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House of Representatives
13 June 1930

12^th Parliament · 1^st Session

QUESTION
- ROYAL AUSTRALIAN NAVY
QUESTION
- RADIUM
QUESTION
- PETROL DUTY
QUESTION
- TIMBER IMPORTS
QUESTION
- CANBERRA HOTELS AND HOSTELS
QUESTION
- WATTLE BARK
QUESTION
- COMMONWEALTH BANK
PAPERS
CENTRAL RESERVE BANK BILL
ADJOURNMENT

Mr. Speaker (Hon. Norman Makin) took the chair at 11 a.m., and offered prayers.

page 2713

QUESTION

ROYAL AUSTRALIAN NAVY

Officers : Gabber Island - Naval Establishment - Medical Unfitness - Retrenchment

Mr ELDRIDGE:
through Mr. C. Riley

asked the Minister for Defence, upon notice -

Is there an official residence known as “Tresco” at Garden Island, Sydney, for the captain-in -charge ?
Is this residence furnished by the department, even as to table linen, dusters, dishcloths,&c.?
Are naval ratings employed there as gardeners, cooks, and stewards for the captain- in-charge ?
Has the captain-in-chargea pinnace provided for his own use, with a crew of about five?
If the facts are as stated, can economies be effected!

Mr A GREEN:
KALGOORLIE, WESTERN AUSTRALIA · ALP; FLP from 1931; ALP from 1936

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

“Tresco” is the residence of the captainincharge, and is on the mainland overlooking Elizabeth Bay.
Yes. The furnishings are Government property.
This officeris allowed,by naval regulations, one steward and one cook. There are no gardeners allowed.
Yes, to enable him to proceed to ships and naval establishments.
The possibilities of effecting economies are receiving constant attention.

Mr ELDRIDGE:

asked the Minister for Defence, upon notice -

Is there a captain-in-charge at Garden Island, Sydney, who is a Royal Navy officer?
Is there also an officer-in-charge of the depot ship at that island?
Is the depot ship tied up to the eastern side of Garden Island, near the store wharf?
Is it in fact part of the island, with its landing stage and heating apparatus on the island ?
If so, why is it that the officer-in-charge of the depot ship cannot officiate in both capacities ?

Mr A GREEN:
KALGOORLIE, WESTERN AUSTRALIA · ALP; FLP from 1931; ALP from 1936

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

Yes, but this officer belongs permanently to the Royal Australian Navy, and has served continuouslysince 1918.
Yes.
Yes.
There is a landing stage, and for reasons of economy the ship is supplied with heating and cooking steam from a small boiler on the island. She is not part of the island, and she is liable to go to sea if required.
The duties of the two appointments are quite separate, and both officers are fully employed.

Mr TULLY:
BARTON, NEW SOUTH WALES

asked the Minister for Defence, upon notice -

How many men have been discharged from the Royal Australian Navy during the past tour years as medically unfit, suffering from tuberculosis? 2.Has the department any knowledge of their whereabouts?
How many have been granted (a) a pension; (b) compensation?
Have those not granted a pension any right of appeal; if so, to whom or to what tribunal can they appeal?

Mr A GREEN:
KALGOORLIE, WESTERN AUSTRALIA · ALP; FLP from 1931; ALP from 1936

– Inquiries are being made, and a reply will be furnished to the honorable member as soon as possible.

Mr LATHAM:
KOOYONG, VICTORIA

asked the Minister for Defence, upon notice -

Is it a fact that naval officers, under the age of 30 years, have received notice of dismissal, without compensation, from their employment, although such officersare bound by obligation to the Commonwealth Government to serve in the navy until they reach the age of 30 years ?
If so, is the Government prepared to consider the propriety of granting some measure of compensation to such men?

Mr A GREEN:
KALGOORLIE, WESTERN AUSTRALIA · ALP; FLP from 1931; ALP from 1936

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

Owing to retrenchment, there are a number of naval officers in excess of naval requirements, and it is, unfortunately, a fact that the Naval Board has been compelled to servo notices of dismissal. Inquiries are being made with the view of obtaining positions in the Commonwealth Public Service for those under 30 years of age, and an amendment of the Public Service Act will shortly he introduced to give effect to this scheme, which will be applicable also to graduates of the Royal Military College.

page 2714

QUESTION

RADIUM

Mr CROUCH:
through Mr.C. Riley

asked the Prime Minister, upon notice -

What amount of radium was imported into Australia during the last two years?
What was its value?
Has any attempt been made to extract the radium existing in Australian ores?
Will he direct the attention of the Development and Migration Commission to an article in theCornhill Magazine, of April last, in which it is shown that quantities of radium exist in Australia, which can be profitably extracted, and obtain a report as to its production ?

Mr SCULLIN:
Minister for External Affairs · YARRA, VICTORIA · ALP

– The answers to the honorable member’s questions are - 1 and 2. The importations of radium into Australia during the years 1927-28 and 1928-29 were as follows : - 1927-28, £103,487 (includes equipment imported into Victoria) ; 1928-29, £9,749.

Yes, in South Australia.
Consideration will be given to this proposal.

page 2714

QUESTION

PETROL DUTY

Rebates

Mr McNEILL:
WANNON, VICTORIA

asked the Acting Minister, for Trade and Customs, upon notice -

Does the Civil Aviation Department receive rebate on its petrol supplies; if so, do all aviators receive the same concession? 2.Do the manufacturers of rubber receive a rebate on their petrol supplies ?
Was the provision for a rebate on petrol repealed by statute; if so, when?
Will the Minister endeavour to evolve a scheme whereby petrol used for other than road purposes may be admitted duty free, or at a lower rate than obtains at present?

Mr FORDE:
Assistant Minister assisting the Minister for Customs · CAPRICORNIA, QUEENSLAND · ALP

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

No.
No.
Yes; the provision which was made in the 1926 tariff was repealed by the last Government in 1929, on the grounds that it was impracticable to carry it out.
The matter is now being reconsidered with that object in view, but it issurrounded by many difficulties which are accentuated by the fact that, in addition to the imported petrol, which is dutiable, there are two oil refineries in Australia, the. petrol from which is not subject to an. import duty, and it was found impossible to check against cases of imposition. Furthermore, in cases where a farmer had both a motor car and a traction or other internal combustion engine, it was impossible for the department to check the claim showing the quantity used in the traction engine. Moreover, refunds of duty can only be given to the importer of petrol, and not to the user in the country. However, the whole matter is now being reconsidered, and any helpful suggestions the honorable member may like to make will be fully considered.

page 2714

QUESTION

TIMBER IMPORTS

Mr RIORDAN:
KENNEDY, QUEENSLAND

asked the Acting Minister for Trade and Customs, upon notice -

What are the total quantities of (a) oregon, (b) Baltic pine, (c) hemlock, (d) spruce, (e) redwood, (f) cedar, (g) kauri, and (h) Pacific maple, imported during 1928-29, and the countriesof origin in each case ?

Mr.FORDE.- The information will be obtained.

page 2714

QUESTION

CANBERRA HOTELS AND HOSTELS

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

asked the Minister for Home Affairs, upon notice -

In view of the fact that on two occasions the honorable member for Melbourne has failed through questions on notice to obtain the name or names of the architect or architects who designed the plans of the following hotels, viz., Hotel Canberra, Hotel Kurrajong, and Hotel Acton, and also the hostels known as Gorman House, Bachelors’ Quarters, and the Printers’ Quarters, will the Minister insist upon his departmental officers supplying the information?

Mr BLAKELEY:
DARLING, NEW SOUTH WALES

– On the 22nd March, 1929, and the 21st May, 1930, the honorable member was informed that the Hotels Canberra, Kurrajong, and Acton were designed by the Department of Works and Railways. On the latter date, the honorable member was also informed that Gorman House and the Printers’ Quarters were designed by the Department of Works’ and Railways, and that the Bachelors’ Quarters were designed by the same department, the additions thereto being made by the late Federal Capital Commission. Inquiries will be made of the Department of Works andRailways as to whether it is possible to supply the names of the individual officers concerned in the preparation of the designs.

page 2715

QUESTION

WATTLE BARK

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

asked the Acting Minister for Trade and Customs, upon notice -

What are the total amounts and values for each year since the inauguration of the Commonwealth of the imports of wattle bark and wattle bark extracts from South Africa into Australia?

Mr FORDE:
ALP

– The information is being obtained.

page 2715

QUESTION

COMMONWEALTH BANK

Interestrates

Mr THEODORE:
DALLEY, NEW SOUTH WALES · ALP

– On the 5th June the right honorable member for Cowper (Dr. Earle Page) asked the following question upon notice -

What was the average rate of interest during 1928-29 on advances made by (a) the Renewal Department of the Commonwealth Bank, and (b) the Rural Credits Department of the Commonwealth Bank?

