12th Parliament · 1st Session
Mr. Speaker (Hon. Norman Makin) took the chair at 3 p.m., and read prayers.
– Has the attention of the Prime Minister been called to the statement reported to have been made recently by Mr.C.W. Frost, the selected Labour candidate in the by-election for Franklin, that -
The fruit industry certainly should be protected. They were paying more for their sugar and now there was a strong government in power, independent of Queensland votes in the House, therewas a good chance of getting the sugar bounty reviewed or eliminated.
Did not the Prime Minister during the recent general election campaign state that if his party were elected to office the embargo on the importation of sugar would be renewed?
– I have not seen the passage quoted by the honorable member, but on more than one occasion during the general election campaign I was asked in Tasmania whether I was in favour of lifting the embargo on the importation of sugar so that cheaper supplies might be available to the people. I answered very definitely in the negative, saying that I was not prepared to submit the sugar-growers of Australia who employ white labour to the competition of sugar grown overseas by black labour.
– Will the Prime Minister consider the advisability of stipulating at the conference to be held on the 9th December between himself and the State Premiers that at least 90 per cent of the men engaged on any contracts or daylabour jobs in connexion with unemployment relief shall be either natural-born or naturalized British subjects?
– I propose to discuss with the State Premiers several subjects relating to the immediate commencement of works for the relief of the unemployed, but I cannot say at this stage what form the discussion will take. I have, however, a good deal of sympathy with the proposal made by the honorable member. I shall discuss it with the State Premiers, who, I believe, will recognize the justice of the principle that in connexion with any relief works that may be started preference of employment should be given to our own people.
– Is the Prime Minister in a position to make an announcement regarding the attitude of the Commonwealth Government towards the Anglo-Egyptian Treaty?
– I am not yet in a position to make a statement.
Preference to Returned Soldiers
– Will the Prime Minister inform the House whether the Government proposes to disturb the long established principle of preference to returned soldiers in connexion withemployment in the Public Service ?
– Preference to returned soldiers is provided for in the Public Service Act, and the Government has no intention at present to amend that statute.
– Has the Prime Minister received any communication from the Government of the Irish Free State or the British Government in regard to appeals to the Privy Council? If so will he make a statement to the House on the matter.
– I have receivedno representations from either government on that subject.
– Is the newspaper statement correct that the receipts of the Postnl Department and from Customs and Excise last month were higher than in any month for years past? If so, does the Treasurer attribute this cheerful development to the recent change of government ?
– The revenue last month was higher than usual, and the explanation suggested by the honorable member is possibly correct.
Mr.C. RILEY. - Will the Minister for Home Affairs make available to honorable members the report made by his predecessor, Mr. Abbott, regarding pastoral lands in North Australia?
– I shall place the report on the table of the House for the perusal of honorable members.
-(Hon. NormanMakin). - I have received from the honorable member for Hunter (Mr. James) an intimation that he desires to move the adjournment of the House this afternoon for the purpose of discussing a definite matter of urgent public importance, namely, “ The critical position of the coal-mining industry in New South Wales.”
Five honorable members having risen in their places,
.- I realize the importance of the step that I am taking, but I have a duty to my constituents and I intend to perform it.
Opposition Members. - Hear, hear !
– I do not want any “ Hear hears “ from honorable members opposite. The dispute on the coal-fields is a matter of vital concern to my constituents. After about 10 months of bitter struggle, the miners on the Northern coal-fields have been forced by starvation, and by the spineless attitude of this Government in failing to support them, to submit to a reduction in wages. On the hustings the Labour party stood for no reduction in wages. I, as a member of it, from my place on the Opposition side of the chamber, a few months ago, criticized the Bruce-Page Government. I called Mr. Bruce and his followers the greatest traitors Australia has produced. But they were not. They at least were true to the class that sent them here. They did what theywere asked to do. This Government, on the other hand, has failed to carry out its promises. We cannot get away from that fact. The suffering people whom I repre sent have been used as a political football, and have been kicked by both sides. They have been used as pawns in the political game. They realize that now. I am quite aware that the step I am taking this afternoon may be the cause of my leaving this party, but I do not care whether that is so or not. I entered the party with honest, clean hands and, if necessary, I shall leave it with honest, clean hands and honest motives. The Government says it cannot do anything. If that is so, why did the members of it criticize the members of the previous Government ?
– Hear, hear !
– I do- not require any “ Hear hears “ from the honorable member for Warringah. We know definitely where honorable members opposite stood, but the electors of Australia were misled about the stand of this party. The people whom I represent are to-day in the position of having to continue a helpless struggle. It would be hopeless for them to continue the fight, and I say to them from my place in this chamber, “ It is of no use for you to continue to struggle further.” My people were deserted by the party which proposed to protect them. Speeches were made by Labour members, myself included, from the benches opposite last session, of from fifteen minutes to sixty minutes duration, to the effect that the Bruce-Page Government had been guilty of cruel and callous actions in respect of the coalminers, in that it had not attempted to do anything to relieve the situation. A good deal was said about the breaking of awards. No one can deny that the coalowners have deliberately broken the awards. Yet this Government has said that it cannot do anything. It says that it has no constitutional power to act. I believe that if it had had the courage to resume the mines and open them and had allowed the coal-owners to test the constitutionality of its action, it would have caused the fall of the Bavin Government. It would have forced that Government to the country and the people would have rejected it, because they would not stand for the coal-owners starving the miners into submission. During the recent election campaign I spoke in five electorates and described the sufferings of my constituents. In four of those five electorates seats were won for the Labour party. The people realized that I had stood up and fought the BrucePage Government. But now the chickens are coming home to roost. What has this Government done? It has not done any more than the Bruce-Page Government did. In these circumstances the members of it were not justified in criticising the previous Government. There was no need to encourage me to do it. I know full well that the people who listened to prominent members of the Labour party to-day have got to face the music. I know that some of them will be asked for their resignations. These people listened to the promises that were made on behalf of the Labour party and the promises appealed to them. Notwithstanding the suffering and poverty of the poor, unfortunate coal-miners they provided £1,000 for the purpose of assisting to fight the election campaign in New South Wales. It is now apparent that that money was got practically under false pretences, because nothing has been done to help the miners.
I have heard a lot in this House about extremism. I have never been an extremist, and have never preached an extreme policy. I have always been a member of the rank and file of the Labour party. I have never held an official position. I came direct from the rank and file to this chamber. I have always tried to combat the extreme elements in (the Miners Federation. There are a few extremists in that federation I admit, but they are not nearly so extreme as some honorable members of this House thought it necessary to be to secure election. I remember reading some time ago, in a book written by the present Minister for Health (Mr. Anstey), something to this effect: “If you desire to stop a man from being extreme, if you hear a man singing revolutionary songs outside your house, the best thing to do is not to stone him, nor to send for a policeman, but to bring him inside and give him a feed. If you put something in his pocket, his singing of revolutionary songs will become weaker, until it will cease altogether.”
That has proved to be true when applied to some members of this party, who have been brought inside the door and have had a feed and something put into their pockets. Their song of revolution and their militancy have become weaker, and we shall finally hoar them no more. I say further that this is a time when we should have strong men in the Labour party. I have here a poem which I have clipped from a newspaper, the sentiments of which can well be applied to the whole of those who sit on this side. It reads : -
Give its Men.
God give us men! A time like this demands
Strong wills, clear heads, true hearts, and ready hands;
Men whom the lust of office does not kill;
Men whom the spoils of office cannot buy;
Men who possess opinions, and a will;
Men who have honour; men who will not lie.
For while the rabble, with their narrow creeds,
Their large professions, and their little deeds,
Wrangle in selfish strife, Lo! Freedom sleeps,
Wrong rules the land, and waiting Justice weeps.
On the northern coal-fields of New South Wales justice weeps at the plight of the wives and children of the men who have had so long and bitter a struggle. Apparently, with the exception of myself, nobody on this side has the courage to stand up now as he stood up when he was in Opposition.
It grieves me to find that it remained for honorable members opposite to provide me with an opportunity to speak on this matter. I did not approach any Opposition member, and none of them knew that I proposed to take this step to-day. But Ihave a duty to perform. To-morrow, meetings are to be held on the northern coal-fields of New South Wales to decide whether the men will accept a reduction of their wages. When I left those coal-fields yesterday I knew that the proposals that were to be placed before the men would not be accepted by them. I realize, however, that it is only a matter of carrying on for a few more weeks and they will be belted into submission. They are being belted into submission to-day. Do honorable members stand for the upholding of law and order? It is not so long since a motion of censure was launched in this House against the late Government for its withdrawal of a prosecution that had been instituted against John Brown. I supported that motion. Has this Government prosecuted John Brown? It has not.
– It is only fair to say why it has not done so.
– I think I had better not.
– The honorable member ought to do so.
– Does the honorable member want me to divulge things that I was pledged in caucus not to divulge? If the Leader of the Government permits I shall do so. I ask the honorable member not to challenge me to break my pledges. No decision has been come to. For over a week I have been prepared to take this action, but have put it off again and again. I had to put up with jeers from honorable members who sit opposite, and to disregard their taunt that I am shackled ; but I strenuously resist the assertion that I am not game. I am as game as any person who sits in this House.
– Ha, that’s it!
– It is not that which has actuated me. I am actuated by honest motives, and a desire to see that the people whom I represent are not crucified any further. Honorable memberswho sit on this side went through the coalfields with me, saw the poverty and suffering that exists there, and made speeches mentioning that the world looked on with horror when nations adopted the principle of the blockade, but that this food blockade on the miners and their children was infinitely worse. They then went throughout Australia advocating the cause of the miners. Why? Did they not wish the electors to believe that if Labour were returned to power that suffering would cease and there would be a resumption of work on a pre-stoppage basis? That is not what is now proposed. At 1 o’clock on the morning of the 22nd March last, I contributed to a debate that took place in this chamber. I was followed by the present Prime Minister (Mr. Scullin) who, in the course of his short speech, said -
A month has passed, and we have not had a further announcement on the subject. I suggest that a month is a long time for starving people to wait. The Prime Minister has repeatedly refused to acknowledge the responsibility of the Commonwealth to people who are in want. I tell him that if ever there was an occasion when the coffers of the Commonweal ti i should be opened it is now, for the purpose of granting relief to those 12,000 miners who, with their wives and families, are on the brink of starvation. I urge the Prime Minister to expedite the investigation into the industry.
As these miners have been used for political purposes, I ask this House to do something on’ their behalf. The Christmas sea- 30ii is fast approaching, and the least that we can do is to grant these starving women and children the sum of £25,000 to relieve them, from the distress from which they are suffering at the moment. There should not be a dissentient voice against that suggestion. I do not ask for this with a view to enabling the miners to continue the struggle. -E realize now- that it is a hopeless struggle) and their leaders ako know that it is useless to continue it. I am big enough to go back to them before the meetings take place and advise them riot to stand out any longer.
I wish it to be understood quite clearly that, although I have criticized the Government of which I am a member, I have no intention of crossing the floor of this House. I would never join any of the parties that sit opposite. There is no honorable member there who appeals to me. I may be a lone figure, yet even if I am kicked out of this party I shall join no other over there. But when politicians go on the hustings and say they can do something in the interests of suffering miners I defy any person to attempt to deprive me of the opportunity to say that they should at least stand up to their professions. It would have been far better for this Government to test the legality of taking over the mines and working them. Far better would it have been to die fighting than to go down without a fight.
In conclusion, I hope that the Government will take to heart this criticism that [ am levelling against them, and that, on any future occasion when they go on the hustings, they will not make rash promises. We frequently find that promises are made but are not fulfilled. I have not made a personal attack upon any member of my party. I believe that every one of them is as guilty as are our leaders. They used the coal position, they used the sufferings of these people, to get them where they are to-day; yet we find that, having landed the job, they are not prepared to take any action in fulfilment of their promises.
– The honorable member should speak for himself.
– I am speaking for myself. I know full well that there was not one speaker in the Labour cause who did not mention the prosecution of John Brown, or the position on the northern coal-fields of New South Wales, during the recent election campaign. Those subjects were the genesis of that election. The prosecution of John Brown could not be dissociated from the withdrawal of the Commonwealth from the arbitration field. We all knew that the award of the miners stood, so long as the Federal Arbitration Court was retained. In my opinion, behind the mind of the ex-Prime Minister (Mr. Bruce), when he brought down the bill for the abolition of that court, was a desire to get rid of the miners’ award, so that the Bavin Government’s proposals could be put into operation. While the award stood, the miners had to be paid in accordance with it; therefore, it was considered necessary by the late Government that the award should be removed. The election was held, but the award still stands. We claim to-day to be upholders of law and order, and yet we allow the mine-owners wilfully to break the conditions of that award, and by starving women and children to force the miners to accept a reduction in wages. That is the position, in a nutshell, so far as the Labour party is concerned. We have fallen down on the job. We have not carried out our promises to bring about a resumption of operations in the industry on a pre-stop basis. It is no use our telling the people in the future that we can do a certain thing, because they will not believe us. Look at the effect that our inaction will have on the Labour party in New South Wales. Our party will soon be seeking the suffrages of the people in that State. The State Government has power to cancel the leases of the mine-owners. Again, Labour candidates will tell the people that they will bring about a resumption of operations on pre-stop conditions, if they are returned to power; but the people will disbelieve them, because it was said by members of the party in this House that, if they were returned to power, work would be resumed on the basis of the conditions that obtained prior to the cessation of operations. I invite those honorable members who have some knowledge of the constitutional position, to answer a question. If certain ferocious animals were protected by law, and honorable members saw them devouring helpless women and children, or submitting them to a process of starvation, would they hesitate to take up a rifle and shoot those animals, regardless of the law ? No ; they would not. Then, I say that the Government should have proceeded to carry out its promise to bring about a resumption of work in the coal industry. That would have forced the owners to contest the constitutionality of its action. It would, no doubt, have been defeated in the High Court; but the party would, at least, have carried out its pledge to the best of its ability. It would have shown that its promises had been made in” all honesty of purpose.
– The honorable member for Hunter (Mr. James) has taken the responsibility of moving the adjournment of the House at this stage.
– That is the right of every honorable member.
– But he has gone beyond that, and has made a number of charges against the Government. I disregard those charges, to some extent, and also excuse the honorable member, in a certain degree, for the tone in which some of his statements were uttered. I realize that the honorable member feels his position keenly, because he represents a constituency that has suffered for eight or nine months through the situation in the coal industry. He has personally witnessed a struggle by men for a principle; they desire to retain the award that they have obtained from the Federal Arbitration Court. The honorable member has seen men, women and children suffer in consequence of the fight that they have made in upholding that principle. While the sympathies of every one of us are touched by such a sight, those who feel it most intensely are they who have witnessed it most frequently, and, therefore, I make certain allowances foisome of the statements made by the honorable member; but it is my duty to place the facts before the House in their true perspective. This Government has not been spineless in its attitude to the coal dispute. It has taken every possible step to bring about a successful settlement of the trouble without a breach of the award and without the sacrifice of one penny by the mcn employed in the industry. Never have we said that we could end the trouble. What we do say is that we have done everything that lay in our power, and all that we have done up to the present moment has met with the approval of the representatives of the miners affected by the stoppage of work. Every proposal put forward by the miners’ representatives has been acted upon by the Government; as a matter of fact, we have anticipated the suggestions that have been made.
In the first place, the Treasurer (Mr. Theodore) called the parties to the dispute together in order to bring about a settlement, and he very nearly succeeded in his object at that time. That was two days after the recent election. Frequent conferences were held with the representatives of the men. The Cabinet met and discussed the situation. We realized that an award was in operation, and we believed that the proper tribunal to consider the new situation that’ had arisen was the body that had made that award - the tribunal appointed under the Industrial Peace Act. The Government decided to ask the chairman of that tribunal to call a compulsory conference. Although much has been said about the pledges given by the Labour party to the people of this country, one thing stood out prominently among our pledges, and that was that we stood for the maintenance of the Arbitration Court, and for the principle of conciliation, and every step that we have taken has been in accordance with the pledges given by us to the people. The honorable member for Hunter hinted at something that he could reveal from the proceedings at caucus meetings. I give him liberty to reveal it.
– It is a bit too late now.
– It was given at the time.
– I invited the honorable member to say anything he liked.
– I did not hear it.
– The miners did not wish John Brown to be prosecuted except as a last resort.
– The only matter referred to as having been discussed in caucus was that of proceeding with the prosecution of John Brown. No. secret has been made of our attitude on that matter.
– What influenced the Government in not proceeding with the prosecution?
– I shall inform the House as to our attitude. I have nothing to conceal.
– Does the Prime Minister suggest that the late Government had?
– Let me take that question as a challenge. What was the basis of this party’s charge against the late administration? It was that it had pinned its faith to prosecutions. It launched prosecutions against the unions every time it had an opportunity to do so. It pursued unionists with vindictiveness, but when it was confronted with law-breaking on the employers’ side it refused to act. Contrast that with our attitude. We have not instituted prosecutions which would have become persecutions, and which would be of no avail in the settlement of industrial disputes. We have all along taken up the attitude that no good is served by enforcing the penal sections of the act, and we fought the enactment of those provisions with all our strength.. We opposed such penal sections, whether they applied to employees in the case of strikes, or to employers in the case of lockouts. The present Opposition, when in power, believed in prosecutions in the case of the men, but did not apply them to the employers. Our attitude throughout has been consistent. Let me go further : The day after cabinet decided to call a compulsory conference of the parties to this dispute, we were waited upon by a deputation representing the miners, introduced by the honorable member for Hunter (Mr. James). The deputation informed us that they did not wish us to go on with the prosecution of any of the owners.
– I introduced the deputation, and it was not my place to put forward personal views which might be in opposition to those of the deputation.
– I asked the members of the deputation whether I was correct in assuming that they did not want the prosecution to be proceeded with. I invited every member of it, including the honorable member for Hunter, to express his opinion, and not one of them urged that the prosecution be renewed. I shall now tell honorable members why they did not wish it, and it was a sound reason. They said, and I agreed with them, that no useful purpose could be served by launching another prosecution. They said that it would only hold up the proceedings. I know what the Deputy Leader of the Opposition (Mr. Gullett) will say. He will say that that was the same reason advanced by Mr. Bruce for withdrawing the prosecution. It does not lie with honorable members opposite, however, to make that easy retort, because their Government turned down the same argument when it was urged as a reason for withdrawing prosecutions against unionists. We are not in that indefensible position. We have never refused to listen to reason, nor pressed on with a prosecution inspite of the arguments advanced against it. We come into court with clean hands on this question. No proposition put up to this Government by the miners has been turned down. Some wild suggestions have been made in irresponsible quarters, but never by the responsible leaders of the miners. Suggestions have been made that we should seize the mines, whether or not we had constitutional power to do so. We were urged to seize them, acquire them, or take them over; all those terms were used at different times. I now wish to tell the people of Australia, through this Parliament, that so long as I am Leader of the Government, we shall not act in any matter unconstitutionally, nor shall we administer the law against one side and not against another in any dispute. We have throughout this dispute followed the path of conciliation. We have called conferences. We have taken every step possible to achieve peace, and I challenge the Opposition to say that we have done wrong. When members of the Opposition stand up in glee to support a motion for the adjournment of this House, and comment on the fact that only three on the Government side supported the motion, my answer to them is that honorable members who sit behind the Government have a sense of responsibility to the country. They know that the greatest struggle that has ever taken place on the coal-fields has reached a crucial stage, and that this Parliament ought not to butt into the negotiations in such a way as to destroy what chance of peace exists. Whatever regret I may have, and it is a very keen regret, that the men have been forced to compromise on the question of wages, as Leader of the Labour party in this country, and as a unionist, I stand behind the leaders of the miners in the action they have taken.
