12th Parliament · 1st Session
Mr. Speaker (Hon. Norman Makin) took the chair at 3 p.m., and offered prayers.
– by leave - Last week it was our painful duty to record the passing of Senator J. H. Chapman ; now death has removed another member of this Parliament. Senator Harold Edward Elliott died in Melbourne early yesterday morning. Although he had been ailing for some time, his end was not expected. Recently he had been discharged from hospital, and we were hopeful that he was on the high road to recovery. To all who knew him intimately - and most of us did - his sudden death was a painful shock. Although a comparatively young man, he had played an important part in the public life of Australia. He was elected to the Senate in 1919 and re-elected in 1925. During his parliamentary career he served on various committees, and was a member of the Royal Commission on Navigation. The late Senator Elliott had a distinguished military career, and endeared himself to the men with whom he was associated in the GreatWar. I am sure that all honorable members will join in expressing deepest sympathy with the bereaved widow and family, and in hoping that they will be consoled to some extent in the knowledge that their beloved husband and father leaves behind him a record of public service of which any man might be proud, and will be affectionately remembered by all with whom he was associated. I move -
That this House expresses its deep regret at the death of Senator Major-General Harold Edward Elliott, C.B., C.M.G., D.S.O., D.C.M., V.D., places on record its appreciation of his meritorious public service, and tenders its profound sympathy to his widow and family in their bereavement.
– I second the motion. Once again we are asked to perform a sorrowful duty on the occasion of the death of another of our number. It was my privilege to know the late Senator Elliott intimately throughout practically the whole of his career. I was associated with him at the Melbourne University in both the academic and athletic spheres, and later in the legal profession. He served in the South African war, in which he was awarded the Distinguished Conduct Medal for bravery. Subsequently, he was connected for many years with the Citizen Military Forces, and for his enthusiastic and patriotic service with them the Commonwealth owes to him a very great debt of gratitude. At the outbreak of the Great “War he enlisted immediately, and his career on active service is well known. For his bravery in the field and his able leadership he won further distinctions, being awarded the orders of CB., C.M.G. and D.8.O. After the declaration of peace he decided to enter political life, and was a member of the Senate since 1919. He was a fearless man, of remarkable resolution and tenacity of purpose. Above all, he was, throughout his career, a man of unswerving loyalties. His achievements should be an inspiration to all Australians, whatever their standing in life. I join the Prime Minister in expressing the most sincere sympathy of myself and my colleagues with the bereaved widow and family.
.- I also pay my tribute of respect to the gallant soldier and illustrious citizen who has just passed away. Throughout his life he was distinguished for his devotion to the service of the public. When almost a boy he served with honour in the South African War, being raised to commissioned rank for his conduct on the field. As a leader of Australian troops in the Great War he was adored by his men. His outstanding characteristic was his desire to ensure that individual merit should be fully appreciated and appropriately recognized by the authorities. In Parliament, apart from his ordinary legislative duties, to which he attended with unflagging zeal, he worked unceasingly to better the lot of returned soldiers, and was a very active member of the soldiers’ committee formed in this Parliament in 1920. His geniality made him beloved of every honorable member. We all feel that in him we have lost a friend.
.- I support the motion. To-day throughout Australia tens of thousands of exmembers of the Australian Imperial Force will mourn the passing of Senator Brigadier-General Elliott. Many of them, particularly those who live in distant States, probably were not in contact with* him during the years he was a member of the national legislature, but they remember him as one of the big personalities in the Australian Imperial Force - a very gallant soldier and a trusted and well beloved leader. In this Parliament are many of all parties who were comrades of the deceased soldier during the critical years from 1914 to 1918, but he is the first to go while actually a member of the National Parliament. Parliament’s appreciation of his services as a member of the Australian Imperial Force, and also as a member of the Senate, will, I hope, help to comfort his sorrowing family.
Question resolved in the affirmative, honorable members standing in their places.
Motion (by Mr. SCULLIN) agreed to -
That Mr. Speaker be requested to transmit to Mrs. Elliott the foregoing resolution together with a copy of the speeches delivered thereon.
– I suggest, Mr. Speaker, that, with the concurrence of the House, you should suspend the sitting until 4 o’clock us a mark of respect to the late Senator Elliott.
Sitting suspended from S.9 to i.0 p.m.
Mb. Coleman’s Expenses
– I desire to moke a personal explanation. In the Sydney Sun of Friday last, there appeared a paragraph in which the Prime Minister is reported as having said, in reply to a question, that “ the cost of sending Mr. Coleman as a delegate last year to the International Labour Conference at Geneva was £1,562.” Similar incorrect statements were made concerning the delegations to the League of Nations and the Imperial Conference, but I am at present concerned only with the reference to myself. The Sun was not the only newspaper to report the Prime Minister’s answer to the question in this incorrect and misleading way. What the Prune Minister said was that the cost of the Australian delegation to the International Labour Conference, held last year, was £1,562. The Australian delegation consisted of not only myself as the sole government delegate, but also Mr. W. C F. Thomas, the employers’ delegate, Mr. 0. A. Crofts, the workers’ delegate, and Mr. 0. C. Fuhrman, who was sent from Australia House to act as secretary to the delegation, as has been the custom. In contrast, the cost of the 1929 delegation was £2,093.
The cost of my representation at the International Labour Conference amounted to £363; not £1,562 as stated by the newspaper paragraph. That amount includes the cost of my transportation. Apart from the cost of transportation over the longer distance the expense of representation would have been the same if the High Commissioner had represented the Government instead of myself.
As is known, I attended the International Labour Conference, the Mandates Commission, and the Assembly of the League of Nations, besides conducting an inquiry into Australia House, and the total amount paid to me for allowance and personal expenses in connexion with all those activities amounted to £608. Since my return to Australia I have refunded the sum of £78 14s. 6d. from the advance granted to me by the Government when I went abroad. Expenses incurred by me for travelling when not on official work were paid out of my private purse. The additional cost of returning to Australia by the Canadian-Australian route were also met out of my own pocket, and did not constitute a charge on the Government.
I have made careful inquiries, and am given to understand that no previous delegate has gone overseas and carried out such a number of duties at so low a cost. Indeed, the cost of sending one government delegate to the League of Nations Assembly in 1929 and in previous years was considerably in excess of that incurred through my representation, and I hope the Prime Minister will take an early opportunity to submit such information to the House, so that contrasts can be made, and fair conclusions arrived at.
– As the Government of New South Wales has now definitely defaulted, is it the intention of the Commonwealth Government to continue to extend credit to that State, at the expense of the other States and the Commonwealth Government, or will the Prime Minister arrange to enter into early possession and thus save New South
Wales and Australia from the financial chaos which is the definite and studied objective of those who dictate the policy of the Lang Government.
– It is not in order for an honorable member to make observations when asking a question.
– I find it difficult to disentangle the observations of the honorable member from the question which he sought to ask. However, I believe that I have grasped its general purport, and, at a later stage, I shall have something to say on the subject.
– Will the Prime Minister intimate what quantity of coal can be made available to distressed families in Newcastle and the surrounding districts?
– Last year the Government made available a considerable quantity of coal, for which there was no immediate demand, to distressed families in the districts referred to. There is at present a stock of coal which can be used for a similar purpose, and the Government has decided to make 10,000 tons available, provided that the mayors of the different districts will take responsibility for its distribution.
– Arising out of a deputation of members of this House and another place, which waited on the Prime Minister last Thursday, asking that the Government establish a stabilization scheme for wool, I have received the following telegram from the Pastoralists Association of Western Australia: -
This association, representing approximately 50 per cent, wool grown this State utterly opposed to suggestions re stabilization wool placed before Prime Minister at request Kojonup growers yesterday. Letters in local press from small growers show numbers in full agreement our views and opposed to any form of government interference. Press reports now show that Kojonup growers not at all unanimous. Trust no action will be taken until Australian Wool Growers’ Council, representing overwhelming majority woolgrowers, is consulted.
Is the Prime Minister prepared to give an undertaking that no scheme governing the stabilization of prices or providing for the government control of the sale of wool will be attempted until it has full publicity, and every opportunity has been given to all who are interested in the wool trade, such as a pastoralist association, to have their views on the project represented?
– The Minister for Markets (Mr. Parker Moloney) and I have received many representations from conferences of wool-growers held in different parts of Australia, urging that the Government should establish a stabilization scheme on lines similar to B.A.W.R.A. Ithas been pointed out to the Government that many growers are losing the benefit of the rising market, which they would have enjoyed had a pool or stabilization scheme such as was recommended by this Government been put into operation. I repeat the assurance that I gave to theWool-Growers Council and Association : nothing will be done by this Government along the lines indicated without first consulting the representatives of the wool-growers and the woolgrowers themselves.
– Will the Minister for Trade and Customs (Mr. Forde) indicate the truthfulness or otherwise of a statement which has appeared in the press, intimating that he has refused a reduction in the price of grapes to be used for wine-making. Did the honorable member for Angus (Mr. Gabb) make representations to him from the South Australian Grape-growers and the Lyrup Village Association, seeking a reduction in the price of grapes? Will the honorable gentleman state publicly why the request from the wine-makers and grapegrowers for a reduction in the prices of grapes has been refused?
– It is true that I made the statement to the press that the Government was not prepared to reduce the price that was fixed for grapes. In connexion with the wine bounty legislation, the Government gave an assurance that all sections in the industry would be protected, that the bounty would be increased from1s. to1s. 9d. a gallon on export wine; that the growers would receive a fixed price for their grapes, and that the workers in the industry would be paid a reasonable rate of wages. I carefully considered all the representations that were made to me. The honorable member for Angas was among those who urged that there should be a reduction in the price of grapes. The price fixed for 1931 was a reduction of from 6 per cent, to 10 per cent, of that fixed for the previous year. When those prices were fixed the organizations representing grape-growers from all States despatched strongly-worded telegrams to me, protesting against any reduction of that price. Certain wine-makers have since asked for a reduction of 20 per cent, in the price of grapes ; and the Grape Growers Association covering Barossa district has despatched to me a telegram supporting the request. But an association that represents 15,966 acres of grape vines in South Australia has forwarded a strongly worded telegram urging that there be no reduction. The association to which the honorable member referred represents only 12,741 acres. The grape-growers as well as the wine-makers of theRutherglen district in Victoria, and the grape-growers of New South Wales, have urged that no reduction be made. In my opinion, certain winemakers are attempting to have the price of grapes reduced; but the Government has decided that the prices announced shall stand.
– Has the attention of the Prime Minister been drawn to the cablegram which was published in yesterday’s issue of the Sydney Morning Herald stating that certain passengers by the steamers Sierra and Aorangi, when interviewed by newspaper representatives at Honolulu, had declared that Australia was on the verge of revolution; and, further, that an. officer of the Sierra was reported to have said that warships were standing by?
– I have seen the statements to which the honorable member has referred. As I considered that, if they were allowed to pass unchallenged, they might do a great deal of harm to Australia, I despatched an emphatic denial of them to the newspaper in which they appeared. 1 also communicated with the shipping company concerned, drawing its attention to the reported statement of one of its officers, and asked for its comment upon it.
Report of Board op Inquiry.
– Has the Prime Minister received the reports, of which I believe there are two, of the board appointed to inquire into the sugar industry? Will he also inform the House whether honorable members will be given an opportunity to consider them before any action is taken by the Government upon them?
– I understand that a majority, but not a minority, report is available. It is not the purpose of the Government to table one without the other. I hope that both will be tabled during this week.
– In Saturday’s Melbourne Herald, the Attorney-General (Mr. Brennan) is reported to have made the following statement: -
The Opposition in the Senate seems bent upon keeping the work us u close preserve for non-unionists, many of whom are foreigners without any record of service in the Australian Imperial Force, as against mcn whose homes have been established and families reared upon the waterfront.
Will the Prime Minister furnish to this House particulars of the number of returned soldiers working on the waterfront who are non-unionists, as well as of those who are unionists, so as to be fair to both sides? The information can be obtained.
– I do not know exactly what information the honorable member wants, and I therefore suggest that he state it specifically on the noticepaper. I do know, however, that under the regulations returned soldiers who have been engaged on the waterfront are still eligible for engagement.
– Will the Prime Minister inform the House whether the State of New South Wales has met, up to date, the whole of its financial obligations under the financial agreement,?
– I have already answered to-day a question relating to that matter.
– Will the Prime Minister state what attitude the Government will adopt towards a large shipment of petrol which, it is rumoured, is being despatched to Australia by the Soviet Government of Russia?
– It is not competent for a Prime Minister to state what will be the attitude of his Government on any matter that is merely the subject of a rumour. If petrol from Russia comes into this country, it will be subject, upon entry, to the same duty that is charged petrol from any other part of the world. I have made inquiries into the rumour referred to by the honorable member, but so far have not been able to find any substance for it.
Export op Surplus Production.
– Will the Minister for Markets state whether his department has taken any action in the direction of procuring markets abroad for bacon and fresh pork? If it has not already done so, will he take whatever action may be necessary to ensure the export of the large surplus of these products that is available, for which there is not a profitable market in Australia?
– The Department of Markets is actively endeavouring, at the present time, to find additional markets, not only for the commodities mentioned by the honorable member, but also for many other commodities.
asked the Prime Minister, upon notice -
What action does the Government propose to take regarding the continuation of the annual grant of £300,000 to Western Australia T
– The matter is now receiving consideration.
asked the Minister for Health, upon notice -
Whether any decision lias been reached between the Commonwealth Government and the Queensland Government with reference to the interposition of barriers necessary to check the advance southward of the buffalo fly?
– The question of the action to be taken to prevent the spread of buffalo fly is now under discussion with the Queensland Government.
South Australia’s Indebtedness
asked the Treasurer, upon notice -
– The answers to the honorable member’s questions are as follow : -
Successor to Admiral Evans
asked the Minister for Defence, upon notice -
– This question is now under consideration, and it is anticipated that finality will be reached at an early date, when a statement will be made regarding the matter.
asked the Treasurer, upon notice -
– The answers to the honorable member’s questions are as follow : -
Excess Travelling Allowance
– On Friday last, the honorable member for Swan (Mr. Gregory) referred to an answer given by me in reply to a question, upon notice, on the 19th March, regarding the amount of allowance which would be payable to an officer in receipt of a salary of £450 per annum or less, travelling between Canberra and Melbourne and vice versa. As promised, I have had a check made of the figures quoted in my reply, but no correction has been found necessary therein. The figures quoted were in respect of an officer in receipt of a salary of £450 per annum. The payment for excess travelling time is made under arbitration determinations, which provide that officers in receipt of salary not exceeding £450 per annum who are required to travel in excess of the normal hours of duty in any day shall be paid for the “ excess “ time, at ordinary rate of pay, subject to certain limitations, e.g., payment is not made unless the excess time in any day exceeds half an hour; where a sleeping berth is provided, no payment is made in respect of travelling time between 10.30 p.m. and 7 a.m. ; no payment shall be made for more than five hours in any one day. An officer in receipt of a salary of £450 per annum or less, would, therefore, receive payment both in respect of excess travelling time and travelling allowance.
– On the 17th March last, the honorable member for EdenMonaro (Mr. Cusack) addressed to me the following questions, upon notice -
I am now in a position to inform the honorable member as follow: -
– On the 20th March, the honorable member for East Sydney (Mr. Ward) asked the Minister for Defence (Mr. A. Green) a question relating to the employment of caretakers at Duntroon. As the matter comes within my jurisdiction, I desire to furnish the following reply to the question : - The only caretaker employed at Duntroon is a married returned soldier and a member of the Australian Workers Union.
The following papers were presented : -
Fuel Oils - Memorandum by A. C. D. Rivett, M.A., D.Sc, Chief Executive Officer, Council for Scientific and Industrial Research, on the present position of investigations into the production of fuel oils from coal, dated 22nd January, 1931.
Seat of Government Acceptance Act and Seat of Government (Administration) Act -
Public Health Ordinance - Regulations -
Ice Cream Vendors.
Service and Execution of Process Act -
Regulations Amended - Statutory Rules 1931, No. 27.
– On the 19th March the honorable member for New England (Mr. Thompson) asked whether information could be made available as to the result of the investigation made in regard to the prices charged for Australian-made tobacco and cigarettes by the tobacco combine. I am now able to state that it has been found that the position generally is as follows: -
By tariff resolution operating from the 6th November, 1930, the excise duty on tobacco manufactured in Australia was increased by 2s. per lb. The tobacco combine did not raise its prices at once, but increased prices took effect from a fortnight later, that is, the 20th November, 1930. These increases applied only to New South Wales and Victoria. In the other States the prices remained as before.
From the 4th December, 1930, the additional 2s. excise duty was rescinded by resolution, and the prices which had been increased by the combine were at once, from the 4th December, 1930, restored to their former levels.
Coincident with this removal of the 2s. excise an increase of1s. 8d. per lb. in the import duty was imposed on tobacco leaf. The tobacco combine did not make any immediate alterations to meet this additional duty, but alterations as hereunder have since been made.