The Commonwealth Bank has now furnished the following reply : -

The rate of interest charged through the General Department of the Commonwealth Bankon all advances, including advances to Governments, but excluding investments in London, during 1928-29, averaged £61s. per cent. The rate on advances made through the Rural Credits Department during the same period averaged £5 10s. per cent.

page 2715

PAPERS

The following papers were presented -

Northern Australia Act - North Australia Commission - Third Annual Report for the year 1929.

Public Service Act-Appointment of W. J. Owen, Department of Health.

page 2715

CENTRAL RESERVE BANK BILL

In committee. Consideration resumed from 12th June(vide page 2713) :

Clause 22 - (5.) The board may appoint from amongst its members an executive committee of not less than three members to hold meetings and carry on the business of the reserve bank between meetings of the board.

Mr ARCHDALE PARKHILL:
Warringah

– On further reflection, I am not so opposed to this clause as I was last night. If the committee is not agreeable that the directors shall be selected because of their fitness, and irrespective of their own business interests and avocations, it may be wiser to retain the clause. I do not concealmy disappointment that there are in this committee men who desire to have on the board representatives of sectional interests, who can be approached when matters particularly affecting those interests are under consideration. I dissociate myself from that reprehensible view, but as it is held and expressed in the bill, the executive should exclude sectional representation as much as possible, and the bank should be carried on in ‘accordance with banking principles. If I wanted information regarding the operations of a bank, I should not approach a director whose only qualification was that he had been a primary producer, a manufacturer, or a representative of the workers; I should seek banking information from a banker. As two of the three members of the executive will be officials, the third man will not count. I agree with the Treasurer that the governor should be a man of dominating personality, who will take the leadership in the bank’s affairs. Apparently, the bank will be controlled by the governor, a deputy governor, and one other director. Will the two official members of the executive be men of such strong personality that they will be able to resist political pressure? Or will the Treasurer of the day have an even more dominating personality, and control the executive? If he has, the fears and doubts expressed at the beginning of this debate will persist. We have to rely on the Treasurer of the day to resist the conservative pressure from one party and the frenzied financiers in another party, and to allow the business of the bank to be conducted on sound non-political lines. If he can do that, the bank will be a success; if he cannot, all the ills of political control that have been predicted during this discussion will fall upon an unfortunate people.

Dr EARLE PAGE:
Cowper

– I cannot understand why warmth should have been imported into the discussion by the honorable member for

Warringah (Mr. Archdale Parkhill). It has never been the practice for sections of the community to approach, or attempt to influence, individual members of the Commonwealth Bank Board, and I hope that no such development will occur in connexion with the Central Reserve Bank. I recognize the need for a small executive, because I hope that the board will consist of men appointed from various States, and full meetings may not be convenient more often than once a month. Provision should be inserted to ensure that at meetings of the executive, three shall form a quorum - at which one outside director at least will always be present. The clause follows the corresponding section in the Commonwealth Bank Act, but in the latter no safeguard such as I have suggested is necessary, because there are only two official members on the board. The Treasurer has foreshadowed an amendment which meets the wishes of the committee in regard to the composition of the executive, and I wish to make sure that at all meetings three directors will be present.

Mr THEODORE:
Treasurer · Dalley · ALP

– I am prepared to move that of the members of the committee not more than two shall be chosen from the official members of the board, and that at meetings of the board three shall constitute a quorum.

Amendment (by Mr. Theodore) agreed to-

That after sub-clause 5 the following new sub-clauses be inserted: - “(5a.) Of the members of the Executive Committee not more than two shall be chosen from the official members of the board. “(5b.) At meetings of the Executive Committee three shall form a quorum.”

Mr E RILEY:
SOUTH SYDNEY, NEW SOUTH WALES · ALP

– I strongly disapprove of the proposal to have sectional representation on the board. The reserve bank should be controlled by the Governor and the Deputy Governor. A successful manufacturer is not necessarily qualified for a position on the board.

The TEMPORARY CHAIRMAN (Hon D Watkins:
NEWCASTLE, NEW SOUTH WALES

– The honorable member may not discuss a clause that has been passed by the committee.

Mr E RILEY:
SOUTH SYDNEY, NEW SOUTH WALES · ALP

– I am aware of that, but I am replying to criticism offered last night by the honorable member for More ton (Mr. Francis), who made a plea for the representation of remote States. In any event a successful business man would not care to give up his business for £600 a year, which he would receive as a member of the board.

Clause, as amended, agreed to.

Clause 23 verbally amended and, as amended, agreed to.

Clause 24-

Where an officer of the Commonwealth Public Service becomes an officer of the Reserve Bank he shall retain all the existing and accruing rights . . .
Where
1. an officer of the Commonwealth Bank becomes an officer of the Reserve Bank; or
2. an officer of the Reserve Bank becomes an officer of the Commonwealth Bank, there shall be payable to the superannuation fund of the bank of which he becomes an officer, from the superannuation fund of the other bank, an amount . . .

Mr THEODORE:
Treasurer · Dalley · ALP

– I move-

That before the word “there” sub-clause 2, the following words be inserted: - “he shall retain all his existing and accruing rights and”.

This will give adequate protection to all officers transferred from one bank to the other.

Dr Earle Page:

– Will the rights of all Commonwealth Bank officers as well as the rights of all public servants be adequately protected?

Mr Archdale Parkhill:

– I understand from the Treasurer’s statement that the rights of all officers of the Commonwealth Bank who may be transferred to the Reserve Bank will be protected in their entirety.

Mr THEODORE:

– After the bill was drafted attention was directed to this matter by certain members of the staff of the Commonwealth Bank, and the position was fully discussed with the draftsmen and the Crown Law officers. They have assured me that the insertion of the words contained in my amendment will fully protect all existing and accruing rights of officers of the Commonwealth Bank, and that there is no need to further specify those rights.

Dr Earle Page:

– Then the amendment covers more than merely superannuation rights?

Mr THEODORE:

– Yes, it covers all rights, whatever they may be.

Amendment agreed to.

Clause, as amended, agreed to.

Clause 25 agreed to.

Clause 26 (Yearly balance-sheet).

Mr GREGORY:
Swan

. -This clause makes provision for the publication by the board of a balance-sheet at least once each year. I suggest that a balance-sheet might, with advantage, bo submitted twice a year, but I do not stress that point. I rose to direct attention to the fact that no provision is made for the publication of a weekly report, which practice is followed by the Bank of England and, I understand, by all other central banks. The Bank of England does not publish a balance-sheet, but issues weekly returns giving all necessary information of its operations. Kisch and Elkin, who are recognized as the standard authorities on central banking, point out that in the case of the Central Bank of Esthonia the League of Nations insists, in Article 48, that the bank shall publish a return of its assets and liabilities on the 7th, 15th, 23rd, and last day of each month, or not later than a week after these dates, in the form set out in the annexe to the law. The annexe provides that the return shall show on the assets side the reserve of gold coin and gold bullion, the net foreign exchange, the subsidiary Esthonian coin, the home bills discounted in relation to commercial, agricultural, and timber transactions; the loans and advances, the immovable property and equipment and other assets. The inclusion in the return of home timber bills is due to the fact that timber is one of the important local industries. On the liabilities side, the bank is required to publish weekly a return of its capital, reserve fund, current liabilities, including notes in circulation, sight deposits, current accounts, and other liabilities. It must also indicate the percentage proportion of reserve to current liabilities. Similar returns are demanded of the Central Bank of Chile. There is no provision in this bill requiring the proposed central bank to furnish any returns, other than a balance-sheet at least once a year. I do not know if this matter has been overlooked, or whether the Treasurer considers that the information should not be given to the public. The bank should be obliged to furnish a weekly return, as is done by the Bank of England.

Mr THEODORE:
Treasurer · Dalley · ALP

– I agree that the bank should furnish a weekly statement showing its assets and liabilities, and giving other details of its business. It is the present practice of the Commonwealth Bank to issue such a statement, although it is not required by statute to do so. The Bank of England issues a weekly statement, giving information as to the quantum of reserve funds in the bank. It is not compelled by law to do this, but it has become the bank practice. There is not the slightest doubt that the same policy will be adopted by the proposed reserve bank. If it were thought desirable to include such a provision in the bill, it could be inserted, but Ido not think it is necessary.

Clause agreed to.

Clause 27 agreed to.

Clause 28 consequentially amended and, as amended, agreed to.

Clause 29 agreed to.

Clause 30 (Issue, re-issue and cancellation of notes).

Mr YATES:
Adelaide

.- I regard this as one of the most important clauses in the bill. It places the note issue in the hands of the central bank board. The other night I directed attention to what I termed the manipulation of the note issue by either the Commonwealth Bank or the Bruce-Page Government for the purpose of financing the wool clip or wheat harvest. The circumstances are well known to honorable members. While the honorable member for Gippsland (Mr. Paterson ) was speaking on the. subject, I rook a careful note of certain passages in his speech. He said, among other things -

Immediately that became known, assets which were then frozen became liquid.