.- The Prime Minister (Mr. Scullin) apologized for the honorable member for Hunter (Mr. James) because of the feeling he introduced into this debate. He indicated that the honorable member for Hunter was deserving of the sympathy of this House. In my opinion’ those who really deserve the sympathy of the House are the members of the Government. I doubt whether the members of any other Government since this Parliament began have ever been placed in a. more degrading position than that in which the present Ministers find themselves in to-day. First, there was the extraordinary spectacle which this chamber presented when the honorable member for Hunter (Mr. James) rose to move the adjournment. He was supported from those richly filled benches behind the Government by only two honorable members, and those two, significently enough, represent coal-mining constituencies. It was the more extraordinary when we recall that when the honorable member rose to move a similar motion from this side of the House, every other honorable member of his party rose to support him. I rejoice that we on this side of the House were able to give him his opportunity. I am exceedingly pleased about it, not because I wish to embarrass honorable members on the other side, but because we, on this side of the House, learned during the last Par liament greatly to respect the honorable member for Hunter. Although he attacked us bitterly week after week, we came to have a complete trust in his sincerity, and we supported gladly to-day his motion for adjournment.
I do not quarrel with the Government in not openly opposing the tentative settlement on the Northern coalfields; we were ourselves working towards a settlement on those lines nine or ten months ago. We accepted the figures which Mr. Bavin depended on. We believed that a reduction in hewing rates was inevitable, and. we sought to bring it about by a contribution of Commonwealth money which would effect a reduction in the price of coal. Knowing that we had nothing to offer to the northern miners we made no false promises to them ; we were honest throughout. As was stated by us and as events have proved, the Commonwealth Government is powerless to do anything for the miners. But members of the present Ministry have not the political honesty to say so. On the contrary, they have exploited the unfortunate, workless, starving people on the northern fields, as no body of necessitous persons has ever been exploited before in an Australian election. The Prime Minister has stated that no extravagant promises were made to the northern miners, and that he will abide by constitutional practice. But what of the speech made by the present Treasurer (Mr. Theodore) at Muswellbrook, and reported in the Sydney Morning Herald of the 7th October?
– What did the last Government say about Walsh and Johnson in a previous election campaign?
– Whatever was said by us we made no attempt to exploit starving people. I quote from the Sydney Morning Herald -
Mr. Theodore said that if Labour were returned, the mines on the northern coal-fields would be reopened in a fortnight. Asked how he would do this he said that the Commonwealth Parliament had sufficient power to bring about a resumption of work. The mere fact that a Labour Government was in office would soon move the owners to open the mines.
To-day the Prime Minister speaks of the constitutional limitations of this Parliament. At the conference of mine-owners and representatives of the miners, which the Treasurer convened immediately after he assumed office, the honorable gentleman frankly admitted that he had no policy orproposals to put before the delegates. The last Ministry at no time exploited the miners. If it failed them, it did so honestly. It never believed that the Commonwealth, with its present constitutional powers, had anything to offer to them. Representatives of the last Ministry did not approach the unfortunate miners, who, according to the honorable member for Hunter, are literally starving, and despicably wheedle £1,000 from them, their women and children, to spend on the election campaign. The Treasurer said that a Labour Government would open the mines within a fortnight of accepting office. Two months have elapsed and the Government has failed to do anything, and if the mines are reopened it will be upon almost the same terms as were available to the miners nine months ago.
I was amused by the Prime Minister’s explanations of the reasons why his party unanimously, I understand, decided not to prosecute John Brown.
– I did not say that.
– We did not decide anything of the sort.
– The reasons which, according to the Prime Minister, actuated his party in not prosecuting John Brown, are identically the reasons which prompted the last Government to withdraw the prosecution of that gentleman. To-day the present Government is in exactly the same position as was its predecessors. Nothing would have preprevented the Government from relaunching the prosecution at any time during the last five or six weeks, and bringing John Brown to justice, if it had wished to do so.
The honorable member for Hunter has my sympathy. I am glad that members of the Opposition were able to give the honorable member an opportunity to put the case of the miners before the House. Without our support he would have been gagged by the members of his own party.
.- Perhaps the most unfortunate feature of this motion is the opportunity it has afforded members of the Opposition to make paltry political capital out of the trouble in the coal-mining industry. The honorable member for Hunter (Mr. James), in moving the motion, has not exceeded his rights and privileges, but it is a strange anomaly that to-day he is supported by honorable members who stood loyally behind the last Government, which, in alliance with the Bavin Government of New South Wales, deliberately sought to destroy the economic conditions of the worker. They were prepared to do anything and everything to beat the miners and other workers into economic subjection. To-day those honorable members, by professing sympathy with the miners, are exploiting politically an unfortunate situation. TheDeputy Leader of the Opposition referred to the suffering of the women and children. That was mere exploitation; he and his supporters do not want the mines to be re-opened; neither does Mr. Bavin. Had Jack Lang been Premier of New South Wales the mines would have been opened long ago. The present trouble has been caused by the policy of Mr. Bavin, who was supported in every way by the last Prime Minister.
I regret the attitude of this Government. I realize the difficulties of the position; but if the Government owes a duty to anybody it is to the workers. Members of the Labour party declared repeatedly in this Parliament and on the hustings that the mine-owners had no justification for their action. The fact that the officials of the Miners Federation asked for a conference with the owners is beside the question. According to our bold utterances in Opposition and on the public platform, the mine-owners had no case, and the Government should have acted accordingly. If immediately after assuming office it had boldly declared that it would stand to the death behind the miners, as Mr. Bavin and Mr. Bruce showed plainly that they stood to the death behind the mine-owners, a psychology would have been created which would have led to the re-opening of the mines. The timidity of the Government has permitted the trouble to continue. If the Government does not represent the workers it represents nobody. Surely an uncompromising declaration of its policy should have been made. It is quite true, as the Prime Minister has said, that he and the Treasurer have met the miners and the mine-owners in conference. But so did Mr. Bruce; under the auspices of his Government, conference after conference was held. The very conditions mentioned by the Prime Minister to-day were thoroughly explored for nine weary months, and nothing was done. But we, sitting in Opposition at the time, challenged the assertion of the Government of the day that the Commonwealth authority was powerless, and we declared in this House and on the hustings definitely and clearly that if we were elected to office the mines would he re-opened. For my own part, although representing a mining constituency, and although three-fifths of my election meetings were held in mining centres, I did not on one occasion promise that the mines would be re-opened if Labour attained office. At one meeting the , chairman, who was a prominent official of the South Coast Miners Association, prevented two_ miners from asking me a question on that subject, because lie said that no undertaking could he given. But I was told when the vote of confidence in me was moved, that a definite promise had been gratuitously given on behalf of the Labour party that the mines would be re-opened. Men, women and children who had been down in the depths of economic hell for five or six months were buoyed up by this promise; it was like a gleam of sunshine through the economic mist, and they were inspired to work energetically and enthusiastically for the return of labour candidates. They achieved a wonderful victory; Labour is in office, but if the mines are re-opened it will be upon conditions that the miners could have had on the very first day of the lockout.
– No; they were asked to accept a reduction of ls. per ton.
– The difference between the ls. and the 9d. now offered could have been the subject of negotiation. If they accept the conditions which are now recommended to them, they will be surrendering a fundamental principle of industrial unionism; they will be agreeing to victimization by the employers, which was not one of the conditions of the proposals first made to the miners. It is not too late for the Government to save the situation. Let it pass through this Parliament before Christmas a bill for a referendum to give to the Commonwealth Parliament complete industrial powers, promising that if those powers are granted the dispute in the mining industry will be settled as it should be. Some months will have to elapse before a referendum can be taken, but despite what the miners may be saying to-day in their disappointment, they still trust this Government, and if the Prime Minister will give an undertaking to put into operation that plank of our platform which provides for seeking fuller industrial powers for the Commonwealth Parliament, I believe that the mines will be re-opened almost immediately.
If the Government asked for the power to take these mines away from the avaricious mine-owners, who not only are exploiting the miners to-day, but exploited the country to the extent of between £7,000,000 and £10,000,000 during the war years, I believe that it would be given it. A move of the nature I have suggested would be acclaimed by the miners everywhere. Let me assure honorable members opposite that these men still believe in this Government; but it would be wise for the Prime Minister to make provision before Christmas for the taking of the proposed referendum early in the new year. The Prime Minister has stated that many wild proposals had been made, but none had been accepted. I submit that the proposal that I have made is sound and worthy of acceptance.
One other thing that should be done is to terminate the investigation of that abomination, called a royal commission, which is at present inquiring into the coal industry in Sydney. It is nothing but a frame-up between the Bruce-Page Government and the Bavin Government. Its object is to prevent the people from learning the true history of coal-mining in Australia. Its investigations are a travesty upon justice. The commission, it is well known, allowed Mr. John Brown to include in his statement of the costs of hewing coal the expense of upkeep of three mines which had not worked -for twelve months. He was also permitted to include in his figures a considerable amount for old rusty trucks, which had been in disuse for years. For every reason, the present royal commission should be terminated, and a body in which the public would have confidence set up in its place to make a speedy inquiry into the true position of the industry, the cost of production, the extent of the profits, and the degree to which stock has been watered and capital inflated.
If, coincident with the making of such an inquiry, a referendum were held with the object of obtaining full industrial powers for the Commonwealth, the miners would accept the conditions which had been laid down, because they would know that the situation could only last for three or four months. It is high time that the Government took over the coal-mines and worked them as a national asset for the benefit of the nation. Naturally, the coalminers are disappointed that their nine months’ struggle has been fruitless, and in their present state of mind they may pass certainresolutions; but their heart is sound - as sound as ever it was. I beseech and implore the Prime Minister to take action along the lines I have suggested. If he does so, the well-being of the coal industry will be assured. The coal-miners know that the Government is composed of earnest-minded men, who will be strong and capable enough to do what is necessary to cure the country of the economic dry rot from which it is suffering, and to bring in an era of prosperity; but I ask that speedy action should be taken to this end.
– The honorable member for Werriwa (Mr. Lazzarini) has tried to find excuses for the failure of the Government to restore harmony in the coalmining industry, but the object of the honorable member for Hunter (Mr. James), in introducing this discussion, was to condemn the Government for having broken its election pledges and to get something done immediately to relieve the distress of the miners and their wives and children. By assuring us that the heart of the miners was still sound, the previous speaker made it quite clear that he was more concerned about how the miners would cast their votes in the future than about relieving their distress at present. It cannot be gainsaid that every member of the Labour party opposite who was a member of the last Parliament must bear responsibility in no small degree for the continuation of the coal dispute, for they have not fulfilled the promises which they made. They led the miners to believe that it was only necessary to place a Labour Government in office to restore peace in the industry. During the last Parliament, the Federal Parliamentary Labour party, through its secretary, Mr. Norman Makin, forwarded to the unions concerned, the following motion -
This meeting of the Federal Parliamentary Labour party congratulates the rank and file of the miners and timber workers on their splendid unity against the general attack on wages and hours.
It is strange, therefore, that within the first week of the assumption of office by this Government, the timber workers of New South Wales were advised to accept the increased hours proposed in the Lukin award. Now we find that the coal-miners have been called upon to accept a reduction of their wages. This does not seem to indicate a fulfilment of the promises made to the electors by the Labour party during the last election.
At a meeting in the Sydney Town Hall on the 18th February last, the present Treasurer (Mr. Theodore), moved the following motion -
That this meeting condemns any increase in the working hours and any lowering of the wages and conditions of the workers in the Commonwealth and pledges itself to support the timber workers in the present fight.
Yet one of the first acts of the Labour Government was to enter into negotiations with the bosses of the trade unions to try to get the coal-miners to accept a reduction of wages. That is the only original thing the Government has done to bring about a settlement of the dispute. It has not done anything to assist the industrialists generally, but has only sought the co-operation of the trade union bosses to urge the unfortunate strikers to accept something less than they could have got within a few days of the beginning of the trouble. The Government, all through, has worked through the bosses of the unions.
– Who is the honorable member’s boss?
– The electors of my constituency and my own conscience.
– Has the honorable member a conscience?
– I am not a Labour politician; I have a conscience. The honorable member for Hunter has shown that he also has a conscience. He told the House to-day that the Labour Government has misled the electors and has not carried out its election promises, and he desires to do something to relieve the distress of the people whom he represents.
– Will the honorable member vote for the £25,000 he asks for?
– Will the Labour party return to the miners the £1,000 election fund collected from them ? It is significant that this debate was introduced by an honorable member elected to support the Government. It is also significant that he declared in no uncertain tones that the Labour party had misled and deceived the people on this subject. Another wise remark that the honorable member for Hunter (Mr. James) made was that the Labour party bad done no more to settle this dispute than the Bruce-Page Government did, and he complained that Labour did not issue a summons against John Brown.
The only people whom the Government has influenced are the bosses of unionism. It was successful in getting these bosses to influence the timber workers to agree to an increase in their hours of work, and it has now been successful in getting the bosses of the unfortunate coal-miners to influence them to accept a reduction of wages. Had the members of the parliamentary Labour party added to the motion which they carried some time ago, and which I have already quoted, a clause advising the men to accept a compromise, this trouble would have been settled long ago.
I feel sure that the Treasurer (Mr. Theodore) will give us an explanation of his attitude before this debate concludes. I cannot see how he can reconcile the attitude he took at the Sydney Town Hall meeting in February with the recommendation that the New South Wales timber workers should accept the Lukin award, which was described as one of the most reactionary ever made in Australia, and that the coal-miners should accept lower wages. The Bruce-Page Government attempted to settle the coal strike by conference, and that is all that this Government has done. If, while they were members of the Opposition, the members of the Government had acted as they have now done, this trouble would have been settled months ago and on a more liberal basis than is now proposed. In order to bring about the present settlement the Labour party has deserted every principle for which it previously stood.
– The Deputy Leader of the Opposition (Mr. Gullett) expressed his surprise at honorable members who sit on this side having declined to rise in support of the motion of the honorable member for Hunter (Mr. James) for the adjournment of the House. I should have thought that any surprise that he originally felt would have been modified a good “deal by the speech of that honorable member. I am not at all sure that, before the conclusion of that speech, he did not regret having risen so hastily in advance to give the motion his support. Apparently, honorable members who sit opposite need reminding that the Labour party was not instrumental in bringing about the unfortunate conditions that exist on the northern coal-fields of New South Wales. They cannot lay any such unction to their souls, because those conditions are a direct result of their own deliberate policy.
– We never promised a settlement.
-But the honorable gentleman did promise that there would be a reduction of wages; that was a part of his settled policy.
– And the Government is accepting it. governmentmembers.- No !
– The honorable member for Wide Bay (Mr. Bernard Corser) quoted us as having applauded thesolidarity and loyalty of members of trade unions in their resistance to this deliberate attempt by members of the Opposition to bring about a reduction of wages throughout Australia. He said that because we had so applauded them we had kept men out of work and fomented industrial unrest in Australia. The honorable member merely repeated the cheap claptrap which, over a period of years, has been uttered from a thousand platforms in this country, in support of every sweater who has preached against agitation. If he goes back 25 or 30 years he will find that that argument has been used whenever men have sought co-operatively to raise the standard of living. In his day and generation, he is ranging himself alongside that class of employer, who is endeavouring to bring about a reduction of the wage standard in this country. When this Government took office it found that it had inherited a lockout on the northern coal-fields of New South Wales. Men were out of work, and women and children were suffering as a consequence of that lockout. During the time that I was a private member, I frequently heard the honorable member for Hunter (Mr. James), in good faith, urge the Government to do something to relieve the terrible distress that existed among the miners and their families. I give him full credit for that action. I sympathized with him. On one notable occasion honorable members who now sit on that side gave expression to their sympathy with the conditions which lie revealed. But neither I nor the Leader of this party, nor any other responsible person in it, ever ventured to pledge himself to give effect to any policy in accordance with the law as we interpreted it that would coerce the mine owners. My attitude as a. private member was no different from what it now is as a responsible member of this Government. That applies also to the Government itself. What were we to do when we came into office in these circumstances ?
– Keep your promises, as honorable men would do.
– There were two lines of action which this Government could have followed. One was to implement the law to compel the mines to open and allow the miners to resume their work; the other was to pursue a policy of conciliation and argument designed to the same end. Those were the only two methods open to us: one, argument; the other, force. The first we employed, the second we could not employ. It is said that we could have prosecuted the notorious John Brown. Of course we could not have done so.
– Why not?
– The Deputy Leader of the Opposition innocently asks “Why not?” as though the charge which we, while in Opposition, made against his Government, was that it did not prosecute John Brown when it ought to have done so. The honorable member knows full well that that was not the charge which we laid against his Government. Honorable members opposite are as well acquainted as t am with the history of this matter. In the last Parliament they heard the honorable member for Hunter repeatedly ask when a prosecution was to be launched against John Brown for having caused a lockout; and, just as repeatedly, they heard the- exPrime Minister (Mr. Bruce) reply that a man could not be compelled to carry on an enterprise which did not pay, and state that the matter was under the consideration of his Government. On one memorable occasion they heard the exmember for Bendigo (Mr. Hurry) ask the ex-Attorney-General (Mr. Latham) whether he was prepared to make a statement in relation to the prosecution of John Brown. That honorable gentleman rose in his place and sai-l that, having taken advice and considered the matter from all angles, the Government was launching a prosecution against John Brown for a lockout. I admit that this is ancient history; but it needs to be impressed on the minds of honorable members opposite, who are seeking to make political capital out of what has happened. They cannot avoid the charge, which we then preferred against them and which was partly responsible for placing them where they are to-day, namely that they had misused the legal processes of this country by instituting a prosecution against a man against whom their own Attorney-General and the Crown Law Department had decided, a prosecution would lie, and then, for political considerations, abandoned it, although, they continued the prosecutions that had been instituted against representatives of Labour. Let there be no attempt to escape from that elementary fact. It is as true now as it was then - and it has never been denied - that the prosecution, of John Brown could not open the mines or give one atom of work to the workers.
– Is that why this Government is not going on with it?