Tobacco. - A new price list was issued on the 12th January, 1931, which provides for an increase of1s. 4d. per lb. in the price of tobaccoes made wholly from imported leaf. These list prices are subject to trade and cash discounts, so that the increases do not amount to quite1s. 4d. per lb. The increase in the price of tobaccoes made from both imported and Australian leaf was not so great. For example, the increase in Signet, one such line, was10d. per lb. No increase was made in respect of tobaccoes made entirely from Australian leaf.
Cigarettes. - On some lines the price has been increased and on others the price has remained the same, but the number of cigarettes has been reduced. The new price list for cigarettes came into operation on the 2nd February, 1931, but it is estimated that the new prices and packings were not applying to retail sales earlier than the 16th February, 1931.
The increase in the selling prices or the reduction in the number of cigarettes in a package represents on an average an increase of 9 per cent, over the prices previously ruling. In the case of Capstans, for example, this represents an increased amount of duty of1s.8d. for 500 cigarettes. The increased amount of duty payable on the imported leaf used in the manufacture of this quantity is1s. 8½d.
As the result of the increased duties on the imported leaf the demand for Australian-grown tobacco is increasing, and the prospects for the local growers arc much brighter than previously. This has lead to a steady expansion of the tobacco-growing industry in Australia. It is believed that there will be a greater quantity of Australian tobacco available for the Australian consumers every year, until we shall be able to grow all our own requirements, and thus eliminate the importations of tobacco which to-day cost Australia approximately £3,000,000 per annum.
In view of the limitations of the Commonwealth Constitution, the Commonwealth Parliament has no power to regulate prices within a State. This is a function that lies within the ambit of the powers of the State Governments.
Motion (by Mr. Theodore) proposed -
That he have leave to bring in a bill for an act to amend the Commonwealth Bank Act 1911-1929.
– The bill brought down last year is intituled the “ Commonwealth Bank Bill 1930.” The bill which the Treasurer asks leave to introduce will be intituled the “ Commonwealth Bank Bill 1931.”
– Will the discussion on this bill take precedence over the debate on the Wheat Bill, and is it the intention of the Government to pass the bill before Easter? It is reasonable to ask that abundant time should be given to the House to consider the provisions of such an important measure.
– It is not intended to proceed with the discussion of this bill before the adjournment for the Easter holidays ; but it is desired, in the interests of honorable members, that the second reading shall be moved this afternoon and the bill circulated, so that honorable members may have time to consider its provisions, and be able to resume the debate when the House meets again after the Easter recess.
Question resolved in the affirmative.
Bill brought up, and read a first time.
– by leave - I move -
That thebill be now read a second time.
This is a measure, containing seven clauses only, which provides that the Government may take control of gold in the possession of the Commonwealth Bank should that be deemed necessary for the meeting of our indebtedness in London. Under it cbe Government may require the Commonwealth Bank Board to hand oyer to it so much as may be required of the gold which at present constitutes the gold reserve against the Australian note issue. This gold reserve under the present law acts as a regulator to the note issue, and restricts its maximum expansion, and, therefore, we propose, should the gold reserve be shipped overseas, to fix by statute the maximum note issue at £60,000,000.
Dr.v Earle Page. - Does that include the proposed issue of £18,000,000 under the Fiduciary Notes Bill?
– No; the bill deals only with the note issue at present authorized under . the Commonwealth Bank Act.
If the gold now held by the board is handed over to the Government for the purpose which I have mentioned, Australian notes will cease to be convertible into gold. There will be no obligation on the Commonwealth Bank to pay Australian notes in gold.
– But the issue will be hacked with the equivalent of gold?
– It will be backed with securities exactly in the same way as is that portion of the existing issue which is in excess of the gold reserve.
– If this bill is passed there will no longer be a gold reserve.
– There will be no gold reserve if the whole of the gold which is now held in reserve as a backing for a portion of the present note issue is handed over to the Government for the discharge of our overseas indebtedness.
The bill also provides that a mortgagor shall not contract out of his right to use Australian notes as legal, tender. It, is believed that, unless this provision is inserted, the inducement to contract out of the right to use Australian notes as legal tender may have a bad effect upon the currency. In this connexion, I invite the attention of honorable members to this statement which appeared, in the Australian Law Journal of the 15th instant, suggesting that the following provision be inserted with respect to mortgages: -
That if on the date on which the principal sum is paid to or received or sued for by the mortgagee the telegraphic exchange rate between Australia and London is against
Australia and is in excess of the existing rate against Australia of £30 per centum, I will on such date pay to the mortgagee in addition to the principal sum such sum per centum of the principal sum as is equal to the amount of the said excess.
That provision is designed to enable a mortgagor, under the inducement or the pressure of the mortgagee, to contract out of certain rights he has in the discharge of his obligations in the event of the exchange rate going higher than 30 per cent. It is, therefore, provided that any contract of that nature should be null and void. It may be necessary to include such a provision in the Fiduciary Notes Bill also. Australian notes are legal tender, and their character as such should be preserved.
– Will the clause apply irrespective of the fluctuation of the rates of exchange?
– Yes. It will apply to all contracts whether made before or after the passage of this bill.
Australia is at the present time admittedly off the gold standard, and it would be useless to ignore that fact in the discussion of the bill. We have only nominally a gold standard to-day. It is impossible for holders of Australian notes to have those notes converted to gold in any considerable sum. They may, it is true, present their notes to the Commonwealth Bank, in accordance with the promise inscribed on the notes themselves, and get gold in exchange for them; but the gold would immediately be requisitioned by the bank. A surer sign that we are off the gold standard is the fact that our currency is at a heavy discount overseas, is indicated by the exchange rate of 30 per cent, and more.
In discussing the bill and its purposes, I ask honorable members to consider whether our gold can be now held in reserve in Australia to greater advantage than might be gained by shipping it overseas to meet a great emergency in regard to the pressing debt obligations of the Commonwealth abroad.
– That depends on how much of it the Government might use to pay off Lang’s overdraft.
– The debts in London, which are pressing acutely upon governments in Australia, were contracted by both State and Commonwealth Governments, but they are Australian obli- gations. We must make provision to meet them with whatever means we may have at hand, or we must default. If we cannot get credits in London or obtain a renewal of the debts as they mature, and are unable to transmit funds from Australia, or to ship gold to London, we must inevitably default when our obligations fall due. I submit, therefore, that it will be far better to make use of our gold in London than to keep it in the vaults of the Commonwealth Bank, where at the present time it is performing no discernibly useful function.
– The Government has gold there to the value of £16,000,000. How could that amount meet an obligation of £30,000,000?
– It is not sufficient to discharge an indebtedness of over £30,000,000, but it would go a long way towards meeting a portion of that debt which is becoming more and more pressing every week. The short term debt in London is causing great anxiety to Australian Governments. It amounts to £38,075,100, and is set out in detail in the following statement: -
– On what dates do these bills become due.
– The treasury-bills become due on the 30th June. The overdraft at the Westminster Bank matures at the end of this month. The arrangements with the trading banks matured on the 2nd March, but arrangements have been made under which the banks will continue to carry these bills. Treasurybills held by the public to the value of £5,000,000 were taken up by the Commonwealth Bank as they matured on the market on the 2nd March; but the bank has not been able to re-discount them on the market since. The urgent portion of the indebtedness is the overdraft at the Westminster Bank and the treasury-bills held in the market.
– What about the internal indebtedness?
– I am now dealing with the overseas indebtedness, which is more likely to place us in serious difficulty than any internal debt.
– Would not the British people find it more advantageous to lend us money than to accept our gold ?
– They have not indicated a readiness to do that. If they would do so, we should find it more advantageous to accept such an offer than to amend the Commonwealth Bank Act to enable us to ship away gold.
A difficult portion of our indebtedness overseas is represented by the overdraft at the Westminster Bank, and by the treasury-bills held in the market, which have been issued to the public. These mature in June, and there does not appear to be much prospect, at the present time, of renewing them. The Westminster Bank overdraft is a debt due by the Governments of New South Wales, Victoria and Western Australia, no portion of it being a Commonwealth Government obligation.
– In what proportions? What are the figures?
– The details are as set out in the following table : -
The term for which the £5,000,000 overdraft with the Westminster Bank was arranged expires on the 31st March, 1931.
The Westminster Bank has recently asked what proposals the Government desires to submit for its consideration regarding that overdraft. That matter is now the subject of negotiation between myself, as chairman of the Loan Council, and the bank. It will not be indiscreet to intimate that the bank is bringing a certain amount of pressure to bear to have the overdraft liquidated.
– Evidently it is afraid of the fiduciary note issue.
– The bank has not indicated that the fiduciary note issue is one of the considerations weighing with it. It is, however, pressing that the overdraft be reduced. If it insists on its demand, we shall be under the necessity of providing £5,000,000 on the 31st instant, and I am afraid that in that case the Governments which owe the money to the Westminster Bank will not be able to pay it. In that event there would be default on the 31st March on the part of these State Governments.
The Government, however, hopes to make an arrangement with the Westminster Bank whereby Australia will not be forced to make default on the 31st March.
The other critical portion of the short term indebtedness is that which matures in June. It is an indebtedness which cannot lie negotiated, because, obviously, the holders of treasury-bills sold and resold on the market are unknown. If we cannot re-sell those treasury bills on the market at the end of June, we must be in a position to retire them. For that purpose we must have funds in London, or we shall inevitably make public default on the 30th June. That is one of the grave difficulties which is now rapidly developing. When the last parcel of Australian bills matured on the 2nd March, we found that there was no hope of re-discounting them and, consequently, as I have said, the Commonwealth Bank was forced to draw upon its London resources. In taking up treasurybills to the value of £5,000,000 on that date the bank completely exhausted its London resources.
The extent to which gold may be shipped from Australia to meet our obligations in London may afford a measure of local relief in addition to paying our present obligations in London. As we reduce our short-termed indebtedness in London, either to the Commonwealth Bank or to the holders of treasurybills, we shall improve bur credit there, and render more liquid certain of the bank’s assets. At any rate, if we ship to London the gold now in Australia, amounting to a little over £15,000,000, we shall not lessen the capacity of the bank to assist Australian governments in Australia. On the CORtrary, it will increase its capacity to assist us here, by making fluid the assets standing to the credit of the notes account here. That would ease the position in Australia.
– What is the attitude of the Bank Board in this matter?
– T. shall show that directly. During recent months, there have/<been considerable shipments of gold from Australia. In December, 1929, the Government introduced legislation to give the Commonwealth Bank the right to acquire the gold held by other banks and financial institutions in Australia. That legislation was necessary, because it was seen then that the gold would probably be required to meet Commonwealth commitments in London. The adverse trade balance which then existed made such action necessary. Had we not made provision for the shipment of that gold, a critical position in Australia’s finances would have arisen nine or ten months ago. The passing of that measure gave the Commonwealth Bank control of the gold in Australia, and that institution was therefore able to ship £21,157,000 in gold between January, 1930, and the pre- se7t time. During the same period, other banks in Australia shipped gold amounting to £3,313,000, making a total of £24,470,000 shipped from Australia since January 1930. Nine or ten months ago, circumstances were such that had it not been for the shipment of that gold Australia would have had considerable difficulty in avoiding default. A similar situation is fast approaching, and it is suggested that we should ship the gold we now hold to meet that situation.
– Has the Treasurer any idea of the rate at which Australia is producing gold ?
– The gold held by the Commonwealth Bank on the 23rd February last amounted to £15,385,700. According to the Commonwealth Statistician, the production of gold for the year ended 31st December, 1929, was valued at £1,814,457, and in the following year at approximately £1,972,000. Of the gold produced in 1929 the Commonwealth Bank received £835,000 and in 1930, £1,045,000. The balance of the production of those years was distributed among the other banks to the extent of £979,000 in 1929, and £927,000 in 1930. Discussions have taken place between the Prime Minister, myself, the
Chairman of the Commonwealth Bank Board, and the Governor of the Commonwealth Bank regarding urgent Commonwealth obligations in London, and the best means of providing for them. As a result of discussions which took place during February of this year, I received from Sir Robert Gibson, Chairman of the Commonwealth Bank Board, the following letter, dated the 6th March: -
Referring to the discussion which thu Governor and I had with the Prime Minister and yourself on the 24th February, when the position in regard ‘ to London obligations of the Government was referred to, and I pointed out the inability of the bank to assist the Government in respect of those obligations in view of certain eventualities referred to hereafter. This matter has been the subject of discussion with the Bank Board at the meeting which has’ just closed, and it is desired that 1 place on record the’ position as discussed with you.
You are aware that the board shipped to Loudon, some six months ago, £5,000,000 of gold for the purpose of holding there a reserve against contingencies which might arise in respect of government needs, owing to unfavorable market conditions preventing the Government from acquiring temporary loans on the London market. As you are aware, this reserve was used to meet a position which arose in connexion with treasury-bills amounting to £5,000,000, which fell due on the 31st December last. Subsequently the bank was able to negotiate treasury bills for the same amount ou the London market, and thereby replaced the bank funds which had been used temporarily. Again, a similar position arose in connexion with the bills duc on the 2nd of March of the same amount, and the bank reserves was again used to meet the situation and pay off these bills. At present the proba-bility of disposing of treasury-bills to replace this fund is distinctly unfavorable, and the board is quite unable to forecast, if and when, it might be possible to discount bills on the London market. It follows, therefore, that the bank is no longer in possession of funds in London which might be required, either to meet the claims of the Westminster Bank Limited of £5,000,000, which is due for settlement at the end of the month, or the further sum of £5,000,000 to meet the treasury-bills falling due on the 30th June, and which might not he again renewed.
As pointed out to you at the interview referred to, the gold reserve now held by the bank is not more than sufficient to maintain the statutory reserve required under the Commonwealth Bank Act, and allow for a bare margin for fluctuations of note issue. The board, therefore, deems it its duty to point out the position to your Government, so that it may give consideration to the question and take such steps as it deems necessary to meet the position. My board desires mc to say that it is possible that a position may arise in London in the near future which tha bank would be powerless to meet.
The board refrained from making any recommendation in that letter as to how the law should be amended, and it has not offered any direct proposals relating to the gold reserve. However, in the conversations between the chairman, the Governor, the Prime Minister and myself, the chairman intimated that the board regarded the present acute situation as distinctly a responsibility of the Government. It is recognized, of course, that the responsibility rests upon this Government, and upon this Parliament.
– What is the responsibility of the States that owe money in London ?
– They have responsibilities also. The Commonwealth Government does not assume the whole responsibility either for long-term or short-term indebtedness in London, but under the system of unified control of loan raising, and the consolidation of the public debt, the Commonwealth Government cannot rid itself of all responsibility in connexion with State debts, or the proper management of London indebtedness. As a matter of fact, we do not desire to do so because, after all, the indebtedness is that of Australia.
– Suppose a State Government refused to pay its debts in London, is the Commonwealth Government to foot the bill?
– That is a different matter. If a State Government refuses to pay interest due on loans floated since the financial agreement became operative, the Commonwealth Government is undoubtedly bound to meet that interest, because Commonwealth bonds were issued, and the loans were raised under the sanction and authority of the Commonwealth Government. The Commonwealth Government also assumed certain responsibilities in connexion with other loans raised prior to that agreement, hut I do not think that this is the place or time to embark upon the discussion of those matters.
There is no escape from the Government’s present proposition, unless it can be shown that the gold reserves can be used to better purpose than to meet the obligations of Australia overseas. If it cannot be proved that to keep the gold in
Australia is a surer safeguard for the country’s solvency, and a better means of enabling her to meet her immediate obligations than to send it abroad, there can be no valid argument against the bill. This measure provides that gold, which is part of the Commonwealth’s assets - indeed, its most immediately realisable and accessible asset - may be used for meeting the most urgent situation that has arisen for many years.
– Does the Government propose to employ this gold upon the recommendation of the Commonwealth Bank Board, or in spite of the board?
– The board has always been consulted in regard to our London indebtedness, and, indeed, most of the negotiations with the Westminster and other banks have been carried on in conjunction with the Commonwealth Bank, or its representatives in London. A close association is maintained with the Commonwealth Bank authorities for the sake of convenience and good service. The Commonwealth Bank Board will not be ignored in this matter, or treated cavalierly. There is no reason why it should be. The board will be consulted and its advice respected, even if it is noi always acted upon.
It may be said that in this bill we are abandoning the gold standard to the injury of the country. The gold standard means, in the technical sense, that the currency of a country is based upon gold and is convertible into gold coin of a certain standard weight and fineness. While that standard is preserved, and the convertibility of notes is preserved, we are on the gold standard. Bui we have been off the gold standard for months, and we can get back to it only if we take certain financial measures which at present are not practicable. The very fact that our exchanges with the United Kingdom and other countries overseas have gone to £30 and £30 10s. for each £.100, is sufficient indication that if those countries are on the gold standard, we must necessarily be off it. In order to remain on the gold standard, we should have had to keep pace with other countries in the matter of declining prices ; we should have had to follow them step by step through the progress of the slump.
– Another way would have been to devalue our money.