Mr Maxwell:

– What practical suggestion has the honorable member to offer in connexion with the provisions of this clause?

Mr YATES:

– The clause provides that the bank shall issue, re-issue and cancel’ Australian notes. I suggest that for the purpose of providing money to find work for ‘the unemployed and to develop this country the bank should issue Australian notes against the credit of the nation. If* through the Note Issue’ Department it wo’uld give the Government a credit of, say, £10,000,000 the Government would then draw against this by cheque to pay its contractors, the cheques being paid into the credit of each contractor. The latter in turn draw against their credits. The whole process, is exactly the same as that which is followed when the Government is operating on loan moneys. If £8,000,000 could be ‘ made available in thatway in 1916 for the purpose of constructing underground conduits, and building the Pine Creek railway and the East-West railway, credit could be made available in a similar way to-day. I am not suggesting that notes of a denomination of £1,000, or anything like that, should be issued; but merely that the bank should issue ordinary notes to the Government against the credit of the country.

Mr Maxwell:

– But if that were done, and the notes used, as the honorable member suggests, would there not still be a debt against them?

Mr YATES:

– When the notes were returned to the Government or the bank in the way that I suggested they could be placed to the credit of the depositor as is ordinarily done in banking transactions, and to the extent of the profit earned an equal number of notes could be cancelled. The Government would meet its obligation in that wa.y and the bank could grant credit by using the notes already in circulation. Plenty of them are still available. That is my answer to the honorable member for Fawkner (Mr. Maxwell), though I do not suppose that he will agree that it. is a good answer.

I have shownhow. the Government spent the notes issued to it; and I have no doubt that if I could follow in a similar way the £20,000,000 worth of credit granted to the States, I should be able to support my argument even more effectively, for no doubt all the States created some assets with the notes made available to them. According to the Treassury return, New South Wales still holds £1,142,500 worth of notes; Victoria, £632,000 worth; Queensland, £1,608,500 worth; South Australia, £326,000 worth; Western Australia £3,025,000 worth; and Tasmania, £251,000 worth. Seeing that the Commonwealth and the States were assisted by Commonwealth notes during the war period, there seems to be no reason why they should not be similarly helped to-day. If that were done, we should have sources of taxation available to us which are not now available, and the people would have a purchasing power which they have not today. The solution of our difficulties is to be found in making the credit of the nation available to the nation. I am sorry that the Government and the Treasurer cannot see eye to eye with me on this subject; but I am quite satisfied that my views are sound.

Mr THEODORE:
Treasurer · Dalley · ALP

– I have listened carefully to the argument of the honorable member for Adelaide (Mr. Yates), and have endeavoured to ascertain exactly what he desires the Government to do; but I confess that I cannot understand his proposals. His arguments on some points were altogether fallacious. He spent a considerable time in contending that great benefit would accrue to the nation if additional Australian notes were issued, and used to provide funds for public works, and he supported his argument by quoting from a longschedule of public works which were constructed with money provided by the Australian notes fund. It is quite true that the profits of the first issue of notes were used as he has stated. When the Commonwealth Parliament created the Australian note issue, and made it illegal for the private banks to continue to issue notes, and compelled the Queensland Government which, at that time, had its own note issue, to retire from that field of finance, the Commonwealth profited by issuing its own notes to meet the currency requirements of the community. The first issue was on a moderate scale ; but as gold was withdrawn from circulation and the notes of the private banking companies cancelled, the value of Government notes issued increased until it now stands at nearly £43,000,000, of which £22,000,000 or £23,000,000 is in the hands of the public. The notes of large denomination referred to by the honorable member for Adelaide were used to meet the requirements of private banking companies as part of their cash reserves; they were never used as currency for circulation as is the case with notes of small denomination, but were held in the vaults of the banks. In recent years the trading bankshave adopted the practice of keeping a proportion of their cash reserves as deposits at the Commonwealth Bank. This has resulted in a large amount of the notes previously held by the banks being returned to the Commonwealth Bank and cancelled. Their place is taken by a credit balance in the ledgers of the Commonwealth Bank.

– Yes ; that is one of the evils that arise from any deliberate policy of inflation. I am not denying that the private banks have the power to create credit to a certain extent, and they exercise that power according to their discretion and judgment. The trading banks, acting in conjunction with a central bank that controls the note issue, have almost unlimited power to create credit, and in creating it they may bring about a greater or. smaller amount of inflation. A central reserve bank is intended to regulate these movements, and maintain the monetary system on an even keel in order to keep commodity price levels as steady as possible. That is found by experience to be practicable. There are many disturbing factors, of course, that no one institution can guard against entirely, but the central reserve bank is designed to counteract them so far as practicable.

At the present time Australia is suffering not from inflation, but from deflation. We are suffering acutely from the effects of deflation. It is not deflation brought about by any authority, individual or institution within Australia. It is a deflation brought about by worldwide conditions - deflation of the commodity price levels of the world - and Australia, together with other primary producing countries, is suffering to a greater degree than most other countries, because it is essentially a primary producing country. Our wheat, wool, dairy produce, metals and all other primary products now command greatly diminished prices in the world’s markets. Unhappily, we are suffering from the consequences of that terrible deflation, concurrent with the effects of financial stringency in the overseas market. We cannot obtain credits overseas to anything .like the extent we could a year or two ago, and there has been, therefore, a stoppage of supplies of funds to Australia, concurrently with the fall in our commodity prices, and consequent diminution in the total amount of credit at our command.

It is possible that the private trading banks might have done more than they are doing in easing the credit situation. It is possible that they have been unduly alarmed and have been operating to an undue extent to curtail credit. It must be admitted that they have been overtrading in the past, and that they are now contracting credit. This, too, is having its adverse effect; but that is also a matter which, it is hoped, the central reserve bank will to some extent influence. Such a bank, having been established, can watch entirely the various movements which are affecting our. monetary policy in Australia, and by taking proper and judicious action, perhaps rectify the position. I am not asserting that this bank can cure all the monetary evils or credit difficulties from which we suffer. I have never made that assertion; but I believe it will prove a very useful instrument in better regulating our credit system.

If there were as simple a way of overcoming our present difficulties, as is imagined “by the honorable member for Adelaide - I do not charge him with any lack of sincerity in this matter - it would certainly be resorted to. It must not be supposed that governments that consist of, let us hope, common-sense men, who are able to understand these problems - governments drawn not only from one political party,’ but from various parties and in various countries - would not haveavailed themselves of an easy solution of the terrible economic and monetary difficulty that the countries of the world arcconfronted with, if one were available.. But an easy solution of the problem isnot to be found. There are fallacies in the honorable member’s reasoning. There are obstacles that prevent effect being given to the policy that he advocates - obstacles that, in my opinion, he has not foreseen. I am unable to see any logical way of carrying out his scheme. I admit that credit can be created in the manner I. have just indicated through the banks, and more especially if the banks cooperate with a central reserve bank that controls the note issue. It can be created to a certain extent, and perhaps to a considerable extent, without causing the evil consequences that we do not wish to ensue. But, if this process is carried on to an unlimited extent, the consequences will be worse than the evils that we are trying to remove. Whether we have gone to the limit to which we may safely go in Australia is quite another matter. Personally, I, think that the trading banks could go further than they have gone. The Government does not control the funds of the banks, nor will it do so under this bill; but we hope that the central reserve bank, functioning properly and without political influence, will tend to make credit easier, more easily controlled, and more susceptible to adjustment in accordance with the needs of industries, and, commerce.

Dr. EARLE PAGE (Cowper) [2.23 J. - Knowing the fate that always befalls one who mixes up in a family dispute, I hesitate to intrude in this debate between the honorable member for Adelaide (Mr. Yates) and the Treasurer (Mr. Theodore). It seems to me that, while the Treasurer recognizes the hardship that inflation can cause to a community, bringing profit to a few and suffering to the great mass of the people, he is not taking under this measure stringent steps to ensure that inflation will not be readily caused. I agree with him as to the evil effects of inflation, which I fear as much as any devouring pestilence. The honorable member for Adelaide said, this morning, that during the war we had an increase of credit by the printing of notes, and he asked what had been the result. We recall that during the war years, instead of producing a rosy picture, with everybody in employment, and enjoying complete happiness, inflation caused increasing hardship. Who were least well off at that time? Whether inflation is used for destructive purposes, or, as it was in Germany, subsequent to the late war, for constructive purposes, its effects are always the same. It forces up price levels. The price level in Australia in 1913 was, say 100, and in 1919 it was 247. In other words, the goods one could buy for £100 in 1913 cost £247 in 1919. Whom did that affect most? First of all, during the process of the gradual rise in prices, it affected the wage-earners of this country more than anybody else. While the increase in prices was occurring, some 363,000 persons went overseas to fight for the Empire, and yet there were continual strikes during the war period. Inflation was the main cause of the industrial unrest at that time because prices rose faster than wages.

