide that the man’s “ behaviour “ has not been good, ‘ ‘ and they ‘ ‘ fire ‘ ‘ him ; and the unfortunate victim oftheir caprice has to undergo all the indefiniteness and difficulty of an appeal to one of the most expensive Courts in the country, with a possible appeal to a Court beyond the seas. Under the circumstances, I entirely disbelieve in the sincerity of the protestations of the Government in regard to maintaining the independence of this bank free from political control and political tutelage.

Mr SPENCE:
Darling

.- It is surprising to hear honorable members, who profess themselves much averse to political influence, now suggesting the introduction of the strongest possible influence of the kind. If the manager or Governor of this bank were dismissed, and the question had to come before Parliament, we can quite imagine all the “ lobbying” and other influence that would be brought to bear. The Government will select an able man with a record behind him; and it is in the highest degree improbable that the “ good behaviour “ of this man will ever be challenged, or that the extreme step of dismissing him will be taken. If, however, such a case arose the official has an appeal to the Court, and, though that may prove costly, we must remember that he is a man in receipt of a handsome salary. The High Court will decide such a case on sworn evidence, such as we here could* not possibly have, unless we called witnesses to the bar of the House. Then, again, if such questions were raised here, the Government would almost surely be backed up by their majority; and there would be all the wrangling and unpleasantness of a discussion of this character. Any Government, no matter of what party, would endure a great deal from an official of this standing rather than dismiss him before the end of his term of office. In ^ ordinary business, when an employe* of importance proves unsatisfactory, he is not usually dismissed out of hand, but is given a hint that his resignation would be acceptable. Let us suppose for a moment that the manager of the bank had created disaster by injudicious advances to farmers and others, and that the question of his dismissal on this score was raised in Parliament. We should have those people to whom hp had advanced money claiming that he was just the sort of manager for the place, and there would be influence brought to bear on representatives by constituents in his favour. The wisest plan would be to keep the bank entirely free from politics.

Mr Kelly:

– But this clause will open the door to secret political influence.

Mr SPENCE:

– That is not so. We may take it, I think, that an official of this standing, if he did cause disaster, would be the first to admit his failure and resign. It would be most inadvisable to accept the suggestion of honorable members opposite. They talk a great deal about the Caucus; and if we are so bound as they would make us out to be, they can imagine how we would support the Government in any emergency of the kind. It is the experience that majorities of all parties back up the Government, right or wrong; and, altogether, there would be much less likelihood of political influence under the clause as drawn. Doubtless the clause represents a new departure; but we must remember that the whole Bill is a new departure.

Mr ATKINSON:
Wilmot

.- There is no doubt that the management of this bank should be as free as possible from political influence; but that object is not attained by this clause, which, in fact, introduces influence of the worst kind. The Governor of the bank will be subject to a sort of Star Chamber, or cabal, and the Treasurer will be in a position to become a perfect taskmaster to him.

Mr Fisher:

– Under this clause?

Mr ATKINSON:

– Who is to be the judge of “good behaviour”? Practically the Treasurer, who may be able to induce his colleagues to dismiss the Governor after a lot of secret work. I feel quite sure that such an official would rather have his affairs ventilated in Parliament than dealt with in such a way. I have not heard from the Prime Minister one reason why there should be a departure from the usual course adopted in the appointment of high public officials such as the Justices, the Auditor-General, or the High Commissioner ; and I am satisfied that this clause is ‘ a beginning of the introduction of that political influence which we all deprecate. The Ministry declare that they wish to remove this bank from politics as far as possible; and yet if clauses 14, 32, and 64 are accepted, the institution cannot possibly escape. If the Bill passes in its present form, political influence must be introduced sooner or later - not necessarily by this Government, but by some other Government in charge of the affairs of the country. What is a few years in the history of a bank? I am thinking, not of what may happen within the next six or twelve months, but of what may occur within the next decade, during which a Ministry may find itself in a tight financial corner, and may press the Governor to do something in its political interest. There is grave danger in binding the Governor to the Ministry in the way proposed. I do not know why his tenure should be different from that of a Judge in this and other British communities.

Mr WEBSTER:
Gwydir

.- The manner whereby the Governor shall be dealt with for misbehaviour is not definitely stated in the Bill.

Mr Fisher:

– Action would be taken by the Governor-General in Council.

Mr WEBSTER:

– Another point to which I direct attention is this : A member of Parliament might contract an obligation towards the bank, and become Minister while it still remained unfulfilled. Should such a man be a member of an Executive dealing with the misbehaviour of the Governor, the suspicion might arise that he was prejudiced. In my opinion, members of the Executive should not be allowed to contract financial obligations towards the bank.

Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

– What about members of Parliament ?

Mr WEBSTER:

– We are not now dealing with ordinary members of Parliament. I have a third point, which is this : The Public Service Commissioner was originally appointed for seven years, and was afterwards reappointed for a second term of the same duration. The law, however, requires that his office shall be filled continuously, that there shall not be a pro tempore appointment. Knowing this, the Commissioner at the last moment made a demand on the Government of the day for an increase of salary amounting to £300 a year. It being impossible to leave the position vacant, or to get some one to fill it immediately, the Government was helpless. There should be some provision in the clause preventing the Governor of the bank from acting similarly. It should not be possible for that official to blackmail any Government in the manner I have described. I hope that the Prime Minister will give these matters consideration, with a view to the improvement of the Bill.

Mr AGAR WYNNE:
Balaclava

– I do not think there is any need to cavil at the terms of the appointment of the Governor. A Court of law would not interpret good behaviour in the loose manner in which some honorable members think it might be interpreted. The Governor is in a stronger position than that which he would occupy were he removable by the vote of both Houses, because a Governor might become unpopular with Parliament or with the people. So long as he does not misbehave, but does his business properly, no Ministry can remove him. It is the High Court that will determine whether he has been guilty of misbehaviour. The Victorian County Court Act provides that -

All persons now being judges of any county court and all persons who may hereafter be appointed judges under this Act and the present and every future judge of the Court of Insolvency at Melbourne shall hold their offices during good behaviour. ‘ Good behaviour “ is a term having a recognised legal meaning. I do not think that the Governor should ask to be put in a stronger position from that of a Victorian County Court Judge. It is true that the salaries of the County Court Judges are not fixed by an Act of Parliament, and have to be voted annually, and therefore an unpopular Judge could be attacked by a strong Ministry. That could not happen with the Governor of the bank.

Mr FISHER:
Prime Minister and Treasurer · Wide Bay · ALP

– The points raised by the honorable member for Gwydir are undoubtedly interesting. One of them, it seems to me, has been answered by the honorable member for Balaclava. “The Governor-General” in the clause means, under the Acts Shortening Act, “ The Governor-General in Council,” and it will be for the authority that appoints to take steps to provide for dismissal, if necessary. As to the danger of a Minister being influenced by his obligations to the bank, it is worth considering whether any Minister should have dealings with the bank other than in the way of making deposits.

Mr Kelly:

– Why not any member?

Mr FISHER:

– A member occupies a different position from a Minister, though this is not the time to discuss that subject. The Auditor-General will periodically examine the books and accounts of the bank, and can do so at any other time if he thinks necessary. In some instances, he will report confidentially at first to the Treasurer; in other instances, his report will come at once before Parliament, The Executive will have to take action, if necessary, to protect the interests of the people, and would be responsible for what it did. As for the possibility of blackmail, that cannot arise, because there is to be both a Governor and a Deputy Governor, and the Deputy Governor would be able to do the work of the Governor during an interregnum. The Administration will have two strings to its bow, and it would have little foresight if it allowed things to drift until the last moment. It could ascertain a year in advance what the views of the Governor and Deputy Governor were in regard to the renewal of their terms of office.

Mr KELLY:
Wentworth

.- If the bank manager is, at the discretion of the Executive of the day, dispossessed of his place, the position will have to be filled, and the Government will appoint another Governor on exactly the same terms. What will be the position if the dispossessed man appeals to the High Court as to whether he has been rightly dismissed?

Mr Fisher:

– Under clause 15, the Deputy Governor automatically becomes the Governor for the time being.

Mr KELLY:

– The provision is very loose. I should prefer the omission of the term “ during good behaviour,” and the addition to the clause of words something like this, “ provided the interests of the bank are not detrimentally affected by the continued occupancy of the position by either officer.”

Mr Agar Wynne:

– That would be very rough on the officers. No man would take the position

Mr KELLY:

– To remove them, it would be necessary to prove that their continued occupancy of the positions was detrimental to the interests of the bank. It would be very rough on the bank if officers, whose continued occupancy of their positions could be proved to be detrimental to it, had to be retained !

Mr Agar Wynne:

– The honorable member would punish them for the fault of Parliament in not providing capital.

Mr KELLY:

– The honorable member could not possibly have listened to what I said. The clause, as now drafted, will expose these officers to the caprice of Ministers. That is not exactly an enjoyable position for them.

Mr Spence:

– A very costly caprice ; if they take action, they will have to pay for it.

Mr KELLY:

– The honorable member’s casuistry would have us believe that the Ministry of the day would have to foot the legal bill. Such a statement might deceive people outside, but we all know that Ministers would not have to pay a brass farthing if one of these officers was awarded damages for wrongful dimissal The country would have to pay the cost.

Mr King O’Malley:

– The Ministry would damage its own standing.

Mr KELLY:

– I have known Ministries to take steps that have damaged their own standing. I have known the honorable member himself to take a step quite recently that affected the standing of the

Ministry. In the same way, if it is necessary, the Ministry will take the step of accumulating within the bank enormous reserves of capital, so that afterwards, on the plea that it is necessary to find some outlet for the deposits, they may be able to advocate the extension of Government enterprise into every industrial sphere. The bank is in for a parlous time if such influences are allowed. I hope, therefore,, the Prime Minister will make the clause more satisfactory. If it is passed in its present form, and the Prime Minister persists in his present attitude with regard to the measure generally, I shall be compelled absolutely to disbelieve the sincerity of the protestations indulged in when the Bill was introduced, that the bank was designed to be free of political influence, and to be run on business lines.

