5th Parliament · 1st Session
Mr. Speaker took the chair at 2.30 p.m., and read prayers.
– I ask the Prime Minister whether he intends to propose a longer luncheon adjournment than usual to-morrow, and whether he is yet in a position to say what business he wishes to deal with before the end of the session?
– I hope to pass the little Bills that are on the noticepaper, the consideration of which should not take long. There are, for instance, the Pine Creek to Katherine River Railway Bill, the Bureau of Agriculture Bill, the Tasmania Grant Bill, and, I hope, the Bill for the establishment of a Standing Committee on public works.
– You are not going on with the Australian Notes Bill?
– It is a contentious measure.
– We shall see about it when we get rid of some of the others. I hope that my honorable friends opposite will help us to bring the session to an end as soon as possible. May I remind the right honorable gentleman that we have not done much business this session ?
– That is no reflection on me. What about private members’ business?
– I hope to deal with private members at least as generously as they were dealt with last year.
– A full sitting day was then given to private members’ business.
– My assurance should satisfy the right honorable member. All the cards are now on the table, and I hope that he will help us to clear up matters and get away.
– What about to-morrow’s luncheon ?
– I propose to move that we adjourn until 3 o’clock.
– A quarter past 3 would be better.
– I am in a generous mood to-day, and willing to do anything that my right honorable friend asks.
– I move -
That standing order No. 70 be suspended for the remainder of the session so far as regards Government business.
Possibly, later to-day I may move to sit in the mornings for the rest of the session, and we may have to ask honorable members to give extra time at the end of the week, if we cannot get through without doing so.
Question resolved in the affirmative.
– I ask the Prime Minister if the investigation which is taking place into the apparent deficiency in the stock of the Ordnance Department was made by the officers of the Department or by independent persons ?
– So far as I am aware, there has been no special investigation.
– Then the investigation has been made by those who are responsible for the muddle?
– The Department does not admit that there has been a muddle.
– Did the honorable member expect that it would?
– The officers simply say that the supplies have not been checked and finally dealt with. So far as I know, this should have been done last year. It is marvellous that my honorable friends should be so anxious for revelations of what took place under their so-called efficient control.
– I do not care when this took place, an investigation is needed.
– I give honorable members an undertaking that the matter will be probed to the bottom before the House rises.
– When will the Minister of Trade and Customs be in a position to pay bounty to the growers who supplied cane before the 26th July? I am being asked daily when the payments will be made. The growers are anxiously waiting for the money that is due to them.
– The honorable member for Lilley has also mentioned the matter to me. Yesterday the ComptrollerGeneral was able to give his certificate of the whole amounts dutiable under ‘the law, and this morning, at a meeting of the Executive Council, approval was given for the issue of the proclamation bringing the Excise Act into force tomorrow. The issue of a proclamation to bring the Bounty Act into force tomorrow has also been authorized. I have arranged with the Treasurer to make all the money available that is necessary for payments. Instructions have been issued to the collectors throughout Australia to expedite the payment of bounty.
Mr.Fisher. - Will they all be paid before Christmas?
– I have given instructions to the Collectors to expedite the payments throughout Australia. Some time ago I gave instructions to them to have all the forms and everything necessary available, so that so far as the Department is concerned, there ought to be no delay whatever in making available almost immediately the payments under the Bounty Act.
– Is it the intention of the Prime Minister, during the recess, to create a Public Works Department, and transfer all the works to that Department ?
– The moment we get into recess, I propose to go into that matter, so far as it relates to the co-ordination . of all the Departments. Most of them want re-shaping, and the duties re-allotted, and one of my objects will be to create a Public Works Department pure and simple, which will deal only with matters relating to public works. I hope we shall have an opportunity of dealing with that matter when we reach the recess.
– Has the attention of the Acting Minister of Home Affairs been drawn to the fact stated by Mr. Knibbs, that there were 175,000 more names of persons on the rolls than were really entitled to vote at the last general election ? If so, is he taking any steps to purge and purify the rolls, so that we may have pure voting at the next election?
– Yes. The information was known prior to the introduction of the Bill to amend the Electoral Act. The information was then given to the House and the additional time necessary before the election to enable the officials to deal with the glut of new business immediately prior to an election was inserted amongst the amending provisions of that measure, but, failing its passage, that particular reform suggested by the Electoral Office cannot be brought into effect. We are taking the utmost care to see, not only that every person is enrolled, but that no person shall be enrolled more than once.
– Did not the Acting Minister of Home Affairs also see that Mr. Knibbs had said that it was impossible to reduce the number of duplications much below what existed, on account of the great number of people that were constantly changing locations and addresses ?
– I did not observe that Mr. Knibbs said so.
Mr.FENTON.- Has the Chief Electoral Officer issued a report in connexion with the alleged duplication of names on the rolls, and if he has, will the Minister place it upon the table of the Library?
– Speaking entirely from memory, I think a report, issued by the Chief Electoral Officer, was laid upon the table of the House.
– Has the Assistant Minister of Home Affairs ascertained what proportion of the 175,000 persons improperly on the roll exercised their votes?
– I shall go into the matter carefully, and give the honorable member an answer, if possible, tomorrow.
– I think the Government Statistician should be protected in this House, if honorable members take the view that he has been wrongly quoted. As I read the evidence given by the Statistician, he said that on the printed rolls there was an excess of a certain number, but that is not the roll on which the vote is taken.
– Order ! Is the honorable member asking a question, or making a statement?
– I am going to ask a question. It would be unwise to raise this question in the meantime, that is, until we get the facts.
– In reply to the right honorable member, I may say that this matter has been under consideration for some time. The number of names on the roll is known in the Department by the number of names on the official roll, not on the printed roll. There is the difference named by the Statistician between the number of names on the official roll and the number of adults in Australia.
Colonel RYRIE. - Has the Minister of Trade and Customs given any further consideration to the question of the removal of the quarantine site from North Head?
– The matter is receiving the attention of the Director of Quarantine. He has had his hands full with the recent Conference and other matters, but I shall ask him to further expedite his inquiries.
– Has the Minister representing the Minister of Defence read the reports in the Sydney press regarding an alleged riot at Liverpool camp on two occasions] If so, will he make inquiries to ascertain if there has been any disturbance there, and see that the thing does not occur again?
– I think some honorable member of the House has already been informed that inquiries were being made by the Defence Department.
– Is it a fact that the Minister has abolished the polling booth at the North Adelaide Hospital, and, if so, why?
– I am glad to have an opportunity of stating the facts in connexion with this case. Some other individuals, in some other place, have been indulging in a tirade of abuse in connexion with this matter, adopting that attitude in preference to the simple method of asking for the facts of the case. If they had asked for the facts, they would have found that what we did had good reason behind it. A telegram was received the other day from the officer in Adelaide stating that the North Adelaide Private Hospital would not be available as a polling place for future elections. “ Therefore,” he said, “ I recommend its abolition before the issue of the writ.” It had. to be done hurriedly, because after the issue of the writ we cannot make provision for other polling places. We had to take action promptly, because the people in charge of the hospital gave us to understand that they would not give us the use of a room at the hospital- for a polling booth on this occasion.
– Has the Acting Minister of Home Affairs noticed a statement made by Mr. Francis Maldon Robb, to the effect that a friend and supporter of his, named Robshaw, was .walking round Brunswick at the last election with hundreds of ballot-papers illegally in his possession; and is he going to have this man arrested and prosecuted for obtaining and using those ballot-papers in the interests of the other man instead of myself?
– I would be “obliged if the honorable member would give me his assistance to probe this matter.
– Does the Assistant Minister of Home Affairs believe there is any truth in the statement that there was a man walking about Brunswick with hundreds of ballot-papers in his possession ?
– The honorable member cannot ask a hypothetical question.
– It is not hypothetical.
– The honorable member must not argue the point with the Chair. He is out of order in asking a question of that character.
– Then I shall ask if the Minister is prepared to take any action against Robshaw for taking ballotpapers about Brunswick?
– If the honorable member will lay an information, the requisite steps will be taken to give it every consideration.
– When does the Minister of Home Affairs propose to make the position of Administrator of the Federal Territory a permanent appointment ?
– I hope I shall soon have time to deal with the matter”.
– Is the PostmasterGeneral aware that up to last Saturday the postal electricians in Queensland had not been paid the advance in wages awarded to them by the Federal Arbitration Court? If ne is not so aware,* will he see that the officials make arrangements for this advance to be paid?
– I shall look into the matter for the honorable member.
– In view of the statement made by the Leader of the Opposition yesterday to the effect that the Fleet Unit was paid for prior to his Government going out, of office, will the Prime Minister explain the actual position in regard to this matter when the present Government came into power?
– My recollection is - and I think it will be found in the Estimates - that there remained at the end of last financial year a sum of about £1,100,000 owing on account of the Fleet Unit. I think the previous Government paid during their three years about £3,000,000 on account of the Fleet, but there remains to be paid this year a sum of between £1,100,000 and £1,200,000.
Bill returned from the Senate with amendments, including amendments in the title.
– Do I understand the message from the Senate says that they return “the Bill”?
– The message says, “the Bill.”
– My understanding of the Bill is that it is not our Bill, but is another measure having a different title. I do not know what I can do with the Bill that has come along. It is not our Bill.
– It is a dangerous procedure for you to discuss the matter in that way.
– Does the Prime Minister propose to take any action in regard to the message?
Mr.JOSEPH COOK.- I suppose it must be taken into consideration. Although the Senate have not sent back our Bill, I shall have to deal with what they have sent back.
Motion (by Mr. Joseph Cook) agreed to -
That the message be taken into consideration to-morrow.
MINISTERS laid on the table the following papers -
Postmaster-General’s Department. - Third Annual Report, 1912-13.
Ordered to be printed.
Lands Acquisition Act. - Land acquired under, at-
Cape Pallarenda,near Townsville, Queensland - For Quarantine purposes.
Queanbeyan, Federal Territory - For Federal Capital purposes.
Weetangera, Federal Territory - For Federal Capital purposes.
Debate resumed from 9th December (vide page 3949) on motion by Sir John forrest–
That this Bill be now read a second time.
.- Notwithstanding the desire to close the business of the session as soon as is conveniently possible, I am bound to tell the Prime Minister and the Treasurer that I look upon this Bill as a highly contentious measure and as one that can have only one effect upon the taxpayers, namely, to deprive them from the time it comes into operation, if unfortunately it ever does, of at least £25,000 a year, as things exist at present, and of an additional £40,000 per year for every increase of £1,000,000 in the circulation of Australian notes.
– But the Bill simply confirms and makes compulsory the practice you followed in regard to the gold reserve.
– I maintained a reserve of 40 per cent., but that is not the same thing as is proposed in the Bill, which says that there shall be not less than 25 per cent, reserve up to £7,000,000, and gold for every note issued above that amount. The two things are quite different.
– The Bill practically makes compulsory the reserve which you, in effect, made.
– The Attorney-General will see that every additional million of circulation will not give a single penny in return to the taxpayers of Australia. If we double our circulation we shall not receive another penny, but with a reserve of 40 per cent, we increase our income with every extra million pounds in circulation.
– I admit it. If there is a large expansion of the issue it will not be the same as your practice, but for the present issue it is practically the same.
– The point is a very subtle one. People will say, “ You will be as well off under this proposition with the note circulation, as it stands now as you were under the existing system.” But as you increase your circulation you lose your money. That is the point that ought to be put clearly before the people.
– Does the right honorable member take no notice of the experience of other countries?
– I take notice of the experience of, not only other countries, but Australia. Does not the Treasurer know that a certain banking and financial journal, which opposed our note issue scheme most bitterly, has been converted recently to the view taken by myself, and has expressed that view without stint or reserve ? Perhaps it would be well to give the right honorable member the benefit of a quotation from this journal. He will admit, I think, that a criticism by The Review of Australasian Banking, Insurance, and Finance is worth quoting in this connexion. In its issue of 31st May last, it published an article entitled “ The Safety of the Australian Note Currency,” in which it wrote -
We have been asked to express our opinion as to the safety or otherwise of the Australian Note currency, and we feel in duty bound to comply with the demand. However much we might prefer to be silent on the subject, we feel our readers have a right to our opinion.
It was, of course, hardly to be expected that a Labour Government would inaugurate a currency system on lines that would meet with our unqualified approval, but we have to acknowledge that advice given in our columns some four years ago has been so far acted upon that our further criticism has been practically disarmed.
We must admit that the Commonwealth Government has acted with praiseworthy determination to secure the soundness of the system. Though the Commonwealth Government, with its immense powers of taxation, is behind every note issued, it treats the gold deposited in exchange for the notes as trust money, such portion as is considered safe from any reasonable probability of demand being invested in giltedged securities. Even the interest in excess of cost, which is very considerable, amounting to far more than £ 100,000 a year, is not taken by the Government, but is invested in the same way as the principal. “ But what would happen,” we are asked, “ if the people were all to make a rush for the conversion of the paper into gold ?” Well, if the rush were confined to these notes, so as to con vince Mr. Fisher that the people were anxious to get rid of his currency, he would pay out his treasured gold, sell off his gilt-edged securities, give the jingling metal for every bit of paper, and then take advice as to what he should do with the 250,000 sovereigns that would be snugly tucked away in his safe. By this time people might be wondering why they had rushed. “ But,” persists our inquirers, “ is there no way that the people could lose by this currency scheme?” Without violating the law as laid down in the Act under which the scheme is conducted, there is no way, unless something should happen that would make our gilt-edged State securities of little or no value, and at the same time nullify the taxation powers of the Commonwealth.
– Our State securities would not be there. We shall use them all.
– The right honorable member ought to be out of office if he is going to do that?
– I did not expect that interjection from the Treasurer.
– It is the truth.
– If I may say so, without desiring to be offensive, the Treasurer does not understand this matter.
– The right honorable member has had such a lot of opportunities to arrive at an understanding of the question and to enable him to understand it better than I do !
– If the right honorable member will permit me–
– What experience has the right honorable member had ?
– Order ! I must ask the Treasurer to refrain from making frequent interjections.
– The Treasurer is in error in saying that he intends to use up these securities. He has no such intention. The securities referred to in this article are the securities which we hold as a double cover against the note issue. I am sure that he has no intention of touching them. If he had he ought not to be in office.
– To what double securities does the honorable member refer ?
– To the securities which can be sold and used as a double cover against the note issue.
– What are they?
– They are Commonwealth securities, which can be placed on the market at any time to provide the money necessary to pay off the whole of the note issue, and they are plus the gold reserve.
– My point is that they are not State securities.
– They are Commonwealthsecurities, and the right honorable member interjected that he was going to use them up.
– The right honorable member spoke of “ State “ securities.
– It would be better for the right honorable member to look into this matter before he begins to dogmatize upon it. The term “ State securities “ is used in the article as referring to Commonwealth securities.
– What did the right honorable member mean?
– Order !
– You must protect me a little bit, sir.
– The right honorable member is out of order in interjecting.
– In my present position it is not only necessary that I should be on the defensive; I must also be aggressive. I must attack when statements are made that are likely to be removed from their context and used to misrepresent our position - used, not by the right honorable member, but by others.
– In the event of the Treasurer being called upon to redeem the whole note issue, and having to liquidate the Commonwealth securities, does the Leader of the Opposition imagine that the necessary gold could be obtained from the States for that purpose? Does he think that gold would be available at such a time?
– It could be obtained without the slightest difficulty. .
– From what source?
– Australia is a goldproducing country, and it could be obtained here. The amount that we should require would be comparatively nominal.
– A general panic would affect the whole country.
– Order !
– We strengthen our case when we induce the other side to talk. This country could never be fully depleted of its gold supply. It is a goldproducing country, and its securities are quite ample. In 1892-3-4, we were accumulating gold, notwithstanding that we were then passing through the most depressed times we had ever experienced. I admit that other countries are more fortunately situated. We should have to draw on the gold reserves of Australia for a merely nominal amount in respect of our note issue, with practically half gold against them in our own safes. When I was interrupted, I was giving utterance, not to my own views, but to the statement of a financial journal The criticism proceeds -
We are bound to admit that Australia’s paper money scheme is upon a basis that leaves no doubt as to its soundness.
We began this article by inferring that the Australian Note system did not meet with our unqualified approval, but honesty compels us to admit that had our system been taken in its entirety it could not have given any better security to note holders.
Others may not agree with us, but if we were in Mr. Fisher’s place we should look upon the bonds he holds as better security than his treasured sovereigns.
– The writer means the bonds of the States.
– No, he means Treasurybills, that can be issued and sold in any market on the authority of the Treasurer from time to time to an amount not exceeding that of Australian notes issued.
– I do not think that is meant.
– Whether that be meant or not, it is what is said.
– I think the reference is to the bonds which the Treasury holds from the States.
– Perhaps the Treasurer would like a little more evidence?
– I am not altogether guided by the opinions of others, who are no more infallible than we are.
– I am not fond of using quotations, but I brought these with me, because I thought the question would be raised. Mr. Finlayson, the manager of the Union Bank in Victoria, who, as the head of what is a very considerable institution, may be regarded as an authority, in giving evidence before the Royal Commission on Banking in Victoria, just after the financial crash, said, in reference to a State note issue: -
If the note issue was confined to the natural wants of the people, I believe I can say that the State could get along with a comparatively small reserve of coin - say, perhaps, 5s. in the
I think the right honorable gentleman will pay heed to the statement of this gentleman. Then, Mr. Frank Grey Smith, of the National Bank, speaking also of the reserve, said -
I think the general consensus of opinion is from one-fourth to one-third in specie.
– When was this?
– This was evidence given before the Royal Commission in Victoria in 1892 or 1893. Mr. Henry Gyles Turner, who is still with us, said -
Generally, it is held that from 25 to 33 per cent, is sufficient in an ordinary circulation.
The Treasurer, in his speech, did not quote anybody on the point, bub pointed to the Bank of England, which, however, is not analogous in any way, as I am inclined to think the Treasurer knows, if his smile is any guide.
– I quoted the great countries of the world.
– Did the Leader of the Opposition see the Bankers’ Journal ofNew South Wales, in which it is said that anything below 40 per cent, would be a danger to the State?
– I saw some of those records at the time when the banking institutions were falling to pieces, and those connected with them were declaring that everything was all right.
– This was after the Notes Bill had been passed.
– At any rate, that was said at that time. The banking authorities in New South Wales have never been favorable to a note issue outside their own banks; and in this I do not blame them. Why should we expect the banking authorities, who can get better results from a private issue, to enthuse over a State issue?
– The right honorable gentleman cannot get rid of an opinion of that kind by attributing bias.
– It is not bias. It is no reflection to say that the banking institutions conserve their own interests; but it is a reflection on the representatives of the people in this Parliament to suggest that we should give up, not only the securities, but the revenue to which we are entitled by issuing a paper as well as other currency.
– Did not the right honorable gentleman, in order to allay fear, give an assurance that he would not go below 40 per cent. ?
– Yes, I did give an undertaking not to go below 40 per cent.
– The right honorable gentleman changed his opinion in a very short time.