I shall take two or three types of people who suffered most in 1919 as the result of the inflation. In 1913, the oldage pensioner was receiving 10s. a week, and, in 1919, he was paid 12s. 6d. a week; but the 12s. 6d. only enabled him to buy as much as 5s. would have purchased in 1913, so the old-age pensioner is evidently one of those who suffers always when there is any great rise in price levels due to inflation. The history of the world shows that the results of inflation are the same whether it occurs in times of peace or war. It always raises price levels, and the persons who suffer most are those lagging behind. A person who, 30 or 40 years ago, insured his life for £100, found in 1919, owing to the increased prices of commodites,that the purchasing power of that £100 was only £40. A man who had been putting his small savings into a savings bank for years, and had finally accumulated £200, in 1919 discovered, owing to the inflation, that his £200 would buy only what £80 would have purchased five or six years before.

Mr Yates:

– What about the property owner ?

Dr EARLE PAGE:

– As the honorable member has said, and as the Treasurer has also pointed out, those who benefit are the men who are in a position to make huge profits, but these are only a few. The great mass of the people suffer under such a system. I hope that the Treasurer will maintain the firm stand that he has adopted in this matter, and put into the bill such provisions as would ensure that, even if the present Government were displaced, and a dominant position in the party opposite were obtained by the section holding the extreme views that have been put forward on various occasions, another government would not be able to carry them into effect without first obtaining the sanction of this Parliament. I feel that this view of the matter should be put to the public. The suggestion is that if we keep on increasing the credit of this country and inflating the note issue, we shall provide more and more work. The fact is, however, that as a result price levels will be raised, and the workers will find themselves earning wages of less value than at present, so involving them in greater hardship than ever.

Mr LAZZARINI:
Werriwa

.- I shall not allow to pass unchallenged the statement of the right honorable member for Cowper (Dr. Earle Page) concerning the alleged family feud that exists in this party. The honorable member’s remarks on the subject are mere humbug. There are members on this side who are fighting for principles which they believe to be right, and who will go to extremes in an endeavour to have those principles carried into effect, but anything in the nature of internecine strife is as remote from the proceedings of this party as is the devil.

Honorable members opposite persistently harp on the theme of inflation. I thought that bogy had been scotched long ago. The honorable member for Forrest (Mr. Prowse) interjected during the speech of the honorable member for Adelaide (Mr. Yates) to the effect that. the £1,000 notes tb which he referred were not given to the banks. The honorable member for Gippsland (Mr. Paterson) declared that prices -would have been higher had those notes been put into circulation. Those notes enabled the banks to expand their . credit, in effect, four times over. , Under the administration of the Bruce-Page Government the banks expanded credit on the right to draw the notes; a budget speech by the right honorable member for Cowper (Dr. Earle Page) indicated - that they were issued merely to give the associated banks the right to draw them and expand credit. In many cases they were not put into circulation, but even when they were, they were circulated in the form of bank cheques, and not as Commonwealth bank notes. The honorable member for Cowper said that inflation- took place during the war, and that thousands in Australia suffered dire distress as a result. That is a misrepresentation of the position. Throughout the war Australia enjoyed a remarkable era of prosperity, and was not embarrassed by the poverty and unemployment that now exists. The distress came afterwards, through a process of exploitation. The Treasurer stated that the note issue had increased by 150 per cent, since the war. I have statistics which prove that the sovereign depreciated over- a period of 30 years prior to the war. While the issue of notes has increased by 150 per cent., prices have increased 600 per cent. I have very bitter recollections of the profiteering that took place during the war period. I have previously related one incident in this chamber and I shall do so again in order to prove that it was the predatory instincts of the profiteers rather than the issue of additional notes that caused prices to soar. At the time I was a draper. I had an order with a Sydney wholesaler for 100 pieces of a ‘certain material which was. quoted to me at 12£d. a yard, and which in pre-war years sold at 3#d. a yard. Later I received a letter from the firm intimating that, through, an act of war, the ship carrying consignments of cloth to Australia had- been submarined, and they could not supply the material at 12-Jd., but were prepared to accept a new order to supply it at- ls. 6d. a yard. Considering that that was too expensive for my trade I went to Sydney to interview the firm.-‘ I went direct to the fifth floor of that warehouse, the Manchester department, and there I saw a room bigger than this chamber stacked from the floor to. ceiling with tens of thousands of pieces of the very cloth that I had ordered. Does an increased note issue inflate prices, or is it caused by roguery and thieving of that description ?

Mr Yates:

– The same thing occurred in connexion with galvanized iron.

Mr LAZZARINI:

– I am aware of that, but am confining myself to the trade in which I was interested. . The predatory instincts of the profiteers impelled them to fatten and batten on the people of this country in an endeavour to bleed them white. I have statistics with me to prove that deflation has caused the trouble that exists to-day. The Treasurer (Mi-. Theodore) spoke about satisfying the currency needs of the country. Does he think that the currency needs of the country are satisfied when there are 150,000 to 200,000 individuals without jobs, and starving. What does the term “ currency needs of a country “ mean ? The doctrine is of little use to me when it leaves Australia with such huge armies of unemployed. The statistics in my possession indicate that since 1926 the population of Australia has increased from 5,357,435 to 6,414,373, the value of annual production from £343,680,000 to £453,311,000 in 1928, while bank capital and fixed deposits have increased from £157,388,122 to £284,579,904, and savings bank deposits from £136,904,536 to £225,485,764. In the same time currency has decreased from £157,500,119 to £138,662,978- nearly £19,000,000 less than in 1926, and about £33,000,000 less than what would be a normal currency. It was suggested that we should not issue these additional notes. I contend that even if £100,000,000 worth of notes were issued, and each unemployed man given £100 worth, they would simply be spent, passed’ through the business houses, and thence tb the bank and would become a means of expanding credits. Honorable members talk of the material basis behind cheques. These £l,000-notes were issued by the nation ; bankers were given the right to draw them, and they used that as a basis to exploit the credit of the country. There is no security behind the cheque power, so far as the bank that issues the cheques is concerned. Australia has gradually extended its note issue since the war, and during the war period Great Britain itself was compelled to issue notes to the extent of £160,000,000 without even endorsing on them a promise to pay the bearer in gold. Has that country gone bankrupt because of that action? Huge quantities of those notes are still in existence, and a lot of them circulate in Australia, and may be purchased at our own bank.

Mr Yates:

– Workmen have to accept them in payment of wages.

Mr LAZZARINI:

– Of ‘course they do, and creditors have to accept them in repayment of debts. A rational extension of credit would not mean inflation; it would tend rather to check the deflation of credit that is occurring in Australia. Only to-day I saw a letter written by a man who owns freehold property to the value of £.10,000, and who cannot pay his income tax this year. Where does the argument of the Leader of the Opposition (Mr. Latham) come in, that you can. issue cheques so long as you have something behind them? You cannot. The banker is the arbiter who says whether you may or may not do so. It is not a matter of having assets to the value of £10,000, or even of £50,000. If they are not fluid - if you have not the currency - it is within the province of the banker to say whether you shall have an advance or otherwise. When the nation floats a loan for governmental work it issues bonds to the public, and intimates that it will pay, say, 5 per cent, per annum on the amount borrowed, and that it will liquidate the total sum ‘by a certain date. All that the creditor receives is a piece of paper upon which is written the face value of the bond, and a promise by the Government to pay. What security is behind that bond? Nothing that, is tangible. Yet, paradoxical as it may seem, those bonds represent the best security in the world, the security afforded by the confidence of the people in the Government and in the ability of the country to pay. The people are prepared to submit to being taxed in order to pay the interest on the loan and, presumably, the principal. Of course, the principal is never paid. The nation simply borrows additional amounts later to repay, and so perpetuate it. At times governments give the people an opportunity to renew their loans. Would it not be preferable for the nation- to say that it will use its own instrumentalities to extend and use the collective credit of the nation that is now given to somebody else, and then tax the general community to effect an annual reduction of 5 per cent, on the loan. In twenty years’ time the whole debt would be wiped out, and the public work created by the spending of the money would remain the property of the people.

Mr Archdale Parkhill:

– That seems fair enough.

Mr LAZZARINI:

– I challenge the honorable member to fault the logic of my proposal. Under it there is a 5 per cent, reduction annually, and a total redemption in twenty years. Under the ordinary system the 5 per cent, interest is paid in perpetuity, a charge against unborn generations. That compels the nation to carry a burden of debt, a veritable old man1 of the sea, for all time. All we ask is that the nation shall do the job through its own instrumentality instead of allowing private individuals to use the collective credit of the nation to exploit the present generation and generations yet unborn.