Clause agreed to.

Clause 13 - (1.) The Governor and the Deputy Governor shall be paid such salaries and travelling expenses as are fixed by the Governor-General. (2.) The salary of the Governor, or of the Deputy Governor, shall not be reduced during his continuance in office.

Mr DEAKIN:
Ballarat

.- In this clause, exactly the same transposition is being effected as in those that have preceded it, looking at it in the light of principle. The Governor and Deputy Governor are to be paid salaries and travelling expenses as fixed by the Governor-General, which means by the Government of the day. They are not only fixed by the Government of the day, apart from Parliament, but, by the next sub-clause, that salary cannot be reduced during the continuance in office of the person appointed. This is another transfer of power from Parliament to the Government, which is, as far as I remember, without precedent, and in principle is assuredly a serious departure. In practice, of course, we have to take certain risks, which are here implied ; but this change in the relative positions of Parliament and Government, emphasized again in this clause, is a very serious consideration. I do not remember such precedents for aggression as are set out in this Bill during the history of the Commonwealth.

Mr FISHER:
Prime Minister and Treasurer · Wide Bay · ALP

– It is only fair that I should put the view of the Government in submitting the clause in this way, It would be inadvisable to fix, in the Bill, the amount of salary to be paid to the

Governor and Deputy Governor. That can best be done by an Executive act.

Sir John Forrest:

– Why?

Mr FISHER:

– Because the salary should lit the office and the man.

Mr Deakin:

– Cannot Parliament do that ?

Mr FISHER:

– I do not think Parliament could do it, and probably you would not get the man you desired.

Mr Deakin:

– That means that Parliament would want one man and the Government would want another. Who should rule ?

Mr FISHER:

– It might, or might not mean that. The reference to the next sub-clause is singularly weak, for, unless you make a permanency of the salary and travelling expenses, what is the use of a seven years’ appointment? I do not want to discuss that matter, because members have made up their minds whether or not they are going to trust the Executive to fix reasonable and proper salaries for these two independent officers. Once the amount has been fixed, it is no longer tinder the influence of the Executive, or of Parliament. I prefer to leave the matter to the Executive, as I think it would be safer all round.

Mr KELLY:
Wentworth

.- Why have not the travelling expenses been made permanent, as well as the salaries? The first sub-clause leaves it to the Governor-General in Council to fix the salaries and travelling expenses, but the second provides that only the salary shall not be reduced during the term of office. If the travelling expenses of either of these officers are taken away, he will be practically compelled to resign.

Mr Thomas:

– He need not travel.

Mr KELLY:

– Then does the honorable member think that the man can sit down in his office, caring nothing about the success of the bank ?

Mr Fisher:

– I will insert “ and travelling expenses “ in sub-clause 2 if it will satisfy the honorable member.

Clause agreed to.

Clauses 14 and 15 agreed to.

Clause 16 -

The Governor may appoint such, other officers and servants of the bank ‘as he thinks necessary for efficiently conducting the business of the bank.

Mr DEAKIN:
Ballarat

– The Governor is intrusted with the entire power of appointment of the officers and servants of the bank Is provision made later for the dismissal of, or dealing with, officers except in clauses 62 and 63, which relate to what may be called criminal offences ?

Mr Fisher:

– I am informed that the power given in this clause enables the Governor to dismiss as well as appoint.

Mr DEAKIN:

– That is usually the case. The implication, then, is that the Government intend that the Governor of the bank may both appoint and dismiss?

Mr Fisher:

– If it is necessary to make it clearer, I have no objection. I asked the draftsman to give the Governor power to control and manage the bank.

Mr DEAKIN:

– Increases of salary are not mentioned. I presume they are also at the discretion of the Governor?

Mr Fisher:

– Yes.

Mr Kelly:

– The Governor will deal with them under clause 32, which relates to the classification of the officers.

Mr DEAKIN:

– Classification would not necessarily mean increases, although it is probably intended that it should. If the power of appointment carries with it the power of dismissal, that will enable the Governor to fix an age limit, which need not be the same for all employes. I take it that the Governor may dismiss at any time any officer for inefficiency, and at the same time may say to an officer : “ There is no complaint of inefficiency against you, but I consider that at your age you are a less desirable servant.” I take it that all that is possible.

Mr Fisher:

– I take it that he can say anything.

Mr DEAKIN:

– Is there no appeal from this decision? Mr. Fisher. - No.

Mr DEAKIN:

– In the same way, I take it that his power extends to reduction of salaries when necessary?

Mr Fisher:

– Yes.

Mr DEAKIN:

– Then in every respect, these are his private employes, and are dealt with as if they were?

Mr Fisher:

– Yes.

Mr DEAKIN:

– I do not know whether that carries any power for imposing penalties.

Mr Fisher:

– Certain penalties.

Mr DEAKIN:

– Such as the imposition of fines for offences, neglects, or omissions ?

Mr Fisher:

– I want that in.

Mr Fenton:

– That comes under clause 32, which gives the Governor power to make- rules.

Mr DEAKIN:

– We are now treating of the particular powers which are to be vested in the Governor, and not of what may be done by regulation by the Government, or by rules framed by the Governor and accepted by the Treasurer. I desire to know exactly how far the power of the occupant of this very high office, under these very special and peculiar conditions, extends. It is a very serious matter for the staff.

Mr Fisher:

– His power of appointment, promotion, and dismissal has no limit, subjectto an appeal which the employes will have later on under another Bill.

Dr MALONEY:
MELBOURNE, VICTORIA · ALP; FLP from 1931; ALP from 1936

.- While, as a Democrat, I agreed to the appointment of the Governor of the bank as the Bill provides, I think this power requires modification. Switzerland, which is known as the schoolhouse of Europe, with twenty-six different forms of government, and tenfold that number of what would correspond to our municipal councils, thought it necessary, after a series of experiments extending over many years, to make provisions against nepotism. There two Ministers cannot be related, and the same principle is applied to the various parliamentary officials. In these circumstances, I propose to move -

That the following new sub-clause be added : - “ 2. The Governor shall not appoint as an officer of the bank any relative by birth or connexion by marriage.”

I trust that this amendment will be accepted by the Prime Minister. If adopted it will prevent the Governor appointing to a position in the hank any of, his own relatives. It is stated in Vincent’s Switzerland that-

It is provided by fundamental law that no father and son or son-in-law, no brothers or brothers-in-law, no uncle and nephew, nor even in some cases, more distant relatives - shall hold certain offices. The historical reasons for these sentiments are discussed in the chapters on Federal government.

Mr Webster:

– What are the reasons given in the book?

Dr MALONEY:
MELBOURNE, VICTORIA · ALP; FLP from 1931; ALP from 1936

– The evils of nepotism are proverbial. Many hold that we could have no better system of government than that of an absolute dictatorship, if it were possible to secure for the office a man ofscrupulous honesty and great ability. The trouble is, however, that a dictator, having secured power, usually desires to hand it down to his soil, or to some other relative, so that, in the words of the old boat man of Lake Lucerne, a dictatorship generally becomes an oligarchy, and proves tobe for the benefit of only those immediately surrounding a dictator. I shall be satisfied if the Prime Minister will assure methat what I desire to cover by my amendment can be secured under the regulationsreferred to in clause 14. The experienceof the country known as the schoolhouse of Europe, however, is worthy of the study of this young community. The principle that I advocate has been adopted by many of the States of America. There is muchbribery and corruption in the United States of America, but in those States where thisprinciple has been observed bribery and corruption have been removed.

Mr FISHER:
Prime Minister and Treasurer · Wide Bay · ALP

– The honorablemember for Melbourne apparently fears that nepotism may creep in, since the bank will be under the sole control of the Governor. The Governor will undoubtedly exercise very wide powers, and these powers are to be intrusted to him because we believe it is well to vest in a man having the highest responsibility the whole government of this institution. General powers are conferred on the Governor and Deputy Governor by clause 14. I should not like to say what restriction, if any, should be placed on the Governor in regard to theemployment of any of his own relatives in the bank; but a wise Governor would avoid the appointment of a relative to any important office in it. I should not like toinsert in the Bill such an amendment as the honorable member proposes, but I shall take the matter into consideration in the sense in which it has been submitted by him.

Sir JOHN QUICK:
Bendigo

.- I think that the view of the Prime Minister is a sound one. One would hardly imagine that there is any cause to fear that an officer occupying such a prominent position as that which the Governor will fill, and which will be subject to the control of the Government, would descend to anything in the form of nepotism. As to the further point which has been raised, I think that the Prime Minister has been well advised that the power to appoint includes the power to remove, because that is expressly provided for in sub-section 4 of section 33 of the Acts Interpretation Act. The clause appears to have been well drafted, and the power to appoint an officer certainly includes the power to remove him.

Mr WEBSTER:
Gwydir

.-If there is any institution in respect of which peremptory powers are required, it is a bank. In connexion with our ordinary Government services, we may await without inconvenience the result of an appeal to or a decision by the controlling officer, but a bank would be liable to suffer both financially and in reputation if any delay took place in dispensing with the services of an officer who had forfeited the confidence of the general manager. There should be nothing to prevent the Governor or Deputy Governor taking prompt action in ridding the bank of an officer who had proved himself unworthy of confidence. It is satisfactory to find that honorable members are at last realizing that we can secure a service that is worth having only by giving these dual powers to some particular officer. One of the great drawbacks of our service at the present day is the inability of those who know that officers are incompetent to deal with those officers. I think the Prime Minister should take into consideration the proposal made by the honorable member for Melbourne in regard to the non-appointment of relatives of the Governor to positions in the bank.

Mr Fisher:

– I have not wholly set my mind against it.