– Yes. Recognizing that we were off the gold standard, we could have restored parity by devaluing the pound - that is, by altering the standard weight of the sovereign. That is what France did in 1926 with respect to the franc. We should not delude ourselves at this time. We are definitely off the gold standard. Whether there is any virtue in being on the gold standard is a matter which we should earnestly consider before taking any drastic steps to get back to it. 1 do not think that the preservation of the gold standard is essential to the safety of Australia, nor is it practicable that we should maintain our currency linked with gold, in the way which is usually implied by adherence to the gold standard. As a matter of fact, it is being indicated everywhere in the world to-day that the gold standard has failed. It has disappointed even its warmest advocates. It was recommended at the Genoa Conference, called by the League of Nations, to examine the monetary systems of the world, that the principal countries should return as rapidly as possible to the gold standard, the object being stabilization of prices, prevention of violent trade fluctuations, and avoidance of the acute economic crises and business depressions which periodically afflict the trading countries of the world. Austria was the first country to return to the gold standard, which she did in 1923. She was followed next year by Hungary, and, in 1925, by Great Britain and the dominions. Since then a great many other countries have returned to the gold standard, until, in 1930, practically all the civilized countries of the world were on that standard. What has that done for those countries ? It has been proved during the last two or three years that the gold standard has not protected them against fluctuations in values. It has not preserved their prosperity, and it has not prevented violent oscillations of price levels. It has not avoided the depression which has overtaken the world, and is causing more disturbance, loss, unrest, and suffering than any other depression in history. The gold standard, therefore, is losing its supporters; it has proved an illusion and a snare.
– It could not prevent fluctuations in values.
– It was thought that it could; that once currencies were based on gold they would have an exchangeable value at par, and that where there were central reserve banks controlling credit and the supply of money, price levels could be kept stable. That was the essence of the report of the Genoa Conference, and the reason why that conference recommended a return to the gold standard. It is what is emphasized in the report of the conference. It was the hope and expectation of every one regarding what would be achieved once a return was made to the gold standard and central banks controlled price levels and stabilized them. Unfortunately, other things have happened. We need not go into all the causes of the present financial disturbance; but it is certain that the gold standard has not, in itself, been sufficient to preserve the stabilization that was thought desirable and necessary for the progress of the world. Metallic money has many inherent weaknesses. If it is a virtue to have currency exchangeable at par between one country and another, metallic reserves may be able to bring that about. But metallic reserves vary in value, as is shown by the present crisis. This is one of the main causes of the present trouble. It was pointed out in the report of Sir Henry Strakosch, published in the London Economist of the 5th July, 1930, and issued as a special supplement to that issue, that the value of gold has changed considerably since the return to the gold standard.
– Sir Henry Strakosch was one of those who, at Genoa, recommended a return to the gold standard.
– He was one of those who took part in that conference, and recommended a return to the gold standard, but he now considers that certain countries acted too precipitately, and, in consequence, caused a great disturbance of price levels. Sir Henry Strakosch, in his report, shows that during the year 1926 gold may be said to have appreciated by 5.4 per cent. ; in 1927 by 2.3 per cent. ; in 1928 by 4 per cent.; and in 1929 by 7.6 per cent. During the five months ended May, 1930, gold had appreciated by another 9.6 per cent., and during the whole period from the end of December, 1925, to the end of May, 1930, by 32.1 per cent. That is what has caused the financial disturbance, has altered the relative value of money and conditions as between creditor and debtor nations. It has caused disturbance and loss to debtor nations. It has upset the whole basis of monetary settlements and transactions, and has caused disturbances which have reacted upon countries such as Australia. These have arisen from the fact that the metallic backing of the currency of the world, which is gold, varies in value from year to year, and, indeed, fluctuates violently.
– Instead of Australia endeavouring to act as a solitary unit in these matters, would it not be better to leave them to international agreement?
– I am not contending that Australia can by the action proposed in this bill, or in any other way, reform the present monetary system, or give an important lead to other countries. Australia plays a small and an unimportant part in these matters so far as its influence upon world affairs is concerned. I have shown that the gold standard itself has not proved a tremendous success. It has not proved such an absolute necessity that we must regard it as sacrosanct, and that, notwithstanding our necessities and obligations in Loudon, we should refuse to allow our gold to be sent to London to meet our liabilities.
– The present position is due to the mobilization of gold in three countries.
– Various reasons have been given for the monetary disturbance which exists in the world. Sir Henry Strakosch, in his report, refers to the mobilization of gold in America, and to some extent in France and elsewhere. I am not suggesting that we can influence other countries; but I say that we ought not to regard the gold standard as sacrosanct. Personally, I regard the gold standard as a fetish. The value of the Australian fi note does not depend upon the fact that a certain amount of gold is held by the Commonwealth Bank, but upon the certain knowlodge that it can be used as legal tender within the Commonwealth for the settlement of payments up to any amount.
– We can get £1 notes much more easily than sovereigns. Paper money can easily be printed. Mr. THEODORE.- That depends upon the system adopted for the control of the currency. Under this measure we are asking Parliament to fix for the note issue a statutory limit ‘of £60,000,000, which cannot be exceeded by the board, the Government, or any other authority except Parliament itself.
– Parliament could alter it.
– Parliament must take the responsibility. But it must not be presumed that Parliament will be unwise, foolish, or reckless in these matters.
– The Government has acted recklessly in other directions.
– Honorable members who presume that Parliament will act recklessly or foolishly are reflecting upon their own capacity. Parliament will protect the interests of the country, and, if necessary, alter our currency laws. We must not regard our currency laws as sacrosanct merely because they have been passed by some other Parliament. Parliament will act with due wisdom and caution in matters of this kind.
– It has not given much evidence of that.
– It has given less evidence of it, perhaps, since the honorable member came here.
Debate (on motion by Dr. Earls Page) adjourned.
Standing Orders suspended to enable Mr. Theodore to move the following motion, which was agreed to -
That he have leave to bring in a bill for an act relating to rates of interest and discount and for other purposes.
Bill brought up, and read a first time.
Debate resumed from the 20th March (vide page 511) on motion by Mr. Theodore -
That the bill bc now read a second time.
.- We have heard for a considerable time past that the present depression is confined to Australia, and that it has been brought about by previous governments; but it is admitted to-day, I think, by most right thinking people in Australia, that our country is merely feeling the effects of a world-wide depression, and that those effects are not so deep rooted that they cannot be remedied by a policy of sound and sane administration. Unfortunately, however, the result of the present Government’s administration has been to accentuate the effects of’ the depression, and to double unemployment. If the Government had only been courageous enough to face the facts, most of the evils that have befallen Australia in the last fifteen months could have been avoided. In May, 1929, Mr. Bruce, then Prime Minister, reviewed the public finances of the Commonwealth at a premiers’ conference. He pointed to the fall in the price of wool, wheat, and metals, and stressed the fact that, the income of the community having fallen, steps must be taken to ensure the balancing of governmental budgets upon, which the nation’s credit depended. The problem, he said, was to distribute the national income in the most equitable manner to give the maximum amount of employment, and cause a minimum dislocation of industry. An increase of taxation in order to make up for a shortage of government revenue was obviously bound to defeat its own object. The aggregate income of the community being less, the extortion of further increased taxation would only withdraw from industry the money that was essential to provide employment. He said economy by the various governments was the first essential for the success of this scheme.
Before the 3929 elections, the Labour party was warned about the -position; it knew, or should have known, the relevant facts; but it denied what was self-evident. It went, to the electors with a policy of promises. The Treasurer (Mr. Theodore) went with a heap of his own. He might be called the King of Promisors. Labour never for one moment intended that its promises should be fulfilled. They were made for vote-catching purposes only, and Labour, having gained its object and won the election, immediately proceeded to forget them. The Government is now following its election promises with a bril to provide for promissory notes.
– Is the honorable member in order in reading his speech?
– No honorable member may read a speech, but he may refresh his mind from his notes. I ask the honorable member for Parkes (Mr. Marr) to observe that rule.
– We have now before us a bill providing for promissory notes which will be just about as valueless as the promises made by Labour at the last elections.
The Commonwealth expenditure offers a wonderful field for economy, yet the party whose Ministers now occupy the treasury bench, having won an election by promising the people all sorts of things, deceiving them into the belief that it could lead the country successfully through troublous times, has made no effort, in any shape or form, to reduce governmental expenditure or to live within the Government’s income. On numerous occasions the Leader and other honorable members of the Opposition have pointed out many directions in which savings could be effected by which the Government could live, within its income. In his budget speech in July last, the Prime Minister admitted that the fall in the prices of wool, wheat and metals, plus the stoppage of loan money from abroad, amounted to at least £70,000,000 a year, yet the Government has taken no action calculated to reduce the burden of governmental expenditure which lies so heavily on the community. The right honorable gentleman also admitted that the income of the general community was down by at least £100,000,000, yet ho budgetted for an expenditure of £4,000,000 in excess of the previous year’s expenditure.
Labour has accentuated the depression in Australia, first, by increasing governmental expenditure, and, secondly, by imposing fresh taxation, thus taking from the industrial fund money that could have otherwise provided employment. I think that honorable members of all parties in this House believe that the great problem confronting Australia to-day is how to provide employment for our people. We must bring about a rehabilitation and resuscitation of industry before we can hope to place men in jobs. Last August the Prime Minister attended a conference of Premiers in Melbourne. These Premiers, who were of different shades of political opinion, had met to discuss Australia’s problems, and the solution at which they arrived was that each Austraiian government should meet its financial obligations and keep its expenditure within its income. To this the Prime Minister agreed, and then left for his trip abroad. His statements overseas earned praise from most people in this country. Thi’.v felt that he had a big task to perform, and that he was endeavouring to do the best he could for Australia by showing clearly to the people of the Old Country that Australia intended to meet its obligations and overseas commitments in every respect.
If the Melbourne agreement had been put into operation, the financial position would have eased immediately. Had Australian Govern ments been prepared to cut their coats according to their cloth, confidence and credit would have been created both in the Commonwealth and overseas; the floating debt could have been funded, and thus bank advances to a corresponding amount would have been released for use in industry. But the ink on the paper was hardly dry before the agreement was repudiated; that, in itself, was sufficient to lower Australian credit. Worse followed. The Labour party agreed in caucus to a policy of inflation and repudiation. Only the firm stand taken by the then Acting Prime Minister (Mr. Fenton) and the Acting Treasurer (Mr. Lyons) prevented effect from being given to that dishonest policy.
– The honorable member may not describe any action of Parliament or of members of Parliament as dishonest. I ask him to withdraw that statement.
– I withdraw it. The courageous and determined action of the two gentlemen I have named prevented that discreditable policy from being put into operation. The Prime Minister’s speeches in England regarding Australia’s determination to honour its obligations were received with commendation by the Australian people. But the right honorable gentleman is famed as a man of words rather than of deeds. He is an able and fluent speaker, but when, he is required to put his words into practice he fails miserably. On his return to Melbourne he was told that in his absence control of the affairs of the nation had been assumed by persons who were without cabinet responsibility, and, despite the fact that he hud subscribed to the Melbourne agreement, he decided to accept the dictates of his followers. At first the people hailed him on his return as a heaven-sent statesman, and when he came to Sydney he received a wonderful welcome from all classes, as the first citizen of Australia should do. The people were looking forward to his opening speech in the Parkes election campaign at the Ashfield Town Hall, in the hope that he would assume the leadership of the nation. But their expectations were in vain. At that meeting four prominent representatives of the Labour party spoke. The Prime Minister enunciated a yes-no policy; his colleague, the Minister for Trade and Customs (Mr. Forde), boasted of the hundreds of thousands of people who had been given employment by thu Government’s tariff policy; the honorable member for West Sydney (Mr. Beasley) spoke frankly as a straight-out repudiationist; and the candidate, Mr. Martin, proclaimed himself a socialist. The newspapers of the following day were worth keeping as mementos ; on one page appeared four different policies advocated by four representatives of the Labour party. A few days later a fifth representative entered the campaign. The prospects of Labour were not bright, and the Treasurer was brought forward to expound his scheme for the extension of credits. Nobody understood what he meant, and it is doubtful whether he himself did. It is certain that the more he spoke of an extension of credits, the move votes the Labour candidate lost. Having failed with the electors at Parkes, he is trying to impose his brilliant ideas upon Parliament and the people. Hence this proposal for the issue of fiduciary notes. According to the Labor Daily, he was told, during the Parkes campaign, that if he could evolve, in three weeks, a scheme for the extension of credits, he would be re-admitted to the Federal Cabinet. This bill embodies his scheme, and he has been duly reinstated in the
Ministry. He has told us that the inflation which he proposes can be controlled. By whom? Can the present Ministry prevent inflation from going beyond a certain figure? It cannot control its own actions or its own supporters. We have witnessed the pitiable spectacle of the Government changing its policy from week to week, at the direction of the caucus, subject always to the final control of outside organizations. Whenever they have repudiated the policy decided upon by caucus, that policy has been reversed, and the Government has followed suit. The honorable member for Fremantle (Mr. Curtin) stated on Friday that the members of the Commonwealth Bank and other financial authorities had been consulted by the Government, but that the Government could not accept dictation by any bank board. He claimed that the supporters of the Ministry are as well qualified to handle the Commonwealth finances as are the members of the Bank Board.
– Hear, hear ! A very sensible statement.
– I am glad to have the honorable member’s admission that he is in favour of political control of banking policy.
– I am. Every member of the Commonwealth Bank Board is a Nationalist.
– The present Government appointed Mr. Duffy to the board.
– A good man, too.
– I agree that he is, and I understand that he agrees with the views of his co-directors. As a result of the experience he has gained on the board, the views he expresses at board meetings show that he is possessed of financial common sense, and I cannot imagine him supporting this bill.
– Read the report in yesterday’s Age of his speech on Saturday night.
– The honorable member for Corio (Mr. Lewis) must cease interjecting.
– What is the object of this proposal to create a fictitious currency? The objective of the Labour party, published in black and white, is the socialization of the means of production, distribution, and exchange.
– Private enterprise has made an unholy mess of the job.
– And the Government is making an unholy mess of private enterprise, which creates 80 per cent, of the employment available to our people. How better can the Labour party achieve its socialistic objective than by smashing industry by excessive taxation, and forcing people out of employment? While that is being done, the Government is dependent upon bank overdrafts to finance the affairs of the country! The Government does not create wealth, but industry does; yet it is being taxed out of existence.
– Does the honorable member suggest that private enterprise creates wealth ?
– The banks find the cash that enables private enterprise to produce wealth.
The Treasurer has gone further, and has said that this is a very simple bill. The members of this Parliament and the people of Australia will be more simple if they swallow it. According to the honorable gentleman, one reason for the introduction of the bill is that thousands of persons are starving. He has known that for the last fifteen months; yet this Government has not taken one step that would lead to employment being provided or to starvation being prevented. On the contrary, unemployment to-day is double what it was when the Government assumed office.
The Treasurer said that the objects aimed at by the Government in its discussion with the Chairman of the Commonwealth Bank, the Premiers of the States, and the representatives of the associated banks were -
With the first object, we can all agree. But does the Government propose to take any action in that direction? Is there any provision in the bill that will lead to even one person being placed in employment? Both the Prime Minister and the Treasurer have stated that the intention is to make available £1,000,000 a month for twelve months to provide employment. Fictitious paper money will be printed, and men will be found government jobs on relief works. Addressing the conference of State Premiers on the 6th February last, the Prime Minister said -
To thousands of Australians out of work, through no fault of their own, it is small consolation to say that this is the lot of millions of people in the world to-day. It is only natural for the unemployed to regard the situation that confronts them as a challenge to our whole social system. This state of affairs cannot bo allowed to continue without danger to the community. The most formidable task before the conference is to shorten, as far as possible, the period of unemployment.
Experience has shown that employment on public works, merely as a measure of relief, is wasteful. It does nothing to cure unemployment, aud nothing to set the wheels of industry turning again. Even if financial conditions permitted the putting into effect of such a policy in Australia, the result would eventually be to aggravate our troubles.
The right honorable gentleman there admitted that the proposed relief works would not place one man in industry. Yet the Treasurer affirms that one of the objects of the bill is the reabsorption in industry of workers who are at present unemployed ! Who is correct ?
The second object of the bill, according to the Treasurer, is the restoration of budget equilibrium. Can the Government point to one direction in which it has endeavoured either to balance its budget or to reduce its expenditure along the tines suggested by the Leader of the Opposition? Last year it increased its estimated expenditure by £4,000,000.
– Does the honorable member object to the increased expenditure on account of old-age pensions?
– That increase was not included in the £4,000,000. I object to the charge being continually levelled at the party of which I am a member, that it intends to reduce old-age, invalid and soldier pensions. This Government, by taxation and other insidious methods, has already reduced them. None other than Nationalist governments have ever increased old-age pensions. The people know full well that £1 will not buy as much to-day as it bought in other days; and the value of the pound will continue to decrease so long as this Government loads individuals and industries with additional taxation.
The third object of the bill, according to the Treasurer, is the maintenance of national solvency. Has this Government endeavoured to maintain the solvency of Australia? On the contrary, it has done everything possible to smash it, both here and abroad, by bringing discredit on the nation. While the Prime Minister was overseas, endeavouring to keep Australia on the map, he spoke with one voice, while his Cabinet colleagues in Australia spoke with other voices.