– I never at any time changed my opinion on this matter. When I introduced the Bill I said that I believed 25 percent., with a working margin of 33 per cent., would be ample and over much. But with a measure of this kind we have to take the timid with us; and we were able to do so, and get it passed. I venture to say that if, unfortunately, this Bill should pass, which I believe it will not, it willbe only a year or two before it will have to be repealed. In the early nineties, and especially in 1892-3, there was, as honorable members will remember, a depreciation of bank paper. It has been said in this House, and quite truthfully, that the note issue of the banks was practically redeemed at face value in time; but when the collapse took place the poor people who held the notes lost, to my knowledge, up to 5s. in order to get immediate conversion.
– It was 7s. 6d. in Sydney.
– I know individual cases where people took less than 10s. for the notes, but my point is to get at the average.
– Is the right honorable gentleman sure that this was not owing to the panic?
– That is an inane suggestion! We might as well expect the sovereign to depreciate as expect a State note to do so.
– The honorable member for Calare has been a bank manager, and knows what he is talking about.
– I was a bank manager at that time.
– If all honorable members opposite were bank managers, it would make no difference to the facts; and I can quote a bank manager against the honorable member for Calare, and not only a bank manager, but a bank director. The late Hon. James Dickson, who was one of the Treasurer’s colleagues in the first Federal Ministry, was a considerable authority, in his own way, on financial matters; and he said, in the discussion on the Queensland measure in 1893, that, although he was dead against a State note issue, it was practically impossible to depreciate State paper. That was on the negative side ; and on the positive side he said that, although four-fifths of the Queensland note issue was depreciated, and the people had lost, immediately the imprint of the Government was put on the notes, they would return to face value and remain at that. As a matter of fact, the very day that the Government Printing Office put on the imprint “Queensland Treasury Notes” they became equal to the sovereign, and were accepted by every one. Surely that is evidence strong enough for honorable members? There is no danger in a note issue with not less than 25 per cent, reserve; and the words “ not less than 25 per cent, at any time “ demand that there shall be a sufficient margin of gold kept above that proportion - a working margin sufficient for all reasonable demands, not only in ordinary times, but also in times of panic. The systems of the United States of America and Canada have been referred to, but the conditions of Australia are not at all like those of Canada. Our trade is fairly regular throughout the seasons, whereas in Canada, as in all countries where they have long, cold winters, the harvesting is confined to four or five months in the year.
– We get droughts which disturb the equilibrium of trade.
– They usually affect only one industry.
– And only one part of the country.
– Yes. There is a difference between a thing that happens occasionally and one that happens regularly. Iti Canada, during the harvesting season, expenditure increases, and the demand for currency is excessive as compared with the remainder of the year. The Canadian system has to provide for that. Here in Australia there is no part of the year that is more productive of wealth -than another. We have the wool season, the wheat season, the butter season ; and mining, of course, gives returns all the year round.
– The weight of finance falls in the month of March.
– The bankers say April. March and April are tight months, but that is chiefly because of the settlement Cat takes place then, and hardly affects my argument. Every man who honestly examines this question with an unprejudiced mind will say that there is no danger with a 25 per cent, gold reserve and a working margin above it. The only justification for the measure is that it is -an attempt to give effect to the statements of the Prime Minister and others that the note issue is in danger, and needs further protection. Happily, the mass of the people took no notice of that statement.
– How would you regulate the working margin?
– It would vary between 33 and 25 per cent.
– That is not provided for by law-.
– I stated originally that there would be that margin.
– Another Treasurer might keep only the bare reserve.
– No Treasurer dare do that. No man of sense would do it. The words in the Act were carefully chosen. They are “ Not less than 25 per cent, in gold.” The Treasurer could not let the reserve become lower than 25 per cent, without violating the law.
– He would have to do the best he could.
– And he would thus do the best for the citizens. The more you have for investment the greater will be your income, and the smaller the taxation. It is the people who are carrying this paper money. It is their confidence that enables us to earn at the present time about £200,000 “a year from the note issue. The Treasurer is privileged in being able to dip into this fund, and to borrow money from it at 3^ per cent. On the open market he would have to pay 4 per cent, or more. By establishing a 3£ per cent, standard we prevented the Trust Fund from earning an additional J per cent, that could be got on the open market. The right honorable gentleman had the audacity to accuse me of tying up the money by lending it to the States at 4 per cent. The States were very glad to get it. We could not give them enough.
– We shall have to pay a good deal to get it back. We cannot sell their bonds at par.
– If the right honorable gentleman, with the security that he has to offer, cannot negotiate for a loan at 4 per cent., it is not a great compliment to his Government, seeing that private persons can do it.
– What were the long-dated Bills issued to the States for ?
– They were issued after I came back from South Africa, the interest being as low as 3£ and 3f per cent. I had to take the market price of the day. We have given the Treasurer more money to use than there would have been under his system of finance.
– We shall lose a lot of money by negotiating the State securities.
– That is a side issue, and the statement is not correct.
– We shall lose probably £100,000 in discounting.
– -I hope that the Treasurer will go on the open market for the money rather than lose that.
– We should not do so well. .
– I have no doubt of that. The right honorable gentleman may thank his stars that he was left a good thing.
– Your financing will not come out well in. the end.
– Most Treasurers would like to begin with a £2,650,000 cash balance, and about £7,000,000 in Trust Funds. The liabilities of the note issue at the present time amount to about ^9, 500,000, and there are £355,000 of assets in excess of liabilities. The providing of machinery and the printing of the notes has been paid for, and each year will add to the accumulation from £170,000 to £200,000, so that, in a comparatively few years, the accumulated interest will more than equal the total face value of the note issue. I appeal to the Government to withdraw the Bill. It is not in the interests of the people.
– In that case, the right honorable member must oppose it. We do not introduce measures without reason. In this instance we are 6n the side of great safety.
– It is not safety to keep an excess of money in a strong room that will never be required-. Hon”orable members opposite are complaining of the excessive taxation, and of the need for borrowing, but they are giving away £25,000 per annum without getting any increased security. Should the Bill pass, £25,000 per annum in interest will be lost, because of the extra amount of gold that will have to be kept in reserve above what is required, and for every £1,000,000 increase in the note circulation there will be a loss of £40,000 a year. I have quoted the highest official authority in ‘Australia - one of the banking journals - to show that the banking community is perfectly satisfied with my scheme. This authority held at one time a contrary opinion, but it is honest enough to say now that it is perfectly satisfied that I have provided ample security, and that if every one applied to the Treasury for gold, there would be £355,000 left after all the demands had been met. The honorable member for Werriwa, who is generally very sensible in these matters, committed a serious error in stating that the securities held were not as good as they were reported to be. I read a speech of his, published in Goulburn, that left that impression on my mind.
– I have always objected . to the Government interfering with the paper currency.
– I understand that position ; but the Treasurer is differently situated. He says that he is really the father of this scheme, and had intended to introduce it. But he is proposing to make it as little useful as possible. He is throwing away money, and I hope that the good sense of the House will not permit this to be done. The measure is not one of those which I regard as noncontentious.
– It is not a party measure.
– It gives away the people’s money without increasing the security of the paper currency. No person must accept Australian notes if he prefers gold. Ours is not a false cur- rency.
– The notes are legal tender.
– Between private persons, but not in favour of the Treasurer. If you go to the Treasurer with notes, he must pay. gold for them. And any person holding notes can. demand from the Treasurer their payment in full at any time. Behind the note issue, we have not only the credit of- the Commonwealth, but also the Consolidated Revenue, and an ample and sufficient gold reserve for the currency, which will prevent all difficulties and earn £200,000 a year in interest, the earning increasing if the law is allowed to remain as it stands. It has been said that I promised to keep a reserve of 40 per cent. I did make that promise, and I think that it was a right promise to make in the first instance, because there were timid’ people who were afraid of what we were doing; although in Queesland the experience of nineteen yearshas convinced the authorities that a reserve of not less than 25 per cent, is ample, and the people of the Stats use, perhaps, per capita, double the paper currency used in the other States. Further, a Conservative like Sir Hugh Nelson has stated that, in his opinion, a reserve of not less than 25 per cent, is ample for all purposes. So that I have not only quoted modern authorities, but can quote the first honorable gentleman that introduced a measure of this kind. It was an eminent success in that State. I appeal again to the Government not to press this measure and deprive the taxpayers of an income that rightly belongs to them without in any way giving the holders of the notes greater security than they have at the present time. I oppose the Bill.
.- I decidedly object to the introduction of paper money by any Government whatever, because if the citizens of a country earn anything they have a right to be paid in the form of coin which is current all over the world. A Government should, above all, see that the currency of a country is always kept at its strict face value so far as it is possible for it to do so. The reason why, in every sound Government throughout the world, the introduction of paper money has been given up is that the temptation in times of difficulty becomes too great. The experience has always been that Governments which have issued paper money have, in order to keep themselves in existence, sought to obtain from the public money which they should not obtain. For instance, the Labour party, when they introduced this paper cur- . rency, actually borrowed £10,000,000 from the people of Australia.
– For whom did they borrow it?
– I am not concerned with the object of the policy at the present time. What they actually did was to borrow £10,000,000 of capital from the banks. In other words, they destroyed the credit of the banks to that extent. Every one of us rightly makes use of the amount of the credit that he has, and it must be remembered that the amount of the credit that there is in the community is frequently what determines the production of wealth in a community. Credit is the greatest factor of all in the production of wealth, and, therefore, anything which tends to injure or lessen it injures the whole community - not the capitalist, as has been alleged, although he sometimes shares in the general downfall, but mostly that smaller section of the population who are unable to get along at all without credit.
– That is all right, but where is the injury in this case?
– For instance, the honorable member will see at once that if credit was denied to every citizen of Bendigo, the pressure on them of ready money would be so great that it would mean the alteration of the whole of. their system of living for some considerable time. What he does nob see, however, is that, while it is an injury to each citizen to deprive him of his credit, it is a still greater injury when a collection of individuals who call themselves a bank are deprived of their credit, because credit is one of the most valuable assets either of a bank or of a citizen. What the Government unfortunately did was to deprive the banks of practically £10,000,000 of credit, which meant that the banks have had to call it together from all their customers. Worst of all, we destroyed the very elasticity of commerce. Another big evil happened in this way. The return on capital put to private use is, roughly, 10 per cent., so that the return from that £10,000,000 when in private use was at least £1,000,000 per year. The amount expended on labour in producing that return amounts to upwards of two-thirds, the rough calculation being that, for every pound earned, two-thirds goes in wages. Therefore, we get a gross return of something like £3,000,000 for the benefit of the community upon the £10,000,000 when used privately - a very big factor in a country like Australia. The Government took that money and put it out on works which, at the most; represent a return of, say, 4 per cent.., or £400,000 per year ; and, allowing that another two-thirds is expended in wages, we get another £800,000. In other words, we get a return on this money, when brought under Government control, of £1,200,000 per year, instead of £3,000,000 per year when under private control. If we carried thatplan far enough, and absorbed all the private capital for the use of the Government, it would put capital up to such a rate of interest as is undreamt of in any other community. This is not idle talk, because it has happened so far in every community that has tried it. Even in England itself there was at one time for nearly four years a discount of 4s. in the £1 on its Bank of England notes.
– How long ago?
– A good while ago; but they learnt the lesson then, and they have not needed to learn it since. France learnt it to such an extent that her notes returned nothing at all, although her assignats were issued, not on the mere credit of the people, but, in the first instance, on the security of all the confiscated land of the nobles. We know the injury that was done to France. Russia tried the same thing, and its pound note fell to 2s., but its Government has learnt the lesson, and wisely adopted the advice of its financiers not to increase their paper issue, although they were engaged in the Japanese War, with the result that the country has recovered from that war infinitely quicker than it otherwise would. America did not learn the lesson, or, if it did, some big financiers were too interested in seeingpaper money issued in that way, because they knew that they could gain, to let the country profit by the lesson of other countries. Whether it was intended or not, the direct result was that the financiers of America benefited to such an extent that it made many of them great millionaires. It is stated by eminent economists that that issue of paper money, over issued as it was, cost the States probably £1,000,000,000 more than the cost of the war otherwise would have been. I need hardly refer to the various States of America that issued paper money, such as Virginia or Pennsylvania, but, in every case, the result was failure, so far as the masses of people were concerned. In France, England, Russia, Austria, Germany, Spain, Portugal, the United States, and the Argentine Republic, the result has always been to impoverish the poorer class of the community.
– What has that to do with the Bill?
– A great deal to do with it, in that, if this Bill is passed, it takes away from the Government the power to double the issue of the notes, or, if the Government does start on it, it has to keep a sovereign back to pay for every extra note so issued, if called upon to do so. That is one of the chief merits of the Bill. It is perfectly true it does not propose to re-establish on a sound gold basis the currency of the country.
– Will it cheapen the money to the man you speak of?
– No, but it will prevent the rate of interest increasing against the poorer people to the extent it would have, had the past policy been persisted in. The Bill is not in the interests of financiers who dabble in finance every day, who are able to foresee every rise and fall in stocks, and buy and sell in advance, and so make a profit either way. What chance has the man in the country, engaged in daily work, though possessing exactly the same class of brains as the financier possesses, to compete with the financier ? For instance, if there should be a sudden rush on the banks, and on our own notes, if there should be a sudden demand for gold, who would fall in ? Would it be the wealthy banks ? Not at all . These institutions would be ready with the £3,000,000 or £4,000,000 worth of notes they hold to hand them in to the Treasury at 10 o’clock in the morning, and so get all the gold reserve there, leaving the public outside with their notes. I admit that at the present time - there is quite enough gold onhand to meet even an unusual demand, but the system is wrong, and it was a wrong policy for the Labour Government to bring forward. I could quite understand a body of capitalists, or big banking men, who hope by trading in the value of notes to earn a profit, advocating this policy; it is manifest that they would be gainers by it; and it is to the credit of some of the great leaders of finance in Australia that each one has pointed out the danger of the policy brought forward by the Labour party. These men know what is going on daily; they know what the rates of discount are all over the world; they know the rates of transfer, and they know the prices of all the various stocks here and in London, and they have an advantage over the rest of the public that cannot be over-estimated in matters like this, and it is precisely because we cannot thoroughly estimate such things that Governments anxious to take up such matters on behalf of the people have always resisted the introduction of paper money. The system introduced by the Labour party is a big mistake, and they, above all, should not have introduced it.
– It has not affected the prosperity of the country.
– If the honorable member follows out the argument as to money used by a private individual in comparison with money used by Governments, he will see that there has been a difference in wages, plus profits, of something like £1,800,000 a year. And if we double that we immediately get a very large difference in the value of the production of the country. It is true that with the general prosperity of Australia we have been able to sustain an increase, but that increase in profits would have been still greater had there been no such call as that made by a measureof this sort. Why prevent banks and other institutions from making use of their credit ? As far back as 2,000 years ago Demosthenes said that “ they who do not understand this - that credit is the greatest factor of all in the production of wealth - are utterly ignorant of everything.”
– Every schoolboy knows it.
– The Australian Notes Act destroyed or limited the credit of all our great institutions; and, if it was right to so affect the credit of institutions, why was it not equally right to destroy the credit of every individual? In these days of co-operation, when we hope there will be more of the co-operative movement, why should we attempt to destroy the credit of corporate bodies? I cannot understand why those who profess Socialism should try to destroy the credit of such bodies. While safeguarding the interests of the public,to consider these bodies fit subjects for taxation in exchange for the use of their credit may be a right course, but a policy of destroying the credit of every individual or association of individuals does great harm to the community, and the assumption of such control, as the late Government did, has sown the seeds of many evils yet to come. Accepting my figures as correct, the effect of this measure has been to make a difference as between private and public works of nearly £2,000,000 a year in the annual production of Australia.
– That is all moonshine.
– Does the honorable member think that money spent in Government works is looked after so well as the money spent by himself, or by any other level-headed individual?
– What have Government works to do with notes?
– Does not the honorable member see that by the issue of these notes the Government borrowed £10,000,000 from private institutions and private individuals? The Labour party undoubtedly concealed from the mass of the public that it was a loan. Without desiring to be at all offensive, I say it was a political move - I shall not say dodge - that concealed from the public the fact that £10,000,000 was withdrawn from private use and put to Government use. That illustration should put the matter I intend to convey as clearly as possible. Passing the Bill now before us will prevent any future Government having the power to so issue notes as to endanger their face value. The passing of the Bill will be a sound policy. It will not be within the power of any Government in the future to use still more notes, because after the issue of a certain sum they must retain a solid backing to meet every note issued, and if any demand is made upon the Treasurer he will be - as is right and proper - in a position to meet it.
– Honorable members do not think a demand will ever be made.
– No; of course, they do not. They did not think they would have a demand in the Argentine, yet the £1 note in the Argentine fell to 6s. 8d., and there was great injury to a community even wealthier in land than ourselves, and closer to the world’s markets.
– What is the gold reserve in the Argentine?
– The Argentine has not a proper gold reserve. If, under present circumstances, we. issued notes to the value of £10,000,000, and allowed the gold reserve to fall, what would be the position ? We have nearly £10,000,000 issued now, and yet we could not meet a demand suddenly made. The Labour Government concealed the fact that they took that money and spent if. I am not arguing whether they spent it wisely or not. I simply say that they took the loan, and disguised the fact from the mass of the people - the fact that they had borrowed so much under the political method of a Bank Notes Act. I have no objection to their borrowing the money if they spend it wisely, but I seriously object to their pretending that the money was not borrowed. There is a serious objection to leaving the note issue as it is at present. It is infinitely better for the sake of our credit that we should pass the Bill, and put it beyond the power of any Treasurer to make an issue of paper money unless there is gold currency to meet it, if the people so desire. By this Bill, the Treasurer renders it impossible to issue notes without having the bullion at the back of him, and he is putting the gold reserve already in existence on a much sounder basis, which is above all things to be desired in the interests of the masses of the people, and in the interests of sound finance. It is more essential for the poorer man than for the richer man that we should pass this Bill. If the members of the Labour party rightly understood the position, they would, and should, be the very first to side with us in attempting to restore the currency of Australia to a really sound foundation. I do not say that this cannot be done up to the limit of the present issue, but the trouble is that we do not know how far we can go, and with a feeling of insecurity abroad we destroy that very confidence between man and man whichis at the root of all credit, and of all production of wealth - the thing so greatly to be desired when we are considering the material prosperity of any community. I regret that the finances have been left in such a disorderly state that it is impossible to restore those millions which have been extracted from the pockets of the people under the disguise of a Bank Notes Act, which enabled the Labour party to conceal from the public how many millions they really borrowed, and the amount of waste that was indulged in by them. I trust that the Bill will be passed in the form in which it has been submitted, though I wish it had gone still further. I accept it, however, because, as things go on from year to year, there will be less and less danger of there being such a thing as a run that will affect the security of our notes.
Mr. ARCHIBALD (South Australia; [3.44]. - I hope the Government will see their way clear to withdraw the Bill, because they must come to the conclusion that they have committed a very grave error of judgment. It is difficult to understand any Government with a clear idea of our finances being a party to a proposal of this character. Reference by the honorable member for Werriwa to the Argentine and to France during her revolution are all beside the question. Every schoolboy knows that paper money without gold backing behind it must depreciate. The Treasurer says he desires that there shall be a gold reserve of 40 per cent. The existing Act requires that there shall be a gold reserve of not less than 25 per cent., but the practice is to have a working margin of 33 per cent. The question of what gold reserve ought to be retained is. after all, merely a matter of fancy. I asked the Treasurer why he introduced this Bill, because, in my opinion, a gold backing of 50 per cent, gives no greater security than is afforded by a backing of 25 percent. The honorable member for Werriwa smiles but he knows nothing about the question. A principle can be laid down. It is necessary to ask ourselves what currency really is. Currency at the present time consists of coined bullion as well as a silver and bronze coinage, and the note issue. But that is not the only currency of a country.