Mr WEBSTER:

– Nepotism is not new to Australia. It will be found that at various times Ministers of the Crown in different States have made openings for their immediate relatives in public Departments. There is a tendency in our Public Service for these domestic relations to have, perhaps unwittingly, an influence with respect to precedence and priority of appointment. A man who has been working in the central office of our great Public Service, where he is under the eye of the man who has the power to promote him, is invariably advanced with greater rapidity than is the man in the back-blocks who does not come immediately under the notice of his chief officer or others who have power to recommend his promotion. These things will creep into a service, and this is one of the troubles that we have to face in other avenues of Government employment, apart altogether from a National bank. We must have some safeguards against the intrusion of nepotism in connexion with out public institutions. Nepotism is a factor to be counted with.

Mr Fisher:

– Still it would be wicked to exclude a man because he was a relative of the Governor.

Mr WEBSTER:

– It would be still more wicked to includein the service a number of incapable men, merely because they were relatives of the Governor.

Mr Scullin:

– A family that can produce a good Governor should produce a good teller.

Mr WEBSTER:

– But not necessarily a good Deputy Governor. We do not desire to do an injustice to any capable man worthy of a position in the bank by prohibiting his appointment on the ground that he is a relative of the Governor ; but whilst we are anxious to avoid any such injustice we have a right to prevent a public institution from being manned by a number of incompetent officers appointed merely because they are related to the man who controls it.

Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

.- The difficulty might be readily overcome by providing that a candidate for employment in the bank shall pass an examination to be prescribed. A man cannot secure employment in our banking institutions to-day unless he has passed a prescribed examination, and I think that such an examination as I suggest could be provided for under clause 32, which gives the Governor power, with the consent of the Treasurer, to make rules of a very comprehensive character.

Mr Webster:

– Does the honorable member mean that the regulations should be drawn up by the Government?

Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

– No. If the honorable member reads clause 32, he will see that the Governor has power to make a great number of rules in regard to a great number of subjects with the approval of the Treasurer; and it has occurred to me that, under the clause, he could prescribe that an entrant shall pass an examination. Such a regulation would not, I suppose, apply to original appointments made, for they would probably be of men high up in the banking world.

Mr Fisher:

– We have to assume that the Governor will be a sensible and capable man.

Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

– If the Government are successful in obtaining the services of a man of the calibre anticipated, matters of detail such as this may be safely left to him.

Mr RYRIE:
North Sydney

.- I hope the Prime Minister will pay no heed to the suggestion of two of his supporters in regard to the relatives of the Governor of the bank. The success or otherwise of the institution will depend on the class of man who is Governor; and if we obtain the services of a man of the calibre desired, such a comparatively trivial matter as the appointment of the officers may be safely left to his discretion.

Mr Webster:

– It is a very important matter ; the bank depends on the efficiency of the staff.

Mr RYRIE:

– And the efficiency of the staff will depend on the calibre of the man appointed as Governor. I do not agree with the honorable member for Richmond in regard to an examination, because, if the Governor of the bank appoints his relatives, it is highly probable that they would be able to pass the comparatively easy test. We may take it that the Governor of this bank will not be so foolish as to appoint clerks not able to pass an examination of the kind ; and if he cannot be trusted to make such appointments, the bank must be a failure.

Mr HIGGS:
Capricornia

.- The appointment of relatives by persons in high positions, simply because they are relatives, and not on account of merit, is no new thing, and one would think that Ministers of the Crown would be the last to afford an opening for anything of the kind. In Queensland, the great “brother-in-law” industry appeared to be largely followed by Ministers of the Crown ; and the Governor ought to be protected by some examination, because, the moment his own appointment is made, he will be pestered by his “ sisters, his cousins, and his aunts “ to find places for their friends.

Mr KELLY:
Wentworth

.- There is something to be said for the opinion expressed by the honorable member for Capricornia. There are some persons who have managed to progress up the ladder of life through what I might call domestic alliances, and there are others, like the honorable member and myself, who have succeeded purely by their unaided and undoubted merit. Thepoint under discussion is certainly worthy of the Prime Minister’s consideration. 1 should not have spoken but for the remark of the honorablemember for Richmond, whose opinion on matters of this kind is worth more than my own, but who, I cannot help feeling, may have been misled in this matter by the precedent setby other private banks. The Commonwealth Bank will have to obtain officers at all stages of life; it is not a bank which, at first, will he able to obtain its officers young, and subject them to a prescribed examination.

Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

– I suggested that the examination should not apply to the higher officers.

Mr KELLY:

– If the Governor is untrustworthy enough to appoint his relatives he will appoint them to high positions. I do not anticipate that the Governor of this bank, if he is the sort of man, even handicapped by this Bill, to make the bank successful, will be so foolish as to jeopardizehis position and reputation by appointing unworthy relatives. The clause may, I think, be left as it stands.

Mr ATKINSON:
Wilmot

.- I, too, think the clause ought to be left as it stands. I agree with the honorable member for Richmond that clerks, before appointment, should pass a satisfactory examination, following the practice of other banks and institutions for many years.

Mr Mcwilliams:

– It is the rule in every branch of the Federal service.

Mr ATKINSON:

– Quite so. There are likely to be a great number of applications for positions by men who are already high up in other banks, and, as they have proved their efficiency, I do not think they ought to have to pass an examination. If the system of examination has to be introduced, it should apply to those who have not had any previous banking experience, and such examination could easily be prescribed under the regulations.

Mr Fisher:

– I think we ought to leave the matter tothe Governor.

Mr ATKINSON:

– If the Governor does not make a rule to that effect, the Government has power to do so under the regulations.

Mr GORDON:
Boothby

.- I hope the Prime Minister will not be influenced by the eloquent appeals of honorable members opposite. We have created an autocrat in connexion with the management of this bank. He is to be given great powers ; and it seems to me that it would be distrust on our part to muzzle him at this stage by declaring whom he shall or shall not appoint. We have a right to assume that the Governor will not only be a banker, but an honest man, and, if he is, he will not jeopardize this great institution by appointing incompetent persons.

Clause agreed to.

Clause 17 (Officers not to borrow from bank).

Mr GORDON:
Boothby

. -I hope this clause will be struck out. It is another of those petty provisions, which suggest distrust of the managementof the institution. Surely we are not going to tell the Governor of the bank that, if an officer under his control has good security to offer, the officer shall not be regarded as an ordinary citizen of the Commonwealth. We ought not to include clauses which suggest that the management of the bank will be such as to be unable to safeguard the institution, if officials are allowed to borrow money. We have no right to anticipate that any official will be able to borrow such a large sum as to place the bank in a false position or jeopardize its financial stability. This, as I say, is one of those petty Clauses which do so much to bring legislation of this character into contempt.

Mr KELLY:
Wentworth

– I doubt whether this clause is as full as similar clauses in the Savings Banks Acts of Australia. For instance, we say that an officer may have any dealings with the bank except that of borrowing money.

Mr Fisher:

– Let him !

Mr KELLY:

– It may be very profitable on the part of an officer to lend money to a bank, and the Prime Minister cannot see any disadvantage in the bank thus incurring obligations in regard to the payment of interest. Indeed, it might be more profitable to lend to the bank, for which the Commonwealth is morally responsible, than to borrow from it. Any operations in the commercial sphere should not be participated in by any officer.

Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

– Certainly no officer should have an account at the branch at which he is employed.

Mr KELLY:

– Quite so, and I think the Prime Minister ought to look into this matter.

Mr Fisher:

– We have looked into it, and we think the clause is a fair one.

Mr KELLY:

– The precedent established by other banks is before the Government, and I suggest that the matter be considered during the dinner adjournment.

Sitting suspended from 6.30 to 8 p.m.

Mr KELLY:

– I trust that during the dinner adjournment the Prime Minister has been able to consider this matter further. In my opinion, it is inadvisable that an officer of the bank should have a current account in it. No one likes to offend or to treat harshly those with whom he is brought into immediate contact, and ‘ it would be unpleasant for a bank official to have tq write on the cheque of a brother officer the fatal words “ n.s.f.”

Mr Page:

– An official might even be called upon to write them on his own cheque.

Mr KELLY:

– Yes. I shall not move an amendment, but I hope the Prime Minister will consider my suggestion with a view to the improvement of the clause.

Clause agreed to.

Clause 18 (Returns to Treasurer).

Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

.- The clause requires the Governor to furnish quarterly statements of the assets and liabilities of the bank, and “of the business of the bank.” What is meant by those words ?

Mr Fisher:

– The returns would show the increase or decrease of the business of the bank.

Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

– Under the clause as drafted, there might be a disclosure of more than it would be wise to disclose. In my opinion, it would be enough to require quarterly statements of the assets, liabilities, and transactions of the bank. That would give all the information’ which it would be necessary to publish in the Gazette.

Mr Fisher:

– The intention is not to disclose more than ought to be disclosed. I do not think that the provision is too wide.

Clause agreed to.

Clause 19 - (1.) The affairs of the Bank shall be subject to inspection and audit by the Auditor-General of the Commonwealth. (2.) The inspection and audit shall be conducted not less often than half-yearly and the Auditor-General shall report to the Treasurer the result of each inspection and audit.

Mr DEAKIN:
Ballarat

.- I have already directed attention to the fact that the inspection and audit provided for by the clause is that with which we are familiar in connexion with the Public Service, the Audit Act setting out in some detail the nature of the examination to be made. Such auditing will be inadequate for a bank. As the honorable member for Balaclava has pointed out, there is no provision for an examination and valuation of its securities.

Mr Page:

– The auditor must see and handle the securities.

Mr DEAKIN:

– I wish to have it made clear that this shall be done, so that the report to the Treasurer shall be a full and fair reflex of the condition of the bank. We should guard against the disclosure of individual accounts, but there” must be an exhaustive examination of the securities of the bank. Probably it would be sufficient to have such an examination made once a year. I shall not propose an amendment, but ask the Prime Minister whether he is not of opinion that the Bill should provide for a searching examination of the actual position of the bank. What is needed is not a book audit such as that to which public service accounts are submitted, but one similar to those made of the affairs of every bank for the sake of its shareholders and its customers.