The fourth object of the bill is to spread equitably over all sections of the community the loss of national income. There will be no disagreement with that. At the present time, however, the Labour party is looking for reductions of expenditure in only one field ; the bondholders must have their interest rates reduced, but other sections should be allowed to go free. I do not agree with that; nor, I think, do a majority of honorable members opposite. A reduction of interest rates can be brought about by means other than those proposed by the Government. The price of our bonds governs the interest rate. If the Government were to set out to restore its credit, the price of our bonds would quickly rise and interest rates would fall. The other day the Treasurer, addressing this House, said that the Prime Minister and himself considered that the risk involved in these proposals was small; but he has changed his opinion so frequently in the last few months that we cannot be sure that he will hold the same view next week. I can hardly believe that the Prime Minister, in his heart, is in favour of these proposals. When the right honorable gentleman returned from abroad he was compelled to adopt the present financial policy of the Government. He has shown that he lacks the qualities that make for leadership, and that he has not a grip of the financial problems aud trials of this country.
The Treasurer went further, and said that the people do not oppose inflation merely because it is inflation, but because it may lead to a collapse of our currency or have such an effect upon our currency as to depreciate its value considerably. He also said that it is opposed because of its possible evil consequences. Does he not consider those sufficient grounds for opposition being shown to the bill? The measure is condemned out of his own mouth. The other day he said that he deprecated the deliberate inflation that took place in Germany. Can ho give to this House a guarantee that the very large section of the Labour party which controls the destinies of this Government, and which unashamedly preaches repudiation and inflation, will not compel the Government to go further on the downward path to ruin? The honorable gentleman cited the experience of France as a glorious example of how currency should be inflated, and said that that country had stabilized her currency by such means. I hope that Australia will never adopt the methods which were followed by France. It borrowed -it the franc rate when the sovereign was worth 25 francs, then inflated ite currency until the sovereign was worth 125 francs, and repaid at the rate of 25 francs to the fi. She robbed those who had lent her money of four-fifths of the amount which was advanced. I trust that there is no member of this Parliament, and no one outside, who would suggest that we should adopt such a policy.
The Treasurer argued that politicians were responsible for the scare that exists concerning inflation. I agree with him, but for different reasons. The politicians who sit opposite, and who are guiding the destinies of this country, have raised the scare by the introduction of these inflation proposals. There was no mention made of inflation in the policy speech delivered by the Prime Minister prior to the last elections. If the right honorable gentleman wishes the people to pronounce upon it he should face the constituencies and seek a mandate from them. I know that that suggestion m’ill not be received with enthusiasm by honorable members opposite.
Yet it is the only fair and honest thing to do. If the Prime Minister and the Treasurer regard themselves as heaven-sent financiers; if they believe that they possess a magician’s wand, with which they can solve our problems, why do they and their supporters fear an election? All the schemes that have been propounded by this Government will not enable industry to be rehabilitated. In normal times 81 per cent, of our people should be in private employ- ment, 10 per cent, in the service of the Commonwealth and State Governments, and the remaining 9 per cent, in the employment of organizations of a semi-governmental character. Government employees do not produce wealth; on the contrary, they spend it. The only practical way to assist industry is to ease the burden of taxation, thus making it possible for private enterprise to widen the area of employment and ensure the release of those frozen credits to which reference has been made so frequently of late, which banking and other financial institutions can make available.
– Does the honorable member suggest that the banks are deliberately withholding credit from industry?
– Not at all. The Minister is well aware that the Commonwealth and trading banks cannot continue to meet all the demands which this Government lias been making upon them and, at the same time, give to industry that assistance which it so urgently needs.
The right honorable the Prime Minister cut a sorry figure at the recent conference between the Commonwealth and State Ministers. He admitted, at the outset, that lie had no plan to meet the present situation, but hoped that the conference would be able to evolve one ! A Prime Minister worthy of his position as a leader should have submitted definite proposals for the consideration of State Ministers. His failure to do so was a frank admission of his unfitness for his position. To-day the people of this country are looking for strong leadership. Unfortunately, they look in vain to the head of the present Government.
Having given a lamentable exhibition of its ineptitude and unwillingness to do the things expected of it in the present crisis, this Government now turns to a policy of inflation, which it hopes will help solve some of our problems. On that point, all I can say is that if this Fiduciary Notes Bill is passed, the position of the Commonwealth in the near future will be infinitely worse than it is to-day.
I was glad to notice an admission by the Prime Minister the other day that the Niemeyer agreement, to which this
Government subscribed last year, was not dictated by Sir Otto Niemeyer, but that it waa, in fact, an agreement arrived at by the leaders of the Commonwealth and State Governments. He also expressed the hope that Parliament would honour it. I agree that, although this Government has done nothing of a practical nature to that end, that agreement must be honoured. We cannot continue to live beyond our means, and at the same time, expect people overseas to whom we have been accustomed to look for financial aid, to subscribe to future Commonwealth loans.
This Government offers the Fiduciary Notes Bill as a solution of our difficulties. In introducing the measure, the Treasurer (Mr. Theodore) said that it was intended to issue fiduciary notes to the amount of £1S,000,000, of which £6,000,000 would be used for the assistance of primary producers, and £12,000,000 at the rate of not more than £1,000,000 a month, for expenditure on reproductive works to ease the unemployment problem. The honorable gentleman added that it was proposed, from time to time, to raise money by way of loans, for the redemption of the fiduciary notes. How can any sane person expect people to lend one penny piece to a government which comes down with this policy of inflation and repudiation !
– The honorable member ought, to be ashamed to say that.
– I am merely quoting the views expressed by certain supporters of the honorable member’s party. This bill will have the effect of still further depreciating our currency. Only to-day the Treasurer, when moving the second reading of another measure, intimated that, under it, the Government would be authorized to require the Commonwealth Bank to surrender the whole of the gold backing to the present currency in order to meet our commitments overseas. The Prime Minister (Mr. Scullin) declared that cuts in expenditure would not balance the Commonwealth and State budgets. We all admit that, but no one can deny that if all the governments of Australia balanced, or nearly balanced, income and expenditure, confidence overseas would be restored, and money would be made available at reasonable rates of interest. No government, irrespective of the party which it represented, could expect to balance the Commonwealth budget in less than two or three years. It is, nevertheless, true to say that, if this Government had taken a firm stand twelve months ago, our financial position would have been improved to such an extent that overseas credit would to-day be available to Australia. We should have been able to fund our external floating debt, and so ease the strain on Australian banks.
The Prime Minister declared also that private enterprise would find employment only when it could manufacture at a profit and find markets. That is not a new gospel; it has been preached from time immemorial. No man engages in a business enterprise for reasons of philanthropy. He risks his capital and expends his energy in the hope that, ultimately, his efforts will be suitably rewarded. Meantime, he provides employment for persons needing it, and, incidentally, earns profits for himself. The Prime Minister admits that if private enterprise can find markets for manufactured goods or primary products, it will provide employment. And yet this Government is using its utmost endeavours to tax industry to the breaking point, thus restricting the area of employment, which the Prime Minister declares should be widened as much as possible. The right honorable gentleman went on to say that the Government would have to find employment and he did not care if it were or were not, profitable. What a confession to have from the leader of a government, charged with the responsibility of lifting Australia out of its present financial troubles ! If, as the Prime Minister and the Treasurer have asserted, the issue of fiduciary notes will overcome our present difficulties, why did not Great Britain adopt the same course?
– The fiduciary note issue in Great Britain amounts to £260,000,000.
– The Treasurer grossly misled the people when he compared this project with the British fiduciary currency. He knows that it is not on all fours with the British scheme, which is amply safeguarded by assets of unquestionable value. The Prime Minister has told us that the notes to be issued under this bill will rank equal in value with the present issue because they will be covered by future loans. Perhaps they will be, but this Government has no earthly hope of raising money in the loan market until it faces the position courageously and makes a determined effort to give effect to the resolutions of the Premiers’ Conference in August of last year. The right honorable gentleman stated further that he was concerned about the internal position, and then went on to say that we should not worry our heads over the external position ! Surely no more extraordinary statement has been made in the course of this debate. No one with a knowledge of the facts can deny that our position overseas is a matter of very grave moment. Ali trade relationships are inter-dependent. Australia, economically, is linked .with the people of other countries, and we can only overcome our present difficulties, when we solve the problem of disposing of our surplus products. For years Australia has been riding on the backs of the farmers. I differ from the Treasurer regarding the figures given by him about the quantity of our exports. I see nothing in this bill that will contribute to the solution of the problem of selling our -products overseas. Last year the Prime Minister appealed to the farmers to grow more wheat; but to-day, unfortunately, the silos are full. “We have induced the farmers to produce wealth on which they cannot realize.
The Prime Minister, without justification, has complained that members of the Opposition sneer at his remarks when he is sincere. It is difficult, indeed, to know when the right honorable gentleman is sincere. He made certain statements when he left for Great Britain to attend the Imperial Conference; he said something different when he was abroad, and he has again changed his views since his return. If he would adhere to what he said before he left these shores, members of the Opposition would support him. He admitted that the poor would be the first to suffer under a policy of inflation. In my opinion, the workers would be the first and Ae last to suffer under this bill, and, if tn© present Government remains in office much longer, all sections of the community will be poor. I heard a state- ment issued by wireless last week by the Treasurer, who remarked that the four honorable members representing the Lang element were mere gramophones. Those honorable members are not in the chamber at the moment; they are probably being wound up. The right honorable gentleman also stated that, if he were given sufficient time, he would find a solution of all the country’s problems; but I point out that he has been in office for eighteen months, and the present bill, which is the chief measure brought down by the Government in pursuance of its policy, would, if it were passed into law, make the position of the country infinitely worse than it is at the present time. He said that we had £15,000,000 in gold in the vaults of tha Commonwealth Bank, and his Government would not allow people to starve while that gold was there. He now proposes to ship it overseas, although he formerly asserted that he would try to prevent the flight of capital from Australia since no policy was worth anything if it did not restore employment. What has this Government done to find jobs for the workless? At the last election it promised work for all ; but unemployment has been doubled during its brief regime. Another statement issued by the Treasurer over the air - I hope that my record of the words which I heard at the time is wrong - was that Sir Robert Gibson had been appointed Chairman of the Board of Directors of the Commonwealth Bank because he had promised to support Labour’s policy.
– The honorable member must have imagined that.
– As I have indicated, I may have misheard what the Treasurer said. He certainly declared that the representatives of the banks were unable to evolve a satisfactory policy. I claim that responsibility for evolving a solution of the financial problem devolves upon the Government. The only remedy which Labour has proposed up to the present time is inflation of the currency, which would inevitably inflict hardship upon the community generally, and particularly upon the workers. The Treasurer admits that this bill involves a certain degree of inflation, and we know that no country has been able to control inflation success- fully.
– Is tie honorable member aware that whenever notes are issued without a gold backing of 100 per cent., inflation is practised, and that British finance furnishes an example of controlled inflation ?
– The honorable member is aware that the law of the Commonwealth provides for a certain gold backing for the note issue, and that inflation of the currency beyond the legal limit would reduce the value of our notes. I recently saw a number of British seamen being paid in Sydney on behalf of a company that is registered in Liverpool, and each Australian £1 note was worth only 12s. lOd. in Great Britain.
Sitting suspended from 6.15 to S p.m.
.- I listened attentively to the speech which the honorable member for Parkes (Mr. Marr) delivered before the dinner adjournment; but, apart from a dissertation on events connected with the Parkes campaign, and a tirade of abuse of those opposed to him, he did not have much to say. Certainly he did not enlighten us regarding the bill before the House. Before his rejection by the electors, the honorable member was a Minister in the Bruce-Page Government; yet he had the audacity to throw all the blame for the present financial depression on the present Government. Has the honorable member forgotten that when the present Government came into office it was faced with a set of conditions more serious than any previous Government had to face ? Has he forgotten that he was a member of a dual-headed Ministry, whose Treasurer (Dr. Earle Page) was described by the present Deputy Leader of the Opposition (Mr. Gullett) as “ the most tragic Treasurer the Commonwealth has ever known”? Has he forgotten that during the regime of the Bruce-Page Government - a period of unprecedented prosperity - huge deficits were piled up year after year, and were funded time after time? Has he forgotten the costly commissions which were appointed, and whose recommendations the Government never attempted to give effect? On assuming office the present Government found a deflated market for our commodities, a huge accumulated deficit, and the greatest adverse trade balance in our history. Has the honorable member forgotten the call which the banks made on the Government to correct that adverse trade balance? The present Government lost no time in taking action to adjust the balance of trade and has been successful in that regard. The action taken was certainly drastic; it has operated to the detriment of some persons in the community; but it was necessary. Like all its predecessors, the present Government has made mistakes. In my opinion, a man or a government which never makes a mistake never does anything worth while. The greatest mistake made by the present Government was made because of its earnest desire to do something to benefit the country. When it assumed office it heard on every side, “Budgets must be balanced.” So earnest was the Government in its desire to balance its budget that it made the mistake of trying to do so in twelve months.
– It made no attempt to balance the budget.
– It certainly did not attempt to do so by cutting down the pensions of soldiers, invalids and aged persons. That, however, is the policy of the Opposition.
– That is incorrect.
– The honorable member for Gippsland (Mr. Paterson), in a speech the other day, suggested a reduction of pensions by 20 per cent.; the Deputy Leader of the Opposition (Mr. Gullett) advocated a similar policy. The Government was too much in earnest in its desire at once to straighten out the finances of the country. Instead of saying that it would put things right within twelve months, it should have told the people that the financial chaos was the creation of others, and that as it took four or five years for Australia to get into her present unsatisfactory position, it would take just as long to get out of it. The State Premiers no longer advocate that budgets should be balanced this year ; they now talk of a three-year plan. They know now that it will take three years to place our finances on a sound basis. That should have been the aim from the beginning. The Government has been too honest. That is an unusual charge to lay against a Government. The honorable member for Parkes (Mr. Marr) accused the present Government of having piled up loans. To what loans did he refer? Honorable members know well that our loan indebtedness increased more rapidly during the term of the BrucePage Government that ever before.
– Will the honorable member quote figures to prove his statement?
– The Bruce-Page Government claims to have reduced Australia’s war indebtedness by £8,000,000, but in. the same period it borrowed £16,000,000. Of the amount borrowed £10,000,000 came from the United States of America. The Treasurer who arranged that loan had previously condemned the present Treasurer (Mr. Theodore) for having, while Premier of Queensland, borrowed £2,000,000 in the United States of America, when he 00uk not get the money in Britain.
Again and again honorable members opposite have said that confidence must bc restored if we are to get further loans from oversea investors. A few months ago, when an internal loan of £28,000,000 was on the market, we were told that if it were fully subscribed confidence in Australia would be restored abroad. That loan was over-subscribed - a fact which is not to be wondered at, considering that it was offered at high rates of interest and was free from State income tax - yet within a fortnight Australian stocks fell lower than ever.
– That was because of the talk of repudiation.
– The Government has never advocated repudiation. I shall have something to say on that subject later. I am not a repudiationist; but I do say that Australia has received little evidence of friendship from British traders. Some months ago the slogan of the country was “ Grow more w7heat “. f.t was thought that itf we had a greater production of wheat we should be able to sell it in the British market, and thus improve our financial position. But what did we find? Australia had a record wheat crop, but the wheat could not be sold because British traders preferred to buy their requirements from Bolshevik Russia.
– A Labour Government in Britain allows it.
– -I wish that the honorable member could rise above party. I am speaking not of governments or parties, but of traders in Britain. It is true that Australia undertook her war obligations voluntarily and that, therefore, she has no claim on any one in relation to the consequences of her action ; but it seems to me that as Australia’s part in the war was greater than that of any other part of the Empire, we should get from Britain treatment at least equal to that given to foreign nations.
– Or which she herself received from America.
– The honorable member for Melbourne must not interject from the front bench.
– Surely Australia is entitled to receive from Britain treatment at least equal to that meted out to France, Italy and the Balkan States in the adjustment of debts! It does not encourage the sentiment of interEmpire trade when we find that Britain is not prepared even to buy our wheat, and will purchase supplies of meat from Argentine and elsewhere when she can get them for something less. It is very difficult to come to any definite conclusions on the issues of inflation or deflation of the currency either in this country or in any other. Some economists tell us to-day that Australia is already suffering from currency inflation ; others tell us that our troubles are due to too much deflation. There must somewhere be a happy medium at which we should aim. I believe that we should recognize that the volume of world trade is greater to-day than ever it was, and, therefore, we need more currency in circulation to cope with the turnover. Many people speak as if the gold standard were something sacrosanct; but what has happened in regard to gold to-day? Everybody knows that there is not enough gold to go round. At the present time the gold supply has been cornered by two nations, America and France, just as goods are sometimes cornered by powerful trading corporations. Those two countries have more gold than they want ; the rest of the world has less gold than it needs. The chairman of the Midland
Bank, Mr. Reginald MeKenna, who has made a study of this problem, referred to it in the course of a recent address, which is reported as follows : -
He would ascribe the economic troubles of the world to three main causes. The first was the mal-distribution of gold, due to the relative inability or unwillingness of creditor countries to lend to debtor countries. Secondly, the public had not yet recovered from the reaction from the American stock market collapse. Thirdly, the effects of a long period of deflation in Britain were still being felt.