– The honorable member for Hunter has said that we ‘might have seized the mines. I presume he feels that we could have issued a proclamation and declared that there existed a condition of serious industrial unrest, and that then we could have put into operation the Crimes Act. Does the Deputy Leader of the Opposition say that we ought to have seized the mines?
– No; but that course was suggested by the present Treasurer.
– Does he say that, if we had caused a proclamation to be issued declaring that there existed a condition of serious industrial unrest in Australia, and had prosecuted people who persisted in a lockout, we would have been any further forward than we are to-day?
– Ask the Treasurer.
– If there had been an industrial dispute extending beyond the limits of one State we could have had arbitration upon it. There is not an industrial dispute extending beyond the limits of one State; therefore, we cannot have an award along those lines. That is a matter of law. As a matter of fact, a conference was held and proved abortive, but that was not the fault of this Government. Honorable members opposite are concerned because this Government, which they pretended to think a revolutionary Government, and which they thought could be stampeded into taking illegal and unconstitutional action; stands fast by the legal forms of this country, and will implement the law only in accordance with the Constitution which it has taken an oath to observe. They can get nothing out of us along the lines of revolution. They predicted that we would obey the behest, and abide by the decision, of individuals outside this House, who, they declared, were our masters ; and that we would immediately succumb to the earnest entreaties of my honorable friend the honorable member for Hunter. We have not done so. We are using the legal forms of this country, and shall continue to do so in the interests, not of any particular class, but of the people as a whole.
– The honorable .member’s time has expired.
.- I preface my remarks by pointing out that the trouble in the coal industry is due to the fact that the Government has not carried out its election promises. During the last fifteen minutes we have had an eloquent speech from the AttorneyGeneral (Mr. Brennan) - one of the most eloquent I have ever heard him deliver - and he seemed to think that with eloquence, and ancient history, he could side-track the issue raised by the honorable member for Hunter (Mr. James). The Prime Minister (Mr. Scullin) also spoke most eloquently, and with the idea of keeping as far away as possible from the definite promise made by the Treasurer (Mr. Theodore). Although this discussion has proceeded for nearly two hours, we find that the Deputy Leader of the Labour party, the campaign director of that party in New South Wales at the recent election, the man who made the definite promise complained of by the honorable member for Hunter, sits in his place and says nothing at all. Last Saturday the Labour Daily, the official organ of the Labour party in New South Wales, published great front page headlines, “Miners deserted by Federal Government. Forced to accept owners’ terms.” To-morrow there ought to be a headline in that journal stating that the miners have been deserted by the Labour party of Australia. When the honorable member for Hunter rose to ventilate this subject, by moving the adjournment of the House, he was simply availing himself of an opportunity to place before it the case for the miners. The honorable member for Newcastle (Mr. Watkins), and the honorable member for Werriwa (Mr. Lazzarini), who afterwards apologized for the stand he had taken-
– I did not.
– I take the honorable member’s word for that. The three honorable members whom I have named are the only members of the Labour party who had the courage to say that the grievances of the miners, and the broken promises of the Government, are of such importance that an opportunity should be afforded in the House to ventilate them. The present Government has always said it stood for free speech; but it did not seem anxious for it to-day. So far as the Country party is concerned - and I think that I can speak on this matter for the Nationalist party also - we shall do all in our power to retain the privilege of free speech in -this chamber, and give an opportunity for the ventilation of the grievances of the people of Australia.
We have witnessed as shameful a betrayal of a body of men as the world has ever seen, but the Government ha3 made no apology for the betrayal ; it has simply tried to ignore the charge levelled against it. No reasonable explanation was given for its failure to prosecute John Brown. During the election it did not admit that the reason why the late Prime Minister did not prosecute kim was to enable a conference to be held, yet to-day it suggests a prosecution might impair a conference. The honorable member for Fawkner (Mr. Maxwell), eight or nine months ago, accepted the then Prime Minister’s assurance that he had acted in a bona fide manner in this matter. There can be no question about that. We, on this side, were asked recently not to discuss the situation, because of the conference that was in progress. Yet, last year, when a conference was held in Canberra, the Leader of the present Government and his Treasurer insisted on discussing the matter very critically in this chamber. To understand how shameful this betrayal has been, it is worth while recalling the history of the dispute, because the Government and its supporters cannot absolve themselves from responsibility for the loss of £2,000,000 in wages in the last eight or nine months, and for the desolation and starvation now obtaining in the mining industry. The proposal of Mr. Bavin, which was adopted by Mr. Bruce, was brought forward in September, 1928, or five months before the notices of dismissal were served on the men. There were five months of negotiations and conferences, and during the whole of that period an endeavour was made by the last Government to arrive at a compromise while the mines were still working. If the federal opposition at that time had had the moral courage to stand up boldly in this chamber and advise the miners to accept a reduction of 9d. per ton, I believe that the men would have taken a reasonable view of the proposal, and there would have been a good chance of a satisfactory arrangement being made, because I do not believe that the men desired to remain idle. But the present Government used all this time in order to exploit the position for political purposes. The trouble was used as a mere election card, which it took good care to play. It did not put its weight into the work of bringing about a solution of the problem of keeping the mines in operation. There were five months when the mines were actually working, and when there were negotiations and conferences, before the mine-owners determined that they could not operate the mines economically. During those five months, the federal Labour opposition did nothing to improve the position; on the contrary, its action caused embarrassment. The question has been asked, “ What was done by the late Prime Minister “to assist in a settlement. He consented to Mr. Bavin’s proposal that the Commonwealth Government should pay a bounty of ls. a ton to help the export and interstate trade. Everybody remembers the sharp criticism there was from all parts of Mr. Bruce’s electorate when that offer was made. Some of it came from the Victorian Government, and the Victorian Electricity Commission, and this had a very great influence in bringing about the personal defeat of the ex-Prime Minister in Flinders, by a few hundred votes. But despite the criticism that was inevitable, he took his courage in his hands, and stood solidly behind the proposal, contending that a reduction in the price of coal would bring about increased prosperity in industry. . Everybody realizes that whenever there is a fall in the prices of commodities, wages drop more slowly than those prices, with the result that the workmen are better off for a considerable time. That is an absolute economic fact. This matter affects the life and welfare of a large section of the people, and yet honorable members opposite laugh.
– The honorable member is not in order in suggesting that other honorable members are laughing over this matter. I have not heard any laughter.
– I could name an honorable member who was laughing.
– The honorable member looks as though he will soon be crying.
– It is enough to make anybody cry to witness such a shameful betrayal of the miners - so great that a member of the Labour caucus has even attacked his own Government in the House. Is that not enough to make any honest-minded man weep ? I am glad to know that, despite caucus methods of control in the Labour party, there is to be found in that party a man who is prepared to stand up for his constituents, and defend the interests of those who have been grossly deceived.
.- Being familiar with the conditions of the miners in the district represented by the honorable member for Hunter (Mr. James), as well as those in my own electorate, I am not at all surprised at his action in moving the adjournment of the House. When members of the Opposition endeavoured to take a hand in the settlement of the dispute, all they could see their way clear to do was to “put the big boot in.” Together with the Premier of New South Wales, they tried to assist in bringing about a reduction in the miners’ wages. If any man has stood in the way of a reasonable and honorable settlement of the trouble, it is the Premier of New South Wales.
– The reason why the miners were kept out so long was that the election promises of this Government were not fulfilled.
– I shall come to that point. The dispute was almost settled by conference when the Government got into office, and no doubt a settlement would have been effected but for the Premier of New South Wales.
– That is untrue.
– Nothing of the kind. This trouble is beyond party considerations to-day.
– It should have been so long ago.
– That is quite true. Prom beginning to end, it. was a case of devils stepping in where angels feared to tread. Beyond the subject of the summons for the breach of the award of the court, the Federal Parliament has never had the power to acquire the mines, and the pity of it is that any promise was made that might lead to the deception of the rank and file of the miners. The power of resumption lies in the hands of the State Parliament and the New South Wales Government has stood with one side throughout the piece. The determination to bring wages down has been put into effect The commission appointed by the Bruce-Page Government is composed of men who have no acquaintance with mining work. I do not doubt their honesty of purpose for a moment, but they are costing this Government £1 a minute, and yet they were so “ bamboozled “ in their efforts to learn the actual profits made by coalowners, that in drawing out a list of mines on which to strike an average, they included one that had been closed for seven years, and another that had been closed for five years, and another the staff of which had been reduced by hundreds of men. That was the basis on which they arrived at the figure of costs at 2s. 3d. a ton. If they refused to take into account the watered capital of the coal companies, they would arrive at a more accurate estimate of the profits being made. Such things go to show the need for giving the Commonwealth Parliament power to deal with matters so vital to the nation. When we first came to Canberra we were told that we were to have a constitutional session.
– What power did the last Government have more than this one?
– I did not say that the last Government had the power, but it refused to take it. We were promised a constitutional session, and we were merely given a constitutional commission. This commission spent its time examining people all over the country who did not know anything of the Constitution. I can say this much for the present Government: it did meet the miners’ representatives; it did call a conference in an effort to achieve a settlement; and a settlement was arrived at which, unfortunately, was a bad one from the point of view of the miners. Whether the Government could have done as the Bruce-Page Government did in connexion with other industries, and flout the Constitution in order to carry out its will, is a matter for the Government itself to consider. I maintain, however, that it was wrong to promise things which it could not carry out, and thus mislead the people. For us who know the facts of the situation, it is almost sufficient to make us shed tears when we reflect upon the settlement that has been reached. We in Australia are living like prodigals in a land of plenty; but the proper way to rectify things is not to insist upon a reduction of wages, and to force the acceptance of such terms by economic pressure. Any attempt to do that will only recoil upon all governments, both State and Federal. I regret that the leaders of the Labour party made the promises to which I refer. I do not blame them for not keeping promises which were really impossible of fulfilment, but they should have known that before making them. We know our constitutional limitations; we know that we have not the power to do the things which were promised. To-day, however, the people are desirous of giving this Parliament supreme power to deal with disputes of this kind. The Government would be well advised to take the advice of the honorable mem ber for Werriwa (Mr. Lazzarini), and submit to the people for their approval a proposal that the Commonwealth Parliament should have power to legislate on all important industrial matters.
.- I congratulate the honorable member for Hunter on moving this motion. I think that he rather resented the support he obtained from this side of this House, but he would not have had an opportunity to state his case had it not been for the assistance of honorable members of the Opposition. I agree that the Government is probably in a more humiliating position than any other Commonwealth Government ever found itself in. The Government, however, cannot blame the honorable member for Werriwa nor the honorable member for Hunter for condemning the making of promises which could not be kept. A very distinguished member of the Government, an ex-Premier of Queensland, the present Federal Treasurer and aspirant for the position of Prime Minister, came into my own electorate and told the people that if a Labour government were returned to power the mines would be opened in a fortnight. Such a statement is not in keeping with his responsibility as a public man, and it is no wonder he has remained silent on this matter. We cannot believe that so prominent a man, and one so well informed on public affairs, could really have believed what he said. Fortunately, not many people in my electorate believed him, and I was returned by a comfortable majority. The only action taken by this Government to settle the coal dispute has been to hold a conference and to refrain from prosecuting John Brown. Both those things were done by the last Government, and the reason advanced by Mr. Scullin for not prosecuting John Brown was the same reason as Mr. Bruce advanced. I should like to see more evidence of sincerity on the part of members of the Government in their dealings with industrial matters.It is a pity that trade unionism has become so closely allied with politics. It would be better for the workers if it had been otherwise. I do not think that the attack of the honorable member for Newcastle on the Premier of New South Wales was justified. Mr. Bavin suggested that the parties should abide by the finding of the royal commission. There was to be a reduction, not only of wages, but also of profits. Moreover, the steel works in Newcastle were to reduce the price of their commodities, which would result in an increase in employment throughout the district.
Debate interrupted under Standing Order 119.
asked the Treasurer, upon notice -
– The answers to the honorable member’s questions are as follow : -
Sale of Sand
asked the Minister for Defence, upon notice -
– The answers to the honorable member’s questions are as follow : -
asked the PostmasterGeneral, upon notice -
– The answers to the honorable member’s questions are as follow : -
asked the Treasurer, upon notice -
– The information is being obtained and will be furnished as soon as possible.
asked the Treasurer, upon notice -
– The answers to the honorable member’s questions are as follow : -
Dr. MALONEY (through Mr. C.
Riley) asked the Minister for Defence, upon notice -
With reference to the particulars asked for on the 19th September, 1928, by the honorable member for Melbourne (Mr. Maloney), will the Minister, from the information that is in his department, bring such particulars up to date as requested in the following questions: -
What was the annual cost of the Naval College at Jervis Bay for the last financial year ?
How many scholars attended during such year?
What is the total number of teachers, officials and employees engaged in connexion with such naval college?
What is the total cost of this institution to date?
How many scholars have graduated through the college to date?
How many of such graduates are at present in the Commonwealth Service?
What was the annual cost of the Military College at Duntroon for the last financial year?
How many scholars attended during such year?
What is the total number of teachers, officials and employees engaged in connexion with such military college?
What is the total cost of this institution to date?
How many scholars have graduated through the college to date?
How many of such graduates areat present in the Commonwealth Service?
– The answers to the honorable member’s questions arc as follow : -
asked the Minister for Home Affairs, upon notice -
– The answers to the honorable member’s questions are as follow : -
Medical Treatment of ex-Soldiers.
asked the Minister for Repatriation, upon notice -
– The answers to the honorable member’s questions are as follow : -
New South Wales. 2 and 3. Treatment is available for returned soldiers, resident in Canberra, for disabilities arising out of their war service, as under: -
Transfer to Canberra
asked the Minister for Repatriation, upon notice -
When is it expected that the Repatriation Commission will be transferred to Canberra?
– No date has been decided.
– On the 28th November, the honorable member for Reid (Mr. Coleman) asked the following questions, without notice -
Will the Minister for Defence take steps to ascertain whether the Navy Department made a contract with the Shell Oil Company, in January, 1929, to supply oil fuel to meet fleet requirements, whether that contract expires in December next, and whether oil is not being delivered under it in overseas and foreign ships, with Asiatic and other foreign crews? Further, will he give consideration to ensuring that the products of the Commonwealth Oil
RefineriesLimited, , in which the Commonwealth has a controlling interest, are utilized for defence purposes?
I am now in a position to inform the honorable member that -
Tenders were invited in October, 1928, for supplies of oil fuel for the Navy. The Commonwealth Oil Refineries tendered for Fremantle only, and their tender was accepted. The Shell Oil Company’s tender was accepted for Sydney, Brisbane and Adelaide (there was no restriction as to the crews to be employed on their ships). The Commonwealth Oil Refineries have a contract for suppty of oil fuel at Melbourne, which expires on 31st December, 1929. Fresh tenders are being invited for supplies for 1930, and a tender from the Commonwealth Oil Refineries will receive full consideration.
Withdrawal of South Australian Equipment
– On the 21st November, the honorable member for Adelaide (Mr. Yates), asked the following questions : -
I am now in a position to inform the honorable member that -
The following papers were presented : -
Customs Act - Proclamations prohibiting the Exportation (except under cetain conditions) of -
Flour (dated 27th November, 1929).
Stud Sheep (dated 27th November, 1929).
Lands Acquisition Act - Land acquired at Ourimbah, New South Wales - For Postal purposes.
Public Service Act - Appointment of D. S. Bull, Department of Trade and Customs.
Debate resumed from 28th November (vide page 430), on motion by Mr. Theodore -
That the bill now be read a second time.
.- The bill, though short, contains proposals that may materially affect the future prosperity and stability of Australia. Therefore it should not be dealt with in a casual, offhand and hurried fashion; all interests and factors concerned should receive the fullest and most exhaustive consideration, and sufficient time should be allowed the House to make a wise decision. I have already indicated the course which I think should be adopted by giving contingent notice of my intention to move, after the second-reading is carried, that the bill be referred to a select committee to inquire especially into the probable effect which the embargo on the free export of gold will have on the maintenance of the gold standard in Australia. The Treasurer (Mr. Theodore) described a few of the symptoms of the existing conditions, but did not attempt to get down to root causes in order that he might make an accurate diagnosis. We are entitled to hear his diagnosis before we accept his prescription ; treatment without an accurate diagnosis may do more harm than good. The Commonwealth and the States owe about £520,000,000 in Great Britain, and the comments which have already appeared in the newspapers in the Old Country convey the impression of financial authorities there that these proposals are likely to be injurious rather than beneficial. The Financial Times is reported in the Argus of Saturday last as having described one passage in the Treasurer’s speech as carrying a threat of direct official interference in financial matters which definitely accords with the socialistic view that banking policy is a national matter, and as such should be directed by the Government, but that journal added, “ this is likely to be viewed elsewhere with considerable misgiving.” The Financial News, whilst agreeing that the concentration of gold in the vaults of the Com- monwealth Bank is in full accordance with modern principles, says -
Everybody agrees that the concentration of gold in the hands of the Commonwealth Bank is a highly desirable development, in full accordance with modern principles. What is open to criticism is the Ministry’s intention to take power to suspend the free export of gold, or, at least, to reserve the right to veto any gold shipment of which it disapproves. . . . Adverse conditions will not last for over; in fact, there is reason to hope that there will be a change for the better In- fore long, so that it would bo a very shortsighted policy to take emergency measures of a nature that would react permanently on thu country’s credit.
Therefore, I think the House would he wise to accept my proposal to refer the bill to a select committee. The outstanding feature of Australia’s position to-day is the huge excess of imports, and the deficiency of exports, with resultant exchange difficulties. One potent cause of the excess of imports is the relatively high price level in Australia, especially in relation to what are usually described as basic wage articles. The Commonwealth Statistician estimates that the prices of these articles are 23-J per cent, higher than are the prices in Great Britain. High price levels attract imports, which in turn make the tariff ineffective, and the decisions of the Arbitration Court valueless as a means of improving the standard of living. Another result is the added difficulty of producing competitively those commodities which must be sold in the markets of the Old World at the lower prices obtaining there. Thus we find ourselves in a vicious circle. The burden of high prices in respect of basic wage commodities discourages the production of exportable commodities. When less wealth is produced, less money is deposited in the banks. If we continue spending on a high level, bank advances become disproportionate to the deposits. According to the annual statement published in the Banking and InsuranceRecord on Friday last, bank advances increased last year by £30,000,000, while the deposits increased by only £10,000,000. The safe proportion of deposits to advances is roughly ten to eight, and on that basis the advances last year instead of being £30,000,000 should have been not more than £8,000,000.