– I should hope not.
– I asked the honorable member what currency was, and he gave us a long yarn which no one could understand. The principal currency of a country consists of cheques and bills, and the cheque and bill system in Australia is similar to that prevailing in the Mother Country. That fact must be taken into consideration, and when we realize the extent of the currency of cheques and bills we must see that this talk about a gold backing is mere moonshine. That is the view of men standing high in the world of finance.
Mr.Conroy. - They would laugh at such a statement.
– Any schoolboy knowing anything of finance will admit the truth of my statement.I think the Treasurer has committed a very grave error of judgment. He referred the House to the established customs of other countries. It is remarkable that the only real system of currency and finance existing in the world to-day is to be found in the Mother Country. The Old Land, by virtue of her sound system of finance, is enabled, through the Bank of England, to carry on her tremendous and marvellous trade by means of a comparatively small amount of gold. The gold stored in the vaults of the Bank of England is far less than that in the vaults of the Bank of France or the Bank of Germany. In America aboslute financial chaos prevails. If any honorable member doubts that statement, I invite him to read an article published in the last issue of the North American Review. Congress is trying at present to bring about some reasonable sort of system. They are utterly ashamed of that which now prevails, and I venture to say that they will make some improvement, because the present system stinks in the nostrils of the people. The Bill which will eventually be passed by Congress, however, will not be worth very much, because too much attention is being given to the views of bankers. I have nothing to say against bankers any more than I have against other professional men, but it does not necessarily follow that the interests of bankers are identical with the interests of the people. We have no right to set aside the opinions of experts, but we have to remember that they may be, and very often are, biased by personal interests, and that the interests of bankers may be detrimental to the public good. If we thought of amending any law, would we consult the lawyers?
– Whom else would you consult ?
– I would listen to what they had to say, and weigh it very carefully, but I would not lose sight of the fact that their opinions would necessarily be affected by their own interests. Private interests are not necessarily public interests; they are almost invariably opposed to the public interests. The Treasurer told us that we ought to be guided by what is being done elsewhere. That is quite right so far as whatis being done in the Mother Country is concerned. Why should the Bank of France and the Bank of Germany hold so much more bullion than is held by the Bank of England?
– Because they tried the paper money, and the people fell in.
– If the honorable member knew more of this question than does a child in the street he would know that the reason is that it has been found impossible to familiarize the people of France with the cheque system. Then, again, German bankers, according to reports coming to hand every day, are doing all that they can to familiarize the people of that country with the cheque system, and I think that they will do so. To the extent to which you familiarize the people of a country with the cheque system, you can release a tremendous amount of gold. An honorable member who has a banking account knows that he is creating currency all day long. Cheques and bills are recognised as being just as much currency as notes are. Finance and currency have been for me an amusing study during the last forty years.
– And only an amusing one, I should say.
– What I meant to convey was that, while some people waste their leisure in following certain amusements, I have probably wasted my time in this connexion.
– The honorable member has.
– That is for the House and the country to decide. The honorable member practically said that we had been taking a forced loan from the banks. But what is the actual position? The currency created by cheques and bills is a currency created by the banks and the community, while coined bullion belongs to the State. With whom should a note issue rest ? For what is a note issue? Is it to suit the convenience of a man in business or trade ? Certainly not. Such a man does not bother about notes; he writes out a cheque, which, in his case, is the equivalent of a note. A bank note is a handy medium of circulation for those who have no banking accounts, and it is essential that such notes should be in circulation. But who should issue them - a bank or the Government? What has a bank to do with such a currency? The claim that the banks have a right to a note currency is a most arrogant one.
– Has the honorable member a right to issue a promissory note?
– That is where the credit of the banks comes in. In determining the currency of a country, we have to consider, not only its coined bullion and its notes in circulation, but the amount of cheques and bills cleared in its clearing-house. The Treasurer oughtto have given us the clearing-house figures of the Commonwealth, in respect of cheques and bills, for the last twelve months.
There has been a tremendous increase in this class of currency in the Mother Country, as well as in the Commonwealth, and honorable members opposite will tell us that by virtue of that tremendous increase we are able to dispense with a very large note issue. The note issue will be absorbed according to the requirements of the country. Let me give honorable members the clearing-house figures for the Mother Country. I take them from an article, not by the honorable member for Werriwa, but by Mr. Chiozza Money, who is recognised in the Old Country as one of the ablest of financiers, as one of the world’s leading economists, although he is detested by those who belong to the school of politics which honorable members opposite affect. When I am faced with an ugly fact that I cannot understand, I have to agree with it or oppose it; and if honorable members wish to understand this question, they will reluctantly have to agree with the conclusion I am laying before them. The article appeared in the Contemporary Review of last September, and in it is given a table showing the world’s gold output, and the United Kingdom’s gold imports compared with the London banking clearances for each year from 1895 to 1912. That table is as follows -
What do those figures show? They show that the banking clearances in the United Kingdom have doubled themselves in seventeen years ; and that means that the currency - and let there be no mistake, for it is currency - in the Mother Country has doubled itself without any increase in gold backing or the circulation of gold. Every banker, if he speaks the truth, will say that those cheques and bills are just the same as golden sovereigns or notes in the people’s pocket. What is the question that naturally arises when we talk of checking a run upon a bank? Whether the Treasurer has a backing of 25 per cent, or 50 per cent., he will have no guarantee that there will not be a nut; and if there is a run, he cannot meet it. It is no use permitting ourselves to remain in a fool’s paradise. I do not quarrel with the view of the honorable member for Wide Bay or of the Treasurer, but I am assuming that the Treasurer would not be able to get gold, as, indeed, I do not think he would. If we can do in Australia what the Bank of England could not do, we are very clever. I favour the view that the Act should remain as it is, because I do not believe in a note circulation without a gold backing. Nobody knows better than a Labour member that, if there be any interference with the currency, the whole of the loss falls on the shoulders of the working classes. This is a fact thatis demonstrated by every financial panic in the Old Country and in America; and if I had time to give the history of the panics of the nineteenth century, I could show that the brunt is always borne by that section of the community which we are supposed to represent only - a supposition, by the way, which has no foundation in truth. Under the circumstances, we, of all men, should be the last to interfere with the currency with a light heart. Why should such a crash as we had in 1893 not occur again?
– Not with a note issue from a National Bank !
– Wemust recognise that the Commonwealth Bank is not doing a large amount of business, compared with the entirebusiness transacted in the community. What are the banks of Australia doing? Bankers are dealers in credit, and they must deal, not in dead securities, but in live securities. I have on former occasions asked whether the securities of the banks to-day are live or dead. If they are live, they are all right, but if they are dead, a smash must come ; aud, as sure as the sun shines, a smash will come at some time. This is shown by the history of banking from the Greeks to the present time. The large financial associations we have all over Australia deal in dead securities; and that is a perfectly legitimate, and, I believe, profitable business, against which I have not a word to say. But we must remember that those corporations are not banking institutions. Assuming that what occurred in 1893 occurs again, what then? There will be a rush, and the banks will close their doors ; and it is likely there will be a rush on the Treasury. If so, whether the reserve be 40 per cent, or 25 per cent., we shall not be able to allay it. There is only one way to allay a panic, and that is the way adopted in 1893. Fortunately for New South Wales there was in that State, Mr. Dibbs, who was Premier, and who declared notes a legal tender; and this declaration stopped the rush. The Bank of England is the model which I should like to see- the Commonwealth Bank follow, not this year, or next year, or even in this generation, but, it may be, when we have all passed away, and there are other legislators in our places. The sooner we have a bank that will exercise a steadying influence on the community the better for us all, and, especially, the better for the great mass of the working classes. What has been the history of the Bank of England ? That bank was started immediately after the revolution in 1688. That revolution was brought about by the commercial people of England, because Charles II. stole all the money out of the Exchequer and out of the Mint, as he would have stolen anything he could lay his hands on. Montague, who was one of the ablest statesmen of all England’s great statesmen, and who had to do with the founding of the Bank of England, gave the Government’s banking business to that institution, and this- resulted in a certain charter being extended to the bank. It is perfectly true that the bank had to suspend specie payment’ during the Peninsular War, but it is not to the credit of any Englishman to cast any reflection on the bank on that account. They were hard and troublesome days for our forefathers, but they managed to get through them. . In consequence of runs on the Bank of England from time to time, Sir Robert Peel amended the charter, giving power, in the event of a run, to suspend the charter with the sanction of the British Government,, and so make their notes a legal tender. I wish now to refer to the great smash of 1857. I am in favour of a gold reserve ranging from 25 per cent, to 33 per cent., but a reserve of 50 per cent, would not guarantee the Commonwealth at all times and under all conditions. We must find out other ways of getting over the difficulties caused by a panic. On page 79 of the Commercial Crises of the Nineteenth Century, by Hyndman, are a few sentences which show the state of trade in the Mother Country in 1857. We hear a great deal of America as the only place where they know anything of banking, but the Bank of England has never had to appeal to the Government for help, except because of a smash in America. The vibrations that cause trouble elsewhere have their origin in America -
On the occurrence ‘of a succession of bankruptcies, the Bank of England found itself exposed to a drain of its gold to Scotland, Ireland, and America, which rushed its rate of discount up in hot haste from 6 per cent, on the 8th October to 8 per cent, on the 19th, to 9 per cent, on the 5th of November, 10 per cent, on the 10th, and 12 per cent, on the 18th. On the nth November the banking department was reduced to ^1,462, 153, and its securities held against advances amounted to ^26,113,453. On the 18th its reserve fund stood at ^’1,552,686, and the securities at over ^30,000,000. The universal panic which set in at this juncture it is needless to describe. All the now familiar features were reproduced on a larger scale than ever. Money seemed likely to become unattainable at any price, and ruin stared even wealthy firms in the face. It is said that the great firm of Overend, Gurney, and Company, of whom more will be heard later on, threatened failure on their own part unless some steps were at once taken to give them immediate accommodation. Such a failure at such a time would have involved ruin to so many, and would have brought about such widespread terror, that the governor and directors prayed the Government to suspend the Bank Act 1844, and permit the issue of bank notes in excess oi the amount of bullion to support them. This was permitted on the evening of 12th November, on condition that the bank rate was maintained at 10 per cent. An over issue of ^1,000,000 followed, and, in spite of all gloomy forecasts, the financial situation at once began to improve. Thus, for the second lime since its enactment thirteen years before, had the Bank Act of 1844 to be suspended and Government securities to be transferred from the banking to the issue department of the Bank of England :in order to forestall a total collapse of credit.
Under exceptional circumstances like those of 1893, no gold reserve could prevent trouble. Should such a crisis recur, the Treasurer of the day, after consulting the leading bankers of Australia, and ascertaining the true ‘financial position, should, I think, declare notes to be legal tender for a time, and thus prevent a rush on the banks. The currency that has been created by means of cheques and bills has to be reckoned with. We are wasting time in dealing with a proposal like that before us; it would be better to devote attention to the possibility of strengthening the Commonwealth Bank. The control of the note issue should.be a function of the Commonwealth Bank, which we should try to build up on the lines of the Bank of England. It may be said that a gold reserve of 40 per cent, would give a better guarantee against panics, but my reply is that, under normal trading conditions, there should be very little fluctuation.
– Our production may fluctuate to the extent of £50,000.000 in a year.
– Our seasons, taking the Commonwealth as a whole, are regular. We have our wool, wheat, sugar, mineral, and other productions to rely on. In Canada, there is a big run on the banks each year to provide for the shifting of. the wheat crop, but there is no similar run on the banks here. It must be remembered, however, that we have to depend largely on ourselves for our supply of gold. In 1891, when the Bank of England was last in a tight corner, it did not apply to the Government for assistance, but got the Bank of France to send over bullion by the night mail; and it is common for the Bank of England, the Bank of France, and the Bank at Berlin to help each other in this way. But in a time of emergency, where will Australia get its gold?
– The Labour party drove gold out of the country by instituting paper money.
– What is a note issue of £9,000,000 or £10,000,000 in comparison with the total trade of this community ? It is a mere nothing. The bankers made a fuss about it to deceive the public. They exaggerated the effect of the note issue for their own interests, and in the interest of the party opposite, whose members are their allies and supporters.
– Then the Governor of the Commonwealth Bank was wrong when he said that the financial stringency had been increased by the driving out of gold.
– If you took only ls. out of circulation it would affect the commerce of the country, but not to an extent that is worth taking into consideration. The creation of a big national bank is of more importance, and such a bank will be created when the Conservative party has become patriotic enough to see that currency ‘ and banking are matters too serious to be treated as ordinary party questions. The ‘ mercantile and commercial interests suffer at a time of financial trouble, but the working classes suffer more. Something should be done to provide for exceptional occurrences. In the Old Country, everything turns on the bank rate of discount. When the rate rises, the money market becomes tight. The same thing happens here. I find no fault Wit the bankers as bankers, and their opinions on financial matters are entitled to our consideration and respect.
– Only when they agree to overdrafts.
– The granting of overdrafts is a matter of business, and if a banker does not properly secure his advances it is so much the worse for his bank. I have heard complaints against bankers for raising the discount rate, and calling in money. It is the business of a bank, when the gold is flowing out of a country, to attract it in again, and it can do so only by increasing the price it is asking for advances, and then the gold will come in and the security will flow out. There are some very curious features about’ the currency business. As a matter of fact, a little while ago, there was more gold in Australia, relatively speaking, than there was in the Old Country. At that time, you could get a draft on London practically at par, but you could not buy a draft on Australia in London on the same terms. We hear, from interested people who are very anxious to bolster up their own interests, statements about the country going to the dogs, but it is our business, as trustees for the people of the Commonwealth, to study the people’s interests, and it is very seldom that public interests are the same as private interests. We have a legitimate note currency backed by gold. It is of no use quoting any of the currencies of the world that are not so backed. If we issued £20,000,000 worth if notes without a gold backing we should then find that a depreciation of the notes would naturally follow. The notes must have an efficient gold backing, and it is our bounden duty to put our finances, our banking’, and our currency on a sound basis. When we see the business that is done in Great Britain by the Bank of England on the gold reserve that it has, we must admit that’ the margin of from 25 per cent, to 33 per cent, now established in Australia is a sound one, and warrants the confidence of every man and woman in the community. As the honorable member for Wide Bay showed, even the bankers themselves, when they found that “ this their craft “ was not in danger, ceased their cry of “ Great is Diana of the Ephesians.” When they found they could not block the legislation of the late Government, they began, as sensible and intelligent men, to admit that the reserves established to-day by law and practice, are sufficient to insure the welfare of the community. In these circumstances, I hope the Bill will be ignominiously kicked out as quickly as possible. We in this House should be very careful of what we are doing. We have no right to allow any feeling of doubt to be created in the minds of the people of the Commonwealth; but if this Bill means anything, it means that there is an element of doubt. 1 must strongly complain of the absence of information in the speeches made, on tlie Ministerial side in this debate. Of all the loose, slipshod speeches that I ever heard, the speech of the Treasurer, with his references to finance and currency, was the worst. He ought to have given the House - and I hope he will do it before it is too late - the value of the clearances in the clearing-houses of the Commonwealth. He ought to have backed his Bill up with that information, and not have attempted to draw analogies from circumstances that exist in Europe, with which there is no analogy at all. The only analogy in the cases that he ‘referred to was that of the Mother Country, and then he carefully avoided any reference to the Bank Charter Act of Sir Robert Peel. Let the Government play any political tricks they like in regard to preference to unionists, electoral reform, or. other matters, but let us not create an element of doubt as to the soundness of our currency, or of the gold backing behind it, in the minds of the working men and women of Australia. To the commercial man and the business man his cheque-book represents his currency, but these notes are the currency of the mass of the people. They have every reason to feel the greatest confidence in the present note issue, and that confidence must not be shaken. I challenge any one in the House, or out of it, to deny that the bank note of the Commonwealth of Australia is equal in security and in value to the bank note of the Bank of England.
.- I shall be pleased to take up the last challenge thrown out by the honorable member for Hindmarsh. At present, about £9,247,179 worth of Australian bank notes are issued by the Treasury, and, of this amount, £4,835,997 worth is held by the banks. We have in circulation £4,411,182 worth. According to the honorable member for Hindmarsh £2,500,000 worth of gold is .quite sufficient reserve to hold against that issue; but, if the banks turned round and presented the £4,835,997 worth of notes which they hold to the Treasury, and demanded gold for them, how would they be paid when the Treasury has only £2,500,000 worth of gold to do it with? How, then, can the honorable member have the audacity to tell the country that these are the safest notes on the face of the earth ? Of course, the banks would not present the notes in that way, because it is their business to keep the finances of the Commonwealth on a stable basis for their own protection, and for the protection of trade generally. To show the wisdom of the Treasurer in introducing this Bill, he proposes to provide £3,997,000 worth of gold to protect the present issue of £9,247,000 worth of. notes. As the actual value of the notes in circulation among the public is a little over £4,000,000, the Treasurer will have a gold reserve nearly equal to that amount. His suggestion is, therefore, a very prudent one, and the Treasury will be amply protected against any rush, provided, of course, that the banks hold back the amount of notes which they now keep in their tills. The honorable member for Hindmarsh said the currency of the country must have a certain amount of gold backing, and told us a good deal about the clearing-house system in the Old Country, but ‘we have just as good a clearinghouse system here as they have at Home. In the Sydney or Melbourne clearing house each of the banks put in £100,000 in gold in my time, and I presume the amount is about the same now. It is not the turnover that matters, but rather the gold held for the difference, which we call exchange. In other words, we do not require to hold a gold reserve for the turnover, but we require to hold it for the difference.We have not this gold reserve so far as the note issue is concerned. I followed this matter very closely, and remember that money was never so plentiful as it was just before the notes were issued, some two years ago or, perhaps, more. People could get any amount of accommodation from the banks, and I recollect attending a big land sale in the Cowra district, and seeing a number of hankers from various parts’ urging people to accept accommodation from their respective banks. Since these notes were issued, however, money seems to have been mopped up. We have never had a greater scarcity of money in Australia, especially in New South Wales, than has been the case since the Commonwealth notes were issued.
– What rot!
– Having made that statement, it is for me to give reasons for it. First of all, the banks had an average circulation of £4,000,000 worth of notes.
– There is a stringency in Canada to-day.
– Not nearly so great as in Australia, especially in New South Wales, and I can trace that tendency to the very month when the Commonwealth notes were issued. You cannot blind the eyes of the Australian public or of the farmers or others who want financing, because they know from actual experience that this has really occurred. The States drew in revenue, by means of a 2 per cent, tax on the old issue of bank notes, a sum of £80,000 a year. The Fisher Government compelled the banks to withdraw their notes in circulation under threat of a penalty of 10 per cent., with the result that they had to find gold in lieu of the £4,000,000 worth of notes. In addition, he forced about £6,000,000 worth of notes on to the banks. Therefore, they had to find something like £10,000,000 of gold out of their treasury, and that amount, consequently, was withdrawn from circulation. The banks were crippled, and the country was crippled as a consequence.