He claimed that if the monetary policy could do little in the present crisis to stimulate a recovery, at any rate, by keeping money plentiful and cheap, conditions favourable to recovery could be preserved.
Discussing whether a recurrence of a catastrophe like the present depression could be avoided, Mr. MeKenna said that after examining the recent history of the matter he reached the conclusion that the gold standard was not working as anticipated in the light of pre-war experience, according to which the flow of gold into creditor countries should have caused an expansion of money supplies mid been a stimulation of prices. The United States and France, however, had offered no more resistance to a fall of wholesale prices than the debtor countries. Moreover, America had shown little readiness to lend abroad; France was closed to the foreign borrower.; and Britain had too small a surplus. He was of opinion that the problem of the use nf the world’s gold supplies was international in character, and could be dealt with only by co-operation among the central banks. There was already evidence of a general willingness to co-operate, but no indication yet of continuous common action, based upon an agreed policy. Trade would not prosper while the world’s monetary units were subject to such wide variations in purchasing powers.
Mr. MeKenna said the present crisis was one of under-consumption. Until sufficient confidence returned to stimulate buying stocks of goods were unlikely to dwindle, nor would the production increase. There was not likely to bo a marked revival of confidence until prices showed a tendency to harden. When the present trend of prices was arrested or reversed we should see an end of the growth of unemployment.
Evidently, Mr. MeKenna is not opposed to making cheap money available. Honorable members who are not blinded by party considerations must realize that this country to-day is suffering from underconsumption of goods. Ther.3 must be a sufficiency of currency in circulation, whether in the form of notes or otherwise, to keep the wheels of trade revolving, and to keep the people employed so that they may buy what they want rather than be compelled to live on the dole. It is a standing disgrace to our civilization that both in Australia and in the Mother Country so large a percentage of the people should be relying on the dole for support. In England, I believe, people have been marrying and rearing families on the dole distributed by the Government. It has been said that men have lived to the age of 35 years without doing a stroke of work. Does any one realize what thar means to a nation; how it is sapping the character of the people ? We, in Australia, are following that bad example.
Mention has been made in the course of this debate of the manner in which France settled certain debts due by her to Britain. If France was guilty of cheating through taking advantage of her depreciated currency, I have no sympathy with her. Apart from that, however, it is well to recall that after the Franco-Prussian war, the French Government set the whole nation to work, making every acre of land productive, and selling manufactured products abroad in order to pay off the indemnity owing to Germany. She did the same thing after the last war, with the result that she has drawn to herself a very large share of the world’s gold supplies, so that she now ranks as second only to the United States of America as a gold-holding country.
– She never gave up her gold right through the war.
– The honorable member stated that we made a mistake in going to the defence of France. Evidently, in his opinion, we backed the wrong howe.
– I do not see the point.
– The honorable member said that we went to the defence of France during the war.
– And of ourselves as well.
– I do not deny that, but France occupied the centre of the stage.
The life of the people of any community is not necessarily affected by the nature of the currency circulating whether it be gold, silver or any other medium. When we nationalized the note issue in Australia, there were gloomy prophecies that we would wreck the financial system, and bring ruin on the community at large. Nothing of the sort happened. Nobody expects to receive gold now in Australia, and even in international dealings, 95 per cent, of the trade is conducted on a paper basis of one kind or another. I often think that the natives of the South Sea Islands, who use shells as currency, have something to teach us from the point of view of simplicity. In civilized communities to-day, money is used for purposes for which it was never intended. It was meant to be used as a means of exchange; to replace the old system of barter. To-day, however, it is used simply as a means of gaining more wealth. The law of interest has been introduced, and interest is regarded of greater value than human life. It does not matter if wages are reduced, and thousands of men and women made dependent on the dole, but you shall, not touch the 6 per cent. interest which is due to those who have invested in Commonwealth loans ! That would be sacrilege ! Either this Government or some other will, in the near future, have to tackle the question of the adjustment of our overseas debts. The same sort of thing is done every Gay between business people. The British Government should be approached with a view to granting us some relief in regard to the £81,000,000 war debt which we owe it, so that we may have a chance to get out of our difficulties.
– She should treat us as America treated her.
– Yes. It is a fair request to make. We do not ask for anything more.
There are other ways in which the country could be helped at the present time. We have to tackle many problems, the greatest of which is a reduction in the present cost of government, which bears so heavily upon the people. We have to simplify the present system, and endeavour to remove the difficulties which exist in consequence of the retention of State boundaries, and give a fair deal to the people under a unified form of government from the Gulf of Carpentaria to Tasmania. To do that we .must dispense with the present system of patching up hero and there, introduce a general policy in the interests of the people, and thus relieve them of the crushing burden which they are now asked to carry. I intend to support this measure, because it provides for the issue of additional currency to assist the farmers who are in need of immediate relief, and to give employment to those who are out of work. The fiduciary notes which it is proposed to issue have been so termed to distinguish them from those now in circulation and under the control of the board. A similar policy has been adopted in Great Britain, where notes of a value infinitely greater than those in circulation in Australia have been issued without any gold backing. Business between nations is carried on as it is between individuals, although in the latter case only on a smaller scale. It is merely a matter of trust. We admit that confidence is needed, but it appears that, before confidence can be restored, it will be necessary to take some of the measures which I have indicated in order to remove the burden that is pressing so heavily upon the people at the present juncture.
– I do not intend to delay the House very long in discussing this measure, because I believe that its fate is practically settled. The sooner we know its fate, and that of certain other complementary measures to follow, the better it will be for every one concerned. At the outset I should like to refer to the financial moves that have been made from time to time by this Government to rehabilitate the finances of the Commonwealth. The present Treasurer (Mr. Theodore) has handled practically two budgets, and, unfortunately, we have not got very far under either of them. I admit that we are living in times that are exceptional, economically, financially and industrially, but, notwithstanding the difficulties with which we have been, and are still, confronted, one would think that greater progress would have been made with the work of rehabilitation. Had the third budget been prepared on the lines propounded by the then Acting Treasurer (Mr. Lyons), who had charge of it, the country, instead of being in its present doleful position, would, I believe, have already turned the corner. Unfortunately, that budget was destroyed elsewhere. Since then we have had what is known as the Gibbons plan. When it was found not to be running too smoothly, yet another proposition was put forward. The banks, we were told, were to be asked to release certain credit, and as a result of the operation of that policy a wonderful impetus was to be given to trade and industry. It was said that something like an additional £100,000,000 per annum would be in circulation. Certain propositions were submitted to the banks, but were not acceptable to them, so they, too, went overboard. The raising of a loan for the purpose of assisting the wheatgrowers, whose position is undoubtedly desperate, was then mooted. The Government declared its intention of raising a loan of £6,000,000 for this purpose, but did not go on with the proposal, for the reason that it knew that there would not be a very handsome response to any attempt on its part to go on the money market. As a final proposition we have this measure, which provides for a fiduciary note issue.
In moving the second reading of this bill the Treasurer (Mr. Theodore) quoted somewhat extensively from a report which he said came into his possession after the Government had formulated its financial scheme, and of the existence of which he asserted he only learned when he re-entered the Cabinet at the end of January. This report, which is signed by Professor D. Copland, Mr. F. C. Dyason, and Professor L. F. Giblin, was forwarded to me as Acting Prime Minister and to the then Acting Treasurer (Mr. Lyons) at a time when we, as members of a sub-committee of the Cabinet, were considering certain schemes which we hoped if brought to fruition would help to lift this country out of its trouble. In quoting from this document the Treasurer omitted some very important passages. He quoted down to a certain paragraph, omitted two important lines that practically governed the whole statement, and then resumed his quotation. The lines which the honorable member omitted were -
The action under paragraph 1 is an essential condition for the working of the monetary policy.
Paragraph 1 which is referred to reads -
Parenthetically, the report states -
What action is possible is a controversial point. There is not time to discuss it here, nor are we on the legal aspect competent to discuss it. The best action might be a temporary suspension of all awards, leaving the States a free hand for immediate action. Another course might be to refrain from the appointment of conciliation committees until after an immediate adjustment had been made by the Arbitration Court.
I do not agree with that view, nor did I when the report was submitted; but it is only right to say that the opinion expressed by the three experts was contingent upon paragraph 1, which I have quoted. The three gentlemen who signed the report are quite capable of defending any attack upon them either by the Treasurer or any one else; but, seeing that the report was submitted to me and quotations made from it in the House, I think it only fair that I should place the position fairly and clearly before honorable members.
I also wish to quote another important paragraph with respect to our monetary system, which likewise was omitted from the Treasurer’s quotation. The Treasurer read right up to the line and then, like a bad hurdle-racer, shied and refused to take the hurdle. In dealing with the amendment of our present monetary system in conjunction with our industrial policy, the report states -
The exclusive control of the note issue by the Bank Board for a period of years might be usefully re-affirmed with due solemnity in an act of Parliament.
I am sure that the right honorable member for North Sydney (Mr. Hughes) will recall what happened when, in 1911, we were dealing with important financial measures, including the bills for the establishment of the Commonwealth Bank and the control by the Commonwealth of the note issue. He will remember the gibes that were hurled by the Opposition at those who advocated those wonderful reforms.. With all humility, I say that if I were never to sit in another Parliament I should be satisfied to have been a member of the Parliament which, from 1910 to 1913, put into legislative effect the whole of the planks of the platform on which Labour was returned, including the establishment of the Commonwealth
Bank and the creation of a Commonwealth note issue. When we were advocating the establishment of a Commonwealth bank the great slogan of the Labour party was that there was to be no political tinkering with that institution.
– It was a plank in the party’s platform.
– Yes ; and effect was given to it.
I do not know whether the Treasurer will have some defence to offer on the points which I have raised, but I think it only fair to the gentlemen who signed the report to which I have referred that the portions I have read should be published. I repeat the words -
The exclusive control of the note issue by the Bank Board for a period of years might be usefully vc-affirmed with due solemnity in an act of Parliament.
These gentlemen, who favour an amendment of the currency system, would not allow the note issue to be controlled by other than a properly-constituted board.
– That was not a characteristic of the legislation passed in 1911, of which the honorable member says he approves.
– I always listen with attention to the honorable member for Fremantle (Mr. Curtin). Although we cannot agree with all he says, his lucid utterances are always entertaining. I do not say that in the hope that the honorable member will refrain from interjecting. He can, of course, do as he pleases in that regard, and I hope he will. Another omission by the Treasurer (Mr. Theodore) was the following passage to be found on page 8 of the same report : -
But we cannot too strongly emphasize that suggestions of wholesale inflation will utterly destroy the chance of conversions except on the most extravagant terms.
This was also portion of the report submitted by the three gentlemen who were asked to come to the aid of the Government in its endeavour to bring about a solution of the country’s difficulties, and it is only fair to Professor Copland that on the floor of this House, I should show that he was perfectly justified in protesting as he did. Later, I shall quote what he had to say in the press in reference to some remarks made by the Treasurer a few weeks ago. From this par ticular document, I could read other appropriate comments on the situation, but I need not go any further to show that justice was not done to these three gentlemen in the quotations the Treasurer made from their report.
I wish to say one or two words now in regard to inflation, expansion of credit, or fiduciary issues, whatever term you wish to apply. In my judgment, there is no difference between them. Speaking on the want of confidence motion, I said that a fiduciary issue was the worst and most damnable form of inflation that could be suggested. I have heard it said that if one can prove one’s case by adverse witnesses, the case is doubly proved, and I shall put in the witness box, if I may use the expression, one or two who may be accepted, at any rate from my point of view, as being adverse witnesses. The first is one who denies that he is an inflationist, but has always been an ardent supporter of a very serious extension of credit. I refer to the honorable member for Werriwa (Mr. Lazzarini). I quote him as a student of banking. Speaking in regard to the fiduciary issue, he said -
Mr. Theodore told the people, the unemployed, and the farmers that the fiduciary issue would lead them to the promised land. lt was a cruel deception. He could not understand a man holding the position of Treasurer deliberately putting forward Chat proposition to hungry people while he knew that it was no solution of the problem. “ Get it through this House and through the Senate “, said Mr. Lazzarini, “ and I warrant that within three months you will come back to reconstruct your financial policy “.
– -What is his proposal ?
– I do not know, but we shall probably have an opportunity to hear it, because I understand that the honorable member has foreshadowed certain amendments which he intends to submit in committee.
The gentleman I am now about to quote is one of the shrewdest business men in politics in Australia to-day. I refer to Mr. J. P. Jones, Minister of Public Works in the Victorian Labour Government.
– He is astute.
– Yes; there are some others I know, who think they are. He happened to make the remarks I am about to quote, when he was in the honorable member’s constituency -
If the resolutions of the August conference, which followed my last visit to Bendigo, had been stood up to by the whole of the Governments of Australia, the economic problem would not be so difficult as it is today.
Mr. Jones had attended that conference. He has attended every financial and every premiers’ conference since the Hogan Government has been in office. Mr. Hogan rightly regards him as his right hand man in financial and business matters. Further on he said -
The carrying out of the resolutions of August - which every Premier had agreed to - would have created a greater amount of confidence, and there would have been a lesser number of unemployed.
Then again - lt is a waste of breath to talk of getting money by inflation. We will have to see how we can divert the currency in existence into channels where it will create developmental activities, instead of having it in channels where it is doing no more than simply continuing to meet the obligations to which the Governments are already committed.
– Surely that is an argument in favour of this bill.
– The honorable member may be able to take it as such, but 1 can assure him that it is definitely an argument against the bill. There is no indefiniteness about the statement “ it is a waste of breath to talk of getting money by inflation.” Mr. Jones went, on to say -
The banks have already gone beyond the danger mark, and have advanced 105 per cent, of their deposits. So Ions as the Government goes to the banks to get money to pay the public servants, the banks cannot advance money to assist legitimate activities, and unemployment will continue.
If the Governments continue to have deficits they can obviously be met only by borrowing from the banks, or by the imposition of a greater amount of taxation, which Australia is not capable of carrying.
I take it that Mr. Jones made those remarks after full consideration of their purport.
– -Can the honorable member tell me why Mr. Jones’s chief supports this measure?
– I cannot; but I do not think that Mr. Hogan is a very enthusiastic supporter of it. Both Mr. Hill, Premier of South Australia, and Mr. Hogan insisted on safety limits and strongly urged their views in that regard.
No one can deny that Mr. Hogan has done a great deal for the unemployed, and I am glad to say that the percentage of unemployed in Victoria is lower than that of any other State except Queensland. It is largely attributable to the splendid work done by Mr. Hogan, and those who have assisted him.
I come now to some correspondence which appeared in the Argus. Professor Copland had put forward a certain proposal to which the Treasurer had replied, and I propose to quote from Professor Copland’s reply to the Treasurer. I have seen no further correspondence in regard to the matter. Professor Copland said -
Mr. Theodore says, “ The bankers are saying that the prevailing high rates of interest are the direct result of shortage of money. The demand for money is greater than the supply. Very well, let us increase the supply.” In this statement there is a serious confusion between the meaning of money and the meaning of capital. The history of European countries which embarked upon the simple but dangerous expedient of increasing the supplies of money shows conclusively that this process, so far from increasing the supply of capital, created a desperate shortage of capital, and drove rates of interest to alarming heights. Never was liquid capital scarcer in Germany than at the height of the inflationary process. Mr. Theodore’s proposals will not increase the supply of capital or reduce the rate of interest. On the contrary, they will hamper efforts to promote a fall in the rate of interest through cooperative action among banking and financial institutions. Mr. Theodore recognizes that internal price stability and exchange equilibrium cannot be achieved, but he suggests at the same time that “ we must rely on obtaining some overseas credit to counteract the effect upon our budgets of the high exchange rate “. I agree that some overseas credits will be required to extricate Australia from her present position. But no one has any doubt that these credits will be available as soon as confidence is restored in the capacity of the Government to produce a plan for balancing budgets in the near future. Until this is done we cannot expect to get overseas credits.
The last witness I shall put in the box is the most important of all. He is actually not the last, but time precludes me from quoting others. I call upon the Prime Minister (Mr. Scullin) to give evidence. He has said -
To create credit for £20,000,000 for loan works is unsound and I expect banks to refuse to do so. Government cannot deliberately coerce administration of banks. Such proposal means permanent inflation, which could not be checked as is implied, and would demand further inflation. Inflation is a desperate attempt at a remedy, and will react seriously on all sections. The first ill-effect is upon our credit. All this talk about creating credits and inflation is most damaging and will seriously prejudice conversion maturing loans and treasury-bills. Since inflation was suggested efforts are being made here by men withdraw their money from Australia as they would lose by payment in a depreciated currency. Depreciation in currency would decrease values of Savings Bank deposits and insurance policies. Property would increase in price, and there would be a rush to sell bonds for investment in properties. Financial panic may result.
– When was that said?