The evil of deficient export production and adverse exchange can be overcome in several ways. We can work harder and produce more goods for export, and in that way counterbalance any loss in price value, or we can borrow money abroad to make up for the loss of revenue from exports. The third alternative is to redress the adverse trade balance by the export of gold. At the present time our people do not seem inclined to work harder than before, and the Treasurer has found that we cannot borrow in other countries on advantageous terms; consequently we are forced to adopt the third alternative of exporting gold. If the export of gold restricted the basis and volume of credit, as it would automatically if there were no governmental interference, the economic position would be automatically corrected, because contraction of credit would be followed by lower price levels with a consequently diminished attraction for imports and greater production for export. It is worthy of notice that f lulling prices have always benefited the workers more than rising wages. That was particularly apparent in 1922 when, despite the fact that the basic wage was reduced, the effective purchasing power of money became greater because of the diminution of prices. It is a well known “ economic fact that, when prices rise, wages lag slightly behind. On the other hand when prices fall wages are slower in accommodating themselves to the change, with the result that for a time at any rate they have greater purchasing power. Australia has never adjusted its economic position since the war, as many other countries were forced to do in the years 1920 to 1922. Two factors prevented us from getting down to bedrock ; the first was the artificial inflation caused by the issue of notes to pay the war gratuities given by Mr. Hughes; and the second was the Massy Greene tariff of 1920, which tended to raise the cost of commodities. Australia, like other countries, suffered a definite waste of capital during the four years of war, but while other countries have adjusted their positions accordingly, Australia has not done so to anything like the same extent.
– Waa not the last Government responsible for that?
– The factors I have mentioned were not brought- into existence by any Government. The sooner we understand that economic problems cannot be resolved by political interference, the better for the community. I am not making a party political speech, but am trying to deal with the subject in the best interests of the country. The subject should be above party considerations, for it concerns, not this Government or that, nor this party or that, but the welfare of all the people. If we deal with it on sound lines the Commonwealth will advance, but if we deal with it unwisely we can never progress.
When the Chancellor of the British Exchequer (Mr. Phillip Snowden) discussed these issues in October, he pointed out how involved they were, and pleaded for an attentive hearing, so that he might make himself understood. I also wish to place the situation clearly before honorable members. In order to do so I propose to use one or two illustrations.
Let us assume that before the war “ a man or a nation had a capital of £10,000 invested at 7 per cent. His income was £700, and he lived at a certain standard of comfort within that income. As the result of the wastage caused by the war he lost £2,000 of his capital. If he still only received 7 per cent, from the remainder his income would be only £560 instead of £700. In those circumstances he could do one of three things. He could re-adjust hia standard of living to his smaller income; or he could work harder and use his capital more profitably and so possibly make the £8,000 earn 9 per cent, instead of 7 per cent., which would return him the same income as formerly; or he could continue to live under the old conditions at the rate of £700 a year by drawing upon his capital to the extent of £140 a year. The last-mentioned course would bring him into difficulties sooner or later.
I suggest that Australia has been following this course. She has been spending freely. Her low rate of interest has encouraged her people to indulge ‘ in luxuries which possibly they could not afford. Prices have been maintained at a high level and imports have been attracted to the country. The conditions have been such that it has been impossible, under our Arbitration Court system, to give wages the same purchasing power as formerly. Nominal increases have been granted, but they have not been affective. High prices under our tariff have also tended to discourage exports. Had we been wise we would have altered our policy, decreased our price levels by careful control of credit and discouraged the buying of luxuries and unnecessary goods from overseas.
The remedy proposed in the bill is co concentrate all the gold in Australia in the hands of the Commonwealth Bank and then use it as an export, with the object of correcting our adverse balance of trade. If we do no more than that we shall not remedy the position. The mere taking of the gold from several places and putting it into one place will be of no use if we continue to spend just as much as formerly. In addition to concentrating and using gold to correct trade balances, we ought to do something to correct the internal position.
I may be pardoned for employing a medical illustration to assist us to understand the position. The symptoms of a man suffering from diabetes are a tremendous hunger and thirst. A sufferer from this complaint desires to be eating and drinking all the time: and at the same time passes an abnormal quantity of sugar. The result is that he does not get any improvement in his health from his food, but day by day grows weaker and weaker. If he does nothing but eat and drink he can never hope to correct his disease, but * if he undergoes a course of internal treatment with the object of curing the cause of his disease, he will be able to retain the sugar in his body, and will gradually grow stronger.
I suggest that it will not be sufficient for us merely to deal with the symptoms of the economic disease from which we are suffering; we must get to the root of it. It is not sufficient for us to do only what the Treasurer suggested - and, however wise the idea may be, I disagree with the method be proposes to adopt in this regard - we must also attempt to correct our internal disorders. I believe that the only way this can be done is through the bank exchange rate. The speech of the British Chancellor of the Exchequer was so apt on this point that the Treasurer agreed to the suggestion that I made on Friday to reprint it for distribution among honorable members. Mr. Snowden dealt with several points that I wish to elaborate. He was putting, not only his private view, but also the official view of the British Treasury. In the course of his remarks he stated that for several years Great Britain had been steadily losing her gold. She was losing it to America because of the high rates that were being paid by speculators in New York. She was also losing it to Germany freely, because Germany was doing her best to rehabilitate her municipalities. Some of these municipalities were offering as much as 9 per cent, for the money that they needed, and the German Reserve Bank discount rate was 7 per cent. She was losing it also to France, because France was doing her best to call back the capital she had lost in overseas investments during her period of inflation. The operation of all these factors caused Great Britain to lose about £4)0,000,000 in gold lust year. The action taken to prevent further loss was to raise the bank rate. The British Chancellor went on to observe that the effect of action taken to correct a particular financial situation was not always what was expected, and added that the credit of the British Government stood just as high that day as it had stood before the bank rate was raised a week earlier.
It might have been expected, for instance, that an increase in the bank rate would adversely affect employment, but that was not the British experience. Mr. Snowden pointed out that three days before the bank rate was raised last February the number of registered unemployed was 1,369,000. Two months later it had dropped to 1,178,000, and it had continued to fall except for a slight seasonal increase in August. A week prior to the date of the Chancellor’s speech, the number of unemployed was 200,000 Jess than at any time since the bank rate was raised in February. He proceeded -
For five months before the bank rate was raised in February the volume of employment has been constant at 104. After the bank rate was raised, it began to rise, and had risen continuously up to the present time, standing last month at the index figure of 107.
Mr. Snowden went on to say that it might have been expected that the increased rate would affect export trade, but that had not been the case. His remarks under that heading were as follows : -
In February, the export of domestic production was £53,605,000 ; in August, the figure was £03,000,000. He did not wish to convey the impression that he had produced those figures to show that improvement was due to the rise in the bank rate. But, on the other hand, they showed that the disastrous results which were then foretold certainly did not appear to have been realized.
Another good effect of a higher bank rate was the discouragement of speculation.
– “Where will all this discussion lead us?
– My object in making these remarks is to urge the Government to let the bank rate and the exchange position settle themselves without any governmental interference.
– There is no suggestion of interference.
– I should like to see the bill passed in such a way that there could be no possibililty of political control over our trade or currency or gold reserves. There can be no doubt that the retention of our high price levels and low bank rate has encouraged importations and has led our people to spend more money on luxuries than should have been spent. Eighteen months ago, New Zealand was in a position something like our position of to-day. Last year, our bank advances increased by £30,000,000 and our deposits by only £10,000,000, which ratio is altogether out of proportion. In March, 1927, it was found that the advances by the New Zealand banks were seriously in excess of the deposits. The bank rate was then raised by -J per cent. The result was that by June, 1928, the deposits were £9,500,000 in excess of the advances. I submit that we could achieve the same desirable end by the same means; but it should be done by the banks without any government interference.
As I have already pointed out, the position in Australia is that the price of the British basic wage articles is 23£ per cent, above the price in Great Britain. “We have been indulging in very free spend- ing. It has been private as much as public spending, for the people have been buying luxuries. This has been one of the ill-effects of keeping our interest rate low when trade conditions were against us. But we cannot continue to regard with equanimity the fact that our bank deposits have diminished in proportion to our bank advances. There are three things that we can do to correct the situation. We can concentrate our gold; but, if the only result of our doing so is that we shall look upon it, and not use it, we shall be no better off. Some countries have collected as much gold as possible and not used it. If it is used to assist our national credit or our foreign monetary position, it undoubtedly will be of extreme value. Our position call also be assisted by exporting the gold if necessary, to ease our exchanges ; but with that export there ought to be an automatic contraction of both the basis and the volume of credit. If that course is followed, as it will be if there is no government interference, our position will be righted automatically. The only difficulty will be caused by those who are engaging in speculation or risky ventures. The effect on those sound industries which are essential to the progress of this country, and which provide the great bulk of the employment that is offering, will be to make available larger advances, because the higher rates offered for deposits will attract more money to the banks. The result should be a repetition of what has happened in England - an increased employment ratio in Australia. I admit that the stupendous tariff that has been put on by this Government in the last couple of weeks will have a tendency in the opposite direction, because automatically price levels will be kept up. It is a matter of history that for a couple of years after the imposition of tariffs on such a large scale the resultant higher price levels have tended to increase unemployment. In the year which followed upon the bringing down of the Massy Greene tariff, the unemployment percentage rose to 11.1, which was the highest in the history of Australia since federation. But leaving that aspect out of consideration, if what I have outlined is allowed to take place without government interference, we shall automatically right our position and be rendered capable of encouraging production and increasing employment.
Let us now examine the methods that have been suggested by the Treasurer (Mr. Theodore). In the first place he intends that all gold shall come into the hands of the Commonwealth Bank. I am the more interested in this proposal of the honorable gentleman, because in the last Parliament and during the recent election campaign I was castigated for having attempted to make the Commonwealth Bank a central bank, or a bankers’ bank. If the Commonwealth Bank holds all the gold in Australia, and is the sole bank of issue, nothing can prevent it from being a central bank. Therefore, although the Treasurer is adopting different methods he is aiming at the same goal that I sought to reach. I desired to make the Commonwealth Bank a central bank by evolution and practice, not by compulsion. I anticipated that if we provided machinery that would enable it to function as a central bank, ultimately, and automatically it would do so with the goodwill of the other financial institutions in Australia. The Treasure]1 desires to take a short cut, and to bring about this condition of affairs by compulsion. It is on that ground that I join issue with him. In matters of defence the Labour party says that there shall be no compulsion, and that one volunteer is worth nine or ten pressed men. I venture to suggest that one financial agent who voluntarily comes forward to help our financial position is worth nine or ten pressed agents, and that one sovereign given voluntarily to the central reserve will be of very much greater value to the credit and trade of Australia than would one that was taken compulsorily from the people who own it. The effect of the arbitrary commandeering of gold and the prevention of its export except by the executive authority of the Treasurer, whatever may be the motives behind or the immediate result of such action, will tend to generate in the community and the world generally the fear of an attack upon the fundamental basis of our national credit, and will make it possible to tamper with the currency in a way that I do not think the honorable gentleman desires.
– It is a very dangerous power to give.
– Very dangerous, indeed. The Labour party has frequently been blessed with good ideas; but has translated them into action in such a way that their value has been destroyed. When the ‘last Government considered the constitution of the Commonwealth Bank, it examined the whole position very carefully, and decided to create machinery that would enable that bank to function as a central bank and to leave evolution to do the rest. In the belief that, if the Commonwealth Savings Bank remained part and parcel of the general bank, fear might be entertained that certain of its funds might not be sufficiently liquid to be freely available, the two institutions were separated. If it will be advantageous to the trade of Australia to have a further re-arrangement of. the functions of the Commonwealth Bank into a central banking bank and a trading branch, and the Treasurer will come down with proposals to separate them, a great deal of my objection to the requisitioning of gold will disappear, and he will have my hearty support in any endeavour to place the measure on the statute-book. If it was made abundantly clear that the gold which is to flow into the coffers of the Commonwealth Bank when altered in such a way is to be ear-marked exclusively for trading purposes, and not to back up a further issue of notes, and that the control of the bank is to be non-political, we should be able to give the Treasurer some support. If he took action in that direction he would improve greatly the financial machinery of Australia, and improve it in the direction which experience proves as wise.
There is one point that the honorable gentleman should clear up. During the election campaign the honorable member for South Sydney (Mr. E. Riley) stated that one of the first acts of the Labour party if it were returned to power would be to give the present directors of the bank notice of the termination of their engagement. That statement was given wide publicity. When a judge has been appointed by one government, he does not vacate his office upon the accession to power of another government. The Government of which the present Commonwealth Treasurer was Premier appointed judges who still hold office despite the fact that another Government has come into power in Queensland. Public officials who are performing their duties satisfactorily should be absolutely free from political interference. The Treasurer should take an early opportuill’ Y to dissipate the impression caused by ihe statement of the honorable member fc” South Sydney.
The honorable gentleman has pointed to the English practice as a precedent for this proposal, and has urged that we should follow it as closely as possible. In Great Britain the £1 note has been made individually inconvertible, the object being to avoid the loss that results from the use of gold as a medium of ordinary currency in the hands of the people; but, if any person or institution has an amount of not less than £1,600 that he or it wishes to use for trading or industrial purposes, or to send abroad to stabilize his or its foreign monetary position, that value in gold can be procured from the Bank of England. To that extent, therefore, there is a convertible note in existence in the United Kingdom. That law was brought into force by the Gold Standard Act,. 1925. There is also in force the Currency and Bank Notes Act, 1928, which gives to the -Bank of England the power to lake possession of gold to an amount not exceeding £10,000, except as to any part thereof which is bona fide held for immediate export. Consequently there is a definite line of division between the proposals we are now discussing and the English practice. Foi the information of honorable members I shall read relevant sections that operate in England. The Gold Standard Act, 1925, enacts -
Unless and until His Majesty by proclamation otherwise directs -
So long as the preceding sub-section remains in force, the Bank of ‘England shall be bound to sell to any person who makes a demand in that behalf at the head office of the bank during the office hours of the bank, and pays the purchase price in any legal tender, gold bullion at the price of three pounds, seventeen shillings and tenpence halfpenny per ounce troy of gold of the standard of fineness prescribed for gold coin by the Coinage Act, 1870, but only in the form of bars containing approximately four hundred ounces troy of fine gold.
The Currency and Bank Notes Act, 1928, contains following provision: -
II. (1) With a view to the concentration of the gold reserves and to the securing of economy in the use of gold, the following provisions of this section shall have effect so long as sub-section ( 1 ) of section one of the Gold Standard Act, 1925, remains in force.
Any person in the United Kingdom owning any gold coin or bullion to an amount exceeding ten thousand pounds in value shall, on being required so to do by notice in writing from the bank, forthwith furnish to the bank in writing particulars of the gold coin and bullion owned by that person, and shall, if so required by the bank, sell to the bank the whole or any part of the said coin or bullion, other than any part thereof which is bona fide held for immediate export or which is bona fide required for industrial purposes, on payment therefor by the bank, in the case of coin, of the nominal value thereof, and in the case of bullion, at the rate fixed in section four of the Bank Charter Act, 1844.
It will thus he seen that there is a fundamental difference between those provisions and the Treasurer’s proposal.
– What is that fundamental difference?
– Upon the presentation of notes to the value of £1,600 a person can obtain in England a bar of gold which can be exported immediately. In Australia, under this measure no export will be permitted except with the consent of the Treasurer. In England one does not need to obtain the consent of the Treasurer or of any other person. There, funds held for immediate export are specifically excluded from the authority to commandeer; whereas here authority to place an embargo on export has been specifically included in the measure.
– The provision that enables the Bank of England to requisition gold except that held for immediate export, is intended to satisfy contracts previously entered into.
– No. The Gold Standard Act of 1925 made the individual note inconvertible - the smallest quantity of gold changed being 400 oz. troy. The Currency and Bank Notes Act was passed in 1928, and if £40,000,000 of gold went out of Great Britain last year, a very free export of gold must. have been possible during that time. If we can ensure as free an exchange of gold as in England much of my opposition to the bill will disappear. If the Treasurer is acting exactly on all fours with what has been done in England, I suggest that, so “* far as possible, the actual text of the English act should be inserted in the present measure.
We come to another point in which this bill differs materially from the English legislation, and, in my opinion, the difference is vital. In the bill as it stands, provision is made, as the Treasurer made clear in his statement, that the final word in connexion with the export of gold shall be said by him as the executive head of the Treasury. I questioned him on the matter at the time, and he said that, irrespective of what the recommendation the Commonwealth Bank Board might be, he would have the last say in the matter, and take the sole responsibility for the action. This is a subject that should be removed as far as possible from political control. The export of gold must be dealt with by the bank rather than by anybody else, otherwise we shall strike a blow at the gold standard of the nation. There should be non-political control of the banking machinery.
– Somebody should have the final word.
– The Commonwealth Bank Board should have it. The Treasurer made it quite clear that, despite what might be the recommendation of the board, he would exercise his executive authority.
– No. I said that the Treasurer would have power to act within his absolute discretion. I did not say that he would act contrary to the advice tendered.
– If it is intended that the Treasurer should act on the recommendation of the board, the bill should plainly say so.
– The Treasurer would act only on the advice of those charged with responsibility in the matter.
– It should be expressed plainly in the bill, because an embargo on gold export would strike a blow at the gold standard, and the. nonpolitical control of our banking machinery. So far as the Country party is concerned, we feel that free exchange is a matter of life and death to the great exporting interests of the Commonwealth, and, in my opinion, it has just as important an influence upon the general trade and commerce of the country. Our exporting interests are, to the extent of 96 per cent., concerned with primary industries, to which free exchange is vital. It is just as important to them as the air we breathe is essential to us. The bill should make it clear that the interests of those industries in this respect are amply safe-guarded.
It seems to me that the bill does not ensure the convertibility of notes into gold. The Treasurer himself said that if a person obtained £1,000,0000 worth of gold in exchange for notes, it could be immediately requisitioned by the bank, and that means that the giving of the gold in the first place is merely a camouflage. Anything that prevented the free export of gold would destroy the convertibility of the currency.