Mr WEST:
East Sydney

.- The subject with which the bill deals is of great national importance. Economic and financial’ reform is a problem of universal interest, and Australia has an opportunity to lead the world by removing the obstacles to progress constituted by the present monetary system. I have spent many nights in pondering these matters which, although very complicated, and not understood by the majority of members, are of great interest to me. Mine has been an active life, and I have known the bitterness and disappointment the reformer feels when obstacles are put in his way by his own colleagues. We are all familiar with the opposition that was encountered by Samuel Plimsoll when he was endeavouring to introduce the load line on ships; on one occasion he was provoked to throw a book at the Speaker, and for that offence was committed to the tower in the

House of Parliament. The Earl of Shaftsbury, when agitating for an improvement of the conditions of the masses, could only get the rooms of the Ragged School and Church Schools in which to holdhis meetings. The reformer, like the prophet, is without honour in his own country. In a pamphlet I issued regarding health and unemployment, I wrote -

The loan debt of Australia amounts to £1,116,834,298 and no thoughtful elector can view this appalling position without feelings of apprehension as to the wisdom of further committing Australia to overseas moneylenders. In five years, the Commonwealth debt has increased £8,000,000; the States debts, £150,000,000.

I am told that the actual wealth of Australia is £2,000,000,000. The honorable members for Adelaide and Werriwa have told the committee that the credit of Australia will bear a further issue of notes.I put before the public a scheme by which notes could be issued without increasing the public debt. I proposed, let me say, by way of illustration, that water supply and sewerage boards should apply to the Federal Government to issue £1,000,000 worth of notes to be used for the carrying out of specified reproductive works, and to be redeemed at the rate of 5 per cent. per annum. Notes to the value of £50,000 would be destroyed each year, and at the end of twenty years the whole liability would be extinguished, but the assets resulting from the expenditure would be the absolute property of the governing body concerned. The ratepayers would not have to pay rates to provide for these works, and in that way the taxation of the community would he reduced or else used for other essential services.

Mr Theodore:

– Will the honorable member let the committee proceed with the bill ? The Government desires to complete it this afternoon.

Mr WEST:

– The trouble with the Treasurer is that he is against our ideas of financial reform. He has been reared in a different atmosphere from some of us.

The TEMPORARY CHAIRMAN (Hon D Watkins:

– I ask the honorable member to address his remarks to the clause.

Mr WEST:

– The clause relates to the issue of notes and I am endeavouring to explain how notes can be issued with great benefit to the community and without addition to the national debt. J. Taylor Peddie, in his book The Flaw in the Economic System, says -

All sorts of superficial remedies have been tried, without effect. New remedies, laws and theories are now proposed, such as rationalization, trustification, and co-partnership; but these, also, will have no effect. Where then is the flaw in the economic system?

I am endeavouring to point out the flaw. The national debt of Australia has reached its maximum.

The TEMPORARY CHAIRMAN.The honorable member must confine his remarks to the clause.

Mr WEST:

– No honorable member has been able to suggest a means of redeeming the national debt.

The TEMPORARY CHAIRMAN.The clause does not relate to the redemption of loans. Imustinsist that the honorable member address himself to the clause.

Mr WEST:

– Peddie says-

The burden of the national debt cannot justly be discharged without a substantial increase of purchasing power in the hands of the people. In a monetary system wherein money is the counterpart of production, the people can have adequate purchasing power provided they work for it; but to enable them to do this they must be given the requisite working conditions.

Every man who is unemployed for a year represents a loss to the community of £350. Unless we can provide employment and make every citizen an effective working unit, we shall achieve nothing. I may be charged with having been inspired by the statements and resolutions of the Labour conference.

The TEMPORARY CHAIRMAN:

– I hope the honorable member will not develop that argument. I have had to call other honorable members to order for irrelevancy, and the honorable member also must obey the direction of the Chair.

Mr WEST:

– I am not deliberately offending. The clause relates to the issue ofnotes and I am contending that that is dependent upon the removal of certain anomalies in the financial system. The bill is a party measure and, therefore, I cannot vote against it. I sent copies of my pamphlet to many representative persons and corporations and the first reply I received was from the manager of a large insurance company, who wrote -

I read your circular and . your letter with great interest. I go further than you, and I say that the Federal Government could very easily increase the note issue by ten millions of money and not do any damage at all. 1 don’t mean with regard to the ten millions of money to allocate any portion of it to any new works, but I do say, and say without any hesitation, and no nian of intelligence will disagree with me, that certain works of a reproductive nature which have been commenced and on their completion will be revenue-producing, should be completed.

The writer went on to say that no. harm would result from the increase of notes, such as I propose, because every 10s. expended in carrying out reproductive public works would increase the national wealth and add to the prosperity of the community. A manufacturer who discussed the financial situation with me, admitted that the adoption of my proposal would be of immense benefit to the Commonwealth, a’nd agreed that we must cease looking overseas for financial resources to develop this country. I understand it, is the wish of the Treasurer to pass the bill this afternoon and I do not desire to delay the committee unduly. I feel, however, that this subject should not lightly be disposed of. Mr. . Lloyd George once asked - “ What is the value of the Bank of England note for fi ?” He himself supplied the” answer - “ The nation is behind it.” Mr. Snowden, the present Chancellor of the Exchequer in Great Britain, has made the same statement in so many words. Similarly the nation is behind the notes issued by the Commonwealth Bank, and we have the added advantage that in Australia we have greater facilities than other countries enjoy for the utilization of our note issue. We have no frontiers. The Australian note is legal tender within the territorial waters of the Commonwealth, and every £1 note will buy 20s. worth of goods.

The principles of high finance appear to confuse many people. Actually there is nothing very mysterious in the business, but a nation, like an individual, must be honest in all its transactions.. Any honorable member who, like myself, has been in business recognizes the need for this cardinal business principle. If a business firm indents goods from Great Britain, the banker accepts his shipping note which he holds until it is. satisfied. If a

State Government wishes to raise money locally, it invites applications from the people and issues treasury-bills for cash received. It is possible to learn the business of banking in a few hours.

Some honorable members appear to be alarmed at the possibility of an inflation of the note issue. In a recent issue of The Economist there appeared a report of a meeting of the shareholders of the Bank of England. Some of those present expressed a doubt as to whether the bank authorities were acting wisely in reducing, instead of increasing, the rate of interest. One of the directors explained the risk of inflation, but another declared that an inflation of the note issue would make money available for the development of business enterprises and so relieve the acute unemployment problem in the Mother Country. Under my proposal there would be no possibility of inflation. If the note issue department increased the issue by £20,000,000, the additional notes could be automatically redeemed within 20 years. This is a matter of vital interest to the people of Australia, and it should receive careful consideration fr.om honorable members irrespective of the parties to which they belong.

Last week there was a meeting of the Loan Council, and subsequently there was an announcement that a loan of £10,000,000 would be issued. The proportion to be allocated to New South Wales will not be of much practical use to that State. To-day I received a telegram from Sydney informing me that the State Treasurer had intimated that the money would not be available for reproductive work, but would be applied to meet the losses due to the recent dispute in the coal-mining industry. The people of New South Wales will be called upon to pay 6 per cent, on that loan for eight years, although it will be of no value to them, because it will be applied to make good losses 1 due to an attempt by Mr. Bavin and the Nationalist Government to lower the “standard of living in that State. -

Mr GREGORY:
Swan

.- I am sure the majority of honorable members were pleased to hear the Treasurer say that the policy of the central bank would be to ensure stability in finance. But I. do not think he was quite justified in suggesting that the existing banking institutions were not doing all that could be expected of them in this crisis. If he will examine the statement of deposits and advances of the various banks, he will discover that they have been doing all that was possible to aid commerce and industry. As for the honorable member for Adelaide (Mr. Yates), all I can say is that it is a pity he was not a director of one of the trading banks prior to the note issue being taken over by the Commonwealth Rank. He would then have been able to put into practice his financial scheme, and if it has in it the virtue which he claims for it, he would have been able to earn magnificent profits for his bank. I understand it is the wish of the Treasurer topass the bill before the adjournment this afternoon. It is to be regretted that so much time- has been lost. We have had a long dissertation from the honorable member for Adelaide, and an almost equally long speech from the Treasurer. Many of the clauses yet to be passed contain highly important provisions. I hope, therefore, we shall be allowed ample time to discuss them.