Mr FISHER:
Prime Minister and Treasurer · Wide Bay · ALP

– The intention of the clause is to empower the AuditorGeneral to inspect and audit at any time he may think necessary the affairs of the bank; That inspection includes the examination of all the securities.

Mr Page:

– What about the valuation of the securities?

Mr FISHER:

– The Auditor-General ought not to be asked to report as to the value of the securities.

Mr Page:

– Some one must do that.

Mr FISHER:

– Yes; but it is not the work of the Auditor-General. It will be sufficient for him to ascertain that the bank holds the securities which it professes to hold, and that they are in proper form.

Mr Kelly:

– Who will value the securities?

Mr FISHER:

– If it be thought necessary to make an appointment to that end, I shall not object to it. All that auditors usually report is that the balance-sheet is correct according to the books and vouchers of the institution which issues it.

Mr Anstey:

– Could not the valuation of securities be dealt with in a measure applying to all the banks?

Mr FISHER:

– We propose next year to introduce a general banking Bill, and hope to have the draft submitted to the public during the recess. In that measure provision can be made for the valuation of securities, which, I think, is advisable. In discussing the Bill with the draftsman and the Secretary to the Treasury, I maintained the view that the Auditor-General should not be called on to do this work. There are not many persons who would be qualified to examine all the securities of the bank, and say exactly what they are worth. In good times the securities might be worth twice the amount advanced on them; but in bad times the values would shrink considerably. I think that such a valuation once a year would be ample.

Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

.-! think that it will be found necessary to create an independent staff of inspectors. The need for proper inspection, to my mind, shows the unwisdom of having one man only at the head of the bank. To whom is the Chief Inspector to report? If the Governor and he had made unwise advances, on which his inspectors reported adversely, he would not be likely to disclose the reports. When the business of the bank becomes large, its securities will not be held wholly in the head office, but will be distributed through the branches, and one man could not examine them all. With private institutions, when an inspector makes his rounds, he goes first through the accounts of the branch at which he is calling, looks at the transactions for the year, and sees that the securities are present and in order ; but it is impossible to value every property on which money has been advanced in the district, though he goes through the books, and obtains a general idea of the bank’s prosperity. If, in his inspection, he comes across any securities about which he is not particularly keen, he may have a look at them, but it is utterly impracticable for him to value all the securities. The Bill should provide for an inspectorial staff, and if the Chief Inspector has anything particular to report in regard to the securities of the bank, he should make a confidential report to the Treasurer of the day, as the the Government has not provided in the Bill for any better method. What is provided for here is nothing more than an audit of the books to show that the balances, cash, and so on, are correct according to the books of the bank.

Mr Fenton:

– The Governor will appoint inspectors as he appoints other officers of the bank.

Mr Fisher:

– The general banking Bill will deal with that; it will make all banks alike.

Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

– I do not see how the special provisions of this Bill are to be applied to the ordinary banks. I gather from the Prime Minister’s Interjection that he is contemplating the creation of an inspectorial staff to inspect the whole of the banks in Australia, and their securities. That seems an extraordinary idea, but even if -it is proposed, it will not touch the inspection of this institution in regard to the whole of its internal management. That should be specially provided for in the

Bill, but, of course, the responsibility rests with the Ministry.

Mr HEDGES:
Fremantle

.- Some honorable members will remember what happened in Adelaide some years ago when the Commercial Bank of Adelaide broke up. It was found that packets which were supposed to contain securities of the value written on the outside contained only brown paper, and these packets had been passed from bank to bank, and accepted.

Mr Riley:

– Was that a Government bank?

Mr HEDGES:

– It was not; but it was the people’s money that was invested in the bank. Whatever has happened to other banks may happen to this bank, and we should therefore make our machinery so perfect that that sort of thing at any rate could not occur again. It was only possible through the scheming and fraud of the manager of the bank, and some one working with him, but it did not last very long, and the bank is now closed. Will the Prime Minister see that the audit makes sure that any securities supposed to be in the Commonwealth Bank are really there?

Mr. FRANK FOSTER (New England) £8.20]. - I ani anxious for full provision for a general inspection in the bank, but am inclined to support the Prime Minister’s idea that it would be better to deal with the matter completely in the general banking Bill, and at the same time to apply inspection and safeguards to the private banks to a greater degree than is done at present. The speech of the honorable member for Fremantle is an eloquent tribute to the idea that those banks should be better watched. The financial good name of the Commonwealth is in the hands of the Government of the Commonwealth, and, in the past, too much laxity has been shown by Governments in regard to financial institutions generally. Much of the over-speculation and trouble of the past could have been avoided if Governments had taken a more intense interest in the matter. It is our duty as a Commonwealth Parliament to encourage all legitimate financing and speculation in the Commonwealth, but when it comes to wild-cat schemes and dangerous work of any kind, it reflects on the Commonwealth generally. I trust that, in the general measure foreshadowed, the Prime Minister will deal as drastically as possible with any private institutions that depart from strictly honorable methods.

Mr W H IRVINE:
FLINDERS, VICTORIA · ANTI-SOC; LP from 1910; NAT from 1917

– The Bill provides for audit, and for an auditorial inspection, but, as ‘the Prime Minister truly said, that does not include anything like a valuation of securities. It includes merely an examination of the books, and of the vouchers. It has never been held to be part of the duty of auditors to have a valuation, or even an inspection of the securities, or the general mode of investing money. In the circumstances of this bank, there ought to be something more than the audit which is proposed. There ought to be an inspection by an officer who is not responsible solely to the Governor of the bank, but whose duty it would be to make a report from time to time to the Treasurer, and through the Treasurer to the House, not, of course, as to the value of each individual security, but as to any fact into which he was directed by the Treasurer to inquire, or which came under his notice in the ordinary course of general inspection, and which he would think desirable to bring before the Treasurer and the House. The Treasurer seems to think it would be sufficient if provision were made in the general banking Bill to cover the case, but I would remind him that proprietary banks are under an obligation to their shareholders to have some general inspection of the securities, which the shareholders, through the directors, are always careful to see enforced. Here, there is no such obligation. I submit that, especially since the Committee in its wisdom has adopted the principle of government by one man, it would be a great additional source of safety to have an officer quite independent of the bank, and of the Governor of the bank, whose duty it would be to report from time to time with regard to matters such as I have mentioned.

Mr CARR:
Macquarie

.- To appoint an independent inspector to act as a sort of check upon the Governor would be a roundabout way of undoing what we have done in deciding absolutely to trust the Governor. We must trust him. The Government could not properly appoint inspectors responsible to it as a check on him. The best thing to do is to permit the AuditorGeneral, when conducting his audit, to engage any duly accredited public valuer to inspect the securities. To superimpose an inspector on the Governor would greatly hamper the Governor. He would not dare to make.’ an advance without consulting his inspector. He would no longer be the controllergeneral of the bank. The inspector would be the man really responsible.. We as a House cannot go into the details of inspectorial reports, but must depend on some one else, who must be absolutely independent.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

.- I agree with the honorable member for Macquarie that it would be undesirable for the Government to appoint a special inspector to go into matters of this kind, but, then, no one has made such a proposal. I understood the Prime Minister to meet the difficulties pointed out by the Leader of the Opposition by admitting that it was desirable to have somebody to do something more than give an assurance as to the “correctness” of the figures in the balance-sheet.

Mr Fisher:

– In the books and vouchers.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– But the mere valuation of the securities is not the only difficulty that occurs in a balance-sheet. It is very easy for the manager of a company who wishes to show a good result to put into his balance-sheet as assets worthless advances made in the past. He might say, “ I am more sanguine than most people, and believe that to be a good debt,” and so might easily put in ^100,000 worth of advances, which had “gone to seed,” as if they were still good assets. Under this provision the Auditor-General would not have power to look into questions of that sort. As the Leader of the Opposition pointed out, and as the next clause provides, he will merely give an assurance of the “ correctness “ or incorrectness-

Mr Fisher:

– The clause says : “ The affairs of the bank shall be subject to inspection and audit.” Inspection covers more than audit.

Mr W H IRVINE:
FLINDERS, VICTORIA · ANTI-SOC; LP from 1910; NAT from 1917

– That means inspection for the purposes of audit.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– It would not give the Auditor-General power to look into the value of the assets, consisting of past advances, where there is a personal element.

Mr Fisher:

– I think it would.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– The Bill provides that all advances made by the bank on real property shall be assured by a seal, but it also gives the Governor of the bank power to make advances by parol, which means without a seal, and may be on personal property. It might be on what is called a contingent remainder, or on ex pectations in an estate. The bank Governor might from time to time include theseamong his assets as expectations which he was justified in valuing at 20s. in the j£iThe Auditor-General would not under a mere power to check “ correctness “ criticise a matter of that sort. If the asset was put in the balance-sheet as a good asset, he would say, “ That is correct, so far as the figures are concerned.” If, however, the Prime Minister can see his way, apart from the general banking Bill, to give in this measure an extended power to the AuditorGeneral by the use of a single word, so as to allow him to certify to the correctness “ and sufficiency,” or something of that sort, of the securities shown in the balancesheet, he would invest the Auditor-General with an extended jurisdiction, and give him the power which an ordinary auditor has with regard to a company.

Mr Fisher:

– I will think over it.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– Any one who says that the auditor of an ordinary company confines his attention to the mere correctness or incorrectness of the figures isquite wrong. I have known auditors over and over again to find fault with certain assets being taken as good where it was quite evident that the security, even of a personal1 character, had failed, and the security itself had gone to seed. It would be wrong to suppose that an ordinary auditor has nomore power than has the Auditor-General of a State, and, therefore, there would be nothing inconsistent in adding words so as to extend the jurisdiction of the AuditorGeneral, and to give him as much power as has an ordinary auditor in going through) the balance-sheet of an ordinary company.