– If we destroy its convertibility, we cannot have the gold standard. We shall render ourselves liable, by a mere executive act, to all sorts of .exchange, monetary, and currency dangers to which we should not be sub’ject were we on a free gold basis. We had some experience of that under the regime of the late Government, which brought about a return to a gold basis. In “my opinion, one of the great achievements of that ministry was that it stood in line with the British Government in 1925 in the establishment of a gold standard. The return to gold immediately relieved the exchange position, through making Australian notes available here against London securities and gold. The exchange rate was reduced from £4 to 5s. per cent, within a month because of the possibility of a free exchange of gold, and the action of the Commonwealth Bank Board. But during the two yeans prior to that, when I was in charge of the Treasury, and m intimate association with the State Treasurers, I found that the exchange difficulties were almost insuperable. In fact, at the latter end of 1923, the State Governments were going on the market themselves, trying to buy or Bell exchange. We found that, because of the different price levels in Australia, our £1 note represented quite a different value from the British £1 note. Although we had sent goods to Great Britain, sometimes we could not get money back in payment for them. Exporters and importers did not know what prices they would finally receive in connexion with their trading transactions. They did not know how or when they should be paid. The State Governments were endeavouring to keep men in employment by selling exchange on the open markets. This trouble was sufficiently serious inside the Empire, but also caused enormous difficulties for us regarding exchange with other countries. These disabilities were accentuated when we were dealing with foreign countries like . the United States of America, because the Australian paper £1 note had no common standard of value for comparison with the American dollar. Before the gold standard was reestablished, Australian, British, and American standards differed so materially in their values that the banks in Australia preferred to import £10,000,000 of gold from America to settle exchanges, to going through the ordinary avenues of British exchange. If we had a similar experience again, as we conceivably might, by departing from the gold standard, we should for ever rue it, because of the damage that would be caused. The benefits of a common standard of value and a uniform medium of exchange are incalculable among the nations. We must maintain our gold standard at all costs. The only way to do that is to ensure the convertibility of our currency in Australia. The gold standard of a country has been defined as one in which, for all practical purposes, all kinds of money are ultimately converted into full-bodied gold money, which is then freely converted into ordinary gold, and is freely exportable. That is the definition given by Professor Shields, a noted economist, and it is practically the opinion given by economists throughout the world. The English experience of the gold standard has brought practically every other country into line. A century ago, Britain was almost the only country with a gold standard ; but, so great have its advantages proved there, that practically every other country has followed her example, some not completely, but all using gold as a uniform basis of exchange. Since 1844, the Bank Act of England has made the working of the gold standard automatic and independent of government management. The gold standard has been effectively maintained, because the principle of convertibility has been observed. The conversion of gold into notes is deprived of all its virtues when a law against it3 export operates. In England there is no embargo on export; but this bill prevents the export of gold, and I cannot see what great advantage there would be in placing such an embargo on it, if the Commonwealth Bank is to be able to requisition practically all the gold in the Commonwealth. Surely, if it is to be a bank of exchange, it will handle the matter automatically, and without compulsion and at competitive rates. In such circumstances, why should we introduce a provision that will most certainly do harm? This proposal is causing alarm among the financial authorities both here and in other parts of the world generally. I can see no tangible advantage in such an embargo; but there is the possibility of danger. There is no advantage in piling up gold merely to look at it. It might be used for London exchanges, or we could employ it as the basis for a further issue of notes. There is an arrangement between the central bank and the States-
– Why wear it out by moving it about?
– There is no need to move it.
– What about the big shipment of gold that was made recently?
– We are shipping gold to other countries because we need it badly to get credits there.’ If we interfere with the freedom of trade in gold we shall very materially interfere with those principles that everybody in Australia holds dear. If gold is not used for the purpose mentioned, it could be employed as the basis of additional issues of paper money. Without question there is a strong desire among some members of the Labour party to solve our problems by the short cut of a further issue of paper money. If we put an embargo on the export of gold, ve might meet dangers which we now automatically escape. Honorable members who advocate that course should remember the experience of all countries that have adopted it. The prices of commodities rise according to the extent of the new circulation of notes. When prices rise the first result is an increase in profits of trade. There i. always a delay in the consequent increase of wages, and it is only when prices begin to fall again that wages get to their proper level. A time of falling prices is better for the workers than when money wages are rising. If there were a further issue of notes, followed by a rise in prices, the immediate effect on wage-earners would be disastrous. During a time of rapidly rising prices, with wages always lagging behind, there has always been an increase of industrial unrest. That has always been the case, despite the fact that wages ultimately tend to rise, but not as quickly as prices.
– What would be the effect on bond-holders ?
– The effect would be a depreciation of the value of the bonds in Australia. If we were deliberately to inflate the currency for this purpose we should be guilty of an act of spoliation, and of a breach of faith with the bond-holders. I am sure that the Treasurer would be one of the first to dissociate himself from any such suggestion. The effect would be to make it practically impossible to get money again in similar circumstances. A deliberate increase of the note issue is a disguised form of increasing indirect taxation on the whole community.
– What would be the result of inflating the currency to the point at. which it stood before we began to deflate it some time ago?
– At present we are on a gold basis, as compared with the inconvertible note basis on which we formerly operated. In the meantime price values have changed. The first result of the action suggested by the honorable member would be a rise in prices throughout Australia. That would tend to encourage imports, the very thing which the Minister for Customs seeks to prevent by increasing the tariff. . “Wages would rise, but they would be always a lap or two behind prices. The economic position would be worse than it is now. There is no easy road to salvation that way. We cannot make a heaven on earth by issuing soft money, but only by doing hard work. We must produce more. The interjections of honorable members during the debate have made it evident that this subject needs exhaustive investigation and discussion.For that reason I urge caution, and a measure of delay. I have already given notice of my intention to move, after the second-reading, stage, that the matter be referred to a select committee. If we take a wrong step now it may land Australia in great difficulties. Already the proposed action of the Government is regarded with suspicion outside Australia.
– Mainly because of Nationalist and Country party propaganda.
– We have said nothing about the matter until to-day, and I am sure that honorable members will acquit me of having said anything of a partisanship nature. It is unworthy of the Minister for Home Affairs to impute this low motive. I trust that the Treasurer will accept my suggestion. I make it in no hostile spirit, but as a serious contribution to this discussion.
Sitting suspended from 6.11 to8 p.m.
.- The right honorable member for Cowper (Dr. Earle Page) stated that most of our financial and commercial troubles commenced in 1923, and I asked him if he did not feel a great responsibility for what had happened. He replied that he was surprised that anybody should regard this matter from a party viewpoint; he was dealing with the economic situation purely in the interests of the Australian people. I repeat, however, that much of
Australia’s financial troubles have resulted almost directly from the partisan policy of the late Treasurer. Throughout his ministerial career he considered, almost exclusively, the private trading banks, the exploiting class and the rentiers or bond holders; whenever their interests conflicted with the interest of the Australian public and the Commonwealth Bank, which in the financial world represents the people, his influence was on the side of the private investors.
– Is not that a very good argument in favour of depriving whoever may be Treasurer for the time being of the power to control the Commonwealth Bank?
– I hope to show that although this bill, like most financial measures, can be used to bolster up private financial institutions, it does not give political power over that bank, but is designed in the interests of the Australian people generally. If, as the exTreasurer stated, our present troubles date from 1923, they were certainly accentuated by the proclamation of the 24th April, 1925, restoring the gold standard.
– I am proud of the action we took then.
– The right honorable gentleman is unrepentent. The fact is indisputable that ever since that date the producers have suffered, and the reason isclear. The ex-Treasurer admitted that the restoration of the gold standard caused deflation.
– Nothing of the sort. I said that under a gold standard there is no inflation.
– The right honorable gentleman admitted that the value of government bonds would depreciate very much if. we were to return to a system which meant inflation.
– That is so.
– He admitted also that our internal currency was worth less in the outside markets of the world before 1925 than it is now. The fact is that the restoration of the gold standard increased the greatly diminished value of the pound note to 20s. in the £1. Mr. J. M. Keynes, who is admitted to be one of the leading financial authorities and economists of the present clay has written that, during the Napoleonic wars the value of the English currency fluctuated 20 per cent., but in the years of 1914-18 the currency values of England fluctuated 142 per cent. and those of Canada and Australia 105 per cent. The value of the pound note gradually declined during the war years and finally became more or less fixed at about 13s. 6d. When the gold standard was restored in 1925 the value jumped suddenly to 20s.
– That was not so in 1925.
– After the export of gold from the Commonwealth was forbidden by proclamation under the War Precautions Act, Chinese at Port Darwin and elsewhere were detected trying to smuggle gold out of Australia. They knew that at Shanghai and Hong Kong they could get for each sovereign from 30s. to 32s. 6d. I had a personal experience of that appreciation of gold when returning from England in 1924. I had some gold with me and I was told at Colombo that if I went to a certain money changer he would give me for each sovereign an Australian pound note and 5s. in silver. I disposed of my sovereigns on those terms, and I was told that if I had gone to the pettah, or to the highest priced money-changer, I would have been paid 28s. It is acknowledged that during the war the pound note depreciated until it was worth only two-thirds of its nominal value.
– Steady deflation took place between 1920 and 1924 through the operations of the Australian Notes Board.
– The depreciation of the pound note was, nevertheless, one-fourth, and on occasions during the war it was one-third. The proclamation restoring the gold standard in 1925 meant that although the Commonwealth had only received 13s. 6d. in the pound for the money borrowed overseas it had to redeem its loan at 20s., or an increase of 33 per cent. For every £100 borrowed the Commonwealth had to pay back £133, and, although the interest decreased from 6 per cent. to 5 per cent., the effect of deflation was to make it, in effect,6¼ per cent. A similar position arose after the Napoleonic wars, when
English currency depreciated to the extent of 22 per cent. Even the right honorable member for Cowper (Dr. Earle Page) will respect the opinion of Ricardo, who was a recognized financial authority and writer on political economy. Speaking in the House of Commons on the 12th June, 1822, he said -
If in the year 1819 the value ofthe currency had stood at 14s. for the pound note, which was the case in the year 1813, he should have thought that, on a balance of all the advantages and disadvantages of the case, it would have been as well to fix the currency at the then value, according to which most of the existing contracts had been made; but when the currency was within 5 percent. of its par value, he thought they had made the best selection in recurring to the old standard.
The same view is repeated in his Protection to Agriculture, where he approved the restoration of the old standard when gold was £4 2s. per standard ounce, but added that, if it had been £5 10s., “no measure could have been more inexpedient than to make so violent a change in all substituting engagements.” The meaning of that is that if the pound note had been within 5 or 10 per cent. of its proper value the disturbance of the economic and financial position of England through the return to the gold standard would not have been so serious, but as its value was only 14s. the deflation was disastrous to England. Similarly, the deflation of our currency has been disastrous to Australia. J. M. Keynes, in his Tract on Monetary Reform, said -
There should be no restoration of the gold standard unless the currency of a country is within 5 to 10 per cent. of its former value. . . The vast issues of war loans have swamped the pre-war holdings of fixed interestbearing stocks, and society has largely adjusted itself to the new situation. To restore the value of pre-war holdings by deflation means enhancing at the same time the value of war and post-war holdings, and thereby raising the total claims of the rentier class not only beyond what they are entitled to, but to an intolerable proportion of the total income of the community. Indeed, justice, rightly weighed, comes down on the other side. Much the greater proportion of the money contracts still outstanding were entered into when money was worth more nearly what it is worth now than what it was worth in 1913. Thus, in order to do justice to a minority of creditors, a great injustice would be done to a great majority of debtors.
This aspect of the matter has been admirably argued by Professor Irving Fisher.
We forget, he says, that not a]] contracts require the same adjustment in order to secure justice, and that while we are debating whether we ought to deflate to secure ideal justice for those who made contracts on old-price levels, new contracts are constantly being made at the new-price levels. An estimate of the volume of contracts now outstanding, classified according to their age, would show that some contracts are a day old, some are a month old, some are a year old, some are a decade old, and some are a century old, the great mass, however, being of very recent origin. Consequently, the average, or centre of gravity, of the total existing indebtedness is probably always somewhat near the present. Before the war, Professor Fisher estimated, very roughly, that contracts in the United States were on the average about one year old.
When, therefore) the depreciation of the currency lias lasted long enough for society to adjust itself to the new values, deflation is oven worse than inflation. Both are “ unjust “ and disappoint reasonable expectation. But whereas inflation, by easing the burden of national debt and stimulating enterprise, has a little to throw into the other side of the balance, deflation has nothing . . .
The ex-Treasurer admitted that contention. The honorable member for Angas (Mr. Parsons) asked him byinterjection what would be the effect on new loan issues if the Commonwealth notes were again inflated. With a great amount - I could almost say, in view of his past actions, “show” - of indignation, the ex-Treasurer said that inflation would be grossly unfair to this community, and would be an act of repudiation. But what of his act of 1925? Was that not an act of repudiation to the Commonwealth? Did he not raise the interest of the bond-holders to 6 per cent, or 6^ per cent.? Has not the Commonwealth rights as well as the bondholders? The ex-Treasurer, in sponsoring that act, had in mind the interests of the moneyed and propertied classes in the community, and he served them to the disadvantage of the Commonwealth. All who care to study this subject dispassionately and thoroughly must realize that the right honorable member made an immediate gift to the bond-holders of £133,000,000 when he caused the 1925 gazettal to be issued. In addition to that he increased the effective interest rate to 6^ per cent, although.it was generally supposed that it had been decreased to per cent. The right honorable gentleman altogether overlooked the interests of the producers, although he is a leader of the
Country party and claims to represent the farmers and men on the land generally. Let me quote Mr. Keynes again. He says -
Legislation is liable in these days of huge national debts expressed in legal tender money to overturn the balance so far in the interests of the rentier that the burden of taxation becomes intolerable on the productive classes in the community.
It means impoverishment to labour.
I come now to another phase of the subject. The ex-Treasurer said that to concentrate the gold, as proposed in the bill, would be injurious to the trading banks. But have the trading banks cared anything whatever for the interests nf the community in the past? Have they ever considered the welfare of the Commonwealth? Have they ever put any interests before their own? When thegold standard was re-established what did the banks do? They increased their gold holding by £10,500,000.
– They imported the gold from America.
– What did they do with their notes ? Fortunately the budget papers gave us some information on this point. The notes in circulation at the end of the financial year in 1924 totalled £56,890,000, but at the end of the financial, year in 1929 their value had decreased . to £42,258,000. Where have those notes gone? The decrease occurred in the holdings of the trading banks- and not in the holdings of the public. Although between 1918 and 1928 the note holdings of the private banks decreased by £14,600,000, their gold holdings increased by £10,500,000. The private banks were able to grab the extra gold from the Commonwealth Bank because of the tragic act sponsored by the ex-Treasurer in 1925.
– The private banks bought most of their gold before the proclamation.
– But what did they do with the notes? Did they burn them? They must have put them somewhere.
– They put them into America.
– It is news to most people and, I think, quite erroneous to say that America took our notes. The difference between the Labour party and the Opposition in respect of this bill is that the Labour party wishes to protect the Commonwealth Bank and enable it to serve the whole Commonwealth, while the Opposition party wishes to serve a special class. That is not an ill-founded statement. It is common knowledge that the ex-Treasurer did his best during his period of office to cripple the Commonwealth Bank. For one thing, he divided it into two parts, and robbed it of the value of its savings bank business. He would have injured, it a great deal more had it not been for the strong protest of the directors of the bank and the Labour Opposition in this House. In deference to the stand that was made at that time, the bank directorate’s control of the Savings Bank was allowed to remain. The ex-Treasurer has always endeavoured to benefit the private banks 1 the disadvantage of the Commonwealth Bank. He was afraid that the Commonwealth Bank would build up a large capital and so impress the nations of . the world. Why is it that during the last two and a half years the Commonwealth Bank has not established any new branches ? The reason is that the Government has endeavoured to give effect to the views of Sir Ernest Harvey, the Comptroller of the Bank of England, who advocated that the Commonwealth Bank’s functions should be limited to those of a bank reserve, and used solely to permit the private trading banks to use it to increase their business at the expense of the people. Previous to the ex-Treasurer interfering with the Commonwealth Bank, it was gradually building up a substantial capital, but now its capital is only £4,61S,000. Before its redemption fund and reserve funds were seized for the purpose of relieving wealthy interests in the community from taxation, the bank was doing well; but now it cannot make much of a show, and its financial prestige has suffered for its capital is not sufficiently large. The ex-Treasurer took half the profits of the bank and applied them for the relief of taxation.
– They were used for sinking fund purposes.
– I am quite prepared to take the ex-Treasurer’s word for that; but I suppose that the right honorable gentleman will admit that if a sinking fund is built up by this means and its money is invested, it will not he necessary to impose such heavy taxation, and if taxation is decreased the trading banks will benefit in common with other interests in the community. To this extent, therefore, the Commonwealth Bank is being used to serve the interests of its rivals. To indicate how small the capital of the Commonwealth Bank is, I give the following details of the capital of various banking institutions: -
The Bank of New Zealand serves a very small population, yet it has a capital of £10,300,000. With its small capital the Commonwealth Bank is expected to do our exchange business with the world. The bank should have been allowed to retain its profits until its capital had been built up to £10,000,000 or £15,000,000. The Bank of England has been able to make London the financial centre of the world because of the huge capital it has at its command. It was a sorry error for the last Government to cripple the Commonwealth Bank by robbing it of its funds. That a Treasurer of the Commonwealth should have been responsible for such an act is deplorable. The right honorable gentleman would have served the community well had he allowed the banks’ profits to accumulate. It cannot be expected that a puny bank with a yearly transferred capital will be able to do verymuch for us in the overseas markets.
I should like to ask now why the last Government permitted the trading banks to escape their fair share of taxation ? The Official Record of the Melbourne Stock Exchange for February, 1928, which is the most recent issue I have been able to obtain, shows without doubt that these institutions have been able to avoid paying their fair share of the expenses of government. The Record observes that these trading banks made profits ranging from 15 per cent, to 10 per cent. I quote the following from an article which is headed : “ Taxation on Dividends ; Substantial rebates allowed “ : -
Not the least of the advantages of the shares of public companies as a medium of investment is the exemption from taxation which applies in varying degrees to the dividends earned by such shares.
All dividends are exempt from State taxation in the hands of shareholders.
The exemptions under the Federal Act are of two kinds: -
Rebate allowable in respect of “ exAustralian “ profits.
The proportion of a dividend deemed to have been paid from profits earned outside Australia is exempt from federal taxation. This rebate attains very large proportions in some cases, and the value of this concession will be appreciated when it is remembered how very high are federal rates of taxation applicable to income from property. In other cases where the whole of the profits are earned outside Australia, such as in some Eastern tin companies, dividends are wholly exempt, notwithstanding the company is registered and the capital subscribed in Australia.
I should like the Treasurer to note the amount of exemption that some of the trading banks receive. I give the following figures to show the proportion of dividend which is exempt from federal income tax: -
The last-named bank pays a dividend of 15 per cent. on its ordinary shares. If I held 1,000 of its shares it would be necessary for me to return for income tax purposes not £150 but a little less than half that sum, because the bank gets the benefit of a rebate of 51.93 per cent. Other banks benefit to the following extent : -
– Is it not a fact that the basis of the federal Income Tax Act was laid down by a federal Labour Government ?
– I am not responsible for what a former Labour Government did. I am responsible to myself. I am here, and I stay here ; and I shall see that the present Government treats the private banks as they should be treated.
Let me analyse the position. How is it that the English, Scottish and Australian Bank, for example, escapes taxation on 44.2 per cent. of its profits? That bank has in Australia deposits totalling £33,318,045, whereas its deposits outside of Australia amount to only £1,454,623. Is it not remarkable that it is able to make 44 per cent. of its profits on £1,454,623 and only 56 per cent. on £33,318,045? It must be remembered that it has no branches in New Zealand. Let us take the case of the Commercial Banking Company of Sydney, which also has no branches in New Zealand. Its deposits total £54,420,876 in Australia, and £1,802,727 outside of Australia. Upon about one-fiftieth, or 2 per cent. of its external profits, it receives an exemption of 40 per cent.
– How do they get away with it?