Mr BAYLEY:
Oxley

.- I do not wish to delay the committee, but I feel I must reply to the statement made by the honorable member forWerriwa (Mr. Lazzarini) He. outlined two methods by which money may be raised by the Government; namely, the issue of bonds and the issue of notes. The honorable member pointed out that if bonds were issued, the Government, besides being required topay interest upon them, would have to redeem them eventually, whereas if it issued noninterest bearing notes, it could levy 5 per cent. redemption from the general revenue, and, at the end of twenty years, they would be redeemed without cost to the community. The point which the honorable member for Werriwa overlooked was this: Suppose, for the sake of argument, there was £100,000,000 worth of currency in Australia, and the. Government issued bonds to the value of £10,000,000. When those bonds had been taken up, the country would still have only £100,000,000 in currency, of which £90,000,000 in cash and £10,000,000 in bonds would be in the hands of the general public and the banks, and the Government would have £10,000,000 in cash for its use, so that when the bonds were issued the currency would not be inflated and the amount of money in circulation would notbe increased. But, under the scheme of the honorable member for Werriwa, the country would still have the £100,000,000, and an additional £10,000,000 in notes, so the currency would be inflated to the extent of £10,000,000. One has only to carry his scheme a little further to see to what extent currency would be inflated and the whole commercial fabric of the Commonwealth brought about our ears.

Clause agreed to.

Clause 31 agreed to.

Clause 32. (Disposal of proceeds of issue of notes).

Dr EARLE PAGE:
Cowper

.- There is one point which I wish to have cleared up. This clause is not quite the same as section 60 i of the act. That section provides for the manner in which the note issue shall be invested. This clause states that part of the money derived from the issue of notes shall be held by the reserve bank for the purposes of reserve, and the bank may utilize the remainder or any part thereof in its ordinary business. I object to this provision because it will enable the reserve bank to buy long-dated and other securities which are not readily realizable.

Mr Theodore:

– On account of the clause dealing with central banking, it is necessary to depart from the terms of the original Commonwealth Bank Act, under which one of the means of disposing of the proceeds of the issue of notes was by deposit with the reserve bank. As this bank is to be the central reserve bank, there is no necessity for that provision.

Dr EARLE PAGE:

– The point that I am making relates solely to moneys from the issue of notes, and I think that they should not be used for the purpose of acquiring municipal securities.

Clause agreed to.

Clauses 33 to 35 agreed to.

Clause 36 (Definitions).

Dr EABLE PAGE:
Cowper

– This clause reads as follows: -

In this division - “ Commonwealth security “ means any Australian note issued in pursuance of the Australian Notes Act 1910-1914, or the, Commonwealth Bank Act 1911-1929,or in pursuance of this part; “ Form of Commonwealth security “ means any form of a Commonwealth security, or any form intended’ or likelyto pass for the form of a Commonwealth security, and includes any part of a form of a. Commonwealth security.

I should like an explanation from the Treasurer as to why the term “ Commonwealth security” has been chosen. It has a fairly definite meaning to the generalpublic, because it refers usually toa bond, whereas in this case it is applying to a note. Could not a better term be applied?

Mr THEODORE:
Treasurer · Dalley · ALP

– It. would apply to securities of this kindas well as to notes. The offence would be of the same nature if it were an attempt to defraud, forge, or utter an Australian note or a Commonwealth security.

Mr LATHAM:
Kooyong

.- This division deals only with Australian notes and “Commonwealth security “is defined to mean an Australian note. The Commonwealth security mentioned in this clause does not refer to bonds, or, indeed, to any securities other than Australian notes.

Mr Scullin:

– That is the definition in this division.

Mr LATHAM:

– Yes. A special meaning is attached to “ Commonwealth security” in this division, and that meaning is confined to Australiannotes, and does not include bonds.

Mr Theodore:

– This clause is taken word for word from the original Commonwealth Bank Act, and I am assured by the Deputy Governor that it does refer to securities other than notes.

Clause agreed to.

Clauses 37 and 38 agreed to.

Clause 39 -

Every person who, without the authority of the Governor, (proof whereof shall lie upon him), makes or has in his possession -

any form of any Commonwealth security; or

b ) any instrument or thing which may be used in making any form of any Commonwealth security, shall be guilty of an indictable offence.

Mr THEODORE:
Treasurer · Dalley · ALP

.- I move-

That paragraph (b) be omitted with a view to insert in lieu thereof the following paragraph: -

any instrument or thing which has been used by that person, or is intended by that person to be used, in making any form ofany Commonwealth security.

That amendment is necessary in consequence of some difficulty in. obtaining an indictment or conviction recently.

Mr LATHAM:
Kooyong

.- This is a clause which I am aware the authorities of the bank have long wished to have in the law. It appears to me, however, that the clause is too farreaching and difficult, because the words are so general. Portion of it reads -

Every person who, without the authority of the Governor, makes or has in his possession, any form of any Commonwealth security or any instrument or thing which may be used in making any form of any Commonwealth security.

The instrument may be a pen, an engraving instrument, or a lithograph. The clause is far-reaching, and I ask that, before the bill is presented in another place, further consideration be given to it. I suggest that a provision relating to. wrongful intent be included in the clause. Is the Treasurer agreeable to that?

Mr Theodore:

– Yes.

Amendment agreed to.

Clause, as amended, agreed to.

Clauses 40 to 42 agreed to.

Clause 43 -

Every person who -

wilfully mutilates, defaces, or disfigures an Australian note;

writes, prints, stamps or draws any thing on an Australian note;

makes on, or attaches to, any Australian note any advertisement; or

designs, makes, issnes or circulates any advertisement in the form of or resembling or apparently intended to resemble any Australian note, shall be guilty of an offence.

Penalty: Twenty pounds.

Mr GREGORY:
Swan

.- I move -

That after the word “ person “ the words “other than an officer of a trading bank cancelling notes to be remitted to the reserve bank “ be inserted.

I think that it is essential that some distinction should be made.

Mr Theodore:

– I accept the amendment.

Amendment agreed to.

Clause, as amended, agreed to.

Clauses 44 to 46 agreed to.

Clause 47 (Counterfeit notes to be marked).

Mr GREGORY:
Swan

.- I wish to draw attention to what I think is a rather severe penalty under this clause, which among other things, states that if any officer of the reserve bank wrongfully writes or stamps “ counterfeit “ on any genuine Australian note he shall, upon presentation, redeem it at the face value thereof. I do not think that that is a fair provision because the teller behind the counter may be under the impression that a note is counterfeit when actually it is genuine.

Mr Theodore:

– That provision is in the Commonwealth Bank Act. If a teller marks an Australian note “ counterfeit “ and subsequently finds it is genuine, he does not lose anything by having to redeem it on presentation. There is no personal loss to the officer.

Clause agreed to.

Clause 48-

The reserve bank shall hold, in respect of Australian notes and in respect of its liabilities to depositors, a reserve amounting to not less than -
1. Twenty-five per centum of the amount of Australian notes issued; together with
2. Twenty-five per centum of such amount of the liability to depositors as does not exceed twenty million pounds, and fifty per centum of such amount of the liability to depositors as exceeds twenty million pounds.
Such portion of the reserve as is held in the Commonwealth of Australia, not being less than fifty per centum of the total reserve, shall consist entirely of gold coin and bullion.

Dr EARLE PAGE:
Cowper

.- This is one of the most important clauses in the bill, dealing as it does with the reserve of the bank, and especially the gold reserve that must be maintained against the issue of notes. It also deals with the reserve that must be held against other liabilities of the bank. At the present time Australia is going through a period of financial difficulty, and if there is a time when we should not be thinking of changing horses in crossing a stream, it is when the waters are deep and troubled. The Government, in this case, is attempting to change its horse for a pony at a time when the stream is deep and angry, as I shall show in connexion with the gold reserve which is to be maintained against the issue of Australian notes. The history of the gold reserve as against Australian notes is briefly this : At the beginning the system adopted was that practically in operation in England. There was a fiduciary issue of £7,000,000 against which 25 per cent. gold reserve was held as well as other securities and £1 in gold had to be provided against every £1 note issued above that amount. That was altered in 1913 to £1 of gold for every four £1 notes issued over the whole issue and that is the position to-day. The Commonwealth went off the gold standard some seven or eight months ago, and if ever there was a time when we should not make public to the rest of the world any intention on our part to’ reduce the gold reserves of this country, surely that time is the present. I suggest that we should retain the gold reserve as against the issue of notes where it is at present, and to that end I move -

That after the word “ reserve “, second occurring, sub-clause 5, the words “ and not being less than twenty-five per centum of the note issue “ be inserted.

, - I strongly support the amendment of the right honorable member for Cowper (Dr. Earle Page). At the present time there is in circulation £44,000,000 in notes, against which we must have a gold reserve of at least £11,000,000. It is probable that the deposits of private banks with the central reserve bank will amount to about £20,000,000. This bill requires that there shall be a reserve of 25 per cent., not necessarily in gold, against that £20,000,000. There will be a total of £64,000,000 in notes and deposits, for which a reserve must be provided, and if wefollowed the American practice of requiring a percentage of gold reserve for both notes and deposits, it would be necessary for us to have in reserve £16,000,000 in gold, instead of £11,000,000 as now stipulated. We are not asking for so much as that, but we are seeking by means of this amendment to maintain the present gold reserve of 25 per cent. against the note issue itself. I hope that even at this stage the Treasurer will see his way to accept the amendment, the purpose of which is to maintain our credit in the eyes of the world.