Mr CARR:
Macquarie

.- I should like to know from the Prime Minister whether it is to be understood that clause 16 gives the Governor the necessary power to appoint inspectors such as are ordinarily associated with a bank, whilst this clause endeavours to cover what the Governor has done, to our satisfaction.

Mr Fisher:

– Yes, that is so.

Mr ATKINSON:
Wilmot

.- This clause is inadequate. While the bank is in its initial stages it might be possible for the Auditor-General to make an inspection and report, and that report might be satisfactory, so far as it went, as to the correctness of the figures submitted to him ; but we should require to know when the report came before us that the assets had! been properly valued, and that the values, were correctly represented by the figures. “We shall require to know, from time to time, how the institution stands. There is no reason why we should wait for the introduction of a general banking Bill to remedy that defect. When that Bill is introduced, we may consider it wise to exclude the Commonwealth Bank from its operation. While the bank is in its infancy the Auditor-General may be able to make these inspections ; but when a number of branches have been established, it will be impossible for him to cope with the work of inspecting and reporting.

Mr Riley:

– Who says that he would be able to do so?

Mr ATKINSON:

– There is nothing in the clause to suggest that the AuditorGeneral shall have power to appoint deputies to assist him in this work.

Mr Fisher:

– The term “ AuditorGeneral “ includes all his officers.

Mr ATKINSON:

– I should like the Prime Minister to give me his authority for that statement. The clause provides that the affairs of the bank shall be subject ito inspection and audit. ;. Mr. Fisher. - By whom? Mr. .- ATKINSON.- By the AuditorGeneral himself. Surely he would not report upon the inspection of others. We should have some independent officer, or set of officers, capable of reporting to us on the affairs of the bank. Mr. Roberts. - Shall we add after the words “ The Auditor-General “ the words, “ and all his staff “?

Mr ATKINSON:

– Even that would not meet the situation. However, I have entered my protest, and the responsibility must rest with the Government.

Mr FISHER:
Prime Minister and Treasurer · Wide Bay · ALP

– No one is more anxious than I am that we should push on with the consideration of this Bill. The anxiety to safeguard the public interest by the inspection of the affairs of the bank is certainly praiseworthy; but the public who invest in private banking institutions, which are managed by directors and general managers, are just as liable to suffer loss by want of thorough inspection as they will be in respect of this bank. Any system of special inspection of securities should apply, not only to the Commonwealth Bank, but to every bank intrusted with the care of public moneys.

Mr Atkinson:

– That can be provided for in the general banking Bill. No one has objected to such a proposal.

Mr FISHER:

– The honorable member said that such a provision should be inserted in this Bill. My contention is that it should be of general application. This clause deals with something entirely separate from the actual audit. It is a very difficult matter to allow another officer of superior powers to enter the bank and value the securities against which money has been advanced by officers occupying responsible positions in the institution. The honorable member for Macquarie put his finger on the weak point of this proposal when he pointed out that it would be very dangerous to put behind the men intrusted with the whole business of the bank, and in whose honour, experience, and integrity, so far as these securities are concerned, we are bound to have confidence, another public officer with the right to intervene and to prevent business being carried on as the responsible officers of the bank desired.

Mr W H IRVINE:
FLINDERS, VICTORIA · ANTI-SOC; LP from 1910; NAT from 1917

– The trouble is that the Government are trusting too much to one man.

Mr FISHER:

– That is not the point. I am not asking the Parliament to treat this bank differently from any other. The interests of the people will be just as much safeguarded by the Governor of the bank as if he had a board of directors to assist him, and whatever provision is made in the direction referred to must apply to banks of all kinds.

Mr KELLY:
Wentworth

– I cannot quite follow the Prime Minister. He seemed to think it was necessary to do what we proposed, but one gathered from his statement that he proposed on some future occasion, and not now, to provide some safeguard in respect of this bank, such as has been suggested by the Leader of the Opposition. I should think that the proper time to deal with the matter is now, when we are starting the Commonwealth Bank. I agree with him that a principle of this kind should have general application, but the inclusion of this clause in the Bill, without any provision for the ordinary inspection work which is carried . on of their own free will in the case of private banks-

Mr Fisher:

– It will be carried on by the Governor in the case of the Commonwealth Bank.

Mr KELLY:

– We are providing in this Bill for all sorts of regulations, even down to one determining whether or not an officer of the bank shall borrow from the bank; but we find ourselves up against a stone wall when we ask for the insertion of a provision of infinitely greater importance. Whenever an amendment is proposed by the Opposition it is immediately denounced by honorable members opposite as a Machiavellian device to ruin the Bill, The Prime Minister has now confessed that some such proposal as is suggested is necessary.

Mr Fenton:

– Government audit and inspection to apply to all banks.

Mr KELLY:

– Exactly. But why not provide in the Bill now before us, not only for Government auditors; but also for bank inspectors? I do not suppose that it is necessary for the Government and their supporters to meet in conclave to settle a simple matter of this kind. They should be able to determine it in this Chamber. The Prime Minister cannot shelter himself behind the plea that the principle for which we ask should be applied to all banks, when he refuses to extend it now to the Commonwealth Bank. Let us, if you like, have a Bill to provide these safeguards in regard to all banks, but do not let us start the Commonwealth Bank without inserting in this measure such a wise provision as that for which the Opposition ask.

Mr HIGGS:
Capricornia

.- The Prime Minister might find something deserving of his consideration in the Queensland National Bank Limited (Agreement) Act of 1904. The Government Auditor of that State audits the accounts of the Queensland National Bank, and has also, I think, an officer continuously employed in examining its books and documents.

Mr Bamford:

– Including the securities?

Mr HIGGS:

– The securities appear to be vouched for by the bank’s solicitors.

Mr Fisher:

– Only as to whether or not they are in legal form.

Mr HIGGS:

– The following is a paragraph from the twelfth half-yearly report by the Auditor-General under the Queensland National Bank Limited (Agreement) Act of 1904 : -

In accordance with the provisions of “ The Queensland National Bank Limited (Agreement) Act of 1904,” I have the honour to submit to Parliament my customary report on the balancesheet of the Queensland National Bank Limited for the half-year ended the 30th June, 1910.

The balance-sheet, a copy of which is attached, was laid before the general meeting of shareholders of the bank on the 18th instant; it exhibits a full and correct statement of the bank’s affairs, as shown by the books and documents. These have been fully examined by the officer appointed for the purpose and by myself. The usual certificate from the bank’s solicitors was seen by me, certifying that all securities at head office had been examined and found in order.

Then follows a series of headings relating to bills payable to the Government of Queensland, coin in hand at head office, Treasury notes, Government stocks, bills discounted, cheque books, duty stamps and other stamp forms ; and also to branches, the London office, the general business of the bank, deposits, realization of securities, and profit and loss. It seems to me that others besides the general manager, the chairman, and auditors, who sign the Queensland National Bank balance-sheet, are responsible for the certificates regarding securities. It would be no reflection on the Governor of the bank if the Auditor- General appointed some officer whose duty it was, as soon as the operations of the bank became sufficiently large to require his services, to examine the books and documents. I do not suppose that an officer of the AuditorGeneral could go into all the branches of the Commonwealth Bank of the future and test the value placed on certain securities. That is a work which I do not think any existing bank would be able to undertake. At present I imagine that the word of the branch managers has to be taken.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– No; the inspectors.

Mr HIGGS:

– Quite so; and no doubt, in time to come, when the Commonwealth Bank has a large commercial business, it will be necessary to appoint inspectors.

Mr RYRIE:
North Sydney

.- In my opinion, the whole trouble arises from the draftsman having inserted one word too much, namely, the word “ inspection.” If the clause simply provided that the affairs of the bank should be subject to an audit by the Auditor- General of the Commonwealth, that would have been quite sufficient. I take it that the Governor of the bank will be a competent man, and that what suffices for shareholders in private banking institutions should suffice in the case of the Commonwealth Bank.

Mr Fisher:

– I think the AuditorGeneral is quite competent to inspect securities and know whether they are in legal form or not.

Mr RYRIE:

– It would be absolutely impossible for the Auditor-General or his officers to literally inspect all the securities of the bank, referring more particularly to landed property. The task might not be so difficult in regard to city properties ; but doubtless the Commonwealth Bank will have to deal with station properties in all parts of the Commonwealth. I should myself be quite satisfied to accept the reports of a competent staff of inspectors. The Commercial Bank of Sydney employs a chief inspector and sub-inspector in the north, and two similar officials in the south, with a numerous staff. If a man makes an application for an advance on landed property, the request is not granted until an inspection is made; and I take it that the value placed on properties by the inspectors should be sufficient for the Auditor-General. If we are to be safeguarded in every direction by officials, we simply say that the Governor is a man not to be trusted, or worthy of his position. Clause 16, in my opinion, gives the Governor of the bank all the power that is necessary to appoint a staff.

Mr Fisher:

– Complete power.

Mr RYRIE:

– The Governor will appoint a chief inspector, and others as the business of the bank expands and warrants.

Mr W H IRVINE:
FLINDERS, VICTORIA · ANTI-SOC; LP from 1910; NAT from 1917

– The honorable member for Richmond has drawn my attention to another matter that requires investigation. It appears from the Audit Act that this clause would impose on the Auditor-General himself the duty of personally conducting the audit - that he would not be able to employ any of his staff. The Audit Act, as amended, imposes certain duties on the Auditor-General which he alone can perform, and there are certain other duties which he may delegate to some other person. By section 45, for instance, the Auditor-General, or such person as he appoints, may, when he thinks fit, and whenever required by the Treasurer, inspect and examine public stores, books, and accounts. The Auditor-General could not be expected to do such work personally ; but section 42 requires the AuditorGeneral to make certain inquiries and observations, addressed to the Treasurer, and it is intended that he shall do this himself. Then section n provides that the Auditor-General may by writing appoint any person to inspect, examine, and audit books, accounts, or stores “under this Act.” This would not help the AuditorGeneral in carrying out the duties under this Bill ; and the suggestion of the honorable member for Richmond is worth consideration. If we intend the staff to do the work, there ought to be an amendment to that effect.