– I do not know how they get away with it, and it is not my business to find out. The right honorable member for Cowper (Dr. Earle Page) blames some previous Labour Government. I do not care whose is the fault; I blame the ex-Treasurer for having failed to cure it. The private banks are using our gold reserve for exchange purposes in London, and say they are able to get 40 per cent. of their profits from that source. A bill on London ought to carry a premium. So far as Australia is concerned there are only two creditor centres - London and New York. In 1911 I travelled abroad. When I went to Paris I cashed a bill on London for £25, and received for it £25 18s. In Berlin I was given £51 13s. 4d. for a bill drawn on London to the amount of £50. Why is it that if I take a bill on London to a Melbourne bank I have to cash it at a discount instead of receiving a premium for it, when exchange is always on London and money has always to be transferred there ? The banks would pay a premium if they were desirous of helping our producing interests. That is another reason why I want the gold reserve to regulate our credit. If our producers have bills on London for their wheat or their wool they should be paid a premium instead of having to cash them at a discount.
The trading banks should have this legislation put into operation against them so that our credit may be mobilized, and thus be of advantage to our producing interests.
There is another direction in which I hope that the Treasurer will take action with the trading banks. In 1910 the Commonwealth Parliament passed a Note Issue Act. A return has been made, annually of the value of notes issued by the private banks and still in existence. In 1918 those banks, according to their sworn returns, held in Australia g61d to the value of £224,739 against notes which they had issued. In 1928 a similar return showed that they had unredeemed notes to the value of £199,995. In that period they had paid back to the people of the Commonwealth only £24,744, an average of £2,474 annually. If they drew interest at 5 per cent, per annum on the £224,739 which they held in 1918 the return would be £13,550 yearly. Thus they have had the whole of the capital, and in addition £11,000 annually from interest on the notes they had issued. This bill should contain a provision empowering the Commonwealth Bank to give an indemnity for the amount still outstanding. It is money which belongs to the people, and apparently the private banks may never pay it back, because the notes may not be presented. They are earning a greater sum in interest than they are paying back annually.
The ex-Treasurer this afternoon gave us a very interesting speech on gold reserves. Those who read it will learn the manner in which gold finally became the medium of exchange among commercial people. Australia has no need to keep other than the smallest possible reserve of gold. In 1892 Russia proposed to create a gold reserve, but found that the monetary disturbance would be so intense that it could not afford to do so. It was then a very deeply involved debtor nation, like Australia is to-day. What did it do? It said, “We will create this gold reserve, but we will put it where it will earn a profit.” At that time Russia’s two creditor nations were France and Great Britain. Consequently, instead of piling up the gold in St. Petersburg it bought securities in both London and Paris, and held them there. Every pound of those securities brought in a return. The Commonwealth Bank will lose revenue if it holds all Australia’s gold in its vaults. That is what the United States of America have been doing. Other countries dig up gold and America buries it. That country has a gold reserve of £900,000,000, into which other nations of the world dip as they require funds, upon payment of certain rates of interest; but it is wholly unproductive. England tried to imitate the example of the United States of America, and lately approached fairly closely the margin of safety. For almost the first time in the history of modern finance London occupies second place in Europe in the amount of gold held as a reserve, because there is a greater reserve held in Paris. Gold is won by English speaking people in South Africa, Australia and elsewhere, and is sent to the United States of America, where it is buried in vaults. What would be the use of decreasing the profits of our bank by holding its gold in vaults, unless it were intended to increase the note issue, which would require an increased gold reserve? I am satisfied that the Treasurer has no intention to inflate the note issue. The Australian trading banks could have their source of credit in the gold held in this country by the Commonwealth Bank.
– The honorable member is now arguing against the great principle of the bill.
– Not at all; I have been indulging in preliminary observations and would ask the honorable member not to jump until he reaches the stile. I say that the gold held by the Commonwealth Bank should be invested in London or New York, where our creditors are. The Treasurer is doing right in getting the gold together, and so long as it is held, it should be used in meeting our overseas obligations, so that we may derive benefit from it, as Russia did under the Czarist regime until 1916. Gold is only required for the settlement of external obligations.
– How could the gold he more profitably employed than by rectifying the exchange position overseas ?
– Where is credit required by Australia other than in London and New York? If the honorable member looks up the returns of the banks he will find that the sum of money at call in London is enormous. The Note Issue Board has from £7,000,000 to £9,000,000 invested in London. I am not in favour of the proposed amendment. Why did not the late Treasurer have a select committee appointed in 1925, when he was doing much harm to the Commonwealth ?
– Would it not be wise now to appoint such a committee?
– I am quite prepared to support the appointment of a committee to investigate the whole financial position, but not on this bill, which is well considered and urgently necessary. We had the spectacle of the late Treasurer bringing down a party measure, and the suggestion is now made that the present Treasurer will administer this legislation on party lines. London itself is in a state of panic and depression that will seriously react on Australia, because we are absolutely dependent on London credit. The right honorable member for Cowper (Dr. Earle Page) knows that the matter under immediate consideration “s too urgent to be referred to a select committee. If he is not familiar with the financial position it might .be well to appoint a select committee to inform him and the whole Commonwealth of the true position. I will support the bill.
.- The honorable member for Corangamite (Mr. Crouch) has referred to the bill as a party measure, but I think that the Commonwealth Bank, as a national institution, should be entirely above party politics. I have not heard much criticism of a party nature. Even the trading banks have not raised any serious objections to the bill. Generally the banks that have made statements about it appear to have accepted its principles, subject to the proviso that, if their gold is taken from them, the Commonwealth will provide them with the exchange credit they require in carrying on the business of the country. The Treasurer has the precedent of the British act that was introduced by a Conservative government. He is also supported by a recommendation of the board of directors of the Commonwealth Bank. The only criticism that I have noticed is with respect to those provisions in which the Treasurer has departed from the British practice, and has exceeded the recommendation of the Commonwealth Bank. He .told us, when he introduced the measure, that quite recently the British Parliament had conferred on the Bank of England power similar to that proposed to be given under this bill; but, as a matter of fact, the bill differs materially from the British measure. In the first place, in Great Britain the control of the finances is reserved for the Bank of England. It is not handed over to the Treasury, and the export of gold is not prohibited. The British act in section 11, sub-section 2, provides that -
Any person in the United Kingdom owning any gold coin or bullion to an amount exceeding £10,000 in value shall, on being required so to do by notice in writing from the bank, forthwith furnish to the bank in writing particulars of the gold coin or bullion owned by that person, and shall, if so required by the bank, sell to the” bank the whole or any part of the said coin or bullion, other than any part thereof which is bona fide held for immediate export, or which is bona fide required for industrial purposes.
That shows clearly that the trading banks have not to yield up all their gold, but only such portion of it as may be required of them. They are permitted to retain all the gold that is bona fide required for industrial purposes. We know that gold is not largely used in payment for goods sent from one country to another ; generally speaking, adjustments are made by a system of exchange, setting off one credit against another. Gold is only required on those occasions when there is a large adverse balance, and it is necessary to utilize it to correct that position. In England the right to use that gold, and by that means to assist the industrial affairs of the country, is retained by the trading banks, and I can see no reason why that principle should be departed from in the present bill, unless the Treasurer adopts some scheme by which credit will be guaranteed to the trading banks. It will be noticed that in Great Britain the initiative is left with the bank; but in this bill the Treasurer proposes to take the initiative himself. It will be seen, by referring to proposed new section 7b, that where the Treasurer is satisfied that it is expedient for the protection of the currency or of the public credit of the Commonwealth, to obtain particulars of gold, coin and bullion held by persons in Australia, or to require the exchange of any gold so held for Australian notes, he may, by notice in writing, authorize the bank to require any person to furnish particulars of the gold, coin or bullion held by him, and exchange it for gold. Under the bill, the Treasurer will use the bank as the instrument for getting the gold, but the Treasurer will call upon the persons upon whom the bank will make these demands. The same principle is followed in proposed new section 7c, and I regard it> as causing the strongest objection there is to the bill. This section provides for prohibition of the export of gold; but in Great Britain there is no such embargo. It appears that the honorable member for Corangamite (Mr. Crouch) would oppose the retention of gold in this country, because he considers it necessary to export it as a matter of economy. The Treasurer, in this bill, authorizes the bank to make a report on all applications for the right to export gold; but he reserves to himself the absolute power to determine what shall be done with respect to every application. The proposed new section provides that the Treasurer “ may in his absolute, discretion approve or refuse approval to any application made under this section.” The Treasurer led the House to believe that he would act on the advice of the Commonwealth Bank Board. He said that, acting on the advice of the Commonwealth Bank, the Treasurer might refuse authority to export gold. That statement does not correctly set out the position. Under the bill the Treasurer retains absolute discretion in the matter. Not much objection can be taken to the bill on general terms, but the proposal of the Treasurer to keep control of the whole situation himself is fraught with danger. It would be very much better that the control of finance should be vested in some permanent institution such as a bank, tinder the Commonwealth Bank Act it is necessary for six of the seven members of the board to be commercial men. The present system ensures continuity of policy, and the directors are, so far as possible, free from political control. A Commonwealth Treasurer, of whatever political party, must be always subject to political pressure of some kind.
– Of course he must be. It is not well that a Treasurer should have the opportunity of putting his personal ideas into effect for a period, and then for his policy to be entirely reversed after the next election. There is a particular reason why, at the present time, we should be careful about putting such extreme powers into the hands of the Treasurer. Next year the Government will be faced with the task of raising about £70,000,000 for the conversion of loans. That means that it will be a very great competitor, not only in the money market of Australia, but also in those of Britain and the United States of America. To the extent that it is a competitor, it will’ reduce the volume of money available for carrying on the industries of the country. There is only a limited amount of capital available for investment, and if the Government takes most of that, the effect will be to starve the industrial concerns of the country. The Government proposes to institute a line of government-owned steamers to ply between Tasmania and the mainland, and that will involve the expenditure of a large sum. Many demands are at present being made on the Government for the relief of unemployment, which will involve further expenditure. The Treasurer has already budgeted for a larger expenditure than that, of last year, which was certainly large enough. All these things point to the fact that during the next two or three years there will be heavy demands by the Treasurer for what money is available for investment. The Treasurer’s speech, in introducing this measure, is remarkable, not so much for what he said, as for what he left unsaid. It was a very bald statement, and honorable members who are not particularly skilled in financial matters must find itdifficult to understand just what the Government’s proposals are. It is only clear that the Government proposes to take power to call in all the gold in the country, and to prohibit its export. These in themselves are very important powers, and honorable members have the right to ask for a full explanation, and, if not satisfied with that, to insist that the subject be referred to a special committee for investigation and report.
.- The Treasurer, has, no doubt, made out a case for this bill from his point of view, and has proved to his satisfaction the need for- safeguarding the gold holdings of Australia. In my opinion, however, he, like the bank directors, has “ got the wind up”, and is afraid “of what the money jugglers may do, by a species of lager de mom,,in working the currency, as they have always done, to the detriment of the workers. I do not propose to set myself up as one with an intimate knowledge of the intricacies of banking. There has been placed on the table a document, bearing the imprint of the Government Printer, which is a reprint from The Australasian Insurance and Banking Record of 21st November. Presumably it has been circulated for the information of honorable members, and sets out the statement of Mr. Phillip Snowden on the bank rate.
– It was asked for.
– I believe it was, and I can understand why. Those who read the statement will be more in the dark - as Mr. Snowden is - than they were before. The ex-Treasurer shakes his head, but this is what Mr. Snowden said -
I have no doubt that all this seems quite as clear to you as mud, but it is the simplest form in which I can express the position.
– He is merely apologizing for -having to make the statement.
– The honorable member may apologize for him, when it suits his purpose, but if circumstances were different he would condemn the Chancellor for his ignorance. These mysteries of banking transactions and gold movements, the power of gold and its overwhelming influence, have held people in subjection for too long. We hear much of the gold backing, of what gold can do, and what will happen if we have no gold. I heard the honorable member for Ballarat (Mr. McGrath) say that he would not care if not another ounce of gold was raised, and that if any one asked him the cost of raising gold he would reply by taking his questioner to any of the cemetries at Ballarat. The honorable member for Coorangamite (Mr. Crouch) asks why we should hold gold and not make it earn for us.
– Hear, Hear!
– The honorable member for East Sydney says “ hear, hear !” and he, we know, is an expert on these matters. Let us analyse the position, however. At the present time we are told, £23,791,169 is held in gold by the trading banks of the Commonwealth, and the Note Issue Department holds a further £22,000,000, making a total of approximately £45,000,000 held in Australia. This gold is held by the banks; it is not being used by the people. That fetish, has been knocked on the head. The gold is in cold storage. The honorable member for 1 Corangamite asks why that money should not be made to earn. Put it out, he says, and let it work for us. Very well, but how are we to do it? Suppose we buy consols in Britain with it. The gold is then transferred to England. They in England will not wish it to lie idle; they will want to make it earn for them. What will they do? They will sell it back to Australia, perhaps. The whole thing is a trick. I defy any one to challenge my analysis of the situation. If we simply keep on passing on the gold in this way, we are merely doing what is colloquially known as living by cutting each other’s hair.
– We must have some standard of value.
– The honorable member has got away from the earning value aspect of gold. If we would make it earn money, the only way is to buy debentures with it. It has been suggested that it should be used as a backing for our commerce, and for that purpose we might send it to England. Suppose England does not want it? Well, we are told that she might send it to America. But then the honorable member for East Sydney, (Mr. West), that wizard of finance, has said that America does not want it.
– It is all a matter of exchange.
– Yes, and who pays the exchange in the long run ? The man who works, and produces commodities. That is one of the points made by Mr.
Paul Einzig, in his book on international gold movement. There is, he says, an enormous trade in simply changing gold from one place to another. No useful purpose is served thereby. It is on a part with “ bulling “ and “ bearing “ the stock exchange market, and the effect is the same - to take millions of pounds out of the pockets of those who produce actual commodities. In this book the writer points out that in 1927 Britain transferred no less a sum than £6,000,000 in gold to America, while in the same year America transferred approximately £6,000,000 in gold to Britain, the actual marginal difference being approximately £190,000. This juggling of gold was done by the money bugs of the two countries whose business it is to deal in specie. I do not altogether blame the Treasurer for this proposed action, because he is probably merely following the British precedent. I hope that the Government here will go further, and effectively control the currency of the nation in the interests of the people. It must be done either now or later. By doing it quickly we may hope to lift the depression from which this country is now suffering. This depression, economists tell us, is due to the fact that we have borrowed too much, and cannot afford to pay the interest. That is quite true, and again the burden falls on the workers of the country.
Figures dealing with the banking operations of Australia are astonishing. On £30,000,000 of paid-up capital the Associated Banks of Australia made £1,500,000 in 1917. The paid-up capital now of the same concerns is £60,000,000, and the profits last year were £4,000,000. The hanks are not suffering as a result of the prevailing depression, but one effect of it is that John Brown has to force down the miners’ wages because he cannot make a profit on the coal won by them from the bowels of the earth. In South Australia the conditions of unemployment are worse than at any other period in its history, they are a disgrace to Christianity, humanity, and civilization. We are told that these are the consequences of our borrowing.
– The more the Government meddles, the worse it will make the position.
– Philip Snowden said-.
I have tried to explain to you as beat I could the reason for the recent increase in the bank rate. I do not profess to understand this question.
Even Philip Snowden does not know the intricacies of the banking business; even he does not understand why or how the bank rates are increased or lowered by the trickery of those who manipulate the currency of the world. He continued -
I know some people who think they do, and the vigour with which they express their views is generally in proportion to their ignorance of the subject.
I quoted that passage for the purpose of exciting the guffaws of honorable members opposite, and I have not been disappointed. I have read the debates that preceded the establishment of the Australian note issue, and I shall quote for the information of honorable members, the gloomy predictions of the “knowalls” of the then Liberal party. They said that the proposal to issue an inconvertible note was a wild-cat scheme, yet it has proved the salvation of Australia. To-day, members of the reactionary parties in this House sneer when I attempt to expose a system of finance, by which financial cormorants keep the workers in thraldom. Mr. Snowden continued -
However, there must be something wrong, and something which needs attention, when an orgy of speculation in a country 3,000 miles away can dislocate the financial system here and inflict grave suffering on the workers of practically every country in the world.
Many honest toilers in Australia are feeling those effects to-day, and that is why the present Government must provide a remedy. I have advocated’ such a policy from every platform, my party has promised it, and now I call upon it to deliver the goods.
– This is an instalment of the policy.
– Yes; I commend the Treasurer for what he has done, but it is not all that must be done.
– With the printing press ?
– No; but if the Government decided to increase the note issue by £50,000,000 it would not require to print another note. In 1924, the year before that in which the Bruce-Page Government claimed to have restored the gold standard, £56,000,000 worth of notes was in circulation. Of that number, £17,000,000 worth was held by the banks and £24,000,000 worth by the public. In 1910, the Conservatives of the day declared that the note issue could not succeed, and that its establishment would be an invasion of realms of which we had no knowledge;; yet, during four years of war, when the Commonwealth was bearing greater financial burdens than ever before, the note issue answered all the requirements of Australia. And to-day there is not an Australian who has not complete confidence that at any time he can tender a £1 note and receive 20s. worth of commodities for it. In 1924 there was £21,000,000 worth of notes of £3,000 denomination. Let no honorable member tell me that those notes went into circulation. The gold held by the banks as a reserve against the notes amounted to £24,000,000. At the end of June, 1929, the value of £1,000 notes was £5,015,000, and the gold reserves held by the’ banks amounted to £22,152,497. The value of £1,000 notes had diminished by £16,000,000; what had become of them? They had not been presented at the Treasury for gold.
– Cheque pounds arc doing the work that the notes were doing.
– If the £16,000,000 worth of £1,000 notes had been cancelled, the banks would have received gold for them, but, apparently, they have not done so, for the gold reserve is practically the same as it was in 1925. These figures show how false the gold reserve is. For international purposes the gold reserve may be necessary to prevent Australia being squeezed by the money monopolists, but what is needed to help this country through its difficulties is government control of the currency in such a way as to utilize the credit of the country. Great Britain has taken action similar to that now recommended by the Commonwealth Bank Board.
– The Government of Great Britain has not gone so far as this bill proposes.