Amendment negatived.

Clause agreed to.

Clauses 49 and 50 agreed to.

Clause 51 verbally amended, and, as amended, agreed to.

Clauses 52 to 55 agreed to.

Clause 56 -

The board may make rules, not inconsistent with this act or the regulations made by the Governor-General thereunder, for any of the following purposes: -

The good government of the reserve bank ;

The classification of the officers of the reserve bank;

To provide a superannuation and fidelity fund; and

Any matter necessary or convenient to be provided for carrying on the business of the reserve bank.

Mr THEODORE:
Treasurer · Dalley · ALP

.- I move -

That the words “ The classification,” paragraph b, be omitted with a view to insert in lieu thereof the words, “ The conduct, control, and classification.”

This will authorize the board to make rules, not only in regard to the classification of officers of the reserve bank, but also in regard to their conduct and control.

Amendment agreed to.

Amendment (by Mr. Theodore) agreed to -

That after paragraph b the following new paragraph be inserted: - (ba) Prescribing conditions of employment of employees of the note and stamp printing branch of the reserve bank.

Clause, as amended, agreed to.

Clauses 57 to 62 agreed to.

Clause 63- (2.) Corporations carrying on the business of banking shall not charge any exchange or commission for cashing or negotiating any official cheque (payable within the Commonwealth) of the Commonwealth Government or a State Government, or the Reserve Bank, whether drawn on the bank cashing or negotiating the cheque on any other bank, nor upon any cheque (payable with the Commonwealth) drawn in favour of the Government of the Commonwealth or a State, or the Reserve Bank, and tendered for deposit to the credit of the Government of the Commonwealth or a State, or any department thereof.

Mr THEODORE:
Treasurer · Dalley · ALP

.- I move-

That the following proviso be added to the clause: -

Provided that nothing in this section shall debar a bank from applying for reimbursement of out-of-pocket expenses when it is put to any unusual expense in carrying out any transaction specified in this sub-section.

Mr LATHAM:
Kooyong

.- I suggest that this proviso does not carry out the intention of the Treasurer. It should state that nothing should debar a bank from “ applying for and receiving “ reimbursements, &c.

Mr Theodore:

– I accept the suggestion.

Amendment - by leave - amended accordingly, and agreed to.

Clause also verbally amended and, as amended, agreed to.

Clause 64-

After a date to be fixed by proclamation, the board shall fix and publish from time to time the rate at which the Reserve Bank will discount and re-discount approved bills of exchange and short-dated Government securities.

Amendment (by Mr. Theodore) agreed to -

That the words “After a date to be fixed by proclamation “ be omitted.

Clause, as amended, agreed to.

Clause 65 agreed to.

Amendments (by Mr. Theodore) agreed to -

That the following new clauses be inserted : - “20a. A person who is -

a director of any corporation (other than the Reserve Bank) the business of which is wholly or mainly that of banking; or

an officer of any corporation (other than the Reserve Bank) the business of which is wholly or mainly that of banking, shall not be capable of appointment, or of continuing to act, as a member of the board.” “24a. - (1.) Where an officer of the Reserve Bank is affected in his employment by an action of any authority of the Reserve Bank, other than the board, the officer may, within the prescribed time, submit in writing an appeal to the board. (2.) An appeal under this section shall state fully the action appealed against and the grounds of the appeal. (3.) The board shall refer the appeal to an appeal board consisting of three members, one of whom shall be appointed by the board, and one of whom shall be elected by the officers of the Reserve Bank in the manner prescribed, with an independent chairman chosen by mutual agreement between the other two members, or, if those members fail to agree, appointed by the board. (4.) The appeal board shall consider any appeal referred to it under this section and shall submit its report thereon to the board, which shall determine the appeal and notify the appellant of its determination which shall be final and conclusive.”

Preamble and title agreed to.

Bill reported with amendments.

Motion (by Mr. Scullin) - by leave - proposed -

That the report be adopted.

Dr EARLE PAGE:
Cowper

.- Before the report is adopted I desire to place on record my opposition to the bill as it has been passed by the committee. I supported the motion for the second reading because I believe that a central reserve banking system will be a great advantage to Australia. Throughout the committee stages the Opposition has attempted by constructive suggestions to make the bill one which will be acceptable to Australia and to the rest of the financial world. In some respects, particularly in regard to the management of the bank, the Treasurer (Mr. Theodore) has me* us to a considerable extent; but it is regrettable that he has not adopted our proposals to keep the resources of the bank sufficiently fluid, or to maintain a sufficient gold reserve against the notes to be issued. In these circumstances I am dissatisfied with the bill. It seems that the whole administration of the bank is to be left to the discretion of the board, and that the bank will be in the position of what geologists term an erratic rock resting upon such a small point that it may easily be dislodged and smashed. The skids have been well greased by the speeches of some honorable members opposite, and I am afraid that if a strong board is not appointed now that the provisions of the bill leave so much to their discretion we may be faced with the spectacle of the bank operating in such a way as to lead Australia to financial disaster.

Question resolved in the affirmative.

Report adopted.

Bill - by leave - read a third time.

page 2741

ADJOURNMENT

Employment oe Southern. Europeans on Queensland Cane-melds.

Motion (by Mr. Scullin) proposed -

That the House do now adjourn.

Mr MARTENS:
Herbert

.- On Wednesday last the honorable member for Lilley (Mr. Mackay), in asking a question, quoted an extract from a letter which I had sent to the secretary of the British Preference League at Innisfail, and asked if the statement made in my communication was correct. My letter was as follows: -

My sympathies are entirely with you in the direction of preference of employment to Britishers in the sugar industry.

I do not think that any honorable member in this House will take exception to that statement. The letter continues -

I have advised the employers’ representatives of the sugar industry that the surest way to lose the embargo is to continue in certain areas to give 100 per cent, preference to Southern Europeans.

I take second place to no man in supporting the retention of the sugar embargo. I have written to Mr. Pritchard, Mr. Hudson, Mr. Curlewis, and Mr. Doherty concerning this matter, and have told them that nothing is more, likely to bring about an alteration of the present policy than the continued employment of 100 per cent, of foreigners in certain of the Queeusland sugar cane-fields. The southern newspapers have given publicity to the fact that in certain mills in Queensland 100 per cent, of the men employed consists of foreigners ; but it is remarkable to find a statement in the Sydney Morning Herald to the effect that the Colonial Sugar Refining Company denies any responsibility in this respect. That company does not employ any cane-cutters, but it is significant that in four of the five places where practically 100 per cent, of the men employed are foreigners the Colonial Sugar Refining Company is engaged in crushing cane. At Victoria and Macnade, in the Ingham district, 100 per cent, of foreign labour is employed. Mills at these centres are owned by the Colonial Sugar Refining Company. Only yesterday Goondi farmers, mostly British, and where the Colonial Sugar Refining

Company are the millers, called for labour, and although 200 Britishers applied for employment, not one Britisher was selected. Mourilyan is another centre where I believe there is a majority of foreign cane-growers who wish to, and do give, preference to their own people, and notwithstanding that there are British farmers there, not one British , cutter is employed. At Hambledon, in the Mulgrave district, where another Colonial Sugar Refining Company mill is operating, there are only 105 Britishers out of a total of 300. In the Cairns district, owing to the agitation by the Returned Soldiers League and the Australian Workers Union an increased percentage of Britishers is employed. I have mentioned a few of the centres in which there is a preponderance of foreign labour ; there are many others that could be cited, but the percentage is small. If the industrial workers of Australia get it into their heads that this industry is, to a very large extent, in the hands of foreigners it will be very difficult for us to secure their approval to the continuance of the embargo.

Mr Maxwell:

– Are these foreigners employed at less than the ruling rate of wages?

Mr MARTENS:

– The employers dare not openly employ them at less than the ruling rates, but there are ways of getting round that. I do not know why they are employed, but the fact remains that they are employed. A report that appeared in the Canberra Times, of yesterday’s date, states that of the 302 canecutters engaged in the Hambledon cane area on Tuesday, 105 were Australian or British born, 31 were of French origin, 56 were Jugo-Slavs, 107 Italians, and 7 Greeks. A report which appeared in the Sydney Morning Herald of to-day’s date states -

Although 200 British workmen offered themselves for engagement as cane-cutters at Goondi mills this morning not one was engaged.

A report from Townsville which appeared in the telegraph news of the Canberra Times to-day reads -

Figures have been prepared in answer to the Acting Minister for Customs’ statement that Italians arc in a minority in the sugar fields.

It is shown that with the exception of South Johnstone, where 75 per cent. of the workers are British, the whole industry north of Townsville is practically in the hands of aliens. It was stated that in the Ingham district last season there was not one British gang among 700 workers.