Mr MAHON:
Coolgardie

.- The honorable member for North Sydney appears to be in error in assuming that the

Governor of the bank has power to appoint inspectors. He relied on clause 16 ; but this merely empowers him to appoint officers for conducting the business of the bank. The “inspection” is not, under this Bill, any part of the bank’s “ business.” The work of inspection devolves on the AuditorGeneral, or on some one whom he may appoint. However, the vitality of the clause depends altogether on the interpretation of the word “inspection.” It is generally admitted that neither the Auditor-General nor any other single individual is competent to carry out the full inspection of this bank. For instance, the Governor of the bank is given power to carry on general banking business, to make advances, discount bills and drafts, and so forth. How is the Auditor-General, or his officers, seeing that they are located in Melbourne, to discover the value of a bill - drawn by a trader in northern Queensland, or a remote part of Western Australia? This measure can be successful only if the inspection is thorough-going; and I recommend the Prime Minister to follow the example of other banks, especially that of the Commissioners of the Savings Banks in Victoria, and institute a very efficient inspection of securities and proposed securities. Indeed, we shall have to go further than the Com missioners of the Savings Bank are oblige* to, because the Commonwealth Bank is empowered to engage in business from which the Savings Banks are barred. Owing to the variety of the securities, and the distance from the Commonwealth centre, together with other circumstances, only officers located in the districts where the securities are can be relied on to attach a. true market value.

Mr Fisher:

– There is a very large staff in the Auditor-General’s office well acquainted with the districts they inspect.

Mr MAHON:

– Knowledge of a district does not imply knowledge of values in that district. I do not know whether a man accustomed to merely keeping accounts and adding up figures is competent to estimate the value of real estate, or of a draft or a bill. I presume that, before the Governor discounts a bill or n draft, he will require some information about the person who offers the security. I do not wish to delay the Bill, but I hope an opportunity will be given on re-committal toreconsider this and other points.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– We are in danger of becoming tangled’ over this matter. Having listened to the debate, it seems to me that there are two distinct questions - the question of inspection with a view to ascertaining the sufficiency of the valuation placed on the securities, and the question of auditing a§ provided under this and the following clause. I do not agree with the honorable member for North Sydney that it would be desirable to eliminate the word “inspection,” because, I take it, inspection is necessary to the audit. The power of inspection is indispensable, in order that the Auditor-General may proceed with his auditing work, and it is only intended in that sense. The honorable member for North Sydney seems to assume that the word “ inspection “ means inspection of the securities, but that is not so, and the honorable member for Capricornia threw a useful light on the question of auditing by quoting from the report of the AuditorGeneral of Queensland on the Queensland National Bank. The balance-sheet of a bank is totally different from the ordinary statements concerning the work of a Government Department. It contains a number of algebraical *’s, and, as to the value which they represent, opinions differ. The question is whether the AuditorGeneral’s powers are sufficient to enable him to do in respect of the Commonwealth Bank what an ordinary auditor does in respect of a public company, or other institution of the kind. I agree with the honorable member, for Macquarie that we might well leave it to the Governor of the bank to appoint a staff for the ordinary work of -.inspection. Each large bank has a small army of inspectors and sub-inspectors, who constantly move about the country examining the securities on which advances are made. Under the clause as it stands, the Governor of the bank, being desirous to produce a good balance-sheet, and being unchecked by a board of directors or commissioners, might put among his assets securities which a competent critic would regard as doubtful or bad, because, as the honorable member for Coolgardie has pointed out, the bank may make advances on personal security, such as the expectation in an estate, or a bill, and the powers of the Auditor-General might not enable him to estimate the correctness of the figures supplied. While the balance-sheet might show assets amounting to ^£2. 500,000, at least ^100,000 might represent advances which had, popularly speaking, “gone to seed,” and this the Auditor-General might not have power to discover. I, therefore, suggest to the Prime Minister that, after the word “ correctness,” in clause 20, he should, to increase the critical power and jurisdiction of the Auditor-General, insert the words “ and sufficency as a statement of the bank’s position.”

Mr Fisher:

– I am willing to submit the matter to the Attorney-General, and, if necessary, to recommit the Bill.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– That is quite apart from the question of inspection.

Mr Fisher:

– Yes.

Mr CHANTER:
Riverina

– Clauses 19 and 20 must be read togetherSome honorable members think that all that the Auditor-General and his officers would do would be to certify as to the correctness of the entries in the books of the bank,, but there will be a double check. The Auditor-General will instruct his officers to carefully examine all the documents in the possession of the bank, at its head office, and in its various branches, and they will-‘ naturally ask what are the values upOn which the advances have been made. Their knowledge of the various districts to which they will be sent will enable them to check the bank’s estimates.

Mr Sampson:

– Then there will be are army of inspectors?

Mr CHANTER:

– Of course. The Auditor-General now has to send his officers all over the country.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– We should make the powers of the Auditor-General undoubted.

Mr CHANTER:

– That is so. There is a double check provided. In the first place, there will be an inspection, and anaudit of the affairs of the bank by theAuditorGeneral, to be conducted not less often than half-yearly, upon the result of which the Auditor-General must report roche Treasurer. Furthermore, the Governor,, at least twice a year, must prepare a; balance-sheet, and submit it to the AuditorGeneral for report. The Auditor-General will thus be able to check the informationfurnished by his own staff with informationfurnished by the staff of the bank.’ He reports on the balance-sheet, which is thentransmitted with the report to the Treasurer and to Parliament. Like the honorable member for Parkes, I am- desirous of” making the inspection as rigid as possible,, but in the Bill as it stands, a very complete check is provided.

Clause agreed to.

Clause 20 agreed to.

Clause21 -

The head office of the bank shall be situated in such place as the Governor thinks fit to appoint.

Mr SINCLAIR:
Moreton

.- I move -

That all the words after the word “ in “ be left out, with a view to insert in lieu thereof the words “ the same city as the Seat of Government.”

While the Seat of Government is in Melbourne, the head office of the bank will, no doubt, be here, but when the Seat of Government is removed to the Federal Capital, I think that the head office of the bank should be removed there too. It is, I believe, the general opinion of honorable members that as many of the Federal offices and establishments as possible shall be located in the Federal Territory. The clause, as it stands, puts too much power into the hands of the Governor. I hope that we can look forward to the time when the head office, and all the conveniences necessary for the keeping of gold reserves, and other purposes of the bank, will be in the Federal Territory.

Mr FISHER:
Prime Minister and Treasurer · Wide Bay · ALP

– This is patriotism run mad. The bank is a business concern, and the Governor is charged with its administration in such a way as will make it profitable and convenient for investors and customers. While it may be desirable to have an office and works in the Capital City, it would be the business of the Governor to have the head office in the best business place in Australia, to enable the business of the bank to be best carried on.

Mr W ELLIOT JOHNSON:
LANG, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– I take it, from what the Prime Minister has just said, that it is the intention of the Government to have the head office of the bank in Sydney, because there is no better business’ place in Australia. This might be a convenient opportunity for the Prime Minister to inform the Committee where he really proposes to establish the head office. We are entitled to know something on that head. Presumably the right honorable gentleman has some location in his mind now.

Mr Fisher:

– The honorable member should read the clause.

Mr W ELLIOT JOHNSON:
LANG, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– The Prime Minister should do so; he will then see that no location is mentioned. I take it that the Governor of the bank is virtu ally under the control of the Government, or, at any rate, of the Treasurer ; and that wherever the Government want the head office to be put, there it will be put. The Prime Minister might, therefore, indicate to the Committee its intended or probable location.

Amendment negatived.

Clause agreed to.

Clauses 22 to 26 agreed to.

Clause 27 -

Where the Bank holds any property (whether real or personal) or business as security for any advance, and the property or business falls into the hands of the Bank, the Bank may maintain repair or improve the property and carry on the business until, in the discretion of the Governor, the Bank can dispose of the property in the best interests of the Bunk.

Mr HIGGS:
Capricornia

. -I should like the Prime Minister to consider whether this clause is constitutional. At present, a private bank will advance money on a pastoral property, on meat works, or on a sugar refinery ; and if the owner is unable to meet his obligations, it is not unusual for it to foreclose, turn him out, and run the business in its own interests. The pastoraldirectory shows that many of the pastoral properties of Australia are in the hands of banks, having been acquired by them by foreclosure. I believe this is one of the Bills which, when passed, will have to be submitted to the High Court to see whether it is in our power as a Commonwealth to carry on a business. At the present time we believe it is not in our power, for instance, to carry on a sugar refinery, or a pastoral property, or meat-preserving works. Yet under this clause the Commonwealth Bank will have power to lend money on any of those concerns, step in, take over the business, and run it on behalf of the Commonwealth. The question of whether that is within our constitutional powers deserves the consideration of the Prime. Minister and the Crown Law officers.

Mr Fisher:

– We have discussed it, and their opinion is. that it is within our power.

Mr HIGGS:

– I take the view that a banker should not be a trader or dealer. It would have been far better for the business people of Australia, and the public generally, if the banks had adhered to the original practice of banking, and not attempted to carry on businesses. I have heard of banking institutions sending their representatives up into farming districts at a convenient time to foreclose on an unfortunate farmer, turn him out, and run the farm in the interests of the bank. If the Commonwealth Bank were not given the power to carry on a business, its officials would be much more careful in advancing money to an institution, company, or individual conducting a business. If the Commonwealth is going to indulge in business transactions, such as sugar-refining, meat-preserving, or pastoral production, we ought to have a Department specially for that work, and it should not be done through our banking institution.