– Different circumstances call for different treatment. Snowden knows England; let him do what he considers necessary there. We know Australia; let us do what is requisite here. I have every confidence that the action proposed by the Treasurer will achieve its purpose. The British Currency and Bank Notes Act of 1928 made another new departure. I quote from section 1 -
Notwithstanding anything contained in any act -
the bank may issue bank notes for one pound and for ten shillings:
I well remember that when the Fisher Government proposed to print ten-shilling notes the innovation was condemned by the troglodytes then in opposition, but last year the British Parliament did what the Australian Labour Ministry proposed in 1910. The section continues -
When the Fisher Government proposed that the Commonwealth notes should be redeemable in gold at the Treasury, Melbourne, opponents of the scheme said that the currency would not be flexible enough. Paragraph (c) of the subsection reads -
I trust that honorable members realize the significance of that provision. It means that bank notes are actually taking the place of golden sovereigns. That has been the case in Australia for many years now, and the country has never developed at a faster rate than in the last decade. Sub-section 2 of the section reads -
In other words the bank note in England may be used to pay any sum. The honorable member for Swan (Mr. Gregory), said something about “ turning the printing press.” I remind him of a recent statement by the Minister for Health (Mr. Anstey) who said that the Bank of England was permitted to print £280,000,000 worth of notes in addition to the amount of its gold deposit and any further amount that might be deemed necessary. It could, as a matter of fact, print an unlimited number of notes. This Government is not asking for that power.
– Not yet.
– I am glad of that interjection. I hope that the time is not far distant when it will ask for it. I know that I am “ a voice crying in the wilderness” at present ; but seeing that the credit of this country has fallen from £59,000,000 to £42,000,000, I must confess that I cannot see that any harm would follow the printing of additional notes. I shall have more to say on this aspect of the subject on another occasion.
I wish now to quote from a book entitled International Gold Movements by Paul Einzig. I am sorry that I cannot at the moment state Mr. Einzig’s qualifications, but I assure honorable members that he is thoroughly competent to deal with this subject and is not one of those of whom the Chancellor of the British Exchequer (Mr. Phillip Snowden) said that their vigour in utterance indicated their ignorance of the subject with which they were dealing. Mr. Einzig is a. gentleman of international reputation on financial affairs. He wrote -
In the ease of Great Britain, the deflationary effect of the abnormal efflux of gold can be neutralized through the application of Clause 8 of the Currency and Bank Notes Act of 1928, by virtue of which the fiduciary issue may be raised for a period not exceeding six months. The increase of the fiduciary issue would not in any way check the efflux of gold, but it would protect trade against the adverse effects of a decline of the gold stock. Contrary to what may appear to the superficial observer, an increase of the fiduciary issue does not result in an increase of the active note circulation, but merely an increase of the part of the note issue which is covered with securities instead of gold.
What does the honorable member for Swan (Mr. Gregory) say to that? It appears to me that we ought to use the printing press to provide the country with the currency that it needs. So long as we hold fast to the fetish of former Governments and borrow money and make book entries in respect of which we pay £5 14s. 4d. per cent., we shall have difficulty in financing public undertakings. That cannot be allowed to go on too long. Some day the workers of Australia will awaken to the fact that they have been tricked, and when that time comes they will sweep right out of public life the persons responsible for such a system.
On page80 of his book, Mr. Einzig refers to the use of gold for internal monetary purposes. He says : -
Since the war, Great Britain and several other countries have adopted a monetary system in which gold has practically ceased to play any part in the internal monetary sphere. The Currency and Bank Notes Act of 1928 has dealt a final blow to the internal monetary use of gold in this country. The object of clause 1 1 , empowering the Bank of England to buy any amount of gold held in this country in excess of £10,000, provided that it. is not wanted for bona fide industrial or export requirements, is to concentrate in the hands of the central institutions all gold available for monetary purposes, so as to provide for the requirements arising from the international use of gold. While before the war the domestic transactions of the bank - the issue and withdrawal of sovereigns to and from internal circulation - were of great importance, at present they are insignificant as compared with international gold movements.
– We are concerned about the internal position.
– So is the Treasurer, and that is why this bill has been introduced. The Government desires to do something to protect Australia against the gold jugglers.
I come now to another shibboleth of the financers. We have been told time after time that when we borrow abroad we must take goods instead of gold. I contend that if we want gold we should demand and get it. Mr. Einzig has some interesting remarks to make on this subject on page 20 of the same book. He says -
An unusual example of special transactions was provided by the gold exports of Brazil. Every Brazilian loan agreement concluded since 1927 - whether by the Federal Government, State Governments, or municipal authorities - has included a clause according to which the issuing houses have to transfer to Brazil the proceeds of the loans in the shape of actual gold. When the loans were issued in the United States of America, gold was taken from New York, When they were issued in London’ gold was usually shipped from South Africa.
Brazil has shown, us what can be done. When she wants gold she demands it and gets it. I trust that it will not be long before we follow her good example. I do not expect my remarks on this subject to bear much fruit immediately, but I trust that those who read Hansard will think over what I have said, and, in the interests qf humanity do their best to scotch the gold jugglers. We must rid our country of the market riggers, stock brokers, and gold jugglers who have hitherto fed upon it.
.- This bill is divided into two parts. The first part seeks to entrust the Treasurer with power to authorize the Commonwealth Bank to requisition gold coin and bullion from persons and banks; the second part gives the Treasurer discretionary power to place an embargo upon the export of gold. An amendment of which the Treasurer has to-day given notice proposes to modify this discretionary power, for it provides that it shall be exercised only upon the recommendation of the Commonwealth Bank. It seems to me that the second part of the bill, which places our gold standard in jeopardy, is particularly dangerous. Great Britain first adopted the gold standard in 181G, the year after the battle of Waterloo, and she has retained it, except during the last war, for more than a century. The gold standard was the successor to the silver pound standard which dated back to before the Norman Conquest. The countries of Europe have been gradually adopting the gold standard until to-day it is almost in universal use. It is extraordinary, therefore, that a Government which has been in office for only a few weeks should introduce a bill which may shake, to its very foundation a system of finance which has served Great Britain so well for so long. Until the outbreak of the great war British bank notes could be immediately converted at the will of the holder into gold. This practice was temporarily abandoned during the war years, and with it there appeared the most effective bar to inflation. In this connexion, I quote the following passage from a book entitled Inflation, by Professor Shield Nicholson, Professor of Political Economy at the University of Edinburgh : -
If, however, experience had shown that the issues of notes by the banks as a part of their own credit system, ought to be limited, still more clearly had experience shown that the issues of paper money by the Government ought to be placed under tlie most stringent limitation.
Again, if we appeal to experience we find that the most effective and tlie most beneficial form of the principle of limitation is the practical rule of immediate convertibility.
So long as the paper money is subject to this practical limitation, and so long as the real limitation is not evaded by all sorts of suspensory devices, or by the control of the export or the use of gold, the other regulations matter very little.
One hundred and fifty years ago Adam Smith, a very great authority on economies, in the Wealth of Nations, dealt with the evils that experience had shown to be associated, not only with inconvertible notes, but also with suspended convertibility. As I understand the latter part of this- bill, the Treasurer (Mr. Theodore) proposes that he shall be authorized to suspend the convertibility of notes into gold.
– Nothing of the sort.
– The Treasurer will have power to prevent the export of gold. That simply means the suspension of the convertibility of notes into gold. It would be of little use to convert notes into gold for internal circulation if one were debarred from using the gold for the main purpose for which it can be used, that is, the rectification of exchanges overseas. Even if this power is never used, the fact that Parliament has given the Treasurer authority to use it, undoubtedly will lead to a weakening of confidence and an impairment of our credit in the eyes of other nations.
In his second-reading speech last Thursday, the Treasurer quoted from a letter sent to the Government by Sir Robert Gibson, the Chairman of the Board of Directors of the Commonwealth Bank. Probably the honorable gentleman felt that the reading of that letter would create confidence in the minds of honorable members on both sides of the House, the inference being that in taking this action the Government is merely carrying out what Sir Robert Gibson proposed. But one does not need to study the bill very deeply to realize that it goes very much further than that gentleman’s proposal.
– This is the actual” proposal put forward by him.
– In that letter, not only does he not propose that an embargo shall be placed upon the export of gold, but he goes out of his way to point out the ill affects of such action. I quote the following extract from his letter: -
My board is of the opinion that the last resource which should be adopted would be any course which meant even temporary departure from the operation of the gold standard on the part of Australia.
It must be obvious that the placing of an embargo upon the export of gold would mean a departure from the gold standard. The letter goes on to say -
Such measure would reflect most adversely against Australia in respect of overseas credit, and incidentally have a most serious effect upon our abilities to raise loans abroad.
That is his opinion in relation to the jeopardising of our gold standard. He then says -
As a measure which would very materially help the position in the meantine, and in addition, having regard to precedent, would in the opinion of the board be a sound measure of permanent legislation, my board definitely recommends your Government to consider immediately the bringing in of legislation on similar lines to that which now exists and is operating in England.
It will be noticed that his pro.posal is that we should copy the legislation in operation in .Great Britain. He begins his letter by pointing out how bad it would be for Australia if we were to shake the foundations of the gold standard by prohibiting the export of gold, and goes out of his way to show that the British legislation does not do what the Treasurer by this bill proposes to do, namely, place an embargo upon the export of gold. I make the following further quotation from his letter: -
I do not propose to traverse the effect of such legislation, as perusal of the acts referred to will fully acquaint you with the position, but I might briefly say that such legislation would place the Commonwealth Bank in immediate control of all gold in Australia by whomsoever held.
Whilst this legislation in itself would not prevent exportation of gold from Australia, it would place the gold in Australia definitely in the control of the bank. Once placed in this position there would only be one authority in control of the gold in Australia.
Those quotations will suffice to show honorable members that the proposal put forward by Sir Robert Gibson is being very greatly exceeded by the Treasurer. His letter does not propose that there shall be an embargo upon the export of gold. I shall now make a further quotation from the work Inflation by Professor Shield Nicholson, to show the danger of imposing an embargo upon the export of gold and the advantage of having a gold standard. It reads: -
To resume the main argument: Before the war the gold standard was effectively maintained in this country because the principle of convertibility was strictly observed. At the small end of the system the proportion of bank notes to gold simply depended on the convenience of people. Any one who wished could change his bank notes for gold or get notes for his gold as he pleased. In cashing a cheque the option of the form of money - whether paper or gold or other coins - was left to the customer. Again, at the big end of the system, foreign countries could convert their claims into gold without let or hindrance. London, unlike some other capital cities, was strictly a free market for gold. The remarkable tiling about this free market was that the whole business was conducted on a less amount of gold kept in reserve than in other great monetary centres. The point was that, owing to the perfect convertibility of all our forms of representative money, a stream of gold was always flowing in and flowing out, and the cistern never ran dry.
Of course, on occasion of panic the reserve fell below that safety limit, but, as observed by the great Ricardo, “ Against such panics banks have no security on any system; at no time can there be in a bank or in a country as much specie or bullion as the moneyed individuals of such country have a right to demand.”
Before the war it used to be said that this country had carried the economy of gold to the verge of danger, and warnings were constantly given that the central reserve should be increased. And yet in practice it was found that the methods adopted to replenish the central reserve in case of need were sufficient. Everything depended upon convertibility - not on the piling up of great stores of gold.
My final quotation is the following : -
We found out in this country by experience that the best way to allay a monetary panic was to pour out the reserves freely in the usual channels on the usual security. “Be bold” was the rule.
In other countries this rule has been imperfectly understood. They pile up masses of gold. They make elaborate provision for the concentration of all the gold. But .they forget the one thing needful. They forget to use the gold.
The Treasurer has said that notes will still he convertible. I remind him, however, that if gold is liable to be commandeered, and its export prevented, such convertibility will be only a pretence.
– It is a pretence now.
– It is not, so far as the utilization of gold for the rectification of foreign exchanges is concerned; otherwise there would be no necessity for the latter part of this bill.
– It is merely a question of the channel through which it shall pass.
– It is not. If it were, I submit that this bill would be complete without the later clauses, which, irrespective of channel, give power to the Treasurer to prevent the export of gold.
The honorable gentleman pointed out last Thursday that certain powers with respect to the mobilization of gold reserves had been given by legislation to the Bank of England. It might be inferred from his statement that this bill merely proposes to confer similar powers. I submit, however, that it goes a very great deal further than the legislation passed in Great Britain in 1925 and 1928, because that legislation does not contain a provision for the placing of an embargo upon the export of gold.
– There is a restriction placed upon its export.
– I admit that there is a restriction; but it means very little indeed. This afternoon, replying by way of interjection to a statement by the right honorable member for Cowper (Dr. Earle Page), the honorable gentleman said that that restriction was to the effect that gold could be exported only to satisfy certain contracts.
– No. The right honorable member was quoting the provision relating to the requisition of gold, and authorizing the bank to take all gold except that required for immediate export. I informed him that that related to existing contracts.
– The Treasurer must already have realized that the necessity to export gold in connexion with contracts may recur over and over again.
– Any firm which desires to export gold from Great Britain can do so at any time in the future, so long as this legislation continues in force, provided that it happens to have some use for the gold.
– After the bank has requisitioned the gold it owns it, and need not sell it.
– For the benefit of honorable members I shall again quote the sections in the 1925 and 1928 legislation in Great Britain which are relevant to this discussion. By clause 2 the Gold Standard Act 1925 provides :; -
So long as the preceding sub-section remains in force- r-
That is the sub-section which prevents the exchange of small quantities of bank notes for gold for internal use- the Bank of England shall be bound to sell to any person who makes a demand in that behalf at the head office of the bank during the office hours of the bank, and pays the purchase price in any legal tender, gold bullion, at the price of £3 17s. 10-id. per ounce troy of gold of the standard of fineness prescribed for gold coin by the Coinage Act 1870, but only in the form of bars containing approximately 400 ozs. troy of fine gold.
That only prevents the exportation of gold of less value than a bar containing 400 oz. and worth £1,557 10s. But the 1928 legislation, upon, which, apparently, the Treasurer is relying, makes the following provision : -
Any person in the United Kingdom owning any gold coin or bullion to an amount exceeding £10,000 pounds in value-
I pause there and point out to honorable members what must be fairly apparent to any one who reads the section carefully, that any person in Great Britain who holds less than £10,000 worth of gold has no restriction placed upon him in regard to its export. The section continues: - shall, on being required so to do by notice in writing from the Bank, forthwith furnish to the Bank in writing particulars of the gold coin and bullion owned by that person, and shall, if so required by the Bank, sell to the Bank the whole or any part of the said coin or bullion, other than any part thereof which is bona fide held for immediate export or which is bona fide required for industrial purposes, on payment therefor by the bank, in the case of coin, of the nominal value thereof, and in the case of bullion, at the rate fixed in section four of the Bank Charter Act 1844.
It will be seen that a restriction is placed, only upon a person or firm holding more than £10,000 worth of gold for which he or they have no immediate purpose. If a man is hoarding that quantity of gold and has no immediate need of it for the purposes of his business, or does not require it for export, the bank may call upon him to hand it over and receive paper money for it. But, if that man has any need to export it for business purposes, the section places no restriction on export. There is no export embargo in the British act, and to that extent there is a fundamental difference between this bill and the British measure, of which some honorable members seem to think it is a copy. The Government is going very much beyond the advice tendered by “the Commonwealth Bank.
– Should we follow Britain in everything?
– Not necessarily; but we shall jeopardize the gold standard, and. make it practically worthless, if we tinker with the convertibility of our notes into gold. After the war we got back to the gold standard, after considerable difficulty and delay, and the last thing we should now do would be to surrender any ground recovered on that occasion. The honorable member for Corangamite (Mr. Crouch) seems to regard the return to the gold standard as having been harmful to the primary producers. In 1925 we had an extremely adverse exchange in Great Britain, which was detrimentally affecting our export trade. The exchange was against us to the extent of £4 per cent., which meant, that, on every bushel of wheat sent to Great Britain at 6s. a bushel, the primary producers lost 3d., and on every pound of butter worth, say, ls. 6d., they lost 3d. What happened when we reverted to the gold standard? That adverse exchange of £4 per cent, dropped to 5s. per cent., and the loss on wheat and butter practically disappeared immediately. What is the real object of the proposal to depart from the fundamental principle of a gold standard and convertibility? Is the object in mind the building up of gold reserves as a pretext for the printing of .’additional paper currency? If that is so, I think that it would be well for the Treasurer to let us know it. An increase in the note issue would simply mean that the cost of living would again advance. Experience shows us that every time paper money is increased in any country beyond a certain point, the additional currency does not enable more goods to be purchased. The Treasurer is playing with fire, and I should like a lot more information from him in his reply. I am strongly in favour of the proposal of the Leader of the Country party that an inquiry should be made by a select committee before the bill is further proceeded with.
.- The honorable member who has just resumed his seat said that the gold standard was restored in 1925, and that that resulted in immediate benefit. If a gold standard means immediate convertibility, no country has such a standard. The honorable member said that Great Britain had returned to a gold standard, and that, when Australia did so, the community benefited; but economists throughout the world agree that the economic woes from which Great Britain is suffering to-day are due to an attempt to deflate back to gold. It is pointed out that this deflation, has meant paying, with a deflated currency, interest on loans raised on an inflated currency. Arthur Kidston pointed out in 1917-18 what the bankers were scheming to do in Great Britain before the conclusion of the late war, and, in his lastpamphlet, he urged Britain to resist to the utmost any attempt to deflate back to a gold standard. If we brought about immediate convertibility to gold, there would be the greatest financial crisis the world has ever seen. In Australia, provision would have to be made for the conversion to gold of £544,000,000.
– But experience shows that immediate conversion is not demanded.