– The Prime Minister was in London at the time. I am quoting these words from one of the cablegrams that have been released or made public. I could also put the Treasurer in the witness box to prove conclusively what a most injurious thing inflation is. He said it in the House. I was away at the time, but I read in Hansard the trouncing he gave the honorable member for Adelaide (Mr. Yates) for having the temerity to make any suggestion in regard to inflation. I have heard him denounce it on other occasions in other places. Many other witnesses could be called upon to prove that inflation, whether it be per medium of fiduciary notes or otherwise, is not in the best interests of the community, and I quite agree with the Prime Minister that it would reduce the value of the deposits in our savings banks, and of the insurance policies held by the workers. A fiduciary issue would be one of the biggest wage reducing factors in Australia. It would lead, not only to a reduction of the value of savings banks deposits or insurance policies of to a reduction of wages, but also to such a depreciation of old-age pensions that we should soon have the old people coming along asking us for an increase. That is the road upon which we are now asked to travel, and if we take it, which is, of course, unlikely, in’ a few months’ time, if we are honest, we shall be ready to admit that we have followed the wrong course. There is a right way and an honest way of taking a stand in regard to finance, and. coming out on top. After all,’ honesty is the best policy.
– The honorable member’s new friends propose to reduce wages and pensions.
– This proposal for a fiduciary currency is as dead as the Dodo. It may survive this House, but another place will throw it out.
– Has the honorable membeen talking to the members of another place ?
– I have not, but I know what the honorable member knows. We all know what fate awaits this measure. Why pretend we do not know?
A statement by the Treasurer last week indicates how far even one who is regarded by some as an expert may get astray. I admit that his statement was made in reply to an interjection, but interruptions rarely upset a cool debater. Replying to an interjector, the honorable gentleman eulogized what France had done in the nature of inflation. I quote from a leading article in the Age, which is favorable to the Government, a comment upon that incident -
He (Mr. Theodore) has already had one lesson. An interjection in the course of his speech drew from him the remark: “In France there had been a certain measure of inflation which did not lead to the destruction of the currency, but led to France being placed in a position better than most countries of the world to-day.” That quite gratuitous testimonial to France will injure and not help the Treasurer’s case. The financial path France took is one Australia will never tread. France has finally intimated that the British loan of £50,000,000 is to be repaid with a sum of little more than £10,000,000. Through the depreciation of the franc, the British investor will be given approximately 4s. in return for each £1 he lent. Every intelligent person is aware that Australia’s obligations to Britain are to be paid in sterling. There is no possibility of emulating the French method, and no selfrespecting Australian ever entertained such a degrading thought. But the Federal Treasurer should hasten to dissociate himself from the suggestion that he regards France’s financial tactics with appreciation.
That was a well merited rebuke.
I have already referred to the depreciation of wages, insurance policies, savings banks deposits and pensions, that is sure to follow a policy of inflation. The honorable member for Brisbane (Mr. D. Cameron) can never be accused of being a bitter partisan. His speeches, though always brief, are full of good meat, and he presents his case dispassionately. One can always listen to him with interest, whether agreeing with his views or not. I do not know on what formula he has based his calculations, but he stated in the House last week that the £4 of to-day will, if the new currency is issued, be worth only £2 8s., and every old-age, invalid and soldier pensioner who now receives £1 a week will get only an effective 12s. a week.
– The honorable member quotes that passage because it suits him.
– The opinions of all experts dovetail with the view expressed by the honorable member for Brisbane. In all countries inflation has always debased the currency, and a debased currency means a reduced purchasing power.
– And the workmen are the first to suffer.
– Unfortunately, that is always so, and I warn honorable members that, although they may be following their honest convictions, or what they consider a sound lead, the policy of the Treasurer will lead to a considerable allround reduction of incomes. Already reductions have taken place. I do not think any honorable member believes in lowering salaries and wages. I would much prefer to be advocating their increase, but I, like most honorable members, find that it is necessary to dip more and more deeply into my pocket for the benefit of the public purse, because my country is in distress and needs all the help which each individual can give. Wherever men are gathered together a question as to how they are faring elicits the reply, “As well as can be expected.” If one asks for further information he learns that their business takings have decreased. That is true of the hairdresser, the grocer and all others. Unionists in various shops and factories have agreed amongst themselves that, instead of some of their number being thrown out of employment because of the stagnation of industry, the wages available shall be shared among all.
– The 10 per cent, reduction did not provide more employment, and so has not helped at all.
– I am merely pointing out what has happened. Wages have been reduced, voluntarily, by arbitration awards, and otherwise, and if the purchasing power of the reduced wage be further depreciated, we cannot expect the workers to remain contented. Out of such conditions industrial turmoil will develop ; therefore, our legislation should aim at succouring those who are in need. I have reminded honorable members before that, when the first measures for the establishment of the Commonwealth Bank and the Australian note issue were introduced, both the then Prime Minister (Mr. Fisher) and the present right honorable member for North Sydney (Mr. Hughes) emphasized that there was to be no political interference with the management of the bank. The Fisher Government placed the bank under the control of a governor and a deputy governor, by whom it was well managed, and when the Bruce-Page Government proposed to transfer the control to a board of directors, I dissented. I was opposed to interfering with a success for the purpose of indulging in experiments. Mr. Fisher, when moving the second reading of the Commonwealth Bank Bill, said -
No government can benefit a single penny piece from the profits of the bank, and, therefore, there can be no inducement to enter into speculative adventures for the purpose of raising revenue for ordinary purposes. “ No political interference “ was the slogan of those days. The years 1910 to 1913 were three of the most prosperous in the history of Australia. Although the number of migrants arriving was the greatest on record, there was less unemployment than at any other time in the history of the country. Mr. Fisher said then -
This is the time to legislate - a time of prosperity and a time of financial calm.
I do not say that in this crisis we should sit with folded hands, but any revolutionary financial policy would be more opportune in a time of peace than in a time of stress and turmoil. Economically, financially, and industrially, the world is in a state of flux; it has never been so disturbed as it is to-day. Therefore, the introduction of any new-fangled scheme or an old scheme called by a new name, at this period, is not in the best interests of Australia. We are told that the world lives on paper money. I recollect the time of the land boom, when Australia lived fast and furiously on paper. At that time my friend, the late John Haucock, said - “ To start a bank all one needs is a hooked nose and a counter.” Australia has not forgotten the suffering that followed that orgy of boom and inflation, and men and woman are still suffering from its calamitous results.
Although honorable members may ridicule what I am about to say, although they may accuse me of repeating a parrot cry, I affirm, without hesitation, that all that is needed to set the wheels of industry whirling, is a restoration of confidence. Of the 2,000,000 wage-earners in Australia, less than 400,000 are employed by governments, municipalities, and State instrumentalities. In normal times, the other 1,600,000 are engaged in private enterprise. I hold no brief for the employer, but I am convinced that unless those who conduct the great industries of our country have confidence in the stability of Australia, the present bad times will continue. Restore the confidence of the leading industrialists and I foresee the wheels of industry again in motion, men and women hurrying to the 3hops and factories, and a general revival of prosperity. Of course, we cannot set the world right in a moment. Australia is governed to a large extent by international conditions.
– ‘The honorable member will not find that the electors have much confidence in him when next he goes before them.
– I have taken the stand dictated by my conscience, and the result to me personally does not matter. After the stress and trials of recent months, were I to consult the inclination of my family and myself I would retire from public life altogether. Although a poor man, I could afford a short period of rest and then I would look for a job in the hope that I could find one. My attitude is not influenced by considerations of the consequences to me. I do not profess to be any better than other men, but I have read the history and experiences of other nations, and have learned of the frightful consequences that have followed dabbling in expedients such as that which the Treasurer has put before the House. With that knowledge and that conviction I should be recreant to the opinions that I hold, as well as to my judgment, did I not take that stand, whatever the consequences might be. I wish to live in amity with everybody. 1 can express my opinions vigorously and in a blunt way, although I may not be so eloquent or dramatic as others. I am not afraid to meet the electors of Maribyrnong. All that I ask is that every other honorable member of this House also should meet his electors. We shall then see in what light we are regarded. I .ask for myself no more than I ask for anybody else.
– We are quite willing to accept the challenge.
– I hope that you will, and speedily, too.
– As soon as the Senate rejects our legislation, we shall do so.
– I have always been an uncompromising opponent of extensive borrowing overseas. I wish to avoid it as much as possible. It cannot be denied that we are in a deplorable position on the other side. That was indicated by the Treasurer (Mr. Theodore) this afternoon, when he introduced another measure. The biggest part of his speech consisted of a lamentable recital of our position at the London end. With confidence restored, with governmental and financial operations carried on as they should be in this country, I believe that, within a period of from four to five weeks, our floating debt of £38,000,000 in London could be funded and placed on a proper basis, and that millions of pounds more would be available to us. Honorable members may say what they like, they cannot escape the fact that there is tagged on to this measure a provision to enable the Government to raise further loans. If it is intended to borrow, why not borrow at the start? Why go in for this fiduciary issue at all? The Government thinks so little of it that, as soon as th, market is favorable, it proposes to approach it for a loan of £18,000,000, cancel this fiduciary issue of £18,000,000. But who can say whether the issue will bf limited to £18,000,000. Unfortunately, the history of other countries teaches us how difficult it is to stop once inflation is embarked upon. Let mc refer once more to the experience of the French people. In recent years they have had two strong Prime Ministers. During the war period France was governed by M. Clemenceau, a very strong man, who did practically what he liked. Later, control passed into the hands of M. Poincare, who, in a financial sense, did practically as Clemenceau did during the war. Although the French people trusted and believed in him, if he were to come again in another decade when the fear of war, which is still a nightmare to the French people, had passed away, and attempted what he did during 1926, the French revolution would be a mere circumstance to the upheaval that would ensue, so awful were the sufferings that the people were compelled to endure. To-day, the attempt is being made to complete arrangements under which bondholders in France will be paid an additional amount because of the fact that they were cheated by inflation of a portion of what was due to them. The British bondholders are applying to have the same consideration extended to them. Whether their representations will be heeded or not, I cannot say. But we do not hear of anything being done by the French or any other government to recompense the millions of people who suffered so greatly in the awful deflationary period for which Poincare was responsible. These are facts in history. They stand out like a pikestaff, and warn us not to travel along these exceedingly dangerous roads.
May I quote certain opinions that have been expressed in the last report of the Commonwealth Auditor-General? In some quarters it is contended that they ought not to have been written. I, however, consider that the Auditor-General of the Commonwealth ought to speak his mind fearlessly. It may be said that he is dabbling in matters of policy; perhaps he is. But, in my opinion, he is our financial policeman, and, in conjunction with those who work with him, must scrutinize the actions of everybody, from the Prime Minister downwards. If I or any other honorable member or Minister offends against his conception of what is right financially, he is quite prepared to interpose. It is remarkable that his report should follow so closely upon the Treasurer’s statement in regard to Commonwealth finance. At page 12 he says-
To help to improve the position, much has been said and written on all phases of this subject, including currency, hanking, monetary reform, price levels, inflation, standard of living, taxation, and many other matters. Notwithstanding all that has been said, there is still a wide divergence of view, oven among those who may be regarded as competent to express sound opinions, whether the numerous theoretical proposals advanced would achieve the desired end. Australia’s position is such that she cannot afford to take a step contrary to the teachings of quite recent history, and abstract economic theories, however plausibly or logically put forward, must be received with great caution.
It is inappropriate, in a report of this character, to discuss the many theoretical proposals, frequently of political import, which have been made to restore a sound financial position, but hereunder reference is made to u number of government and private activities which give scope for assured and immediate savings and improvements of an understandable and practical character, and without the risk of resorting to experiments based on untried, speculative and contentious theories. 1 recommend those as words of wisdom. They were written by a man who not only has been Auditor-General for some years, but who formerly occupied a high and prominent position in the Commonwealth Public Service, having been Assistant Secretary to the Treasury, in which position he assisted in the compilation of many budget statements. It would be well for us to pay heed to the observations and recommendations of such a man, because he is able to consider our problems calmly and dispassionately, and from a strictly financial point of view.
I have little or nothing to add “at the present stage to what I have already said. If this bill goes into committee, something more may be said in relation to different clauses.
This proposition will not ensure stability, provide security, enhance our credit, make possible financial equilibrium, create confidence, or increase employment. It will increase unemployment and cause instability, insecurity, a lack of credit, a loss of confidence, and unsettled finance. Although it has been propounded by a Labour government, which professes to be the herald of, shall I say. forward finance, I am unable to support it. I have always been prepared, and shall always be ready to play my small, humble part in trying to improve measures that are submitted to this chamber. But I hope that those measures will always have for their foundation that which is essential for Australia at a time like the present. I shall record myvote against the second reading of this bill, and I hope that a majority of honorable members will consign it to that political oblivion from which I consider it never should have emerged.
. - In contributing to this debate, in support of the motion before the House, I intend, largely, and. I hope, respectfully, to reply to the arguments of the Leader of the Opposition (Mr. Latham). Before doing so, however, I should like to comment upon some statements of the last speaker, and upon the sympathetic consideration with which they were received by members of the Opposition.
The honorable member for Maribyrnong (Mr.Fenton) based his opposition to this measure on the fear that it may reduce wages and lower the standard of living in this country. That statement by him was applauded by honorable members opposite. The most remarkable feature of it was that the very things which the honorable member fears may evolve from this proposed legislation have been causing suffering to our people during the last two or three years. Never in the history of Australia, at any rate in my lifetime, have we passed through such an unprecedented period of falling values, falling wages and falling prices. An illustration of that which should convince the honorable member, because his electorate is so vitally affected, is the position of the railwaymen of this country. During the last eighteen months their wages have been decreased by11s. a week as a result of the automatic fall in the cost of living. In addition, they have lost the 10 per cent, cut-in their wages, making a total reduction of 18s. or 19s. a week. I should like honorable members to realize exactly what this means to those men. Thousands of them are returned soldiers who are purchasing war service homes, and others are purchasing homes through the Savings Bank. They entered into those obligations seven, eight, or ten years ago. Young married returned soldiers, used portion of their gratuity and their savings in making a first deposit on a home. They calculated the extent of the responsibility they could shoulder, basing that responsibility upon the minimum wage of £4 12s. 6d. a week that they were then receiving. They decided that they could pay £1 7s. 6d. a week or some other amount off the purchase price of their respective homes. On the average they had one or two children. Since then their responsibilities have considerably increased; but, during the last eighteen months, their wages have been reduced to £3 18s. a week, whereas interest rates, insurance and other fixed charges remain unaltered. What have the honorable member for Maribyrnong and those who applauded him proposed during the last twelve months to relieve the situation ? I cannot help thinking that the sympathetic cheers or plaudits which accompanied the statements of the honorable member were not altogether sincere. But, in the time at my disposal, I wish to devote as much attention as possible to the arguments of the Leader of the Opposition.
In the first place, the honorable gentleman agreed that this legislation was exceedingly important and far-reaching in its character. On numerous occasions during the last twelve months he and other honorable members opposite have acknowledged that Australia is passing through a terrible period of depression ; that hundreds of thousands of our citizens are unemployed; and that our primary and secondary industries are almost paralysed. All these facts are admitted, and yet, in the face of them, the Leader of the Opposition and his colleagues have repeatedly made known their intention to oppose the legislative measures brought forward by this Government. The honorable gentleman stated definitely that he had opposed all its financial proposals, and was opposing this bill.
He bases his first objection to the bill on the ground that it embodies the principle of compulsion; that it enacts that the Commonwealth Bank shall do certain things which at present it refuses to do. It may not be out of place to state that the board itself has indicated that if its policy is to be altered to give effect to the proposals of this or any other Government, legislation on lines similar to this bill would be necessary. But, apparently, the main objection of hon- ora bie members opposite to this bill is the compelling force embodied in it. I agree that there is in it an element of compulsion, as there is in practically all our legislation. No one can deny that the bank board has repeatedly and dogmatically refused to co-operate with the Government in seeking to give effect to its financial proposals. Therefore, it is necessary to introduce legislation to alter the policy of the bank.
The Leader of the Opposition also objects that the Government’s intention is to interfere politically with the management of the bank. All honorable members would be opposed to political interference with the bank or any similar institution if governmental action were interpreted in the manner suggested by the Leader of the Opposition. I take the view that there must be political or parliamentary interference embodied in legislation relating to the policy of institutions established by the Government, in the interests of the people ; but legislative proposals framed to lay down a policy for the Commonwealth Bank cannot be interpreted as political interference with the management of that institution. In view of the obvious facts, I cannot help feeling that some honorable members opposite, in their objection to this measure, spoke with their tongues in their cheeks. The bill cannot be regarded as an attempt by the Government to interfere with the management and control of the Commonwealth Bank. In the act establishing the bank a definite line of policy was laid down by the Government of the day. The charter under which the bank was established clearly defined its particular functions; but no one can argue that, in passing that measure, the Government of the day was guilty of political interference. The honorable member for Maribyrnong expressed his complete satisfaction with the original charter of the bank, and went on to say that it was functioning successfully, and was increasing its profits from year to year. I remind him and other honorable members who object to this bill on the ground that it implies political influence in regard to bank policy, that the Bruce-Page Government was responsible for the first act of political interference, about which the Leader of the
Opposition (Mr. Latham) is now so sensitive. Immediately it came into power it introduced legislation affecting the policy and management of that institution. It altered completely the policy of the bank by curtailing its activities and preventing it from being a serious competitor with private banks. It hamstrung the bank in every possible way, and made it a wholesale supplier of credit for private banks to retail to their customers.