Mr Thomas Brown:

– The power will be exercised only when necessary, until the bank can dispose of the property.

Mr HIGGS:

– It will all depend on the view taken by the Governor, or Deputy Governor of the bank, how long the business will be run by the bank. If it is not constitutional for us as a Commonwealth to carry on a business, I do not see how it can be constitutional for us to do it by a side wind, by means of a Commonwealth Bank. I am afraid that if we attempt it we shall get into trouble with the High Court.

Mr. FISHER (Wide Bay- Prime Minister and Treasurer [9.27]. - The honorable member for Capricornia raises two important points, which have been discussed with the law officers. The clause was put in the Bill principally to protect the interests of the bank, and therefore the interests of the people of the Commonwealth. Nearly every bank charter gives power to take possession of and work properties until such time as they can be disposed of in the best interests of the bank.

Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

– It is very often in the best interests of the creditor, also.

Mr FISHER:
ALP

– I was about to point that out. It will be a marvellous bank if some instances do not arise where the collateral security falls in because of circumstances over which neither the borrower nor the lender has control ; and this is most likely to happen at the very time when the property, although valuable, would be quite unsaleable. A property might also be useless without further expenditure on it. It might need improving within and without before it became valuable; andthe bank ought to have power, under proper supervision, to make it valuable, and await the opportunity to dispose of it. It is not the desire of the

Government to encourage the obtaining of property of any kind in this way for trading purposes. The clause is designed to protect the interests of the bank, and to enable it to get rid of property in its hands at the most profitable time and at the most convenient opportunity. As to the constitutional point regarding trading in prohibited articles,I can only say that our legal advisers think that we are on the right side of the fence.

Clause agreed to.

Clauses 28 and 29 agreed to.

Clause 30 (Disposal of profits).

Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

.- I doubt very much the wisdom of compelling the bank to divide its profits in the way for which this clause provides. It would be much wiser from the point of view of the bank to allow the Governor to determine what proportion of the profits should from time to time be allocated to the bank reserve fund and the redemption fund mentioned in this clause. Let him have the two funds if honorable members like, but give him power to determine how much shall be paid into the reserve fund and how much into the redemption fund every year. It is conceivable that the Governor may be able from time to time to see sufficiently far ahead as to make him consider it advisable to use the whole of his profits, particularly in the early stages of the bank’s career, in strengthening the reserve fund, and I doubt very much the wisdom of compelling him to divide the profits in the way proposed.

Mr Fisher:

– We think this is the best course to adopt.

Mr AGAR WYNNE:
Balaclava

– The suggestion made by the honorable member for Richmond is worthy of consideration. I think it would be wise to so amend the clause as to provide that not less than one-half of the net profits shall be placed to the credit of the bank’s reserve fund. For the first few years of the bank’s existence it might be considered desirable to apply the whole of the profits to the building up of such a fund, and if my suggestion were adopted it would givethe Governor a discretionary power. If it is desired to make this a strong bank, it will be necessary to build up a big reserve fund. On the other hand, the debentures will probably be issued for a term of from twenty to forty years, so that some years would necessarily elapse before they would have to be redeemed.

Mr FISHER:
Prime Minister and Treasurer · Wide Bay · ALP

– I should be very glad if I could see my way to adopt the suggestion, but if it were to apply for only a year or two, I do not think it would be of any distinctive value. I prefer that the bank should begin operations on the principle that we have set forth. The clause provides that one-half of the net profits of the bank shall be paid to a reserve fund, and I think that we are entitled to the remaining half for other purposes. No demand will be made on the bank in respect of the payment of dividends to shareholders, although, of course, it will have to pay interest on the debentures issued. The bank will have the advantage of having the Government account, and, after all, there is very little difference between the clause as it stands and the clause as proposed to be amended. I prefer that the clause shall be passed as submitted.

Clause agreed to.

Clause 31 agreed to.

Clause 32 -

The Governor may, with the consent of the Treasurer, make rules . . . for any of the following purposes …

Mr DEAKIN:
Ballarat

.- This clause is, so to speak, one foot of the tripod on which the whole of the Government control of the bank is supported. This requires the consent of the Treasurer to be obtained by the Governor in order that he may make rules’ for the good government of the bank, the classification of its officers, and - any matter necessary or convenient to be provided for carrying on the business of the bank.

I should like those who welcome such a proposal with enthusiasm to put in concrete shape any possible limitation of the lastnamed provision.

Mr Webster:

– Why should there be any limitation?

Mr DEAKIN:

– Is it realized that under this clause we are giving an absolutely unbounded authority?

Mr Webster:

– Hear, hear !

Mr DEAKIN:

– Very well.; that is admitted. This is one of the clauses that complete the control by the Government of the whole of the operations of the bank. In other words it means political control, although it need not be, and, I hope, never will be, used for what are ordinarily spoken of as political purposes.

Mr Fisher:

– I should like to strengthen the power of the Governor under the clause.

Mr DEAKIN:

– I do not see how the Prime Minister could strengthen the Governor’s powers without recasting the whole clause.

Mr Fisher:

– The Treasurer will have only a negative, not a positive power under it.

Mr DEAKIN:

– I pointed that out on a previous occasion. This clause will mean that although the Governor may appoint what officers he pleases, pay them whatever he pleases, and dismiss them whenever he chooses to do so, he will not be able to deal with their classification without the consent of the Treasurer.

Mr Fisher:

– Would the Leader of the Opposition approve of a proposal that the Treasurer should lay on the table any request for rules that he negatives? I am particularly anxious to meet the Opposition on the point as to political influence.

Mr DEAKIN:

– The late Government established the practice to which the right honorable member refers, and no doubt it will be followed by our successors. I have only to remind the Committee that this is one of the three clauses to which I called special attention on a previous occasion.

Mr FISHER:
Prime Minister and Treasurer · Wide Bay · ALP

– I am so anxious to meet the views of the Leader of the Opposition and some of his party regarding the complete authority of the Governor of the bank that I would readily agree to lay on the table of the House any memoranda in respect of any rule submitted by the Governor to the Treasurer and not approved by him. If that were done, there could be no shadow of political influence exercised bv the Government to the detriment of the Governor in carrying out the duties of his office. It is essential that the public mind should be absolutely relieved of any fear that the Government are going, by means of this power, in respect of rules, to embarrass the Governor of the bank. I, therefore, feel that the best way to meet the charge that this is going to be a political institution, and that the Governor can be harassed and embarrassed by the acts of the Treasurer, is for me to say that any memoranda in the shape of a proposed rule sent to me, and of which I do not approve, shall be laid on the table of the House or published in the Government Gazette.

Mr W H IRVINE:
FLINDERS, VICTORIA · ANTI-SOC; LP from 1910; NAT from 1917

– The danger will be in respect of rules to which the Treasurer does agree.

Mr FISHER:

– No; the power of the Treasurer under this clause is only a negative one. The complaint made by the Opposition is that political influence may be introduced by the action of the Treasurer in negativing a proposed rule ; and so far as that is concerned, 1 am quite prepared to meet the wishes of my honorable friends.

Mr. AGAR WYNNE (Balaclava) [9.41 J. - The principal banks carrying on business in Australia, as well as all our large insurance companies, have formed superannuation funds for the benefit of their employes. Out of their profits a certain percentage is set aside each year towards the establishment of such funds. The employes also contribute a certain amount, with the result that, after service extending over a’ certain number of years, they are entitled to receive pensions. We might add to this clause the power to make rules to provide for the establishment of a superannuation fund.

Mr Fisher:

– I am prepared to accept an amendment embodying the honorable member’s suggestion.

Mr Wise:

– Under clause 30 we have already determined how the profits of the bank shall be dealt with. That being so, how can we provide in this clause for the proposal now made?

Mr FISHER:
Prime Minister and Treasurer · Wide Bay · ALP

– In answer to the honorable member for Gippsland, I would point out that we can overcome the difficulty he suggests by making the bank’s contribution to the proposed fund a charge upon its profits. It might, perhaps, be made a first charge on the profits of the bank.

Amendment (by Mr. Agar Wynne) proposed -

That the following new paragraph be inserted : - “ (bb) to provide a Superannuation Fund.”

Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

.- I suggest that it would be well to combine the proposed fund with the guarantee provident fund.

Mr Fisher:

– A guarantee provident fund is common to the whole service. All this can be done by regulation.

Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

– Tt will be to the benefit of the bank officers to have the two funds in one. as is the case iri many of the hanking institutions to-day

Mr Fisher:

– I think the officers ought to provide their own guarantee fund.

Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

– They will provide the whole of the guarantee fund, but they will also contribute to the superannuation fund. If the two are run together it will mean a smaller charge on the officers. The bank with which I was connected for a number of years was worked in the way I suggest, and the small demand on the funds in case of defalcation was remarkable, with the result that the pensions were considerably larger. If the officers have to guarantee their fidelity to the . bank by means of a separate fund it will mean a double charge on many of them. I suppose that 999 out of every 1,000 officers are absolutely honest; and why should the honest be penalized by providing a special guarantee to meet the dishonesty of the one? I think that if the Prime Minister will favorably consider my suggestion he will be conferring a great benefit on the officers.

Mr FISHER:
Prime Minister and Treasurer · Wide Bay · ALP

.- I do not desire to mix up the two funds, because I consider that such a step would be unwise. I should now like to suggest that the new proposal be called sub-clause c.

Mr FENTON:
Maribyrnong

.- It is quite likely that a number of officers who will make up the staff of the Commonwealth .Bank will be taken over from existing banks in which they have been called upon to contribute to superannuation funds. I desire to know whether we shall have power to insure that these men will sacrifice none of their rights in the banks from which they come.

Mr Fisher:

– I think we might have such a power under a general Banking Bill.

Mr FENTON:

– A provision of the kind is necessary, because it is hardly fair that the money these men have contributed should revert to the funds of the various banks.