It is reported that -

Only two and a half per cent. of the total labour in the district employed in the pick-up yesterday for Halifax and McNade mills were of British extraction.

Those statements are misleading and inaccurate; and it is unfortunate that the capitalistic press should seek to lead people in the south, who do not know the real position, to believe that this industry is passing into alien hands. South of Townsville a very small percentage of foreign labour is employed in the sugar areas. Some years ago the Australian Workers Union made an agreement with the Babinda mill which provided for the employment of 75 per cent. British and 25 per cent. other labour; the position is better than that to-day. I understand that 81 per cent. of the employees of that mill to-day are British. In the Tully area there is not one foreign canecutter, and Tully is well above Townsville. About 300 cutters are employed there in the season. Only a very small percentage of foreign cutters is employed in the Mulgrave area, although some of the farms about there are owned by other than British born. At Mossman, where between 230 and 240 cutters are employed, every employee is British born or naturalized. The position, therefore, is not nearly so bad as has been stated in certain quarters, and I submit that my attitude in connexion with it is thoroughly justified. I have always stood for first preference to people of my own nationality.

I wish also to say, for the benefit of the honorable member for Lilley (Mr. Mackay), that the Prime Minister stated in his policy speech that he was definitely in favour of a continuation of the sugar embargo. I do not think that the embargo is in any danger at present, but there may come a time when public opinion will not stand for it, because the industry may have passed into foreign hands. For the present, however, a very small percentage of it is in the control of foreigners.

Mr FRANCIS:
Moreton

-I direct the attention of the Prime Minister to an important matter affecting the butter industry of Australia. Queensland is one of our largest butter exporting States and I have been requested by many persons interested in the industry in that State to urge the Government to take steps to prevent the export of so much second-grade butter to England under the Kangaroo brand. The position is becoming acute and requires the immediate attention of the Government. The High Commissioner for Australia referred to this matter in his last report, just received, in the following terms : -

Apart from many of the Victorian Kangaroo butters, which turned out first quality, there were many, averaging about 22 per cent. which turned out only second grade. . . Unfortunately factory managers in Victoria do not seem to have yet discovered the causes of their butter turning out of inferior quality in London, and early arrivals in October of Victorian butter in Kangaroo boxes showed very serious defects in quality, and this continued up to the end of December, 1929, causing many complaints to be received from importers and buyers concerning the quality generally, and the return of the butter by purchasers in a number of instances. The position is therefore most unsatisfactory, for inferior butter in Kangaroo boxes tends to weaken the prices obtainable for Australian butter generally.

– Does the High Commissioner say that the complaints are nol well founded?

Mr PARKER MOLONEY:
HUME, NEW SOUTH WALES · ALP

– He refers to the fact that there are certain factories that are still offending in this matter; but the expert informs me that our butter generally compares with the best in the world. I am now going further, to see that our inspectors visit the factories, because we are determined to bring those who are remiss in this matter right up to the mark. Enough people already are going out of their way to slander Australian industries, and honorable members ought not to repeat complaints of this natura until they are seised of all the facts. I think that the honorable member for Moreton will admit that, if he had come to me -first, he would have avoided the risk of damaging the industry itself and acquainted himself of all the facts.

Question resolved in the affirmative.

House adjourned at 4.20 p.m.

Cite as: Australia, House of Representatives, Debates, 13 June 1930, viewed 22 October 2017, <http://historichansard.net/hofreps/1930/19300613_reps_12_124/>.

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House of Representatives13 June 1930

QUESTION

ROYAL AUSTRALIAN NAVY

Mr ELDRIDGE:through Mr. C. Riley

Mr A GREEN:KALGOORLIE, WESTERN AUSTRALIA · ALP; FLP from 1931; ALP from 1936

Mr ELDRIDGE:

Mr A GREEN:KALGOORLIE, WESTERN AUSTRALIA · ALP; FLP from 1931; ALP from 1936

Mr TULLY:BARTON, NEW SOUTH WALES

Mr A GREEN:KALGOORLIE, WESTERN AUSTRALIA · ALP; FLP from 1931; ALP from 1936

Mr LATHAM:KOOYONG, VICTORIA

Mr A GREEN:KALGOORLIE, WESTERN AUSTRALIA · ALP; FLP from 1931; ALP from 1936

QUESTION

RADIUM

Mr CROUCH:through Mr.C. Riley

Mr SCULLIN:Minister for External Affairs · YARRA, VICTORIA · ALP

QUESTION

PETROL DUTY

Mr McNEILL:WANNON, VICTORIA

Mr FORDE:Assistant Minister assisting the Minister for Customs · CAPRICORNIA, QUEENSLAND · ALP

QUESTION

TIMBER IMPORTS

Mr RIORDAN:KENNEDY, QUEENSLAND

QUESTION

CANBERRA HOTELS AND HOSTELS

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

Mr BLAKELEY:DARLING, NEW SOUTH WALES

QUESTION

WATTLE BARK

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

Mr FORDE:ALP

QUESTION

COMMONWEALTH BANK

Mr THEODORE:DALLEY, NEW SOUTH WALES · ALP

PAPERS

CENTRAL RESERVE BANK BILL

Mr ARCHDALE PARKHILL:Warringah

Dr EARLE PAGE:Cowper

Mr THEODORE:Treasurer · Dalley · ALP

Mr E RILEY:SOUTH SYDNEY, NEW SOUTH WALES · ALP

The TEMPORARY CHAIRMAN (Hon D Watkins:NEWCASTLE, NEW SOUTH WALES

Mr E RILEY:SOUTH SYDNEY, NEW SOUTH WALES · ALP

Mr THEODORE:Treasurer · Dalley · ALP

Dr Earle Page:

Mr Archdale Parkhill:

Mr THEODORE:

Dr Earle Page:

Mr THEODORE:

Mr GREGORY:Swan

Mr THEODORE:Treasurer · Dalley · ALP

Mr YATES:Adelaide

Mr Paterson:

Mr YATES:

Mr Gregory:

Mr YATES:

Mr Paterson:

Mr YATES:

Mr Paterson:

Mr YATES:

Mr Paterson:

Mr YATES:

Mr Paterson:

Mr YATES:

Mr Paterson:

Mr YATES:

Mr Paterson:

Mr YATES:

Mr Gregory:

Mr YATES:

Dr Earle Page:

Mr YATES:

Dr Earle Page:

Mr YATES:

Mr Gregory:

Mr YATES:

Mr Gregory:

Mr YATES:

Dr Earle Page:

Mr YATES:

Mr Theodore:

Mr YATES:

House of Representatives
13 June 1930

Mr ELDRIDGE:
through Mr. C. Riley

Mr A GREEN:
KALGOORLIE, WESTERN AUSTRALIA · ALP; FLP from 1931; ALP from 1936

Mr A GREEN:
KALGOORLIE, WESTERN AUSTRALIA · ALP; FLP from 1931; ALP from 1936

Mr TULLY:
BARTON, NEW SOUTH WALES

Mr A GREEN:
KALGOORLIE, WESTERN AUSTRALIA · ALP; FLP from 1931; ALP from 1936

Mr LATHAM:
KOOYONG, VICTORIA

Mr A GREEN:
KALGOORLIE, WESTERN AUSTRALIA · ALP; FLP from 1931; ALP from 1936

Mr CROUCH:
through Mr.C. Riley

Mr SCULLIN:
Minister for External Affairs · YARRA, VICTORIA · ALP

Mr McNEILL:
WANNON, VICTORIA

Mr FORDE:
Assistant Minister assisting the Minister for Customs · CAPRICORNIA, QUEENSLAND · ALP

Mr RIORDAN:
KENNEDY, QUEENSLAND

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

Mr BLAKELEY:
DARLING, NEW SOUTH WALES

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

Mr FORDE:
ALP

Mr THEODORE:
DALLEY, NEW SOUTH WALES · ALP

Mr ARCHDALE PARKHILL:
Warringah

Dr EARLE PAGE:
Cowper

Mr THEODORE:
Treasurer · Dalley · ALP

Mr E RILEY:
SOUTH SYDNEY, NEW SOUTH WALES · ALP

The TEMPORARY CHAIRMAN (Hon D Watkins:
NEWCASTLE, NEW SOUTH WALES

Mr E RILEY:
SOUTH SYDNEY, NEW SOUTH WALES · ALP

Mr THEODORE:
Treasurer · Dalley · ALP

Mr GREGORY:
Swan

Mr THEODORE:
Treasurer · Dalley · ALP

Mr YATES:
Adelaide

Mr LATHAM:
Kooyong

Mr YATES:
Adelaide

Mr THEODORE:
Treasurer · Dalley · ALP

Mr E RILEY:
SOUTH SYDNEY, NEW SOUTH WALES · ALP

Mr LAZZARINI:
Werriwa