Another reason advanced by the Leader of the Opposition for opposing the bill was that it was designed to create and issue credit without adhering rigidly to the orthodox and fast-becoming obsolete system of maintaining a gold reserve of 25 per cent, of the note issue.
– Did he say that?
– The honorable gentleman did not mention the actual percentage, but he said he objected to the bill because it would permit the issue of credit without the protection of the orthodox gold reserve. Surely, the honorable gentleman must make some allowance for the march of events and progress made since the original act was placed on our statute-book. I know something of his point of view, something of his knowledge of history, economics and financial policy, and I cannot believe that he ‘did himself justice in his speech in opposition to this bill. Honorable members opposite must make some allowance for the later problems that have arisen from the development of social obligations, and acknowledge that the present capitalisticsystem has progressed beyond the infantile stages it occupied when the gold reserve was fixed originally. The honorable gentleman said also that this Government could not get, either by taxation or from loan, the money which he admits is urgently needed to save our primary and secondary industries, and to feed, clothe, and house our people.
– He said that that could not be done without a change of Government.
– It is possible to interpret the statement of the Leader of the Opposition in more ways than one. I agree with the suggestion of the honorable member for Balaclava (Mr. White) that there was a hidden and sinister meaning in the criticism of the Leader of the Opposition. He implied that, because of the personnel and policy of this Government, it would not be possible to raise, either by taxation or loan, the money necessary to rehabilitate industry. Such a statement was as ridiculous as it was ill considered. Surely the honorable member does not believe that the money-lending instituttions of this country or Great Britain would refuse to loan money to this Government, at the ordinary ruling rate of interest, if they were approached?
– Why were they not asked to subscribe to a loan?
– It is not a question of the Government’s inability to raise money, by way of loan, so the statement of the Leader of the Opposition that the loan market was closed to this Government was just as ridiculous as was his assertion that we could not impose further taxation. The policy upon which this Government was elected was that it would not follow the old beaten track of continuing to raise one loan after another simply to pay the interest or portion of the interest owing upon a preceding loan, and continue in that way to build up the burden of interest until, like a rolling snowball, it reached such dimensions as to break the back, figuratively speaking, of the economic resources of this country. The Labour party, during the last election campaign, pledged itself to cease gradually this policy of borrowing, and undertook, further, that if borrowing were absolutely necessary, it would raise loans in Australia rather than abroad, so that interest payments would be made in this country.
When we turn to the field of taxation, it must be recognized that, unless we wish to make taxation absolutely confiscatory in character, we must observe some sense of proportion. If people are taxed beyond a reasonable limit, the purpose for which taxation is imposed is frustrated. The Government is aware that the field of taxation is not unlimited.
The Leader of the Opposition also said that the proposals in the bill were quite new, and nothing had been said at the elections about them; but that is not the case, for the policy of the bank board was extensively discussed throughout every electorate. The people were told that the policy of the board had been interfered with by the then Government, and the pledge of the present Government was to free the bank from the control that had been imposed upon it.
– Has this Government yer done so ?
– We are now attempting legislation to free the Commonwealth Bank. The Nationalist party represents the private banking interests of this country, and it is opposing this measure in defence of the interests of the private banks. The fundamental issue between the two political parties1 is the question of the sacred right of private banking. The present Government believes that the people’s bank should be allowed to compete with th* private institutions; but the Nationalist party is opposed to the Commonwealth Bank entering into trade. That statement has been made repeatedly by the Chairman of the Board of Directors of the Commonwealth Bank. That board is carrying out the policy of the Nationalist party, which stands for the sacred right of private banking. It is opposed to any encroachment on that right; it believes that banking should be sacrosanct to private enterprise. Therefore, the Opposition makes every financial proposal submitted by this Government an issue that it must fight te the last ditch, not because of a fear of any evil result of such legislation, but because it stands in the interests of theprivate banks. Many honorable members opposite, because of their previous studies, must know that the legislation before the House is necessary and inevitable to put the ship of State or; an even keel.
– Then take this issue to the country.
– It is going to the country. The opposition to the measure is purely political.
The first action of the Nationalist Government was to alter the policy of the Commonwealth Bank. It made certain that the bank would not be in competition with the private banks. It not only hamstrung the Commonwealth Bank, and refused to allow it to enter into trade. but it also made it more than ever purely a bulwark of the private banks. In 1924, the private banks did not have sufficient security on which to raise the necessary credit to satisfy their clients, and the Commonwealth Bank came to their rescue.
– And thereby fulfilled its original function.
– Quite so. Whan the right honorable member for Cowper (Dr. Earle Page) was Treasurer, the Commonwealth Bank released £15,000,000 worth of credit, and placed it at the disposal of the private banks, upon which credit they could advance four or five times as much. This credit was released at 3 per cent., and the private banks immediately passed it on to their clients at 6 per cent., 7 per cent, and 8 per cent. Then the private banks suddenly came to the conclusion that they need not pay even 3 per cent, to the Commonwealth Bank, and with the exception of not quite £3,000,000 they declined to lift any more of that £15,000,000. They allowed that note issue to lie in the vaults of the Commonwealth Bank, knowing that they could advance money upon that security, and they paid no interest upon it. Surely, if the Commonwealth Bank could come to the rescue of the private banks in 1924, it could do as the present Government now proposes, and come to the rescue of the people of Australia. In 1924, the assets of this country were not nearly so valuable as they are to-day. I claim that there is no historic or present-day precedent for the fears expressed by the Leader of the Opposition. In every country, credit and even the supply of notes exceeds by millions of pounds the 25 per cent, gold reserve which was at one time thought necessary. A casual study of the subject is sufficient to show that the almost universal attitude of nations is that the old conservative and orthodox gold reserve is no longer required. Let me quote an authority to back up that statement. A. S. Wade, in Modem Finance and Industry (1926), says -
Experience has shown that the amount for which banks shall be liable to their depositors shall not exceed ten times the legal tender they hold or can command.
I suggest that the value of Australian assets in 1921 was £20,000,000 or £30,000,000 less than in 1924, when the right honorable member for Cowper released £15,000,000 worth of credit. The Commonwealth Year-booh of last year shows that, since 1924, the privatelyowned assets - land, buildings, machinery, plant, &c. - have gone up in value by £50,000,000. In 1921, Sir Denison Miller, late Governor of the Commonwealth Bank, referring to the Commonwealth Bank, said -
The whole of Australia is at the back of this bank, and so strong as this continent is, so strong is this Commonwealth Bank. Whatever the Australian people can intelligently conceive in their minds, and will loyally support, that can be done, and I will do my utmost.
Since 1921 the assets of Australia, which Sir Denison Miller referred to as the real security on which the bank issues credit, have gone up in value by nearly £100,000,000. I draw honorable members’ attention to what the Commonwealth Statistician says in the 1929 Year-booh, at page 820.
– But a wonderful change has occurred since 1929 !
– In some things, no doubt ; but Mr. Wickens points out that the value of plant, buildings, laud, machinery &c. - private operations only - has increased in four years from 1924 to 1928 by over £49,000,000, or at the rate of £12,250,000 a year. If we add to that private wealth the value of government and semi-government institutions, we can scarcely compute the increased value of our total assets.
I pass on to another authority, the report of the Gold Delegation which has just finished its sittings at Geneva. In that report, under the heading rf “ Departure from the Gold Standard “. are the following comments: -
We do not consider it necessary to describe in detail the changes which have taken place in the distribution of gold in recent years or the causes which have determined those changes. We think it sufficient to say that those causes have sprung from the general political and economic conditions of the world during the last fifteen years, from the war and its immediate consequences, from its influence on the economic structure, from the disruption of normal trade relations, from the profound changes during certain periods in the relative prices of crude products and manufactured goods. The distribution of gold to-day is indeed due more to the fact that the vast majority of countries have, iti consequence budgetary deficits, departed from the gold standard in the course of the last decade aud a half than to the normal working of that standard.
That is the latest report dealing with gold and its distribution throughout the world. Honorable members will observe that during the last fifteen years most countries have departed from the gold standard. Dealing with the influence of discount rates, the report states -
A rise in bank rate would tend to increase market rates also, and thus raise the price of credit facilities and restrict demand. In this way the total volume of loans and advances, and of the deposits in which those advances were duplicated, could be controlled. If in such circumstances, prices tend to fall this is due to the effect which the higher rates exercise on the domestic demand for credit and ultimately for capital. On the one hand, they render saving more attractive by increasing the interest earned on such savings.
The suggested legislation to tax interest is along those lines. The report continues -
On the other hand, they diminish the demand for capital goods by increasing the cost of borrowing. Purchasing power is thus directed from consumption goods to savings, but not in its turn diverted to capital goods by means of investments. Prices of both classes of goods are depressed. This depression of prices in its turn renders the country a favorable market for foreign purchases and the balance of payments is affected in the manner described above.
Surely the primary producers of this country have had their lesson ! I desire to quote one further extract from the report in refutation of the arguments used by the Leader of the Opposition -
We are of the opinion, therefore, that, in order at once to allow central banks the liberty of action which is necessary for the conduct of a rational credit policy, and to permit of an economy in the use of gold, the existing legal stipulations concerning gold reserves should be modified.
As we stated in our previous report, the existing minimum could be reduced without in any way weakening the general credit structure, granted an international understanding had previously been reached.
In volume 20 of The History of Europe during the French Revolution, Sir Archibald Alison, a Scotch historian, who is noted for hi3 reliability, states -
In February, 1797, when the vast abstraction of specie from the British islands, owing to the campaigns of the preceding year in Italy and Germany, joined to an extraordinary run upon the banks, arising from a panic at home, had brought matters to extremities, the Bank of England was on the verge of bankruptcy, and the nation within a hair-breadth of ruin. But Mr. Pitt was at the helm, and his firmness and foresight not only surmounted the crisis, but drew from it the means of establishing the currency of the country on such a footing as enabled it to bid defiance, throughout the remainder of the war, alike to foreign disaster and internal embarrassment. To the suspension of cash payments by act of 1797, and the power in consequence vested in the Bank of England of expanding its paper circulation in proportion to the abstraction of the metallic currency and the wants of the country, and resting the national industry on a basis not liable to be taken away, either by the mutations of commerce or the necessities of war, the salvation of the empire is beyond all question to be ascribed.
In that case a government, in carrying out a policy of credit expansion, interfered with the banks, but its interference saved the situation. I also take the following extract from Sir Archibald Alison’s work in order to show that the relaxation of reserves to allow the currency to meet the requirements of the time saved the situation in Britain -
A similar crisis, and from a similar cause, occurred in 1810, but it led to no injurious results; on the contrary, it was contemporary with the greatest exertions of the nation. The prodigious adsorption of specie for the use of the French and Austrian armies during the campaign of 1809, joined to the immense cost of the campaign in Portugal, and the importation of 1,500,000 quarters of wheat, to supply the deficiencies of a bad harvest in 1810 had occasioned so great a dearth of specie in Great Britain, in the latter year, that gold and silver had almost entirely disappeared from the circulation, and a light guinea was worth 25s., and sometimes as much as 27s. But what then ? The banks increased their issues in similar proportion: that of the Bank of England was raised to £28,000,000; its discounts reached £20,000,000 in a single year. Ail other banks did the same; and, by this moans, not only was the crisis surmounted without difficulty, but 130.000 combatants, with 40 ships of the line, were assembled around Lisbon, which hurled back the French legions from the lines of Torres Vedras
– Has the Treasurer not told us that the only reason for this bill is the impossibility of floating a loan because, although the people have the money, they will not trust the Government with it?
– The Treasurer did not say that.
– Nevertheless, it is a fact.
– No. The explanation is that the long period of borrowing by the late Government, necessitating the paying of interest year after year, has so sapped the industrial resources of the country that to raise further money by loan, and to incur further interest liabilities, would be to ruin our industrial and commercial activities.
– The Government could not raise 2s. if it tried.
– In times of crisis the Bank of England has had to be taken over by the governmental authorities, which released credit and saved the situation.
The Leader of the Opposition also opposed the bill because it contains an element of compulsion in that the Commonwealth Bank is to be made to do certain things. In this connexion, I desire to quote some authorities to show that sometimes it is necessary to interfere with a policy. Wade, in his Finance and Industry, says -
Conceive of banks as a system of canals running all over the country and even to its remote villages, as being channels whoso waters are collected like rain into supply reservoirs which are bigger and bigger according to the populations of the large cities and towns, as having numerous reservoirs adjoining each other in London, and as, finally, having one central reserve reservoir from which, at need, they can draw, and in which they can conserve supplies against any sudden drought. The last is the Bank of England: That analog)7 will serve our purpose well enough for stressing one function of the Bank of England as the final reservoir of our credit and cash in normal times. I use the qualification, because in troubled times or in crises, the ultimate control of all the supplies automatically passes to the Government, as may bc seen in the various suspensions of cash payment and of the Bank Charter Act. The history of the various crises which have affected the bank since its foundation in 1604 - particularly those of 1797, 1825, and the long financial pressure of 1830-39, which led to the Peel ACt - shows that though the bank is in ownership and control a private institution whose capital is held as that of other business undertakings, the Government of the country accepts responsibility for its maintenance and also for its control when any upheaval disturbs the financial situation of the country. As a matter of fact, ever since the Peel Act it has been modelled on a plan imposed on it by legislation, and at each crisis since - the railway panic in 1847, the overtrading crisis in 1857, Black Friday in 1866, and finally the European War crisis of 1B14 - an act of the Government and’ not of the bank directors has been the means of restoring the public mind from panic to assurance. And to-day, as every one realizes, the prestige of the bank and the absolute confidence of the public at home and abroad in its operations, are due to the knowledge that the Government of the nation has always been its final support.
I suggest that the Commonwealth Bank is in a similar position to the Bank of England and other banks, which, during normal times, conduct their operations in an ordinary way, but during a crisis, such as we are now passing through, the Government should come to the rescue of the people. The late Mr. H. E. Pratten, who perhaps controlled the Department of Trade and .Customs more successfully than any other Minister, made the following statement on this subject on the 1st April, 1924 :-
Our private banking arrangements may have been suited to the earlier periods of our history, but Australia evolved first from a British settlement to a colony, then from a colony to a dominion, and is now an independent entity within the British Commonwealth of Nations, being no longer governed by the Colonial Office. We should no more hesitate to throw off the shackles of international finance than we did the shackles of the Colonial Office.
On the 15th May, 1924, the late Mr. Pratten said -
No attempt has been made through any banking organization to protect the true interests of Australia because the British banking system, which the British manufacturers have built up, has provided tremendous monopolistic power. The British banking system has been framed, designed, and carried out for decades in order to swell British exports, to sell British manufactured goods, and to facilitate the importation into Britain of raw materials. The shareholders or owners of these banks are wedded to British manufacturing supremacy j their whole interest- lies in this direction. Consequently, the policy of the British banks - which is largely in the hands of manufacturing and trading interests - is designed and carried out in order to continue and perpetuate this system. This policy has also been grafted upon Australia by the British registered banks operating here, and, in my opinion, the Australian registered hanks have found themselves compelled to follow suit.
He concluded by saying -
Do not allow foreign financiers to take us where we do not want to go.
The private banking institutions of Australia are operating in the interests of their shareholders, who are business men, instead of in the interests of the country. The Leader of the Opposition (Mr. Latham) also said that the easiest way in which to increase wages is to reduce prices. I also quote a table which has just, been received from Geneva showing the effect of a fall in prices upon unemployment. The table, which sets out the position from May, 1929, to August, 1930, discloses that, without a single exception, a fall in prices in Great Britain and Germany has resulted in increased unemployment. The table is as follows : -
That information, which has been obtained from a reliable source, contradicts the assertion of the Leader of the Opposition. I now quote the following article from the New Statesman, published on the 31st January, 1931, entitled “Gold and the Price Level “. It reads-
It is an old saying that promoted servants make ill masters, and the place of gold in our modern economic system scums to bear the saying out. For, as all of us who have learnt the rudiments of economics know, gold has much to recommend it as a standard of value. It is portable, durable, uniform in quality, readily divisible - ithas all those virtues which are retailed in the economic text books, and have sufficed to make it, over most of the world, the basis of the monetary system. It has been, in many respects, a good servant and, as a servant, deserves a good character. But somehow, from being our servant, gold seems to have been promoted to be our master; and most of us are not finding its rule to-day either easy or benign. Whatever the method, back to gold we all crane, well assured that, by so doing, we should not only bring all our national currencies to a common standard of value, but also get therewith stability and a secure basis for future trade relations. Alas! that we should have been so sadly disappointed. A man may now, indeed, exchange pounds for francs, or dollars for pounds, withoutserious uncertainty about the quantity of the one currency that the other will command. The extreme fluctuations of the foreign exchanges have been eliminated by the return to gold; although even so the recent movements of the Australian exchange have taught us that the gold standard itself affords no absolute guarantee of exchange stability. Broadly, we have stabilized pounds in terms of dollars, and dollars in terms of francs; but we have not succeeded in stabilizing any of these currencies in terms of what matters most - its power to command goods and services, and to con stitute thereby a stable measure of real value Since the world came back to gold as a standard, the level of prices has gone down and down. There have been, indeed, temporary interruptions to the downward movement, and in certain countries, notably the United States of America, the internal price level has remained stable for long periods on end. But for years past there has been no mistaking the general downward tendency of world prices; and during the last fifteen months the price level has plunged more and more steeply downwards into the abyss. Nor does any one seem able to offer convincing reasons for supposing that the fall in prices islikely to stop in the near future. There may be temporary recoveries, no doubt; butmost economists are agreed that, unless some action is taken to counteract the prevailing tendency, prices will go on sagging for as far ahead as it is possible to. see with any degree of confidence.