– They had the notes on the counter in place of the gold.
– They had to withdraw their own notes from circulation, and they had to hold a large amount of Commonwealth notes in addition.
– The scarcity of currency was merely a coincidence.
– It was directly occasioned by the withdrawal of money from circulation by the issue of the Australian notes. The banks were lending money at 5 per cent., and afterwards it was difficult to borrow it at 7 per cent, or 8 per cent. Money was never scarcer than subsequent to our note issue. I suggest to the honorable member for Hindmarsh that it would be a good plan to follow on the lines of the Bank of England. I have the Banking Record, giving the latest figures, and they show that the Bank of England, while it has notes in circulation to the value of £28,628,000, has gold to the value of £35,566,000.
– That is also held against current accounts.
– That may be, but our friends over and over again have told us that the Australian banks of issue had only 5s. behind every £1 note, whereas, as a matter of fact, the Australian banks have £32,788,278, and the New Zealand banks an additional £5,334,422; so that there would be £8 behind every note in circulation.
– But there is nearly £60,000,000 deposited on current account in Australian banks.
– That is immaterial, because, so far as Victoria is concerned, the notes are a first charge on the assets of a bank.
– It was not so in 1893.
– It was not so until the banks became insolvent in Victoria, and then the notes were made a first charge on assets, provided there were no mortgages or liens.
– If it was possible for Victoria to make the bank notes a first charge, it was quite possible to have them made a first charge throughout Australia ; and if tlie Labour party are as earnest about the matter as we are, it is possible for us to make that provision now. It should be done. Then for every note in circulation, there would be £8 in gold in the vaults of the banks, which would be far better than the 6s. 8d. now proposed. We have heard a great deal about the panic in 1893. I was in a bank in a’ New South Wales town on that occasion, and there was not a single person who, to my knowledge, lost a shilling through not getting notes cashed. After about A fortnight or three weeks the banks honoured their notes.
– You must have been in a, hollow log, or asleep.
– I was not asleep; I was in a banking chamber at the time. Mr. S. J. Clements, a well-known storekeeper of Blayney, came to me and said, ‘ The banks are closed, what about accepting bank notes at face value - do you think I would be justified in doing so?’.’ I assured him that he would, and he accepted all the notes at face value, selling goods for them.
– Did not the Premier of New South Wales go security for those notes?
– This occurred prior to that step taking place. These were the notes of the Australian Joint Stock Bank and the Commercial Bank, the only two doing business in Blayney. When the banks opened, Mr. Clements paid in the notes he had to his credit, and he received 20s. in the £1 for them. The same thing might have taken place throughout the State. I admit some people were victimized, because they became frightened. A great statesman has said that any man who introduces a State paper currency does not bring lasting honour on himself, nor contribute to the stability of his country. We have the past experience of other nations to show the absurdity of introducing a State paper currency. During the French Revolution, assignats were issued to the value of 45,500 million francs ; but Carlyle points out a number of instances, showing the real worth of these assignats. A gentleman, having hired a cab. and asked the cabby what the cab hire was, the cabby replied “ Two thousandlivres.” In other words, assignats to the value of £100 represented an ordinary cab fare. In another instance, a man went into a cafe and ordered a cup of coffee, for which he was charged 1,600livres. Notes to the value of £80 represented the price of a cup of coffee. We have, also, the history of the American States to guide us in the matter. The Leader of the Opposition has said, “Have we not the resources of the whole of the Commonwealth to back up this note issue?” The French people said the same thing; but, in the end, their notes were not worth printer’s ink. .Mr. Reymond, an old French gentleman living in Forbes, and an ex-member of the Legislative Assembly of New South Wales, told me recently that, when he was a boy, he visited his grandfather in Paris, and in a lumber-room discovered a big packet of notes tied up in red-tape, and, thinking he had a tremendous haul, he rushed down to his grandfather, but the grandfather said, “ You can take them up again, or throw them in the fire; they are not worth the printer’s ink.” These were the assignats that ruined thousands of people in France. The cruel part of the matter was that the French Republic actually passed a law by which a man could not discriminate against these assignats. He could not sell his wares cheaper for gold or paper; he had to charge a fixed price; and if he was found breaking the law in this regard, he was sentenced to six years’ imprisonment for the first offence, twenty years for the second offence, and to the guillotine for the third offence. The notes were legal tender, and inconvertible. Our friends opposite say that the Australian notes are legal tender and inconvertible.
– They are legal tender, but they are convertible.
– If we do not keep enough in reserve, they are inconvertible.
– But there is enough; that is the point.
– In France, despite their drastic laws, and despite the ‘ wealth of the nation, the assignats were not worth the paper they were printed on. America had a similar experience. They started on very solid ground, and actually had a sovereign for every note issued; bin, in 1861, the reserve was reduced to 90 per cent. ; in*1862, it stood at 40 per cent. ; and in the following year it was down as low as 6 per cent. ; and the value of the “ greenbacks,” as they were called, was something like 6s. 8d. in the £1. I now wish to call attention to what some political economists have to say on the matter of exchanges. Adam Smith has written largely on the subject, but I have a quotation from Ricardo which I think is very much to the point, and which, T. understand, is repeated by Mill. It is as follows: -
If, by the general operations of commerce, 10 millions of pounds sterling, of a known weight and fineness of bullion, should be the portion of England, and10 millions of paper pounds were substituted, no effect would be produced on the exchange; but if by the abuse of the power of issuing paper money,11 millions of pounds should be employed in the circulation, the exchange would be9 per cent, against England ; if 12 millions were employed, the exchange would be 16 per cent. ; and if 20 millions, the exchange would be 50 per cent, against England.
Thus, with 25 per cent, of gold behind our notes, the exchange against Australia would be something like 75 per cent. I have no desire to labour this question. I haveonly to say that I hope most sincerely that the Bill will be carried, and that the Opposition will join with us in voting for sound . finance in Australia.
.- I shall not occupy the attention of the House at any length, but some of the statements that have been made during this debate are really so extraordinary that I feel justified in answering them. Has’ any honorable member any idea of the weight of the gold behind our present note issue? Our note issue weighs 10 tons ; there are 9 tons of bank notes in circulation, and we have in our Treasury 30 tons of gold behind them ; yet the Treasurer greedily asks for more. T. should not object to such a demand if the Commonwealth had the liabilities of the private banks. The Commonwealth Bank at the present time, however, has no debits of any extent in respect of current accounts. The liability of the Government relates only to the note issue. When the Australian Notes Bill was before this House some time ago, a prominent member of the present Ministry said -
As to the proposed reserve, I think that 25 per cent, of gold should be sufficient, but it might be better to make it a little larger at first, as probably, as the public become used to them gold will be less in demand.
– Who wrote that prescription?
– I shall reply to the honorable member by saying that I know of no chemist who could make it up.
With a note issue of £7,000,000, and a gold reserve of 25 per cent., we would have in our safes gold amounting to £1,750,000, and weighing not less than 13.8 tons. With an issue of £10,000,000, our gold reserves under this proposal would amount to £4,775,000, or a higher percentage than any banking company in the world holds at the present time. The banks of a country may have in their vaults gold in excess of the face value of the notes issued by them, but that gold is held to secure, not only the note issue, but all their deposits. We know, from our experience in the terrible crash which followed the collapse of the boom, that the assets of a bank as shown on paper are largely in excess of the amount that can be realized. If we had a note issue of £15,000,000- and that would not be extraordinary, judging by the enormous expansion which has taken place in the note issue of the United States of America - we would need 65 per cent, of gold, and with an issue of £20,000,000 it would be necessary to have a gold reserve of 731/2 per cent. Can the Treasurer point to any bank or any community that requires a gold reserve of 731/2 per cent, to secure a note issue of £20,000,000 ? The quotation that I read a few moments ago was from a speech delivered in this House on the 19 th August, 1910, and reported on page 1843 of Hansard for that year, by the present Treasurer, and, in view of the statement which he then made, he will, no doubt, vote against the second reading of this Bill. I have tried again and again to nail down the misstatement so often made that the notes issued by the banks were a first charge upon their assets. That is an absolute fabrication.
– They were for some years.
– The honorable member for Calare made that statement this afternoon under a misapprehension. He could not have taken the trouble to read the Victorian Banks and Currency Act, from which I am about to make a quotation, or he would not have made such a statement. A dozen legal men of high standing in this city agree with the construction that I place upon the section of the Act that I am about to read. The present Warden of the University Senate agrees with my construction of it, and so does Mr. Godfrey, a solicitor of standing in this city, who has been a hank director for many years, while the late member for Bendigo, Sir John Quick, when I challenged him in this House some time ago, could not deny that it was correct. Section 12 of the Victorian Banks and Currency Act provides that -
Notes payable to bearer at sight or on demand issued in Victoria by any banking company firm or individual banker in the hands of any bond fide holder - thereof for value who has received the same in the ordinary course of business without notice that the same have been issued or dealt with contrary to the provisions of this Act and has not subsequently dealt with the same otherwise than in the ordinary course of business shall in the event- and I come now to the important part - of such company being wound up or such firm or banker being insolvent or bankrupt be a first charge on the assets in Victoria of such company firm or banker not being the subject of any mortgage pledge lien charge or other security in favour of any other creditor.
– Surely bullion would not be mortgaged?
– The honorable member, with the usual tenacity of a lawyer, is trying te raise a quibble. Could not bullion be made answerable to a lien or mortgage? This section was drawn up by legal men to make the position of the banks secure, and it will be seen that it is a farce to say that prior to the establishment of the Commonwealth Bank the notes of the private banks in this State were a first charge on their assets. Again, any one in Victoria could establish a bank and swindle the people out of thousands. Section 14 of this Act declared that -
No banking company firm or individual banker shall issue notes payable to bearer at sight or on demand unless such company or firm has a subscribed capital of not less than Two hundred and fifty thousand pounds and a paid-up capital of not less than One hundred and twenty-five thousand pounds or unless such individual banker has a capital of not less than One hundred and twenty-five thousand pounds, and an v company firm or banker issuing notes contrary to the provisions of this section shall be liable to a penalty amounting to Twenty-five pounds per centum of the amount of the notes so issued, to be recoverable with full costs of suit by any person who may sue for the same.
That section allowed notes to be issued by any banking company or individual with assets worth presumably £125,000. There was no limit to the issue of notes. They could have been issued in millions.
– The banks kept from 48 to 53 per cent, of gold reserves.
– There was no such requirement under the Victorian Act. The words used by Henry Clay, in Con gress nearly three-quarters of a century ago, that never in the history of the world has a cent been lost in a National Bank, are as true to-day as they were then. The Commonwealth Bank, is guaranteed by every hill, valley, dale, and river in Australia.
– But our note issue is not under the control of the Commonwealth Bank.
– I am glad that it is not. It is under the control of the Government of the Commonwealth, which is firmer and stronger than any bank. The record of the crisis to which I have referred was found in ruined homes and robbed widows and children; and three friends of my own committed suicide owing to the deb dele. We are told in Hyndman’s Crises of the Nineteenth Century that booms occur, on the average, every fifteen years; and I believe that we here are on the way to a boom at the present time. Up to June last, there were two and. a half times more buildings erected this year in the suburbs of Melbourne than there were in the same period at the boom time. All the money that is lent out by the Commonwealth Government is spent on reproductive works, and the security is undeniable. According to the Treasurer’s statement, State Government securities are represented by New South Wales funded stock, £1,000,000; and is there any honorable member who can point to any better security in the world I Victorian Government debentures represent £980,000; Western Australian stock, £650,000; Western Australian Treasury bills, £100,000; inscribed stock of Tasmania - that .bonnie little island, blessed by God but cursed by man in its government in the past - £500,000. On fixed deposit, the New . South Wales Government hold £800,000, £200,000, and four sums of £100,000; Queensland, £840,000; the Brisbane Bank, £25,000; and the Launceston Bank, £25,000. These, with fixed deposits in the Commonwealth Bank, amount to a total of £5,720,000 advanced on assets superior to those held by any. banking company in the world. Even the United States of America, with its £317,000,000 worth of gold and silver coinage,- cannot show superior assets. These advances bring in a revenue of £216,600, which is earmarked, and which, on the 30th June, 1913, will represent a sum of £365,107. I look forward in the early future, say, in ten years, to a currency of £20,000,000; and does the Treasurer think that his successor of that day will suggest that 73 per cent, of the note issue shall be backed by gold? Why, it would take 116 lorries, each drawing 1 ton of gold, to move the reserve from one .building to another. Where is the “ sink-hole “ of gold today? Every ship which leaves this country for Hong Kong, Calcutta, Bombay, or Japan, takes away gold, either in sovereigns or bullion. The European steamers that go to the Homeland carry gold to Ceylon, where it is distributed; and the words are as true to-day as when they were uttered by . George Francis Train, in 1854-5, that the East is the “ sink-hole “ of gold. Only once in my reading have I seen it stated that gold has been exported from China to England, and that was when that country had to pay the terrible indemnity of £11,000,000 to Japan. The Treasurer has only to consult the Secretary to the Treasury to learn that the whole of the gold currency in the world would not pay for one month’s transactions on the New York stock exchange alone. It was credit that for 600 years carried on the Bank of Venice - ah institution which failed only when the army of France took possession. Yet in these days, with securities superior to those of any bank, we’ are asked to sanction this immense gold reserve in the case of the Commonwealth note issue. The Bank of England, which many think the richest in the world, is, after all, only a private company, and not nearly so rich as the Bank of France; but, in consequence of giving a loan to the Government, the Bank of England has the privilege of issuing the only note in London. The first banking community in the world is the Treasury of the United States of America, and the National Banks,- with close on £355,000,000 in gold and silver as a reserve. Next, as is shown in the New Dictionary of Statistics, is the Bank of France, with £162,900,000; and then come the Russian State Bank, £115,400,000; the Bank of AustriaHungary, £60,600,000; the Imperial Bank of Germany, £51,600,000 ; the Bank of Spain, £42,600,000; the Bank of Italy - even poor, little Italy shows more gold and silver in its coffers than does the Bank of
England - £40,300,000; and, last, the Bank of England, £39,400,000. The Bank of England, for twenty-two years, never paid its notes in gold. Three times was it on the verge of insolvency, and was saved by the Bank of France, the Imperial Bank of Germany, and the Imperial Bank of Russia. The bank would have failed in the Baring crisis, when Lord Rothschild took the chair at a meeting, not caring, perhaps, whether or not the rival firm went to the wall so long as he saved his own great banking concern. However, that great banking concern has disappeared, and there is now no European combination to equal the Rothschilds. It is said that the financial policy of the Commonwealth Parliament has robbed the private banks. At one time in Australia there >vere forty-two different banks of issue, each with their different currency of notes ranging from £1 to £100. The only alteration that has been made by the Commonwealth note issue is that represented by the 10s. note. Here I may say that it is very difficult to get those 10s. notes in any of the private banks ; and, to my knowledge, on one occasion the note could only be secured by a client on his threatening to remove his account. I suggest that the central post-offices might be allowed to hold a few of those notes, so that the people might know where to get them. This would be a great advantage, because to register a 10s. note costs no more than would a 10s. postal order, and there are other advantages. With only one note issue we know that it is far easier to detect forgery, as is shown in the case of the Bank of England, which never re-issues its notes. When I was for five years in the Colonial Bank, sound, dirty, and smellful notes were issued and re-issued; and that is most undesirable. At the time of the boom in Victoria I suggested that there should be a State issue ; and in collecting evidence on the point I one day stopped twelve men on the Block in Melbourne, all of whom had notes in their pockets, but not one of whom could say, without looking at them, which banks had issued them. Indeed, on one occasion, when I sent a ten-dollar note of the Chinese Republic to the aa6- lady of one of the smart city hotels, in order to let her see what it was like, she, to my astonishment, changed it, and handed me ten sovereigns. To show how; careless people really are, I may say that the notes of the Provincial and Suburban Bank were in currency for twenty years or more after it had ceased to exist. The misfortunes of human beings should never benefit other human beings, and, in the case of burnt or lost notes, the advantage should go to the community. If the Government have decided to push this measure to the extreme, there ought to be an honorable understanding that, until the note issue goes beyond £10,000,000, a reserve of 30 per cent, shall be considered sufficient. To me, a gold reserve of 47 per cent, is ridiculous. What the Treaeurer said when the note issue was first proposed is true to-day, but we are not now at the beginning of tilings in this matter. We have got over the first rough portion of the journey, and the note issue is now close upon £10,000,000. Those who go into the matter carefully will see that there is no need for the large reserve proposed. Can any honorable member point to any bank in the world that has such splendid assets as those behind our note issue ?
– The Commonwealth. Bank has all assets and no liabilities; its advances are not liberal enough.
– I agree with the honorable member. But I resent the statement that the Government has taken away opportunities from the banks. What we have done is to give the people a secure note. We insist now that every one who uses a note must pay in gold for it, so that no one may be robbed, as in the past. I join with the Treasurer in his good wishes for our system of banking and note issue, but I think that those who have studied the history of credit will not vote for such a foolish measure as I consider the Bill to be.
Mr.FENTON (Maribyrnong) [5.56].- The introduction of this Bill is an indication that the Liberal party has lost faith in the country; I cannot conceive of any other reason for proposing to increase the backing to our note issue. The honorable member for Melbourne has shown what the Treasurer thought about this matter in 1910. The Treasurer said then that a backing of 25 per cent, was sufficient, though at the commencement a little more might be needed. But we have now had nearly three years’, experience of the note issue. I said in the beginning that I considered the late Treasurer somewhat conservative. He instituted the note issue in 1910, but two years later introduced a Bill to reduce, the gold reserve behind the note issue to not less than 25 per cent. In making that proposal he had, no doubt, in mind the statement made by the present Treasurer that a reserve of 25 per cent, was enough. There is no countryin the world whose resources are so great, or whose people are so prosperous as . are those of Australia. What is needed in banking is confidence. If we have confidence, our institutions, banking and other-, will go on swimmingly. It is the lack of confidence which creates panic.
– That is when you want the coin.
– Yes, but it has been shown in the history of Australia that the credit of a State is sufficient to restore public confidence when the Government announces its intention to stand behind the banks. It is useless to go far back into history to ascertain what was done by the French or by the early American Colonies, because our circumstances are entirely different from theirs. The government of the world was never so stable as it is to-day. The great countries of the world enjoy nowadays government much more stable than any government ever was before. Consequently a comparison between present-day conditions and those which existed when communities were in a formative stage are useless. The Government of the Argentine to-day is quite a different thing from the Government of the Argentine forty or fifty years ago. To-day it is on stable lines, and there can be no fear when a government is so established. The late Mr. G. B. Edwards was opposed to me in politics, but it will be generally admitted that there never was a member of this House so well qualified to speak on currency questions as he was. He supported the note issue at every stage, and I wish to make a short quotation from his remarks regarding it. He said -
I take it to be almost axiomatic that a paper currency, without an ounce of gold backing, made a definite legal tender, and not issued in excess of the requirements of the community for whose service it is issued, can never fail.