– So far as my reading of the currency history of Great Britain and Australia enables me to speak, the gold standard has nothing to do with the export of gold, because gold is exported not as sovereigns, but as bullion. Sir Reginald McKenna, a former Chancellor of the British Exchequer, and President of the Midland Bank, has stated that the amount of money in existence depends, not on the note issue, but. on the action of the banks in increasing and diminishing deposits. He said that, in 1920, deposits in England were supposed to amount to £1,230,000,000, and payment of every penny of it could be demanded in gold. What is the use of talking of a gold standard? I merely rose to show the foolishness of some of the arguments that have been advanced in this debate. In 1907 a gang of swindlers was operating in New York and Great Britain, buying securities in America and getting gold for them. They purchased £70,000,000 worth of securities and obtained 70,000,000 sovereigns from the Bank of England. Although the total .wealth of England at the time was supposed to be about £300,000,000,000, that transhipment of sovereigns caused a slump in 225 standard British securities. The gold waa shipped to New York, and it caused an appreciation in American securities. It has been pointed out by Kidston that these persons gambled on two tables with double-headed pennies, aud in nine months they raked off £1 5,000,000. The free export of gold and a gold standard allow the financial juggler to play those tricks with the finances of different countries. The ex-Treasurer forgets that Great Britain was the only country with a gold standard until 1870, except that France had adopted bimetallism. We remember the way in which Bismarck built up Germany at the expense of Great Britain by draining its gold. The statistics of these two countries show that, prior to 1870, Germany sent her primary products to Great Britain, and took in exchange the merchandise of British factories; but, when it obtained the huge indemnity of £400,000,000 from France in 1870, the scene was changed. Germany no longer took the products of British factories, but drew gold from the Bank of England in payment for the primary products sent there. The Canadian and American farmers, whose wheat went to Great Britain, previously took away the produce of British factories.They ceased to do so, because it is an’ economic truism that money is more valuable in a poor country than in a rich one. Germany, at that time, was a poorer country than Britain, and the result was that the farmers of Canada no longer took the products of British factories but transferred their gold credits to Germany, and bought the products of that country. The same sort of thing would happen here, with perhaps Japan as the benefiting country, if no control were exercised over the gold reserve. That is why I support this measure. It represents only a small portion of the reconstructive financial programme of the Government. Unless the whole fabric of capitalistic finance is radically changed, the economic drift will become worse and worse. The vehicle we have, been using has landed us in a quagmire, and it is time we changed it for a more up-to-date one. The Leader of the Opposition (Mr. Latham) quoted from a book dealing with inflation. This word is used as a bogy to scare people when financial matters are under discussion. There is no financier in the world who can say where the line of safety ends, and that of inflation is crossed. The worst form of inflation is by the creation of cheque credits. In Great Britain, 1,230,000,000 cheque pounds have been manufactured by the banks on a legal currency of not more than £90,000,000. In our own country the associated banks have never, held more than £45,000,000 of legal currency, and with that they have manufactured 226,000,000 cheque pounds. The total liability of the banks here amounts to £276,000,000, and their assets are shown at £312,000,000. Their chief liabilities consist of deposits amounting to £270,000,000, and their chief assets are advances and overdrafts amounting to £236,000,000. “’ The difference is £34,000,000, which represents the actual legal currency paid into the banks. The gold standard is a figment. It has no more real existence than have the fetishes created by the medicine men of the South Sea Islands. It is a fetish by which financial gamblers, thieves and brigands have exploited the workers of every country in the world. Not until this fog of ignorance has been dispelled can we get back to a sane basis of commercial dealing, aud free ourselves from the economic mess in which we are to-day. Therefore, I am glad that this measure has been brought forward, not because I believe, any more than the
Treasurer does, that it will effect any great reform in our financial affairs, hut because it is necessary to protect us against the stupidity of other countries. It Will protect the country from the depletion of its gold reserves by financial gamblers, and will prevent the further forcing down of wages and prices in this country, for the purpose of improving the value of war bonds and loan debentures, as has been done in Great Britain and elsewhere. I should not have spoken on this matter at all, were it not that we have heard such a lot during the debate about the gold basis, when no such thing as a gold basis really exists.
.- It would have been very interesting if we could have heard the full-dress debate in the Government party room, revealing the real desire of the Government in regard to the note issue, and the wishes of honorable members generally on this matter. The honorable member who has just spoken referred to the great importance of the credit system generally in Australia, and the honorable member for Adelaide (Mr. Yates), when speaking recently on the subject, said that it was the duty of the Government to utilize the credit of the Government through the note issue, and make money available for carrying out important work to relieve unemployment. Is he aware that a pound note is a. promise to pay, and that we have to foot the bill no matter how many notes are issued?
How oft the sight of means to do ill deeds
Hakes ill deeds done!
What worries me is that when this measure is passed other legislation may follow of even greater importance. E look upon this bill as one of the most important which has been before Parliament for a long time. It deals with the credit of the nation, and there is undoubtedly very grave danger in passing legislation of this kind without the fullest inquiry. If it is urgently necessary that something on these lines be done, the Government has power to issue a proclamation prohibiting the export of gold, but it is not right to involve honorable members on this side of the House in the responsibility for such action until the matter has been fully investigated.
– Why does the honorable member always urge procrastination?
– Perhaps some honorable members do not realize the advantage of obtaining the opinion of persons conversant with a subject before passing legislation dealing with it. Probably they would be only too pleased to pass this measure, and learn afterwards what its effect was. I want, if possible, to learn the effect beforehand. Surely there is need for caution. Time and again I have advocated that we should set up a special finance committee in Parliament to deal with all financial measures, particularly those dealing with taxation. Taxation billa have frequently been passed which next year had to be amended, and great harm is so often done when illconsidered legislation is rushed through Parliament. Evidence should be taken by a committee on such matters, and a report made to the House. What objection can there be to a slight delay? It ought not to take more than a fortnight for a committee to conduct its investigations and present a report. As I said before, if the Government feels that the position is acute, and is prepared to take the responsibility, it has power to proclaim by order in council that gold must not be exported. Such a proclamation could be repealed at any time it thought fit. An embargo was placed upon the export of gold from Australia at the beginning of the war. In 1922 a proclamation was issued repealing that prohibition. Only a few months afterwards the embargo was re-imposed, the previous action having been premature. Things went on in that way until February, 1925, when the banks were given authority, under certain conditions, to export gold. Later in 1925 a proclamation was issued making the export of gold free.
There has been carelessness in the drafting of this bill. The new provision in clause 2 is to follow section 7a of the principal act, which is the section empowering the Commonwealth Bank to acquire the business of other banks. It has really no connexion with that section whatever. The proper place for it is after section 60a which deals with the note issue. Further evidence of carelessness in drafting is shown in the provision in proposed section 7b that any person may be required to exchange for Australian notes any gold coin or bullion held by him, whilst section 60h of the principal act provides that notes shall bear the promise of the Treasurer to redeem them in gold coin on demand at the head office of the bank. Two conflicting rights are being set up - first, the right of the bank to commandeer, and secondly the right of the note-holder to secure gold for all notes presented.
– There is no disadvantage in that. The retention of section 60h maintains the convertibility of the note.
– If I receive £5,000 in notes for gold coin or bullion requisitioned from me, I can present the notes at the Commonwealth Bank on the following day and demand gold for them.
– “What would be the advantage of doing that if the gold could be commandeered by the bank at any time, and could not be exported without permission ? The honorable member might urge the same criticism against the British legislation.
– I do not think so. Most financiers agree with the contention of the right honorable member for Cowper (Dr. Earle Page) that the Commonwealth Bank should be made a central bank, and I was in accord with his statement that the policy of the last Government was to endeavour to induce the private banks to come to a friendly understanding with the Commonwealth Bank. Hasty and coercive legislation of the character proposed in the bill cannot be too severely condemned. The world has been compelled to adopt a standard currency that can be offered by every buyer and will be accepted by every seller. Iron, wheat and other commodities have been suggested as substitutes for gold, but the gold standard is almost universally accepted, and it provides that stability which is essential in international trade. Some critics condemn as absurd the hoarding of huge quantities of gold in bank vaults, but the gold reserves are like the foundations of a building; although hidden from view they are the basis and sup port of the superstructure of credit. Any action to interfere with the nation’s credit is dangerous. The desirability of establishing a central bank calls for the consideration of experts rather than of politicians, and if the Government will agree to the appointment of a select committee, full inquiry can be made as to the policy the Commonwealth Bank should adopt in regard to the reserves of the private banks, with a view to the adoption of a system similar to that which is successfully in operation in the United States of America, South Africa and Great Britain. No . Treasurer should have the power to permit or forbid the export of gold; such a power would give politicians too much influence in the trade and commerce of the country. If that power rested entirely with the Commonwealth Bank Board, I should have less objection to it. Already the Treasurer has given notice of an amendment to provide that action to prohibit the export of gold shall be preceded by a recommendation from the bank. If private reserves of gold are to be commandeered and placed in the vaults of the Commonwealth Bank, those in control of that institution should have absolute control of the export of gold.
– Would the honorable member give the bank absolute power to refuse a permit to export?
– Yes, rather than that the politicians should be given too much influence in the trade and commerce of the country. This bill is dangerous because of our limited knowledge of financial practice. As Mr. Snowden has said -
Nobody likes a high bank rate, but in this rather imperfect world we are sometimes compelled to submit to things we do not like, afraid that, if we do not, the consequences may be still more disagreeable.
The opinions of some honorable members in regard to the use of the printing press for the solution of our financial difficulties are well known, and we have had some experience of the result of such operations. About 1915 the private banks handed over to the Commonwealth Bank £10,000,000 worth of gold and with that backing, £18,000,000 worth of notes was issued and loaned to the various States for the carrying out of public works during 1917. A Governmental extravagance followed.’ When 300,000 of our vigorous men were at the front, works- to provide relief for the unemployed should not have been necessary; but that policy caused inflation, which increased until 1925, when approximately £53,000,000 worth of notes was current. The Note Issue Board then determined that deflation was necessary, and I think that about £5,000,000 worth of notes was cancelled. I well recollect that the wool sales at Brisbane had to be postponed because, owing to the reduction of the note issue, the banks had not the money with which to finance the transactions. A Japanese firm of buyers offered to send £200,000 worth of gold from San “Francisco to Sydney to be exchanged for Commonwealth notes, on condition that the gold would be repaid when the notes were returned. The offer was refused. The policy of inflation caused a great deal of trouble, and should act as a warning against the dangers of hasty and meddlesome legislation. In the Commonwealth and in every State, taxation has been increased until to-day it amounts to between £87,000,000 and £88,000,000. Notwithstanding this, nearly all the States have deficits, yet, at the same time, their governments are being asked to borrow more money for undertaking works that will relieve unemployment. Still further taxation will be necessary. Such circumstances offer considerable inducement to a necessitous Treasurer to resort to the printing press in order to overcome his difficulties. I quote from Currency and Credit by R. G. Hawtrey -
While the process of inflation is going on the Government has the advantage of spending money without the trouble of raising it; when the process is reversed the Government has the trouble of raising the money without the advantage of spending it. As the Bed Queen said to Alice, it takes all the Tunning you can do to keep in the same place.
The Government must raise the money either by taxation or by borrowing, and the borrowing must be genuine; it must draw upon the available stock of savings, and, like the taxation, diminish the amount of the consumer’s outlay in other directions. The portion of the consumer’s outlay so taken by the Government, vanishes like a stream which loses itself in the desert, and what remains thereupon becomes the measure of the consumer’s income, to suffer further diminution in turn. Demand flags, stocks accumulate, orders to producers are curtailed, production slackens, profits shrink, unemployment supervenes.
The depression does not differ in kind from that which is incidental to the familiar trade cycle, or from that which the country has to face when it has lapsed from gold parity through some miscalculation or some economic misfortune, and seeks to return. But although it does not differ in kind, the depression may differ vitally in degree. It. is serious enough to have to face a fall in the price level of, say, one-fifth, and on occasions when the trade cycle has involved so considerable a contraction, the process has been spread over several years of tribulation. But we are supposing that a country has lost control over its currency, and that the consequent depreciation has been gathering impetus during a period of strain which may have been contracted for years. If prices have been no more than doubled the disorder may be called mild.
Faced with deficits, increasing taxation, demands for further expenditure on public works, and with loan money obtainable only at a fairly high rate of interest, governments may find attractive the suggestion of the honorable member for Adelaide (Mr. Yates) that additional money should be put into circulation by means of the printing press. We should like to know what the Government intends to do, if this bill is passed, in regard to the control of the note issue which in 1925 was taken from the control of the Treasurer and handed to the Note Issue Board. The fiscal policy which it has adopted must result in an increase in the cost of living and of the cost of production; and possibly its actions after the passing of this bill may discourage our export trade. It must be realized that our returns from wool and wheat will be lower this year than last, and it would be very serious if anything were done to add to the discouragement of our producers.
We are a debtor nation and must maintain our export trade to the greatest possible degree in order to meet, our obligations. We shall receive at least £15,000,000 less this year for our wool than we received last year.
– And we shall import fewer motor cars.
– When the 1920 schedule was before us it was said that our imports would decrease, and the same story has been told upon the introduction of successive tariff schedules since that time. The present Minister for Customs has the doubtful distinction of receiving the record monthly return for the
Customs. Between £25,000,000 and £28,000,000 must be sent out of this country every year to meet our interest bill, and it would be serious if anything more were done to dislocate our financial position. 1 trust that the Government will accept the amendment and allow a full inquiry to bo made into this subject. If the committee were appointed to-morrow it could submit its report within a fortnight, for it would not need to examine many witnesses. We have been told that we have £44,000,000 in gold and bullion in Australia. A good deal has been said during this debate about the private banks, but I direct the attention of honorable members to the fact that in 1925 the private banks imported £10,500,000 worth of gold coin and bullion.
– Where did it come from ?
– Chiefly from America, although some came from London. I obtained this information from the Customs Department for use during the election campaign, but honorable members will find the details in relation to it on page 220 of the 1926 Year-Book. Since then some gold has been exported.
– We exported £4,000,000 worth a month ago.
– I have not been following the gold movements recently.
– If the honorable member had done so he would have realized the necessity for the introduction of this bill.
– The information that I have, is that we have £44,000,000 worth of gold in Australia. The Treasurer read a statement from the Argus when he introduced this bill, that the Commonwealth Bank alone had £22,000,000 worth and that it could export £11,000,000 and still hold enough gold to still be within the 25 per cent. limit.
There is no urgency in this matter. A fortnight’s delay would not injure anybody. Seeing that the subject is of such vital importance to the community it should be given proper consideration. So far as I know none of the banks have protested against the proposal in the bill. Possibly they may be reluctant to enter the political arena. But I am firmly of the opinion that the sooner we make the Commonwealth Bank a true central bank, and empower it to take care of our currency, the better it will be for the country.
.- When this bill was first introduced I thought it quite an innocent measure, and I believe that the Treasurer read the letter from the Commonwealth Bank with the object of deepening that impression. But when we compared the bill with the act that was passed by the British Parliament with the object of achieving similar ends we saw at once that there were fundamental differences between the two. The Treasurer also told us the amendment was on the lines of the British act. In these circumstances, I urge honorable members to support the amendment of the Leader of the Country party. It is not a fair thing to expect laymen in finance to pass a bill like this without expert advice. Like the honorable member for Swan (Mr. Gregory) I should like to know what the Government proposes to do with the gold when it is concentrated. Does it intend to work the printing press with the object of issuing notes in accordance with the gold collected from private individuals and tradings banks? If it does that, it will cripple the credit of the country. The Treasurer stated, in reply to a question, that there would be no interference with theexport of gold for legitimate purposes; but it seems to me that if the bill is passed in its present form the Treasurer will be able to prohibit gold exports for any purpose whatsoever. Immediately the export of gold to pay legitimate accounts is prohibited, the good name of the country will suffer.
– What happened when the previous embargo was enforced?
– The honorable member knows very well that war-time conditions prevailed at that time. So far as I can see, the British act places no restriction upon the export of gold. If the British banks find that too much gold is leaving the country they increase the discount rate, and automatically the gold begins to flow back again. That system allows freedom of trade between nations, and also indicates that Britain is prepared to pay her debts in gold if gold is wanted. If the impression should go abroad that Australia is unduly inflating her currency it will be serious for the people generally.
– What happens when the discount rate is increased ?
– Judging by the interjections of the honorable member this evening he does not know very much about the subject. It is clear to me that the honorable member for Werriwa (Mr. Lazzarini) and the honorable member for Adelaide (Mr. Yates) think that all we need to do is to set the printing press to work and issue as much paper money as we desire.
– That is a deliberate misrepresentation of our views.
– Nothing could have a worse effect upon the Australian working man or bring about more depression and unemployment than the inflation of the currency by the issue of paper money without a proper gold reserve to cover it. I shall vote for the amendment, and on account of the extreme importance of the subject, I trust that the Government will accept it.
Debate (on motion by Mr. West) adjourned.
Motion (by Mr. Scullin) proposed -
That the House do now adjourn.
.- It is. to be regretted that the Treasurer (Mr. Theodore) did not see fit, this afternoon, to reply to the charges levelled against him in connexion with his undertaking on the hustings to re-open the coal mines. He, alone, is responsible for the making of that promise, but the fact that neither the Prime Minister nor any other member of the Cabinet has seen fit to repudiate it, makes it necessary-
– I trust that the honorable member will not discuss that subject for it has already occupied the attention of the House today.
– With all respect, Mr. Speaker, I submit that the House did not reach a conclusion on the subject, nor is there a motion concerning it on the notice-paper.
– The House disposed of the question, having dealt with it for the length of time allowed by the Standing Orders.
– I submit that it did not reach a decision upon it, and therefore I am in order in continuing the discussion of it.
– If it were permissible for an honorable member to resume the discussion of a question that had been under consideration at an earlier hour of the day, it would be possible for the debate to continue for practically an unlimited period. Seeing that the discussion of this matter occupied the two hours allowed by the Standing Orders, I cannot permit the honorable member to raise it again unless there is a suspension of the Standing Orders to enable further debate to take place.
– It is not my intention to discuss the subject. I merely wish to point out that the Treasurer has been arraigned before the bar of public opinion, and to ask whether it is his intention to reply to the charges that were levelled against him. One would have thought that he would welcome an opportunity to do so. This afternoon, when the honorable member for Hunter (Mr. James) moved the adjournment of the House-
– Order ! The honorable gentleman will not be in order in proceeding along lines of debate that have any relation to the question which was under discussion at an earlier hour this day, or to make any substantial reference to it.
– I shall content myself with a passing reference to it, so as to lead up to a question that I wish to ask the Treasurer. When the honorable member for Hunter this afternoon moved the adjournment of the House-
– I rise to a point of order. It is passing strange that an honorable member who is supposed to be a stout defender of the rules of debate should persist in referring to a debate that took place in this House earlier in the day when you, sir, have ruled at least three times that he will not be in order in doing so.
– The honorable member for Oxley (Mr. Bayley) has almost exhausted my patience, and if he continues to disregard my ruling, I shall ask him to resume his seat.
– On the occasion to which I have referred, the Treasurer took his seat at the table, as though he intended to make a reply to the charges that had been levelled againsthim. Later, he moved to the front Government bench and subsequently left the chamber. I now ask him why he maintained silence, and whether he is prepared to make a statement.
– This afternoon, when the right honorable member for Cowper (Dr. Earle Page) was speaking, I interposed because I felt that his remarks were giving an incorrect impression of the conduct of honorable members at the time he was speaking. As presiding officer, it is my duty to protect honorable members, and to see that debate is properly conducted. I feel that it is my responsibility to prevent any unfaithful presentation of the conduct of any honorable member, or of members collectively. That was the reason of my intervention. But as some honorable members appeared surprised at what I did, I wish now to inform the House that I acted in accordance with the very best precedent, and in support of that statement I propose to quote briefly, in justification of my action, what was said in 1909 by Mr. Speaker Holder, in circumstances which, although not quite the same, are sufficiently similar to make his remarks valuable for our guidance - the passage will be found in Hansard, Vol. LI., page 3530 -
I would point out to the honorable member for Hume that vested in the chair is the right to so control debate that the feelings of an honorable member shall not be offended. The honorable member, having regard to his long and wide political experience, will bear out my statement that many honorable members suffer indignity rather than complain. I feel, however, that it is my duty to intervene on such occasions, and to protect honorable members.
I shall at all times, without regard to party, seek to protect honorable members, individually and collectively, from any misrepresentation of their conduct.
Question resolved in the affirmative.
House adjourned at 11.8 p.m.
Cite as: Australia, House of Representatives, Debates, 3 December 1929, viewed 22 October 2017, <http://historichansard.net/hofreps/1929/19291203_reps_12_122/>.