Mr Fisher:

– I do not think that we have the power, or that it would be advisable, to deal with that matter in this Bill. As I say, it is a subject for a general banking Bill.

Amendment agreed to.

Clause, as amended, agreed to.

Clause 33 -

The Commonwealth shall be responsible for the payment of all moneys due by the bank.

Provided that nothing in this section shall authorize any creditor or other person claiming against the bank to sue the Commonwealth in respect of his debt or claim.

Mr DEAKIN:
Ballarat

.- I merely propose to point out a rather odd consequence which is likely to flow from clauses 33 and 34 if read together. In clause 33 it is provided that the Commonwealth shall be responsible for the payment of all moneys due by the bank. The whole credit of the Commonwealth is behind the bank, which will draw on that credit according to its needs. Clause 34 provides that the bank may invest any money held by it in any Government security approved by the Treasurer. As the bank starts with all the credit of the Commonwealth behind it, what is it going to gain by purchasing Government securities, whether approved of by the Treasurer or not ?

Mr FISHER:
Prime Minister and Treasurer · Wide Bay · ALP

– Clause 33 means exactly what it says, namely, that the Commonwealth shall be responsible for the payment of all moneys due by the bank. That is, whatever happens to the bank.

Mr Deakin:

– Hear hear ! Unlimited credit !

Mr FISHER:

– Whatever happens to the bank, the Commonwealth’s public funds will be available to satisfy every creditor. The second paragraph of the clause met with some criticism on the. second reading, though we hear nothing of it on the present occasion. That paragraph provides that if any person is aggrieved by the bank he is not to be allowed to sue the Commonwealth in the first instance. He must sue the bank, and, if the bank does not satisfy the claim, then the Commonwealth comes in. Now, the next clause serves to cover the retreat - or, shall I say - the abandon- ment of an earlier attack. The honorable member for Ballarat desires to know-

Mr Deakin:

– I do not desire to know - I merely point out the position.

Mr FISHER:

– I had better wait until we come to deal with the next clause. I think this a wise provision ; but if it is in any way embarrassing to the Governor. I shall be glad to receive suggestions for its amendment.

Mr KELLY:
Wentworth

.- The Prime Minister apparently took it for granted that there would be no criticism in regard to this extraordinary and selfcontradictory clause. I am not clear as to what the clause means, although the Prime Minister has told us with great confidence that it means what it says. The extraordinary feature is that, while the Commonwealth is to be “ responsible” for the payment of all moneys due by the bank - while this placard is displayed to the creditors of the institution - no creditor is free to sue the Commonwealth for the recovery of his debt !

Mr W H IRVINE:
FLINDERS, VICTORIA · ANTI-SOC; LP from 1910; NAT from 1917

– The clause will not do any harm - it means nothing.

Mr KELLY:

– We are told that the clause means what it says; and, since onehalf contradicts the other half, I fail to see that it means anything. I presume that the result is nil; but it is more or less our duty to point out that the clause is purely a placard for those who may have dealings with the bank. The Prime Minister tells us that it is to prevent creditors suing the Commonwealth in the first instance; but what is the meaning of ‘ ‘ first instance ‘ ‘ ? Will the clause entitle creditors, at any stage, to sue the Commonwealth?

Mr Fisher:

– We may imagine a “crank” suing the Commonwealth for 9½d.

Mr KELLY:

– The Prime Minister can not get away from the issue in that facile way. I desire to know definitely whether the clause gives a creditor of the bank power at any stage to sue the Commonwealth.

Mr Chanter:

– If the creditor gets judgment against the bank, the Commonwealth will have to pay.

Mr Fisher:

– If the bank does not pay.

Mr KELLY:

– I do not see that the clause means even that. The Commonwealth is not responsible at law, as the second paragraph of the clause shows. The Commonwealth has a moral obligation, but it cannot be sued ; and what chance is there of any recognition of a moral obligation ?

Clause agreed to.

Clause 34 - (1.) The Bank may invest any moneys held by it

  1. in any Government security approved by the Treasurer, or
  2. on loan on the security of land, or
  3. in any other prescribed manner. (2.) Nothing in this section shall prevent the Bank, in carrying on the business of banking, from making advances to a customer on any security which the Governor thinks sufficient.
Mr W H IRVINE:
FLINDERS, VICTORIA · ANTI-SOC; LP from 1910; NAT from 1917

.. - What is the object and effect of this clause? In an ordinary case, when it is desired to limit the powers of a company or any body, such a clause as this is inserted setting forth the particular powers with which it is invested. By clause 7 we have already invested the bank with power in every direction. The bank may invest in land, make advances by loan or overdraft, discount bills and drafts, and so forth, all of which business comes within the meaning of “ investment.” Now we proceed solemnly, by an investment clause, to limit the power.

Mr Fisher:

– I agree with that.

Mr W H IRVINE:
FLINDERS, VICTORIA · ANTI-SOC; LP from 1910; NAT from 1917

– Then in subclause 2 it is provided, as if there was any doubt-

Mr Fisher:

-That is the limit of the limitation.

Mr W H IRVINE:
FLINDERS, VICTORIA · ANTI-SOC; LP from 1910; NAT from 1917

– And the limitation of the limitation shows that the limitation itself-

Mr Scullin:

– Is wiped out by the limit!

Mr.W. H. IRVINE. - No. but that the limitation itself wipes out clause 7. A reasonable interpretation, reading this clause with clause 7, is that none of the powers of clause 7 can be exercised, except that of making advances to customers, unless the power is prescribed by special regulation. Clause 7 provides that this bank is to be invested with all the powers incidental to the ordinary business of banking. That includes lending money on land and on personal security, and investing it in Government securities. Lending money on any security you choose is included in the general business of banking.

Mr Chanter:

– Has every bank the right to lend money on land?

Mr W H IRVINE:
FLINDERS, VICTORIA · ANTI-SOC; LP from 1910; NAT from 1917

– I do not know any Australian bank that has not that right; though, under the laws of Canada, and some other countries, banks are expressly prohibited from lending money on the security of land. The business of banking is strictly the discounting of commercial bills ; but the lending of money on mortgage has, in Australia, become so mixed up with banking business, that I think the expression “ general business of banking “ will undoubtedly cover the lending of money on landed security. But the conferring on the bank, by clause 7, of certain specified powers, may impliedly exclude other powers. It is true that, under clause 34, the bank may invest money “ in any other prescribed manner “ ; but the effect of clause 34 is that, before the bank can start its operations, the Governor in Council must make regulations repeating the provisions of clause 7.

Mr FISHER:
Prime Minister and Treasurer · Wide Bay · ALP

– I thank the honorable member for Flinders for his criticism. The intention of clause 34 is that, when the Governor of the bank’ desires to invest money in any Government securitv, or on loan on the security of land, that is for general loan purposes, as an invest ment to earn interest, or in any other prescribed manner, he shall do so only with the consent of the Treasurer ; because it is thought that such investments should not be greatly encouraged, and should be made only with the cognisance of the Treasurer. The honorable member, with his legal acumen and knowledge, has pointed out that, in seeking to place restrictions on the Governor in regard to these three kinds of investments, we may have prevented him from exercising the powers conferred by clause 7, unless they are given to him by regulation. That was not intended. It was not our wish to impair clause 7. I think that this provision will have to be re-drafted, and as it is not proposed to go further to-night, I propose now to move the Chairman out of the chair.

Mr W H IRVINE:
FLINDERS, VICTORIA · ANTI-SOC; LP from 1910; NAT from 1917

– Before that is done, may I make a suggestion? I understand that it is desired that the powers given by clause 7 shall be exercised.

Mr Fisher:

– Yes; without reference to the Treasurer.

Mr W H IRVINE:
FLINDERS, VICTORIA · ANTI-SOC; LP from 1910; NAT from 1917

– But that the investments specified in clause’ 34 shall be made only with the consent of the Treasurer ?

Mr Fisher:

– Yes. These are special investments.

Mr W H IRVINE:
FLINDERS, VICTORIA · ANTI-SOC; LP from 1910; NAT from 1917

– I would suggest that precautions are more necessary in regard to loans on the security of land than in regard to investments in Government securities ; and that the provision should be drafted in a negative form. It should be enacted that the Governor shall not exercise certain powers without the approval of the Treasurer.

Progress reported.

page 3396

ARBITRATION (PUBLIC SERVICE) BILL

Mr. SPEAKER reported the receipt of a message from His Excellency the GovernorGeneral, recommending an appropriation for the purposes of this Bill.

page 3396

PAPERS

MINISTERS laid upon the table the following papers : -

Public Service Act - Papers relating to the promotion of R. W. Chenoweth, as clerk, 4th Class, Department of the Treasury, Land Tax Branch, Victoria.

Defence Act - Military Forces - Regulation Amended (Provisional) - Financial and Allowance, No. 6, Statutory Rules 191 1, No. 196.

page 3397

ADJOURNMENT

Naval College Site

Motion (by Mr. Fisher) proposed -

That this House do now adjourn.

Mr KELLY:
Wentworth

.- I ask the Minister representing the Minister of Defence if, at an early date, he will take the House’ into his confidence as to what is proposed to be done regarding the selection of a temporary site for the Naval College? It is stated, in a newspaper whose veracity can occasionally be relied upon, that the College is to be temporarily situated at Geelong ; and it would be interesting to know whether the recent professed zeal of our Victorian friends for its establishment at Jervis Bay was only a cloak to their efforts to obtain its temporary, and perhaps permanent, establishment in the neighbourhood of Melbourne?

Mr ROBERTS:
Honorary Minister · Adelaide · ALP

– I am quite unable to hold out any hope whatever that the question of the selection of a temporary site for the College will be a subject for the consideration of the House.

Question resolved in the affirmative.

House adjourned at 10.12 p.m.

Cite as: Australia, House of Representatives, Debates, 29 November 1911, viewed 22 October 2017, <http://historichansard.net/hofreps/1911/19111129_reps_4_62/>.