There is a consensus of opinion that when Mr. Edwards discussed questions or this character he was listened to with the closest attention, and that the words that fell from his lips were words of wisdom. I remember sitting with him on the Ministerial bench, when he pointed to the opposite side of the Chamber, where the members of his party were seated, and said, “ I cannot conceive why those men. are opposed to such a fine national measure as this.” In the course of his remarks he quoted the opinion of Mr. Russell French, the general manager of the Bank of New South Wales, one of the most competent authorities on currency and banking, though one who, I should say - though I know him only by repute - consistently opposes most of the measures of the Labour party. Mr. Edwards said -
Very shortly after the big bank crisis, Mr. Russell French said, among other things -
When abnormal conditions, such as periods of crisis, supervene, the Act of Parliament by which the issue is authorized has to be suspended in order to do away for the time being with the rigid regulations which prevent expansion.
This indicates that, when a note issue or currency is in the hands of a responsible Government, it is a wise thing to expand your paper currency to relieve financial stringency. All that is wanted is to reestablish the confidence of the people. I remember reading speeches by Mr. Robert Harper in the State Parliament after the great collapse in the early nineties. One of the strong points that he made was the absolute necessity,, in a community like this, for a strong central institution. He said, “ It is not so much coin you want as confidence. When you have confidence you can give credit.” Mr. Russell French went on to advocate the issue of Federal notes to become part of the securities held by the banks, and said, further -
Such a note, having Federal sanction, and resting, apart from the coin basis, on the credit of the whole Federation-
That is the point many honorable members’ seem to miss in discussing this question. The credit of the whole Federation is behind the note issue. If there was not a single gold coin behind it, I should have just as much confidence in it, so long as the Federal Government had charge of it. No matter what Government was in power, so far as internal trade was concerned, I would just as soon have a Federal Bank pound note as a sovereign. I have always said that, so long as the note was made legal tender and backed by the Government, it did not matter so much about the gold reserve. Mr.- Russell French continues - would be n wholly satisfactory circulatory medium in ordinary times and for ordinary purposes of business, and would serve as a bulwark of no insignificant strength to resist and overcome the results of panic. . . . And as a practical consideration, it can scarcely be denied that a uniform note system common to the federated colonies would conduce in some degree to the convenience of the public, and would be much more cheaply administered in the matter of working expenses.
Mr. Edwards commented on that ;
That is a big admission to get from one of the- most prominent banking officials in Australia.
The late Mr. W. E. Gladstone, who, it was said, could make the dry subject of finance most attractive to his hearers, when speaking on the Bank Charter Act, as far back as 1866, said -
All the profits of the bank note issue belong to the State, and what is more important than the profits, the responsibility of issue belongs to the State.
Even the strongest critic of a State note issue cannot deny that Mr. Gladstone was an authority upon finance. I should like to read to the House the views of Senator Aldrich, of the United States of America. He is one of the most eminent financial authorities of that country, and speaks strongly against the banking system as it exists there. All the leading men in banking in the United States of America are fighting for a strong, central, financial institution; their idea being to secure a system approximating to the British system, right in the centre of which stands the Bank of England. The following is the extract to which I refer -
Banking circles in America are evincing increasing interest, it is stated, in the proposals by Senator Aldrich to establish a central bank for the United States. It is clearly recognised that some such drastic change in the monetary system of the country is imperative if the exceptional tension experienced every year at the period of crop moving is to be avoided. A strong indorsement of Senator Aldrich’? plan for monetary reform was given recently by Mr. MacVeagh, the secretary of the Treasury, in an address delivered before the Bankers’ Association of Missouri and Kansas. The lecturer pointed out that the existing banking system of the United States was a disorganized mass, composed of 25,000 units, and that a central reserve association would bring them all into a workable organization. One of the things necessary to a proper banking system was a circulation always adequate and never superfluous, and another great desideratum was a reserve. The existing reserves had been established bylaw with great exactitude, but they were simply fixed amounts of money in banks held in useless isolation, so that when accommodation was most needed financial facilities were not obtainable. What Senator Aldrich’s scheme aims to do is to change the control of the volume of currency from thousands of separate and scattered banks to a central agency, which would represent the financial institutions as a whole, and at the same time would protect the interests of the public”.
This is infinitely preferable to dependence on the decision of over 7,000 boards of directors, who do not pretend to consider anything but the immediate profit of their own bank. According to Brad-streets, the question of currency reform in the United States is fast approaching the region of practical politics.
Nothing that I or any other honorable member could say with regard to banking and currency could be better expressed. Two of the greatest authorities in the United States of America hold that it is absolutely necessary to have a central institution to control the currency, in order to give that elasticity which is so essential, especially in times of stress. We are glad to know that the policy we have followed in Australia is indorsed by an up-to-date country like America. Perhaps the Commonwealth Bank does not meet with our approval in every particular, but it is a start, - and we shall be able to improve it as we go along. I am certain that the Commonwealth Bank, with our note issue, is going to be one of the greatest blessings that Australia ever had. The late Mr. G. B. Edwards, who had studied the currency question from A to Z, advised men sitting on his own side of the House to vote for the Note Issue Bill. I hope we shall not do any more of this tinkering with good legislation. We are getting altogether too much in Australia of the stinking fish cry. We do not seem to think that anything we create ourselves is of any use, but must always go rushing off to copy some other country. The man who says there is any danger in our note issue has very little faith in the Commonwealth. The Bank of England has a gold reserve of only about £40,000,000, and that includes the reserves of a great many other banks in Great Britain, yet the liabilities of those banks amount to £1,200,000,000. All the gigantic operations of commerce rest on the foundation of credit - simple trust and confidence, not coin. The Australian notes in circulation amount to about £4,000,000, the gold reserves in the banks throughout Australia amount to £33,000,000; yet the total liabilities of those banks are about £80,000,000. The whole of this banking business, as these figures show, is conducted practically on a system of credit. It is a matter of trust between bank and bank, and between the banks and the people. So long as that trust or faith is unimpaired, the course of business flows smoothly. Mr. Laughton, the Victorian Government Sta’tist, in part V., “ Accumulation,” of the Victorian Tear-Book for 1912-13, gives the following interesting information: -
This table shows that there is £648,413,000 worth of uncovered paper in the world. Other countries besides our own are not particular about having a note currency without a very strong gold backing. The proposition in our Statute is perfectly safe, because the gold reserve will range between 25 per cent, and 33 per cent. If the State of Queensland could conduct a note issue for nineteen years, and no great harm come to the State, how can any great harm come to Australia in conducting its own note issue and circulation? We have to consider the great benefits that have accrued through our note issue. Owing to the wise investment of the money by the late Treasurer, the present Treasurer is in the happy position of being able to handle millions and spend them on desirable public works, and he has assured us that he intends to secure the money with which to carry out these public works from our Trust Funds, the best and most permanent of which is that associated with the note issue. Following the example of Queensland, and seeing what has been done in France and its semi-State institution, and also what is done in England, we should retain the measure already on our statute-book, and have faith and confidence in our country. With Australia behind the note issue, even though there were no gold reserve in the Treasury, I should have no fear, travelling anywhere within the confines of Australia, that I should not get 20s. in the £1 for a Commonwealth note. We should not unnecessarily lock up a number of sovereigns in the Treasury safe. We should make use of them. The Treasurer, however, proposes to lock away an extra million, t consider that we could at least release £1,000,000 from the 40 to 45 per cent, now lying in the gold reserve, and make some use of it. In fact, I would have no qualms at seeing the reserve wiped out altogether, so long as the control of affairs was in the hands of a safe, honest Government. Of course, I could understand people being alarmed if we were likely to have in office a body of brigands, who would play ducks and drakes with the finances and the note issue, but when every one, independently of his politics, is interested in the stability of our institutions there is no reason to fear. I do not wish to see the Bill before us passed. I know there is no chance of its being withdrawn, but I think the Senate will hardly spend any time considering it. The Treasurer seems to have some little scheme that he has thought of since 1910, but I trust his measure will not be passed, and that the gold reserve will remain as at present provided for, not less than 25 per cent., so that we may release some of the present reserve and make it of benefit in the construction of useful public works.
Sitting suspended from 6.S0 to 745 p.m.
.- Having regard to the stage of the session we have reached, and to the anxiety of honorable members to return to their homes, there is not much encouragement to dilate at length upon the terms of the Bill now before us. During the recent election campaign, I heard nothing of any intention on the part of the Liberal party, if returned to power, to mutilate the Australian Notes Act. The Treasurer, in introducing this measure, should have given us a clear indication of the intentions of the. Government. It seems, to me that they are trying to mislead the people, and, by a subterfuge, to do that which they dare not do in the open. The AttorneyGeneral to-day contradicted a statement made by the Leader of the Opposition, and said that, as he understood it, the Bill would not carry out what was said to be the declared intention of the Government. As it stands, it means, in my opinion, that our note issue will not be allowed to exceed £7,000,000. The Bill provides for a gold reserve of 40 per cent, up to an issue of £7,000,000, and there is to be a sovereign in the Treasury safe for every note issued beyond that amount. I do not think that the Treasurer will be prepared to keep gold in his safes merely to be looked at. I understood that the country was satisfied with the action of the late Government in providing for a gold reserve of not less than 25 per cent., and investing all the gold held in excess of 40 per cent, of the note issue by lending it to the States, or devoting it to developmental works. So far as I and my party are concerned, there is no hope of this Bill being carried. It may pass this House, but once it leaves this Chamber, I feel sure that we shall see it no more. I am at a loss to find any reason for the action of the Treasurer in introducing this Bill, unless it be his vanity. Most men of his age become somewhat vain, and perhaps he is anxious to have his name attached to a measure of this kind. I should have liked to see his name associated with some other Bill than one to emasculate the Australian Notes Act. When I took an active part in the. Federal movement some years ago, I little thought that we should have in the National Parliament so many pessimists as we have in it to-day. It is deplorable that there should be in this House so many honorable members who have but little faith in their own country. Anything that, will tend to belittle Australia appears to meet with their solid support. I, on the other hand, have always had confidence in Australia, its resources, and its people, and am prepared to trust the people with a national note issue. I go further than do some of my party, since I look forward to the time when, with the advance of civilization, paper money will play a greater part than it does to-day in this island continent. Honorable members opposite are constantly referring to the history of other countries, but they seem to lose sight of the conditions prevailing in their own land. At no time in the world’s history has there been more honest government than exists to-day. The Government and their supporters appear to forget that Australia is a continent, that it has no frontier, and that it has practically no governmental transactions outside the Commonwealth. Our note issue is operative throughout the continent, and. I doubt whether the people worry very much about the question of whether there is behind it a gold or a silver reserve. Their chief care is that they shall be able to get the full face value of the notes they hold or that the notes will pay their debts or obtain for them the commodities they require. We were led to believe that the Government were not anxious to introduce controversial measures, but I cannot conceive of a more contentious Bill than is this, designed, as it is, to turn down one of the best pieces of legislation ever passed by this Parliament, and recognised as well worthy of the party responsible for it. Honorable members opposite have referred again and again to what has taken place in connexion with the note issues of other countries. I would remind them that in Australia we have Governments conducting the public business of the people, and that if they do not conform to the will of the people, their political lives are but of short duration. That being so, there is no opportunity here for such . serious occurrences as honorable members opposite suggest may take place in connexion with a paper currency. Very little gold is used in connexion with our trade. Indeed, the whole trade of Australia, like that of other parts of the world, is conducted upon credit, and as long as the credit of Australia remains good her trade will be carried on upon credit. The value of our import trade is something like £70,000,000 per annum, but surely no one imagines that 70,000,000 sovereigns are required to conduct it. As a matter of fact, in connexion with the whole of our oversea trade, not more than 500,000 sovereigns are shipped from Australia. It is true that some small shipments of gold are sent to the East, but that is in connexion with trade done by John Chinaman. In China, as much as lOd. in excess of the face value of the sovereign can be obtained, and some of the Chinese do a nice little business in this way. A few years ago, some of the English banking institutions conducting business here used to send away small shipments of gold in connexion” with the making up of their bank balances, but their exchanges did not amount to more than 100,000 sovereigns per year. That used to be the whole exchange that took place, and, therefore, there is actually no necessity to have a big gold reserve. I do not think that there is any honorable member opposite who, during the whole of the election campaign, said anything to justify the introduction of this Bill. The notes are legal tender, and the credit of the country is behind them. We are here as directors to insure the public welfare, and we ought to see that everything is done to promote the prosperity of the country. We have been told about the wreckage that has occurred in other parts of the world where there are State note issues; but this affords no reason why we should depart from the policy laid down by the late Government. There have been many great railway accidents, bub the people of Australia continue to travel on the railways. We in Australia are establishing precedents, and our legislation, in many respects, is entirely different from that of. other nations. We are not a lot of school children. Honorable members are not, I think, so bereft of reason as not to be able to grasp and appreciate something new if it be practicable. It would appear, indeed, in the absence of any sound arguments, that nothing but vanity has prompted the Treasurer to bring up this measure. While the election campaign was in progress, the right honorable gentleman told the people of Perth that it was he who should have the credit for the note issue; and yet he now lays before us a proposal to murder it. It is this that leaves the impression on my mind that he is not serious, but that he is only giving us a little Falstaffian humour, and so endeavouring to attract the notice of the pres3. Now, however, that he has secured that notice, I hope he will put the Bill in the waste-paper basket. In his introductory speech, the Treasurer did not tell us what “the Bill contained, but we find that it is somewhat different from what he then represented it to be. This, of course, may arise through th* fact that some one else drafted the Bill, and that he was in ignorance as to its provisions. When the Leader of the Opposition drew the attention of the Treasurer and the Attorney-General to certain points, neither of those gentlemen appeared to be seized of the facts. We shall be traitors to the progress of our country if we pass a measure of this kind. Every State of the Commonwealth is thirsting for capital. We were told that, With the advent of the Fisher Government, capital would leave the country; but the present Government are endeavouring to prevent gold being put to ite proper use. I suppose that if I were to claim to be an authority on banking or finance, the Treasurer would tell me that I had had no experience, because I had Hot been the Treasurer of Australia; but however that may be, I tell the right honorable gentleman that by his proposal lie would rob Australia of £120,000 a year. The Treasurer’s first duty is to protect the revenue, and if the sum of £3,000,000 is not made to earn money, he, and those associated with him, are showing their incapacity as administrators. For three years we had men in power on whom we could rely to conduct the business of the country in a progressive way; and I am sure that the people of the country now realize the mistake they have made in returning to power, in the present Parliament, men of such weak administrative ability. During the discussion this afternoon, I feel satisfied that the Attorney-General left the chamber convinced that the Leader of the Opposition is better acquainted with this Bill than .’are the members of the Government, who father this very unhealthy baby. I know that this Bill will never see this Chamber again after it once leaves us, unless it comes back in a very different form; and, therefore, I shall try to assist to close the session by making my remarks as brief as possible. When I go back to New South Wales, where the people do understand business, I shall be able to explain the position to them more fully; and I feel sure that the conclusions they will come to will be that there are no financial geniuses in the present Government. The note issue established by the late Government excited the admiration of the financial world, and the day is not far distant when paper currency will play a greater part than it does at present in the business world of Australia. If we could only remove the fear that people have of paper transactions in the commercial and industrial world, all that stringency which sometimes blocks progress would be removed. Future generations will realize that there is no necessity for the doctrine that has been preached from the other side this afternoon. When that fear of which I have spoken has been removed, we shall be able to reduce poverty and secure greater happiness in the lives of our people. This, however, will require a process of education. When I, and others, some twenty-five years ago decided that we would enter Parliament, even if we had to wear our hob-nailed boots and bowyangs, we were laughed at, but, as a matter of fact, the ablest administrators of the country have been found in that class to which I myself belong. When the people realize this, many of their fears will be removed. Millions are transmitted between the Old Country and this new world in the southern seas without any movement of gold or other metal, and numberless financial transactions take place in the commercial world which depend wholly on paper. There are honorable members in this House who write out cheques for £500 or £600, and, perhaps, larger sums, and no gold passes at all, the whole transaction resting on credit. Thousands of pounds pass and repass in this way on what are practically IOU’s. The hill system is merely a paper credit system.
– There was an Irishman who, when he gave a hill, used to say “ Thank God, that debt’s paid ! “
– Irishmen have said some very sensible things, and if my honorable friend had more of the Irishman in him he might be better. There seems to be too much anxiety on the part of honorable members opposite to decry Australia; but members of this Parliament should rise above that sort of thing. I hope that those who cannot do so will, on the next occasion, be rejected by the electors. More optimistic views should be taken of Australia’s finances. I have always taken large views. As a representative of the people,- 1 feel that it is one’s duty to instil confidence, into the community. We should not suggest that we have no confidence in the country. At the beginning, a 40 per cent, gold reserve was very rightly proposed by the Leader of the Opposition, but, personally, I should be willing to let the whole £10,000,000 received for the notes be used for the good of the State. The action of the Leader of the Opposition in keeping a large reserve until after the elections was wise, because it created confidence in the note issue. But now that the people understand what has been done, this large reserve is not necessary. At the present time about £1,750,000 worth of gold is lying idle in the Treasury vaults, although one of the State Governments has had to borrow money at 4f per cent, to meet its obligations. No doubt the Treasurer swells with pride when he walks into his office, and thinks that he has control of so much money, but it is not the act of a statesman to lock up money in this way. The members of this National Parliament should be men of broader views and of larger calibre. They should realize their position. To be elected a member of the Australian Parliament is one of the greatest honours that can be conferred on a man. I am certain that these views will meet with the approbation of all true lovers of Australia, and will be indorsed by all who have any knowledge of finance. The Government are acting falsely towards the public interest in proposing this measure, and I ask the Treasurer, for the sake of the reputation which he has won by his long connexion with public affairs, especially in Western Australia, to withdraw the Bill. It is not disgraceful toadmit that one has made a mistake, and for him to do so now would be the easiest way out of the difficulty in which he finds himself.
– The proposal of the Government is, in effect, to keep £3,000,000 of gold unused in the Treasury as a reserve against a probable note issue of £10,000,000. I understand that this Government is at present keeping a reserve of about 40 per cent., and it is at liberty to continue to do so. Why, then, has it introduced this Bill? Is it afraid that it will be tempted to reduce the reserve? Do Ministers wish to be protected against themselves?
– The Bill will give greater confidence to the people.
– If Ministers think that a reserve of 40 per cent, is necessary to give confidence to the people, they can keep that reserve; it is not necessary to pass an Act of Parliament to authorize it. The currency of -a country is like the blood that courses through the veins of the body. If you lessen the supply of blood, you lessen the vigour of the body, and, similarly, by lessening the currency you reduce the power of commerce, and restrict the avenues of investment.
– But it does not do to let one’s blood become too poor.
– The Government will get no return from the £3,000,000 which it proposes to hold in reserve; but the money might be usefully employed. If it were lent to the States, we should have a security as good as the gold itself, and the lending of the money would increase employment, and benefit the community generally. As a member of the Opposition, I ought, perhaps, not to object to the measure, because it will increase the reserves at the disposal of the next Ministry. This Government, however, wishes to borrow money, and what better could it do, if it is in a tight corner, than borrow from the Trust Funds, as the Fisher Government did, paying interest on the loan as it would to a foreign creditor? Honorable members opposite seem to forget that an Act of Parliament can always be repealed or amended.
– Then, why object to the Bill?
– I object to it because it is absurd for Ministers to pass an Act to protect them from themselves. They need not take the money from the strong-room. But they cannot prevent their successors from doing as they like in the matter. The Labour party, when it came into power, repealed the Loan Bill that had been passed at the instance of the Fusion Government. We are wasting time with this Bill. The other Chamber will not pass it.
– We have nothing to do with the other Chamber.
– The other Chamber will have a great deal to say in regard to this Bill, and the measure will not become law. It is really only a placard.
– If the banks presented at the Treasury all the notes that they hold, and demanded gold for them, what would become of the reserve?
– If the banks demanded sovereigns for their notes, what would happen ? The Government have an income, in the shape of revenue, of over £21,000,000 a year. We have always a large amount to our credit at the bank, and we have lent between six and seven million pounds to the States, for which we have the best of security.
– But you cannot get the cash.
– We have better than that. If the banks did demand a sovereign for every note in circulation, there would be no difficulty in finding the money. The States have Savings Banks of their own, and, if necessary, as they owe us money, we could get accommodation from them. To put a case on the other side, if all the people who have deposits in the private banks presented their bank books, and claimed their money from the banks at the same time, would the banks be able to pay them? The whole success of banking depends upon confidence. The greater the confidence which the people have in the Commonwealth Bank, the greater will be its stability. No private bank can have a greater stability than the Commonwealth Government. This Parliament controls all currency, and represents the whole of the people and institutions of the Commonwealth. If the Government want to keepnearly £3,000,000 out of circulation and earn no interest on it, the people will say, “ These men are not business men; they are keeping a lot of money lying in the strong-room earning nothing.” I see no advantage in or necessity for this Bill. If all the banks took the precautions which the Treasurer wants to take, they would not make half their present profits. The whole system of finance depends on healthy circulation, but this Bill is an attempt to stifle that circulation. It will be of no use to the country, and will certainly deprive the Government of a good deal of revenue; but seeing that Ministers are not going to be long in power, I have no objection to helping them to pass it.
Question - That the Bill be now read a second time - put. The House divided.
Majority … … 1
Question so resolved in the affirmative.
Bill read a second time.
Clause 1 agreed to.
Clause 2 (This Act shall commence on a day to be fixed by proclamation).
.- Why does the Treasurer desire this measure to- be brought into effect by proclamation? He made no reference to the fact in. his speech.
– It is not unusual.
– It is quite unusual in
– We may not have the gold there to start with.
– If this legislation is part of the Government’s policy, it ought to be so framed as to operate as soon as it receives the Governor-General’s assent. Otherwise, it may or may not be proclaimed.
– If it were not proclaimed, it would suit you.
– Then the Government want to have this string to their bow - to use or not to use?
– What we are doing is perfectly genuine. We have a 43 per cent, reserve now.
– If it is perfectly genuine, the Government, of course, will be quite prepared to protect the public interest, from their point of view, by bringing the enactment into operation at once. The basis of this legislation, from the Treasurer’s point of view, is that it is necessary to have the larger amount of gold in reserve for the safety of the public, who hold the notes. It is said by the Treasurer that the people who are holding Australian notes will have their credit endangered because of the amount of gold in the Treasury.
– I said the very opposite. It was not on that ground at all. It was the future that I was thinking of.
– Then, apparently, there is no need for the Bill; but, even admitting it is necessary, then the measure should come into operation so soon us it is assented to, and it should not be left to any Government to proclaim or not proclaim it. The law now provides ( hat the Treasurer shall at all times keep a reserve of not less than 25 per cent, of the issue, but the right honorable gentleman insinuates that, if another Government were in power, the Act would be maladministered, and the credit of the
Commonwealth, and those holding our notes, endangered. He clearly tries to convey the impression that the present Act does not give sufficient security to the people who hold our notes. He has brought down a Bill to make it statutorily impossible for a Treasurer to hold less gold in reserve against an issue of £7,000,000 than £1,750,000, and a sovereign for every £1 note issued in excess of £7,000,000.
– That was provided in your first Act.
– Certainly, our first Act was on those lines. The many bankers who came into conference with me before the matter was brought on at all were in favour of limiting the issue to £6,000,000. They were kind enough to give their opinions to that effect.
– That was in order to defend themselves.
– No. . They were perfectly prepared to discuss every phase of the question, and they did it well. Mr. Archibald. - They did not know much about it.
– I pay them the courtesy and justice of saying- that they gave me, honestly and fairly, every information in their possession. Their idea was not to have a ‘large State issue of paper. They thought that for some years the Commonwealth would not have an issue of more than £6,000,000 or £7,000,000.
– There was not more than £4,000,000 in circulation then.
– There was a very limited issue of paper, and it is to the credit of the Australian Notes Act that the issue of paper money doubled within a couple of years.
– Only apparently; because previously there were notes in existence to the value of £9,000,000.
– There was £4,000,000 in the tills and £4,000,000 in actual circulation.
– As the only reason foi passing a financial Bill is that it is urgently necessary to protect the interests of the public, I would like the Treasurer to explain why he proposes that this measure shall not come into operation at once ? If the Government have made up their minds that the Bill is necessary, they should take- the steps to make it an enactment, and throw the responsibility on every future Treasurer to carry out their views upon the matter until Parliament expresses its will otherwise. Certainly, it is not proper for Parliament to express its will in definite terms and leave it to Ministers to proclaim a measure as they think fit.
– The Bill must be carried out in its entirety when it is passed, but a little time will be needed in order to prepare for it, I think we have just about enough gold to comply with the provisions laid down; but if the Bill became law immediately upon its being assented to we might not have enough gold in reserve. A little time is necessary to enable us to see that we are thoroughly prepared. It is quite a usual thing for an Act to come into force by proclamation. At a circulation of £7,000,000, the present law provides for a gold reserve of not less than £1,750,000; but, if it were necessary to hold the proposed reserve, we would need to hold £3,750,000 on a circulation of £9,000,000.
– On an issue of £10,000,000, you would need to hold £4,750,000.
– It is not supposed that the circulation will increase beyond £10,000,000, and, with a reserve of 331/3 per cent., we should need to hold £3,333,000; but, under the proposal in the Bill, we should need to hold £4,750,000, whereas under the 40 per cent, plan, to which we are at present adhering, the amount would be £4,000,000. As a matter of fact, in accordance with the practice actually carried out by my predecessor, and followed by myself, it might be £4,200,000.
– I promised that, but I did not approve of it.
– You promised to keep to it until after the general election.
– That is so.
– I found it was the practice when I entered the Treasury, and it is the practice now.
– Do you think that £4,000,000 is absolutely necessary as a reserve against a circulation of £10,000,000?
– I am inclined to think so. In times of peace, I do not think anything is necessary by way of reserve, but what we have to think of is the future, and times of difficulty.
– Is the honorable member afraid of private banks coming at us? One can see that the banks are driving Ministers.
– The honorable member has no right to say that. I have not spoken to a banker on the subject, nor have the bankers interviewed me upon it. I said clearly, in moving the second reading, that we intended to reinstate the
Original Act as passed by our predecessors, not because it was considered that the present issue is unsafe, but in order to provide proper safeguards for the future. I am not considering the party to which a Ministry may belong - Ministries will come and go long after we have departed - but I consider it is the duty of a Government, if it has any ideas on a subject, to try to place them on the statutebook. We have strong opinions upon this matter. We consider that, in these early days of the Commonwealth, we should “ gang warily.”
– Where does the danger lie!
– I could hardly expect to convince my honorable friend, hut I have tried my best to place the Bill fairly and fully before the House, and cannot do more. The reason, as I have said several times, why we propose that this Bill shall be brought into operation on a date to be proclaimed, is that we desire to prepare the way, and to have in hand the required reserve. Once having the required reserve at the Treasury, we shall be able to keep it there.
.- The Treasurer now tells us that it is proposed to bring this Bill into operation on a date to be proclaimed, so that the Treasury may be able to prepare the way, and have in hand the gold reserve necessary to comply with its provisions. A few moments ago, however, he said that’ the late Government had maintained a gold reserve of 42 per cent. That would meet the requirements of the Bill.
– When the Treasurer makes these varying statements we are inclined to ask whether he is sincere in bringing down this Bill. In answer to the Leader of the Opposition, who said that the Bill should be brought into force as soon as it became law, the right honorable gentleman said, “If we did not proclaim it that would suit you.”
– I meant that it would be in accordance with that which he is advocating.
– it is difficult to know what the right honorable member meant. When the original Bill was before this House he said that a gold reserve of 25 per cent, would be sufficient.
– What I said on that occasion has already been read two or three times.
– I am going to read it again.
– I stand by what I said.
– The right honorable member then said–
As to the proposed reserve, I think that 25 per cent, of gold should be sufficient; but it might be better to make it a little larger at first, as probably, as the public become used to them, gold will be less in demand.
– I then had more freedom, and less responsibility.
– And this is the statement of the Treasurer, who has said from many platforms that we are Caucus bound ! Is he eating more dirt as usual.?
– - The honorable member ought not to be rude.
– Is the Treasurer held down by the Caucus or his colleagues in the Cabinet!
– When I said that I then had more freedom and less responsibility, I was merely quoting Gladstone.
– Are we to come to the conclusion that the right honorable gentleman, when in Opposition, feels that h e has no responsibility, and is prepared to make inaccurate statements - statements that are diametrically opposed to those which he makes when in office?
– I think that the Speech from which the honorable member has quoted was a very good one. I have not read it for a year or two, but it was fairly near the mark.
– Then the Treasurer believes not in this Bill, but in the view expressed by him, when the Australian Notes Bill was before us, that a gold reserve of 25 per cent, would be sufficient ?
– I modified that statement a little.
– The right honorable member said distinctly -
As to the proposed reserve, I think that 25 per cent, of gold should be sufficient ; but it might be better to make it a little larger at first . . .
The reserve was made a little larger. It was eventually decided that there should be a reserve of not less than 25 per cent. This Bill is merely a political placard for electioneering purposes. The Treasurer is dressing the political shop window, with the -object of making the people believe that the present Government are placing the note issue on a firmer basis. He knows, as a matter of fact, that the gold reserve has actually been maintained at the level for which this Bill provides,, and under this clause he practically admits that the Bill may not be brought into operation.
– We shall proclaim it as soon as we can.
– I should not have risen but for the Treasurer’s statement in reply to the Leader of the Opposition, ‘ If the Bill were not proclaimed it would suit you.” The inference is that the Government are not going to proclaim it.
– I did not mean that, and I have already said so.
– I have no desire to misrepresent the right honorable member, but in view of his contradictory statements I am forced to the conclusion that the Government do not propose to proclaim this Bill. They will tell the country, as the honorable member for Calare and the honorable member for Werriwa have already done, that they took steps to place the note issue on a sound financial basis by increasing the gold reserve. They will not tell the public, however, that they have locked up a lot of gold, and by doing so have practically deprived the country of a revenue amounting to nearly £40,000 a year. I have always objected to Acts being brought into operation by proclamation.
– What about the Excise Sugar Act and the Sugar Bounty Act?
– I was just about to say that there are occasions when it is impossible to do otherwise than to provide that a Bill shall come into operation on a date to be proclaimed. The Treasurer already has a gold reserve sufficient to comply with the provisions of this measure.
– We have not.
– We are getting nearer the facts. The late Government really maintained the gold reserve at the level for which this Bill provides, but the present Government have allowed it to fall below it.
– That is incorrect. The Treasurer gave the Committee the exact figures.
– He could not tell as the exact amount of the note issue.
– I have the figures here.
– The Treasurer has the figures in his typewrittenspeech. He told us a little while ago that he could only give us an approximate estimate.
– On the 9th September the note issue amounted to £9,266,000, and it is something like that amount now. The figures are published every week.
– The Treasurer should be prepared to give us the exact information.
– It is near enough, I think.
– Order ! The matter now being discussed is really outside the scope of the clause.
– The clause provides that the Bill shall come into operation on a date to be proclaimed, and we have been told by the Treasurer that this is because he desires to prepare the way, and to bring the gold reserve up to the required level. In these circumstances we wish to know exactly how the reserve stands ?
– The gold reserve at present is £1,785,000 in excess of the 25 per cent. It is 42.85 per cent, of the note issue.
– That is more than the reserve required by this Bill.
– Why should it be necessary to wait some time before proclaiming the Bill ? The late Government left in the Treasury a gold reserve sufficient to comply with the provisions of this Bill, and the ex-Prime Minister promised to keep the reserve at a certain level.
– We have a bigger reserve than the late Government left.
– When will the reserve be sufficient to enable the Bill to be proclaimed ?
– In -a very little time.
– The Bill may never be proclaimed.
– It will be proclaimed in a very little time.
– I think we ought to have the fullest information, and that the Treasurer should be prepared to supply it. In the face of the Treasurer’s previous statement that he believed 25 per cent, a sufficient reserve, we are quite justified in taking exception to the proposal. I trust that the Treasurer will give us some additional information.
– What about?
– When the Treasurer introduces an important Bill like this, he should be able to tell us his exact financial position. He should inform us as to the number of notes in circulation and the percentage of gold reserve, and, if there is any shortage, the amount that will be required. He should also give us
Rome idea as to how long it will be before he makes up the necessary amount, in order to proclaim the Act.
.- I am surprised at honorable members opposite objecting to the Bill being brought into operation by proclamation. In their own Act of 1910 it was provided that it should commence on a day to be fixed . by proclamation, and so with the Act of 1911; and these Acts came into operation by proclamation for exactly the same reason that the Treasurer now advances. Surely what was right when the Labour Government were in power is right now? The question is whether the course is the right one; and it does not matter which party introduces the measure. I agree with the Leader of the Opposition that it is objectionable, as a rule, to proclaim Acts ; but there are certain measures, such as those connected with Excise, in which the practice is desirable; and I think that the Bill before us comes within that category. It would be impossible for the Treasurer from day to day to know what the amounts are, and he has, perhaps, to look a week ahead; and, under the circumstances, it may be impossible for him to say now at what date the measure should come into operation. The honorable member for Gwydir, in an interjection, said that the Government were acting at the dictate of the banks. The honorable member did not understand that the gold paid by the banks is going into the Treasury to be kept there, which is the very purpose of the Bill. However, we can understand the honorable member becoming muddled, because this is a financial matter. This Bill is promoted in the interests of the poorer people, because, if there was a run, the banks would present their notes first, and the other holders, who would be mostly the poorer portions of the community, would be left lamenting for a while, because, of course, all demands would eventually be met. If the banks part with their gold to the Treasury, they will, of course, desire to see confidence maintained, because, as large holders, they would naturally not like to see any depreciation in value. I admit that, in one way, it is to the interest .of the banks to have gold kept to meet the notes, but otherwise it is immaterial to them.
.- I understand that, when this Bill is brought into operation by proclamation, the Government, from that day forward, will make no profit on the issue over £7,000,000, but that over that amount pound for pound will be kept in the strong room. What interest have the Government in allowing notes to be issued up to £10,000,000, seeing that they are to have no profit on the issue over £7,000,000 ? It costs something to print, circulate, and otherwise deal with the notes ; and to keep the balance over £7,000,000 for the convenience of the banks-
– Not for the convenience of the banks, but for the convenience of the people of the country. The fiduciary issue will be only £5,250,000.
– The expenses to which I have referred will reduce the profit on the £7,000,000.
– We are not thinking of profit, but of the convenience of the public, and of a stable currency.
– The Government ought to be recouped for the expense of printing and circulating the notes. Would the Government be prepared to issue up to £15,000,000 or £20,000,000 in notes and receive no compensation for the expense incurred over £7,000,000? I suggest that the Treasurer should consider the advisability of not issuing more than £7,000,000 of notes.
– The country cannot lose by it.
– The country must lose by it, and the banks must profit.
– Make a profit, then, and ruin the currency !
– That is not a statesmanlike answer.
– It is not a statesmanlike question.
– Would a private firm issue more notes than they could make a profit on ? I understand that this is a business transaction.
– I have answered the question already. The fiduciary issue will be only £5,250,000.
– I must conclude that the Treasurer has not considered this phase of the matter, and, that being so, hia irritation is understandable. I leave it to the country to say whether the Government are doing right in providing for an unlimited note issue for the convenience of the banks, from which the country will get no profit beyond the first £7,000,000 issued. We should deal with the banks as with other institutions, and in giving them the right to use our notes, we should make them pay us for the convenience. But the Government are providing that the note issue may go to £15,000,000 or £20,000,000 without the country making any profit except on the first £7,000,000. Ministers might as well go a little further, and provide that no profit shall be made on any part of the note issue.
.- I am sorry, on my return after a few weeks’ absence, to miss familiar faces from the chamber, and express my regret at what has occurred during my absence. The Leader of the Opposition has done right in trying to ascertain from the Treasurer why he proposes that the Act shall come into force on a day to be fixed by proclamation instead of immediately the Governor-General has assented to it. The honorable member for Werriwa, as usual, has been looking up Hansard in the attempt to prove that what is now proposed is in keeping with what was done by the Labour party when in power. He argues that, because the original Act came into force upon the issue of a proclamation, this Bill, when passed, should also be brought into force in the same way. He fails to see that the position of things to-day is very different from that in 1910. When new legislation has to be brought into force, there are a great many preliminaries to be attended to. A great many things had to be done before the Government note issue could be arranged. There is not all that preliminary work to be done in connexion with this measure. One would imagine, too, that the Bill, having been introduced at this stage of the session, is an emergency Bill, and should come into force at once. To show that it is not urgent, I draw attention to the fact that the percentage of gold held in reserve against the present note issue is 42.8 per cent., or £4,150,000. Practically the same amount would be held in reserve if the Bill were law today.
– But suppose that the note issue suddenly increased next year by £3,000,000.
– I take it that it there were a sudden expansion of the note issue, it could be met by the law as it stands, which requires a gold reserve of not less than 25 per cent., with, as the Leader of the Opposition has explained, a margin going up to 33 per cent. Such a reserve is regarded all over the world as sufficient for any note issue, and a national note issue so protected would, therefore, be doubly safe. The honorable member for Werriwa wanted to know how the Bill will benefit the banks. It will benefit them in this way: On a note issue of £9,500,000 the Treasurer will be compelled to hold in reserve £1,875,000 worth of gold more than he need hold under the law as it stands. That money will be useless to him. He will not be able to lend it out or use it himself, and, as he is short of money, he will have to go into the market and borrow from the banks, which means that they will be able to get a return of about £40,000 a year on their advance. Instead of the State making £40,000 a year by lending out the money, it will make nothing, and will have to pay £40,000 a year for borrowing a similar sum. A proposal like this does not indicate the possession of great financial ability. The Treasurer has not told us why he wishes to provide that the Bill shall come into operation on the issue of a proclamation. What is the hidden reason for this proposal? I wish to know from him, in addition, why he holds an opinion now, in regard to the reserve that is necessary, differing from that which he held when a Commonwealth note issue was first proposed? He then said that a gold reserve of not less than 25 per cent, would be sufficient. But now he proposes to keep a reserve of 25 per cent, for the first £7,000,000, and £1 for £1 over that amount. That is thepoint the Treasurer has to explain away if he can. Surely he, whom I always looked upon as the acme of consistency in days gone by, has not so far fallen from grace in the short time that he has been in his present company as to change his opinions to that extent! What is the reason for his change of front? It is unwise for the Government to throw away their borrowing power. They cannot borrow on the open market so cheaply as they can from the bank-note fund, where they have no brokerage to pay, and less interest; yet they are wilfully throwing themselves into the hands of the private financial institutions to the extent of £1,250,000 on the present note issue; while, if the issue goes up to £10,000,000 or £12,000,000, as it may easily do, they will be crippling themselves to a proportionately greater degree. In trying to show that they know more than the Labour party, they are taking a retrograde step, one against the best interests of the country. This kind of financing is not creditable to the Treasurer, or to the party to which he belongs. The Treasurer says that he is only reverting to the first Bill that was introduced by the Labour party. That is what the Government did with- the postal vote. They do not seem to be able to frame a Bill of their own. They have to dig in the waste-paper basket and drag out some old piece of legislation that the Labour party threw away years ago. They are plagiarists of the worst kind. Because the Labour party found it necessary to introduce the first Bill on this subject by proclamation, when the conditions were totally different, the Government slavishly follow suit on this occasion, when there is not the slightest necessity to proceed by proclamation. It is of no use for the Treasurer to say that the object of the Bill is to safeguard the note issue. Its effect will be to limit his_ power to borrow money in the cheapest market, and drive him into the dearest. This is a borrowing Government. “ Borrow, and the results be blowed,” is the Treasurer’s policy. If the Government go on as they have been going, they will involve us in the payment of thousands of pounds every year in interest. If the Treasurer could show us, by the experience of other countries, that 25 per cent, is not a safe margin, there would be some logic in his reasoning, but he has never done so. Surely, if he did not know the conditions prevailing in other countries, he could get his officials to look up the facts for him, so that he could present them to the House. With that information before him, he would be able to judge what was a safe margin for a national institution, and what was safe for a private banking institution. While 25 per cent, would be absolutely safe for a Commonwealth Bank, 50 per cent, might be unsafe for an ordinary financial institution. The Treasurer does not seem to realize the strength of this bank. He does not seem to know that the people, and the credit, and all the resources of Australia, and all the taxing powers of the Government, are behind it. The right honorable gentleman has such a high opinion of Australia that he openly declares that we cannot safely issue £9,500,000 worth of notes unless we put in the Treasury strong-room £1 for £1 for all notes issued over £7,000,000. When another honorable member was speaking, the Treasurer interjected, “ Make profit and ruin your currency.” This meant that if we kept a reserve of only 25 per cent, against the whole of the note issue, and made an additional profit on the amount of the issue over £7,000,000, the country would be ruined, because to ruin the national currency must ruin the country. The Treasurer knows better, because, in the speech from which I have already quoted, he deliberately said -
As to the proposed reserve, I think 25 per cent, of gold should be sufficient. It might be better to make it a little larger at first, as probably, as the public become used to them, gold will be less in demand.
That sentence ought to be printed as a headline to this Bill. There is no necessity for the measure, because there is as much gold in the reserve now as the Bill requires, on the present basis of an issue of £9,500,000. The measure is only a make-believe, and need not be put into force’ by proclamation, or in any other way; but the Government have to fill up the session with something. Every Bill they bring in is proved to be absolutely unnecessary and useless. This measure will not make us more solvent than we are to-day, and the only reason the Treasurer can possibly have for introducing it is that he is favoring the private banks, by refusing to hold a fund which he might safely hold, and from which he could borrow on the most legitimate and easyterms for the benefit of the Common-‘ wealth. He will be forced to borrow nearly £2,000,000 from private institutions, paying more interest, and all the brokerage and other expenses incidental to loans, and at the same time be unable to regulate to his own liking the terms* of the loan! As there is no need for the Bill, and no virtue in it, it ought to be withdrawn as quickly as possible.
– Order ! The honorable member is now discussing the Bill as a whole.
– Instead of being proclaimed, the Bill ought to be withdrawn. It is simply another evidence of the lack of ability, the futility, and the barrenness of the Government. It brings forward only make-believe, useless legislation.
– It is not creditable to the Government to attempt to bring this measure into force in the way they are proposing-. If there is need for the Bill at all, there is immediate necessity for it. If there is no immediate necessity for it, there is no need to have the Bill in order to carry out what it proposes, because by administration the Treasurer can keep his reserve as high as he wishes. During the recent elections we were told that the Labour party had restricted currency by the note issue, and that the banks had been robbed of their till money, but I would point out that, if this Bill passes, it will still further restrict the circulation of gold, and the banks will be able to charge the authors of this legislation with having restricted the currency. If the Government immediately proclaim the measure, they will receive the blame for further restricting the circulation, but they do not intend to issue any proclamation until they feel the Government benches slipping away from them. Then they will proclaim the Act in order to make it necessary for future Governments to bring in fresh legislation so that they may enjoy what the present Ministers are enjoying through the limitation imposed by the existing Statute. The Leader of the Opposition has spoken to-night of certain information that was given to him by the Associated Banks, and he has told us that they considered it would be sufficient to have notes in circulation to the value of £6,000,000. But they must have known it would not be sufficient.
– There was less than £4,000,000 in circulation, but they did not reckon on the till money it would be necessary for them to keep.
– The Treasurer has struck the point. The banks were really operating on £9,000,000 in notes, but paying duty on £4,500,000. They used the sovereigns they received for the £4,500,000 in circulation to replace the £4,500,000 in the shape of notes held in their vaults, and thus evaded paying duty on the latter amount. That is why, when the Australian note issue came into existence, there was double the previous apparent note issue in circulation. I consider that the Government are not playing fairly by leaving this measure to be proclaimed. They will only issue the proclamation when they find the legislation they propose will have the effect of restraining some other Government from operating on the funds that they can now utilize. Unwittingly, perhaps, they are not giving the people of Australia a fair deal by this legislation, because they seek to retain for themselves certain rights which they will not concede to any Government that may follow them.
Clause agreed to.
Clause 3 -
Section9 of the Australian Notes Act 1910- 1911 is amended by omitting sub-section (I.) thereof, and by inserting in its stead the following sub-section : - “ (1.) The Treasurer shall hold in gold coin a reserve as follows : -
an amount not less than one-fourth of the amount of Australian Notes issued up to Seven million pounds; and
an amount equal to the amount of Australian Notes issued in excess of Seven million pounds.”
.-I move -
That all the words after “issued,” line9, be left out.
If this amendment be agreed to, the subsection will provide that the Treasurer shall hold in reserve an amount not less than one-fourth of the amount of Australian notes issued.
– That would be the present law. Why not reject the Bill ?
– The present law is quite satisfactory. If the Treasurer considers it insufficient to hold a 25 per cent, reserve, which really means 33 per cent. - because no Treasurer can cut it down to 55 per cent. - he can keep the reserve as high as he likes. Therefore, the Bill is quite unnecessary. I move the amendment because I believe it will be in the interests of the people, and because the Bill, as framed, will deprive the taxpayers of a large amount of interest. I take an issue of £10,000,000 on which to base my figures. Under the provisions of the Bill, there must be a reserve of 25 per ‘ cent, for the first £7,000,000; that is, the Treasurer must hold a reserve of £1,750,000, leaving £5,250,000 to invest, which, at 31/2 per cent., would earn in interest, per annum, the sum of £183,750. But the Treasurer would not invest every penny of that £5,250,000. As he must have a working margin, he would retain a reserve of, say, 331/3 per cent. By amending the clause as I suggest, and still working on the basis of an issue of £10,000,000, and retaining a margin of 40 per cent., which is 15 per cent, more than the Treasurer provides for up to £7,000,000, there would be £6,000,000 left for investment, which at 31/2 per cent, would earn £210,000 per annum, or £26,250 per annum more than could be earned under the provisions of the clause, provided the Treasurer would invest every penny above 25 per cent. Therefore, by the Bill, the taxpayers will be deprived of £26,250 per annum. We are not justified in passing a Bill that will do this.
– Why not have no gold at all in reserve?
– The right honorable gentleman is talking on the ridiculous side. Will the Treasurer contend that 40 per cent, is not a good reserve against a note issue? By passing this measure, we shall deprive the taxpayers of £26,250 per annum, and the Treasurer will put himself in a difficult position, because, if he remains in office long enough, he may find he will need money to carry on public works.
– There is no doubt about it. It shows how self-denying we are.
– But the right honorable gentleman will tie the Commonwealth down so that Ministers can only use a limited sum of £5,250,000 for Commonwealth purposes, and at the same time the balance between that amount and £10,000,000 will lie idle in the Treasury. If we wish to borrow £5,000,000 with which to build big national works, though we have this money lying in the Treasury, we shall have to go elsewhere for it, and pay interest to other people.
– On an issue of £10,000,000, you would not have much more to. invest than we propose.
– We would earn at least £26,250 per annum in interest on the money which the Treasurer proposes to lock up in the Treasury; and the people of Australia would be paying that interest to themselves, taking it out of one pocket and paying into another. The Treasurer need not be afraid of any difficulties with a reserve of 40 per cent, behind the notes. He need not be afraid of a panic. The only thing that would cause a panic in Australia would be in consequence of private banks having control of the note issue. In the case of private concerns, people are afraid. The least thing that comes along, and shakes their confidence in private financial institutions causes a rush upon those institutions, but when they know that the Commonwealth, with all its resources, is behind the note issue, who will rush us?
– What about our being at war?
– I am not afraid of that. When that times comes, the note issue will make good. The people will know that they will always get 20s. in the £1. During the banking crisis of 1893 - and there was no war at that time - the people were rushing the private banks, withdrawing their deposits and demanding gold in exchange for their notes. What saved the situation? The Premier of New South Wales, Sir George Dibbs, announced that the credit of the Government was behind the note issues, and that at once put a stop to the panic. In that case the State saved the situation, and surely the Treasurer will not contend that there will ever be any scare in regard to the national note issue when the whole of the resources of the Commonwealth are behind it. When the note issue was controlled by the private banks, they did not keep a sovereign for every pound note issued. They made money out of the issue. They promised to pay on demand a sovereign for every note, out they kept in their tills only a reasonable amount in gold to meet any sudden demand. I venture to say on many occasions there was not a gold reserve of more than 30 per cent, behind their note issue. If my amendment be carried, it will leave the law as it stands to-day. I regard this Bill as a fatal mistake. It is quite unnecessary. The Treasurer says that it is necessary to protect the public. My answer is, that as long as he is Treasurer he may keep the reserve as high as he pleases. He will, of course, have to answer to the people; but there is really no necessity to maintain such a reserve as he now proposes. We have the security of the States in respect of any money that we lend them from the Notes Fund, and there is no danger in that direction. If, later on, we have to borrow money to construct the transcontinental railway, as well as railway lines in the Northern Territory and in the Federal Territory, surely it is not reasonable that we should have to go into the open money market for it, and pay interest to private money lenders, when we could, borrow from the Notes Fund, and so pay the interest to the people themselves. There is no justification for the Bill.
– It is exactly the same as the measure that the Labour Government first brought in. What has happened since to make wrong what was then right?
– The Labour Government. showed their prudence in acting1 as they did. We did not want to go too far, and we were very careful. But when experience showed that it was not necessary to maintain such a gold reserve as that for which we first provided - that we could invest a portion of the Notes Fund and earn interest, which could be added to the fund itself, we decided to do so. The present Treasurer, in discussing the Australian Notes Bill, said that a 25 per cent, reserve was sufficient.
– There was a qualification attached to that statement.
– The only qualification was that “ we should have a little more at the start.”
– Quite so. My amendment will enable the Government to keep a reserve of 80 per cent, or 90 per cent., if they like, but we should not be justified in passing the clause as it stands. We may find it necessary to borrow money from our own Trust Funds, and we should not pass a Bill that would tie us down in this way. I therefore submit this amendment, in what I believe to be the best interests of the country.
. -The Treasurer, by way of interjection, referred to the position of the reserves in the United States of America, and I replied at once that his statement was incorrect. I had before me at the time an authority on the subject, and I have verified my statement By a reference to Webb’s New Dictionary of Statistics, in which it is said that the ratio of the reserves to the deposits is 21 per cent. The Treasurer was under the impression that the reserves in the United States of America were very high, having regard to the notes issued. In 1903 the ratio of reserve to deposits there was 22 per cent., but in 1907 it was only 21.3 per cent.
– I think that is the proportion to the whole of the deposits of the banks.
– It includes the whole of the gold reserves and the whole of the liquid assets. The New Encyclopaedia of Social Reform refers to the fabulously large individual deposits in the banks of the United States of America - which amounted to £2,357,000,000 in 1905 - and states that in 1897 the ratio of reserves to deposits was 31 per cent., whereas in 1905 it had been reduced to 21.7 per cent.
– Does not that include all fixed deposits?
– It includes the whole of the fluid assets. The AttorneyGeneral will remember that in the boom time here the assets of our- banks, on paper, were far more than their liabilities, but that when they attempted to realize on them a different tale was told.
– They vanished into thin air.
– The assets were still in existence, but confidence had been destroyed, credit had been lost, and the debacle followed. If this amendment be carried, the Treasurer will have power to invest a portion of our gold reserve over and above a certain percentage. It seems absurd that we should keep locked up such a large gold reserve as that which the Government now propose to hold. Great expense is incurred in guarding it. and in providing for the note issue. Our present note issue represents 10 tons of paper, and the cost of this paper, and the printing of the notes; is very heavy. What private banking company would print notes at its own expense, unless by doing so it knew that it would make a profit? Our present note circulation is £9,500,000, so that, if the clause as it stands became law, we should have to maintain a gold reserve of 44.7 per cent. There is no country in. the world where there is a note issue like that of the Commonwealth. There are neither current account deposits nor fixed deposits against our national issue. It is a purely Government issue, and when we lend any portion of the Notes Fund to the States, we have their gilt-edged securities behind those loans. With a £10,000,000 issue we should have, under this Bill, a gold reserve of £4,750,000, or 47 per cent.; with a note issue of £15,000,000, we should have a gold reserve of £9,750,000, or 65 per cent. ; and with a note issue of £20,000,000, as we might have ten or twenty years hence, we would need to keep, under this Bill, a gold reserve of £14,000,000, or 731/2 per cent.
– We are not providing against all future time; we are simply providing a reasonable safeguard for the immediate future.
– The Government want to have some gold to save the banks when they go “ bung.”
– The AttorneyGeneral knows very well that our system is very different from that of any private bank. Under the Victorian Act, any company or individual with assets amounting to £125,000 could have a note issue of millions. There was no limitation to the issue,, and, as I have already shown, it was all moonshine to say that the notes of the private banks were a first charge on their assets. There are 30 tons of gold locked up in the Treasury, and it belongs-, not to the banks, but to the people. Thirty lorries would be needed to move such a reserve, and it is proposed to add more, simply because this is a borrowing Government who like to go to the “three-balls” in England begging for money. As the Bulletin says, however, “ Cohenstein “ will surely get tired. Is there any private person who would be so foolish as to put his gold in a locker and make no use of it? I remember when the unemployed in Victoria were sought to be made use of by a certain gentleman who wished to “ smash “ a bank-; but I had the honour to prevent this, and to receive the thanks of the directors for doing so. The idea was that these men should rush with their notes to the bank; and we can quite understand how every little depositor with a little current account would have been madly nervous. In the present case, however, there are no current accounts and no deposits; and we present the first instance in the world where the Government have made the currency gold, silver, copper, and paper. The Treasurer actually did not understand the increase of the ratio of the percentage, when he was corrected by the Leader of the Opposition, and he became so muddled that I was sorry for him. The statement that the Treasurer has made here to-night is so ridiculous that I had better not further refer to it, in case I say something harsh. I look forward to the time when keen financial brains, not warped within the narrow limit of the present banking system, will be prepared, with a clearer view, to face what the century must face. If the Government, by strength of numbers, defeat the amendment moved by the honorable member for Hunter, I hope it will be made in another place, so that we may have a further opportunity of voting for it. If we had the referendum and initiative, I am confident that the people would say they were quite content with the guarantee of the Commonwealth, backed up by 25 per cent, of gold.
– I do not know why the Treasurer and the Government are so insistent on this clause, which will practically mean at least a 50 per cent, gold reserve. Experience shows. that a reserve of “not less than 25 per cent.” means really a reserve of about 30 per cent., and the proposal of the Government will, therefore, mean, as I say, at least 50 per cent., because, in order to be perfectly safe, there must always be a margin to work on. The Savings Banks returns show that hundreds of thousands of pounds are deposited there, without interest, by the timid people of the country; and this is because those people know that the Savings Banks are guaranteed by the various Governments, and that their money is perfectly safe. If people have this confidence in the Savings Banks, they will have quite as much confidence in a note issue backed by the Commonwealth. The Government and their supporters, in insisting on an excessive gold reserve, are practically expressing a lack of confidence in the country in which they live. The Treasurer, in introducing the Loan Bill, complained that the late Government had so invested the Trust Funds that he could not lay his hands on money which he needed ; and yet we find him now proposing a restrictive measure, and thus preventing himself from earning money for the people by locking up hundreds of thousands of good golden sovereigns. In this I cannot see any consistency on the part of the Treasurer. The proposal of the Government is neither more nor less than a pretence to make the people believe that the note issue is not quite safe.
– Is that the pretence the late Government made when they increased the reserve?
– The Treasurer, when the Bill of 1910 was under discussion, said he believed that 25 per cent., was sufficient, but that, in the initial stages, it might be advisable to have a little more. The Leader of the Opposition, when, as Treasurer, he introduced the second Bill dealing with the note issue, bringing down the reserve to 25 per cent., gave a pledge, in order to allay any fears, that, until after the general elections, at least 40 per cent, would be held.
– In the first instance, I said that I was never in favour of more than 25 per cent.
– When the present Government came into office the Treasurer said that his predecessor had been true to the pledge, so that the interjection of the Attorney-General does not apply.
– What is the average reserve throughout the world? It is over 60 per cent.
– The banks of the world do not hold more than 50 per cent., on the average, against the whole of their liabilities, so I do not, therefore, see how there can be 50 per cent, against the note issues. No country in the world except Queensland has ever adopted a note issue such as we have, and yet Queensland, as asingle State, conducted that note issue for nineteen years with a very low reserve. Where the credit of the country is behind the note issue, everybody knows that it is safe. It is a foolish thing to lock up money. We might just as well follow the example of the natives of India, who hide their savings in a hole in the ground. The Treasurer, and those who support him, seem to be doing much the same thing. I am afraid that this little baby of his will never come to maturity, and that it will get very short shrift in another place. To discuss the measure is merely a waste of time. The Bill should be withdrawn. To amend the existing law would be very foolish, and the Government ought to be content to let well alone.
– I shall support the amendment, because it provides a< sound basis for the note issue, backed with a gold reserve, and I am surprised that the Treasurer, or some other Minister, has not made a reply to my statement earlier in the afternoon that, in dealing with currency, you cannot ignore the cheques and bills which form part of it, just as do coin and notes. I expected from the learned and distinguished financiers on the Treasury bench some recognition of the big alteration in currency, which is increasing every year, and which was such a marked feature of the last years of the nineteenth century. The honorable member for Wannon spoke of the relation of coin and bullion to currency in other places, and wished to compare it with the relation here. But, as I have already pointed out, any one who tries to compare our own with the financial conditions of France or Germany, or any other country in which cheques and bills are not used to the extent to which they are used in Great Britain, and in the Commonwealth, is either ignorant, or wishes to cause confusion.
– The more you increase that kind of currency, the greater the necessity for gold reserves.
– That is not borne out by experience. London is <now the financial centre of the world, because of its sound banking system. Ten or twenty years ago, it was a common thing for meetings of leading bankers there to declare that a bigger gold backing to the Bank of England was essential ; but that opinion is .not so often expressed now, because the clearing-houses of the banks show a tremendous expansion of the currency by the use of cheques and bills.
– Every banker and financier will say that the increase in the note currency indicates danger.
– That may be so with an increase in the note issue of a private bank, but with that I have nothing to do now. I do not say that there is any bank in Australia which is not solvent. The position of a bank depends entirely upon the nature of its securities, which may be dead or alive, and managers and directors who know their business see that their bank’s securities are alive.
– What is the reserve held in the Bank of England ?
– It rises and falls, like the mercury in a barometer, with the discount rate. If gold is going out of the Bank of England, the discount rate increases rapidly. No one ever bothers about the amount of coin or bullion in the Bank of England. I referred this afternoon to an occasion when the discount rate went up to 10 and 12 per cent., and the Chancellor of the Exchequer stipulated that notes were not to be issued if the bank rate went below 10 per cent. The Treasurer is proposing to disturb the currency of Australia. The average citizen who has not made a study of these questions will naturally suppose that the basis of the note issue determined by the last Government is not a sound one. This Government is practically depreciating the currency of Australia, which is a wicked thing to do. Therefore, I ask for a reason for the proposed increase in the reserve, in the face of the increase in the currency. The Treasurer should have told us the value of the cheques and bills passing through the clearing-houses of the Australian banks, so that we might know the relation of that currency to the gold backing of the note issue. But, notwithstanding the army of officials from which the Treasurer could get information, he has told us nothing. The proposal be’ fore us is not creditable to the Government.
Question - That the words proposed to be left out stand part of the clause - put. The Committee divided.
Majority … … 5
Question so resolved in the affirmative.
Clause agreed to.
Clause 4 and title agreed to.
Bill reported without amendment; report adopted.
Motion (by Mr. Joseph Cook) agreed to-
That the Standing Orders be suspended to enable the remaining stage to be passed without delay.
Motion (by Sir John Forrest) proposed -
That this Bill be now read a third time.
.- I regret the decision of the House and Committee in this matter, and am of opinion that the people will agree with me when they come to know the facts. If this policy is put into operation, at least £25,000 will be given up immediately, and each additional £1,000,000 that goes into circulation will mean an additional £40,000 a year loss to the people of Australia. At the same time, the Commonwealth will have to pay the expense of providing the note issue, and also for the destruction of worn-out notes. The taxpayers of the future will be the losers by this measure.
Question resolved in the affirmative.
Bill read a third time.
– I move -
That this Bill be now read a second lime.
It is a very small measure, and deals with two matters only. Some time ago the London Post Office submitted to the Department a proposal to admit to the benefit of the English newspaper rate of ½d. per copy in the United Kingdom copies of any publication published in any part of the Empire. The Department took up this proposal, and I think the matter was in hand at the time that my predecessor was in office. It means that by a reciprocal arrangement the Australian papers, after being registered in England within the meaning of the English Act, can be transmitted from place to place there for Jd., instead of paying the existing rates of 1½d. and 2d. At present, if a paper like the Sydney Daily Telegraph is sent from one part of England to another, the postal rate is l£d., and, for the larger edition, 2d. If this Bill is passed, the British Post Office has arranged to reciprocate with Australia, we transmitting British newspapers from one part of Australia to another for id. apiece, the same rate as our own papers pay, while our papers, such as the Australasian, Argus, Sydney Morning Herald, and Daily Telegraph, will be transmitted from one part of the United Kingdom to the other for the same rate-.
– What is the cost of registration for newspapers at Home ?
– There is no cost for registration. They simply have representatives registered there to satisfy the Department of their bona fides. There is no expense at all.
– Then this is only a Bill to assist the newspaper companies ?
– There are a large number of Australians who visit tho Mother Country from time to time, and we have a number of immigrants out here, who at present have to pay the higher rates if they send newspapers to one another. The Bill is certainly a benefit to the newspapers, but it is also a benefit to people who like to receive papers. No doubt the immigrants who come here like to get the English papers, and transmit them from one family to another.
– Will there be any loss to the Department?
– We shall probably make a profit on it, as a larger number of papers will go through the post. If we can afford to transmit our own papers at $d. apiece, we can afford to transmit papers like The Times at the same rate.
– Can we afford to transmit our own papers at $d. apiece?
– Up to the present we have done so, and I presume that we can continue’ to do it.
– Have we done it profitably ?
– I have never had a separate return made out, but we have done it for years. And the more the public have opportunities of reading newspapers the better will be their knowledge of what is going on. I arn sure the public appreciate these facilities, and it is very wise that we should give them. The second clause deals with what we call letter-telegrams or lettergrams. We have a large number of telegraph offices open after 6 o’clock at night for the purpose of receiving telegrams for newspapers - some remain open until 2 o’clock in the morning - but as there is not much work in connexion with receiving these telegrams for newspapers we propose that if a telegram is lodged after 6 o’clock at night forty words may be transmitted at a cost of ls., and the message will be delivered by post in the morning. People missing the mail to Sydney or Brisbane, or to any part of the Commonwealth, even from State to State, can send a telegram containing forty words for ls. The system has been tried, and found a great success in the United States of America and Canada. Every telegram, so sent will be a profit to the Department. At Geelong recently I asked the postmaster if he kept his office open at night, and he informed me that it was kept open until 2 o’clock in the morning to receive a few press telegrams. I asked him whether the operator could also put through 20, 30, or 40 telegrams, and he said that the operator would be rather pleased to do it, because it was difficult to pass the time from the hour at which he com.menced duty until 2 o’clock in the morn ing waiting to deal with these press messages. Thus every telegram we get will be a profit to us. Twenty telegrams sent in the night will mean a revenue of £1. 8
– A business man might wait until night, and send forby words, aud thus make a saving.
– I do not know that even then the messages will nob be profitable. I doubt whether the present telegrams pay at 9d., but these lettergrams will be’ sent at a time when the telegraph offices are comparatively idle. Let me compare this proposal with the operations of an electric light company. Electric light companies sell power at a very cheap rate in the day time, because they must keep their plant going, and all they get in the shape of revenue from power is “ found “ money. All we shall get from these lettergrams will be “ found “ money to the Department.
– Except where it undermines your present patronage.
– I do not think it will do that. As a rule, business people who send telegrams send them at the moment, because the matters are urgent. If a business man wishes to save money he will not telegraph; he will send a letter. These lettergrams will be delivered as letters in the morning. They will be used in a great many cases where people have missed the late delivery. The Department consider that they will be profitable, and certainly they will prove of considerable advantage to the general public.
.- Is the Postmaster-General prepared to adjourn the debate?
– I did not think the Bill would be debated. As the Senate are waiting for work, let us dispose of this Bill before adjourning.
– The first proposal is that newspapers coming from England or Canada, or any other place willing to reciprocate with us, shall be sent through our post-offices at our rates, when our newspapers going to those countries will be sent through their post-offices at their rates. But it seems to me that so far as England is concerned, we are giving considerably more than they will give us. Newspapers in Australia go through the post at the rate of 20 ounces for Id., whereas in England the rate for newspapers is $d. for every 2 ounces. It appears to me from reading the Bill that English newspapers will go through our post-offices at our rates.
– When they arrive here.
– I do not object to it very much. When the Postal Bill was going through the House in 1901, I advocated the reciprocity for which the Postmaster-General is now asking. The present Prime Minister was on the same side with me at that particular time, but the protectionist sentiment of this House threw out the proposal because it would not protect the newspapers of Australia, and it was decided that only newspapers printed and published in Australia should go through Australian post-offices at our rates. That idea has been carried out, not only in regard to newspapers, but also in regard to magazines, and, later on, in regard to books. At the present time a magazine, printed and published in England, cannot go through our postoffices as cheaply as an Australian magazine.
– And they will not under this Bill.
– But if we are going to provide these new rates for newspapers, why not also for magazines?
– Because the English Act provides that they must be weekly or daily papers.
– By the Bill English newspapers can be brought here and posted from Melbourne or Sydney at the same rates as Australian newspapers. 1 raise no particular objection to that.
– At present they are delivered by hand on account of the high rates.
– But if we are to take away the protection that was given to Australian newspapers, it seems to me we should go a little further and allow Australian rates to apply to English magazines.
– In England they will not take our magazines, so we should not take theirs.
– That is a very fair argument. The Postmaster- General referred to Australian newspapers going through English post-offices at $d. The rate in England is £d. for 2 ounces, whereas our rate is Id. for 20 ounces j but here in Australia eighty newspapers need not weigh 20 ounces. Eighty newspapers weighing 20 ounces can be handed in and sent all over Australia for Id. That could not be done in England where only one newspaper, no matter what its weight, can be posted for ½d. I think that we have been too liberal to the newspapers. The reason why the very cheap rate we charge was adopted in 1901 was because the Federal Parliament had to recognise that, in New South Wales, newspapers were carried free through the post. We had to arrive at some compromise, and so a postage, rate of Id. per 20 ounces was decided upon. It is one of the difficulties of the Department that so large a number of newspapers of light weight can go through the post for Id. Another difficulty that has arisen has been to decide what a newspaper is. I have no doubt that the present PostmasterGeneral has, several times since he has been in office, been called upon to decide whether a particular publication was a newspaper. In England it does not matter much what is called a newspaper, because postage at the rate of £d. must be paid on every 2 ounces, or upon each newspaper. If we had imposed the rate of ½d. for each newspaper, there would be very little to object to in this proposal.
– The quack medicine publication is the trouble here.
– I believe that is so. I have heard the honorable member for Riverina mention the fact that his mailbag is filled with quack medicine publications. I take it that newspapers sent here from England will have to be accepted here.
– Only to be delivered here at the same rate as in England.
– It seems to me that the honorable member is not quite clear as to the meaning of the Bill. I asked him whether English newspapers were to be delivered here after their arrival in the Commonwealth, at the rates charged here, and I understood him to say that that would be so. I do not profess to be a lawyer, but it appears to me that that is what the Bill means, and that that would be a reasonable proposal. What the people of England say, as I understand the matter, is, “ If you allow our newspapers to go through the post in Australia after their arrival in the Commonwealth, at your rate, we will allow your newspapers to go through the post in England, at our rate.” That would be a reasonable proposal ; but,- if that be so, an
English newspaper would not have to pay postage in Australia at $d. for 2 ounces.
– The honorable member will see that the matter is dealt with in clause 2 of this Bill, in which it is provided that -
The Governor-General may, by proclamation, declare that the provisions of this section shall extend to any part of the King’s Dominions which permits newspapers printed and published in Australia and posted in that part., to be transmitted through the post at same rates of postage as newspapers printed and published in that part.
– Under the present Post and Telegraph Act, a newspaper printed and published in the Commonwealth goes through the post at a certain rate. The honorable gentleman is asking in this Bill that that concession shall be granted,’ not only to newspapers printed and published in Australia, but to every newspaper printed and published in any part of the British Empire that is prepared to reciprocate with the Commonwealth in this matter.
– No; at the same rate as they charge us. If our newspapers have to pay Id. postage in England, theirs will have to pay Id. postage in this country. They will not get the benefit of our rate of Id. for 20 ounces.
– Then what about newspapers printed and published in Canada, where very big postage concessions are made to the newspapers?
– At present, they have not passed this measure.
– If they do, under this Bill, we are prepared to reciprocate.
– We may, if we choose to issue a proclamation to that effect.
– Canadian newspapers are charged a very low rate of postage, and if we reciprocate with Canada, Canadian newspapers will go through the post here at a much cheaper rate than English newspapers.
– If we care to reciprocate.
– I presume that we will be prepared to reciprocate with Canada if we reciprocate with England. If in Canada our newspapers are allowed to go through the post at their rate, we will be prepared to permit Canadian newspapers to go through the post of the Commonwealth at their rate.
– Wo may not be.
– I understood that that was the proposal, and if that be so, the Canadian newspaper would go through the post in Australia at a cheaper rate than the Australian newspaper.
– We would not agree to that. I do not think that any Postmaster-General would agree to that.
– It seems to me a more logical and business proposal to say, “If you will allow our newspapers to go through your country at your rate, we will be prepared to allow yours to go through our country at our rate.” If in Australia we had not decided upon the cheap rate of 20 ounces for Id., and had charged Id. for each newspaper, as we ought to have done, there would be no difficulty at all. Passing from that subject to the second portion of the Bill, 1 think there can be no objection to the concession proposed to be granted. If the Government are asking for this concession, I, as a member of the Opposition, am not going to raise any particular objection, but we have to face this fact - that in Australia the telegraph system is losing. Last year we lost £120,000. It is not fair to put the whole of that loss on the Telegraph Branch, because, if it had been run as a business concern, £80,000 would have been demanded for transmitting shipping and meteorological telegrams, or the service would not have been rendered. It is only fair to put that sum against the loss of £120,000.
– The week-end cables have turned out to be very profitable.
– I can quite understand that, because it costs 3s. a word to send cables ordinarily to England. When only two words to England cost 18s. because of the charge for the address, I can quite understand that a number of people would send week-end cables.
– These are day-end cables.
– I can quite understand that a number of persons, instead of paying 18s. for sending two words, would prefer to send twenty words at a cost of 3s. or 4s.
– I mean that it has not reduced the revenue of the Cable Board.
– I can quite understand that, because week-end cables will supply a need. But I ask seriously; whether there is likely to be any desire on the part of the people to send forty words in a telegram ?
– Why do they pay in Canada and the United States of America? It is a good-paying business there.
– I do not know the charge in Canada.
– They send sixty words for a1s. there.
– In Canada ordinary telegraph messages cost a great deal more than do ordinary telegraph messages here, because the privately-owned concern charges a great deal more than does the Government concern.
– Yet they send sixty words for1s.
– That is after a certain time.
– We only propose to send forty words.
– I can quite understand that in America a number of persons who cannot afford to send at the high charge during the day are prepared to send, in the evening at a much lower rate. In Australia one can send to its uttermost parts sixteen words for1s. up to 6 o’clock. The Postmaster-General referred to a number of post-offices that are kept open for a number of hours after 6 o’clock in connexion with press messages. I take it that he is not going to limit the lettergrams simply to those postoffices.
– To the principal cities virtually, and some of the larger towns where there are big newspapers. .
– If a lettergram is put in after 6 o’clock it may be sent immediately, and may be delivered by the letter-carrier. I must confess that I was rather amazed when I heard that this system is only to be limited to postoffices that are open after 6 o’clock. Take Broken Hill and Deniliquin.
– Those two places have open post-offices because they have newspapers.
– In those two places the telegraph office is open, and, consequently, it is all right. I venture to say that most of those who will send a wire of forty words from Broken Hill for1s. will be business men.
– I doubt it.
– Some time ago I closed practically all the small post-offices in Australia at 6 o’clock. I believe it was one of the best things that were done while I was at the Post Office. Although there was a little flutter in two or three newspapers, I do not notice that the present Minister has re-opened the offices, because it would be simply . a waste of money to do so. A very keen business man here, whose name I am prepared to give to the Minister privately, told me that it did not make much difference to his firm. He said that prior to the postoffices being closed at 6 o’clock they used to allow the telegrams to accumulate, and give them to the boy at 6 o’clock when he was going home to be handed in at the General Post Office. He said that after the small post-offices were closed at 6 o’clock, as soon as a wire was ready it was sent off by the hoy to be despatched. If that is so, in the case of a man running a big business here there will be a number of telegrams which there is no need to send for two or three hours. I think that quite a number of the business men in my constituency do not care particularly whether they get an ordinary telegram at 6 o’clock in the evening or at 9 o’clock in the morning. My opinion is that if a business man here realizes at 5 o’clock that he has to send a telegram which will take more than sixteen words, and that it will cost 3d. or 6d. over the1s., he will keep it back until 6 o’clock, and then send it along, and his business representative will get it in his letter-box at 9 o’clock next morning, which will be quite soon enough for him. Business men will look at every 3d. or 6d. I was very much amused one day when a person who was then connected with Reuters’ agency told me that a very able, keen, business man, who is known to every honorable member, drove up in a magnificent motor car, and spent a quarter of an hour in haggling over one word in a message, because it would have made a difference of 3s. I do not think that many persons will bother about using forty words for a lettergram. The ordinary individual, who wants to send a letter, will pay the 1d. to do so rather than pay1s. to write out forty words. This great reform of the Postmaster-General is to be limited.
– I do not say that it is a great reform. I say that we are copying places where it has been a great success.
– It is to be limited to a very few places.
– No, it will be available to a fair number.
– How many?
– About 33 per cent, of the post-offices probably receive telegrams for the press.
– Does the PostmasterGeneral mean to say that one-third of the post-offices of Australia receive press messages ?
– Very nearly.
– If that be so, the matter ought to be taken very seriously into consideration. The Postmaster-General admits that in most cases these offices are open till 1 or 2 o’clock.
– The only one of which I have had experience is Geelong.
– The people want the news, that is why the offices are kept open.
– Then why should not the people pay for the news?
– They are not often kept open till 1 o’clock.
-I am dealing with the statement of the Postmaster-General. I ask leave to continue my speech on a future date.
Leave granted; debate adjourned.
In Committee (Consideration of GovernorGeneral’s message) :
Motion (by Mr. Glynn) agreed to -
That it is expedient that an appropriation of revenue and moneys be made for the purposes of a Bill for an Act to provide for the construction of a railway in the Northern Territory, from Pine Creek to the Katherine River, the appointment of officers, the making of charges, and the appropriation of money in connexion with such railway.
Resolution reported and adopted.
– I take it that it is the desire of the Opposition as well as the Government that we should get this Bill through as quickly as possible. If it were a bit earlier in the session, I might say something about the Territory, but I know that the occasion is not opportune. Last year, the honor able member for Barrier introduced a Bill for the purpose of a survey of about 54 miles of railway from Pine Creek to the Katherine River. That survey is now complete, and I think the honorable member’s opinion is that we might almost proceed with the work without a Bill to authorize its construction. But, as a matter of courtesy to the House, I thought it better to submit this proposition in the form of a Bill. The Loan Bill, as honorable members know, makes provision for the construction of the line. I ask the House to formally sanction the work. When the occasion offers to go a little more intothe railway policy which the Government have in view in the Northern Territory, I shall be happy to give to honorable members all the information that is in my possession. ‘ I move -
That this Bill be now read a second time.
Question resolved in the affirmative..
Bill read a second time, and reported without amendment; report adopted.
Standing Orders suspended, and Bill read a third time.
Motion (by Mr. Joseph Cook) pro posed -
That the House, at its rising, adjourn until half-past10 o’clock to-morrow morning.
– The first business will probably be the consideration of the Post and Telegraph Bill.
Question resolved in the affirmative.
House adjourned at 11.49p.m.
Cite as: Australia, House of Representatives, Debates, 10 December 1913, viewed 22 October 2017, <http://historichansard.net/hofreps/1913/19131210_reps_5_72/>.