Now, in some people’s eyes, a falling price level is by no means an evil. For any one who enjoys an absolutely secure fixed money income, it obviously offers the prospect of a steadily increasing real income -
If the Leader of the Opposition stands by the statement he has made, I take it that he is representing people with fixed incomes -
But most people are not in that position. They depend either on variable profits or on wages or salaries, which will continue to be paid only if profits can be made by the employment of labour. A falling price-level, or, at any rate, one falling faster than industrial efficiency is increasing, tends to mean less profits, or none, and, therefore, less employment. Even if wage-rates are maintained, it reacts on the volume of employment, and, therefore, on the total sum paid out in wages. It tends to diminish the total purchasing power of the community by these means much faster than it can be increased by the greater value of each pound distributed in income.
Consequently, most people now recognize that a falling price-level, or, at any rate, one falling as fast and as uncontrollably as world prices have been falling of late, is an almost unmitigated economic evil. And most experts now agree that the persistent fall in general I ii’ ices is to be attributed largely to the behaviour of gold, or rather to men’s behaviour in its use. The return to the gold standard has been accompanied by a great increase in the world’s demand for gold, and by a bottling up of the greater part of the available supply in the reserves of the great central banks. This bottling up would do no harm - for there is no advantage in actually pouring gold from hand to hand in payment of debts - if the central banks could and would use their supplies as the basis for an expansion of currency and credit on a scale commensurate with the world’s needs, aud sufficient to keep stable the level of world prices.
That is the point I wish to make. The proposal before the House to-night is intended to have the effect of releasing sufficient credit to meet the requirements of the times and stabilize the level of prices. Mr. Reginald MeKenna has recently said on more than one occasion that there is no possibility of preventing this disastrous fall in prices, with its consequent evils, unless we create a tendency to increase prices and restore confidence.
Whilst I am on the subject of confidence, I should like to place upon it an interpretation which is not given to it by honorable members opposite. I agree with them that we must, as they have repeatedly said, restore confidence; but I disagree altogether with the sinister suggestions they apply to the word “ confidence.” For instance, they suggest that confidence has been lost because of the Government in power.
– Not because of the personnel of the Government, but because of its actions.
– I think it is fair to say that honorable members opposite claim that the country is suffering because the people have lost confidence in the Government. Let us ask ourselves why business has become stagnant; why values are falling, and why there is industrial inactivity with consequent unemployment. I agree with my friends opposite that the country is suffering from loss of confidence ; but the interpretation I put upon it is that people engaged in business activities have lost confidence because of the continual fall in prices and values. No man in competition with others can have confidence where there is a steady fall in prices and values. How can he buy material to-day with the prospect that the price of that material will drop to-morrow to the advantage of a competitor? This loss of confidence prevents people from extending their operations. It is restricting business activities.
– Does the Assistant Minister think that the people have confidence in the administration of the present Government?
– 1 have no justification for thinking otherwise.
– I suggest that there is no evidence of it.
– The last election proved that people had lost confidence in the then Government, and, generally speaking, the tests which have taken place since then have not disproved the fact that the people have still no confidence in that Government. There is no evidence that they have lost confidence in the present Government.
The loss of confidence which is ruining industry in Australia to-day is not lack of confidence in the Government, but is that lack of confidence among business men, which has been brought about by the continuous fall in prices and values. If you go into Flinders-lane and make inquiries of wholesale suppliers of tweed for clothing operations you will be told that, whereas the practice of previous years was for the clothing manufacturer or retail tailor to buy rolls and rolls of cloth, the purchaser will now buy just sufficient material to enable him to make up the orders he has already contracted to supply. He will not carry £1 worth of additional stock because of his fear that there may be a fall in price.
– If he looks at the last wool sales he will soon alter that practice.
– Yes. The fact that wool is jumping up in price should stop the dismal wails of some honorable members opposite. [Extension of time granted.]
Speaking previously in this chamber I mentioned that in 1920 a financial conference was held in Brussels . at which was initiated the period of deflation from which the world is suffering to-day. I pointed out that at that conference delegates from 46 nations discussed by what means they could checkmate the then period of inflation and get back to pre-war prices and values, and that by resolution they instructed the business people of the world to begin to restrict their activities in every direction with a view to the creation of the right atmosphere for deflating prices, values, wages, and standards generally until they got back to the 1914 conditions. I have with me the verbatim report of the discussions and a report of a special address delivered by Professor Gustav Cassel, who attended the conference, as financial adviser. In that address he strongly advised the delegates not to take the risks that would be involved in the policy of deflation they were proposing. He said -
Supposing that it really would be possible, by some very severe restraints on the market, to keep down the supply of money, during this long period, at its present figure, such a policy would involve a continual depression of the general level of prices by about 3 per cent, per annum. Under such prospects, however, it is obviously impossible to expect a normal rate of progress; indeed, the most probable result would be a more or less complete killing of industrial enterprise and of the very spirit of economic progress. But then the need for money reduced to pre-war prices, would hardly ever grow up to the figure of the present supply. Clearly, the policy Involved in this conception of the problem of deflation can never be seriously contemplated.
We then, secondly, have to take account of the possibility of enforcing deflation by a high bank rate, or by other restrictions of the lending of the banks. The restrictions must then be so sharp that a stage is reached where the banks lend less than the actual savings deposited with them, and use the rest to cancel nominal purchasing power. Such a policy would, without doubt, press down prices, but it would at the same time have a very depressing influence on trade and industrial enterprise. The difficulties of a prolonged application of such methods are obvious. These being the means by which a deflation can be carried through, it seems clear enough that the practical possibilities of the programme of deflation are rather narrow, and that a radical realization of this programme will, in reality, show itself very little desirable. A prolonged period of falling prices and consequent general economic depression will never be accepted as a wise device of deliberate economic policy.
However, it seems hardly advisable to enter upon any deflation scheme which would involve a reduction of the general level of money wages; for every such endeavour would, with- out doubt, lead to social unrest, and in this way make harm out of all proportion to the advantage it could bring.
The delegates came to this general conclusion -
It is useless to attempt to fix the ratio of existing fiduciary currencies to their nominal gold value; as unless the condition of the country concerned were sufficiently favorable to make the fixing of such ratio unnecessary, it could not be maintained. The reversion to, or establishment of, an effective gold standard would in many cases demand enormous deflation, and it is certain that such deflation, if and when undertaken, must be carried out gradually and with great caution; otherwise the disturbance to trade and credit might prove disastrous.
In spite of that statement and the warnings of Professor Gustav Cassel, the conference resolved upon a policy of deflation, the results of which are being experienced by Australia and the United Kingdom to-day. The purpose of it was to get back to the standard of values existing in 1914. But the only persons who have reaped any advantage from it are the bondholders, money lenders, and usurers of the world - those who have a fixed interest income which hitherto could not be affected by any parliamentary or governmental action. The men who came to Australia to draw up the financial policy which the honorable member for Maribyrnong has lauded this evening, represented the group who insisted upon the policy of deflation, the investors who were deriving advantages from it. Those delegates attempted to overbear the judgment of the representatives of Australia, and instead of our parliamentarians and bank directors adopting an Australian policy suited to the needs of our people, they were deluded into accepting a policy suggested by and advantageous to the money lenders in Europe, and others who were interested in getting from, this country cheap primary products. Their attitude was wrong; it was anti- Australian. The only formula that has yet been proposed for correcting that mistake is represented in the bill now before the House. It alone can stimulate industry, and surely honorable members, instead of carelessly and haphazardly flinging about such terms as loss of confidence, inflation, and deflation, should seriously consider a proposal which aims at restoring financial equilibrium, rehabilitating industry, and restoring our people to employment.
Throughout the world students of finance and economics have been for years trying to devise a means of ensuring a uniform flow of credit. They have sought to establish a point of stabilization, below which would be deflation and above which would be inflation. I have heard the Leader of the Opposition (Mr. Latham) talk on this subject before students of economics, and I believe that his private judgment endorses some of the assertions I am making. I should say that, if you were to ask for a scientific analysis of the two terms, the answer would be that each is a degree of the other. “When you get below the stabilization point, you have deflation; and when deflation exceeds a reasonable margin it becomes an evil, the only known corrective of which that has ever been evolved being a temporary period of inflation for the purpose of regaining the stabilization point. Honorable members opposite attach to the term “ inflation “ a sinister meaning, with which they endeavour to impose on the ignorance of the people. I am not afraid of inflation. I agree entirely that the opposite of deflation must be inflation. If inflation exceeds stabilization by a reasonable margin it, too, becomes an evil, and corrective measures must be applied until the stabilization point is again restored. A correction of either when it becomes an evil cannot be brought about without a temporary use of the other.
– On what principle does the honorable member fix the degree of inflation necessary in order to obtain stabilization 1
– The real principle upon which stabilization should be based is, whether the credit flow in the community properly and scientifically meets the volume of production and distribution at the particular period, or in a particular place; the manner in which it meets the necessities of the industrial system at the moment. For these and many other reasons, which time will not permit me to discuss, I strongly support the bill.
.– The Assistant Minister (Mr. Holloway) spent the whole of his extended time, and a good deal of his ordinary time, in defining with increasing vagueness the terms “ inflation “, “ deflation “ and “ stabilization “. His definitions were not very clear, even to himself, when he had finished, because he constantly changed them. I suggest that his vagueness was caused, to some extent, by views that he held or endorsed long before he became a member of this Parliament - views that were given expression by Trotsky.
I have in my hand a pamphlet entitled “The World Crisis: Will Capitalism Survive written by L. Trotsky, with a foreword by “ E. J. Holloway, Secretary of the Melbourne Trades Hall Council In that foreword, Mr. Holloway said that he “ was fortunate enough to receive a copy of the wonderful speech contained in this pamphlet from Moscow. . . . the educative value of the wide distribution of such a survey cannot be overestimated “. The price of the pamphlet is 6d.
– I thought that it was cheap; otherwise the honorable member would not have had a copy of it.
– This cost me nothing; and its value is the same as would be that of the new notes, which are not likely to see the light of day. It is published by the Proletarian Publishing Association, of Melbourne. On page 35 I find the following reference to the gold standard: -
In order to restore world economy on a capitalist basis, one must have the worldequivalent back again, namely, the gold currency. Capitalist economy cannot exist without this gold currency. When prices rise at the rate of 100 per cent, in the course of one month, as is the case in Germany, as a result of the fluctuations in the German currency, there can be no production. The capitalist is not interested in production, while speculation, with its high prices, is winking to him from the distance as something much more tempting than the slow development of production. What does the restoration of the currency mean? For France and Germany it is equivalent to a declaration of bankruptcy. Such a declaration, however, means a great upheaval of the property relations of the nation. And the States which declared themselves bankrupt would start a new struggle for a share in the new national property. That is a mighty stride towards the class struggle, signifying at the same time the disturbance of the social and the political equilibrium, and creating revolutionary movements.
At page 38, the pamphlet says -
To enlarge these struggles, to broaden them with the consciousness of the economic situation, is our task. This is quite clear. The question is, however, will these great struggles for wages, oi which we have a classical example in the miners’ strike in England, become automatically transformed into a social revolution, into the final civil war, and into the battles for the acquisition of political power.
Juggling with the currency has been the stock in trade of political disturbers for a very long time. This proposal to issue fiduciary notes is the last of a series of proposals with which the Treasurer (Mr. Theodore) and his supporters on the Government side have been bidding first to one and then to another section of the community, in an effort to re-establish the political foundation that they enjoyed some months ago. There is a group of bills, the first of which we are now discussing. Then, depending on that, is one which indicates the use to which the first issue of these notes is to be applied. Following upon that is the bill that was introduced to-day, to enable the gold reserve to be exported to meet our obligations overseas. Other proposals forecast by the Treasurer’ may involve legislation, but it has not yet appeared. There is a measure to regulate interest, and there is alao, looming somewhere in the distance, another proposal to regulate exchange. This bill to issue fiduciary trusttoluck notes lacks one provision, namely, a clause to override the penal sections in State laws against people who issue cheques which are unsupported by money in the bank. The bill is a deliberate, cold-blooded piece of inflation. It is one method to cut down pensions and other fixed charges.
– Do not introduce that argument.
– Undoubtedly it will have that effect, because this Government has been accepting dictation from outside forces in regard to its various lines of policy, and it is certain that it will be unable to withhold further doses of this dangerous drug. It will not take very much to create a panic. The Prime Minister (Mr. Scullin), when in England, indicated this danger in one of those cablegrams sent by him to the Acting Prime Minister (Mr. Fenton). But even if a panic is staved off, this continual infusion of new currency into the volume of notes in circulation must have a very serious influence upon price levels. In this way, it will affect, seriously, people with fixed incomes, including more par ticularly pensioners and the savings of the thrifty sections of our people. Although the large bondholder may also be hit, as a general rule his investments cover a. large range. What he loses in one form of investment he probably picks up in another, whereas people with small savings invested in government securities or life insurance societies, will stand to lose all. Pensioners will also run an equal risk. To some extent, wage-earners are protected by arbitration awards, but experience has shown that the lag is always considerable between the time when arbitration courts vary rates of wages in conformity with the changes in price levels, and the value of money. Wage and salary-earners, therefore, will also be serious losers as the result of this policy.
The general danger of inflation has been well expounded by numerous speakers on this side of the House. They have also been clearly indicated in speeches made by the Treasurer (Mr. Theodore) and the Prime Minister (Mr. Scullin), although not actually during the last week or two. I wish to direct particular attention to its effect upon our big exporting industries, notably, wool and wheat, upon which the ultimate prosperity of all other industries depends. Most mining industries will also be adversely affected, although those interested in gold-mining have an opportunity to adjust their conditions to the changes due to inflation. The Treasurer and the Prime Minister have endeavoured to persuade us that this policy upon which the Government is embarking is not fraught with danger, because, so they argue, it will be possible to control the inflation of currency. We are asked to believe that all they wish to do is to infuse into the economic system of Australia just sufficient of this drug to give industry the necessary impetus, and then, when it has recovered slightly, to allow it to develop in the normal way. When the Treasurer inquired why honorable members on this side believed that it would not be possible to control the currency, he was promptly reminded by the honorable member for Angas (Mr. Gabb) that caucus would not allow the Government to control the currency. We have had ample evidence, recently, of the power exercised by caucus over this Government. During the absence of the Prime Minister (Mr. Scullin) and the Attorney-General (Mr. Brennan), caucus, despite the unanimous decision of the Cabinet that appointments to the High Court were not necessary at the moment, directed the Government to so fill the two vacancies. Accordingly, the appointments were made, notwithstanding urgent radiograms sent by the Prime Minister making it perfectly clear that he and the AttorneyGeneral were opposed to the manner in which they were made. I am not suggesting that the Cabinet was unanimously against the persons whose appointments were proposed, but it did object to the way in which it was done. If caucus could override the decision of the Government in such a matter as that, it is reasonable to assume that it would do so with regard to the currency, which is a much more tempting object. A government which accepts dictation, first from secretaries of outside industrial organizations, and afterwards from caucus, concerning appointments to the judiciary, is not likely to stand up against the influence of caucus with regard to an extension of the currency. I have no doubt that this Government could not control the forces upon which it depends, in such a matter as the proposal to make available what might appear to be a fresh amount of easy money.
If the export in our primary products were governed by the issue of licences to exporters, the Government could, in that way, control exchange. It is the avowed intention of the Treasurer to raise prices to the 1929 level, but he cannot raise the prices of our main export commodities. Even this first dose of the fiduciary trusttoluck notes will only give our wheatgrowers a bounty of 4£d. per bushel. This proposal will do nothing for any other exporting industry.
If the fiduciary currency is to be controlled, that can only be done by controlling the exchange, which, as the Treasurer has indicated, would involve the licensing of exporters, allowing them to send goods overseas only on the condition that they put the proceeds through the exchange pool, out of which the Govern ment would get the first “ cut “ for meeting commitments overseas. If that were not done, with the price levels rising in Australia even to the 1929 level, there would naturally be a flight of much capital from Australia. With prices at that level, the cost of carrying on the main exporting industries would be so terrific that they would be bound to languish, and the funds available in London for paying for imports, and for meeting government commitments there, would not be sufficient. New taxation would have to be raised to meet government commitments, and the exchange rates would go still further against the Australian pound and government expenses, although in favour of the exporting primary producers. The Government proposes to safeguard its budget, to control the exchange, and, as suggested in the Treasurer’s speech, that could be done only by the licensing of exports, which could not be easily accomplished administratively. The Treasurer said that he considered the exchange rate to-day to be abnormal. In his second-reading speech, he remarked that -
Another measure may be necessary to provide better and more effective control of the exchange so that the rate will not rise to an abnormal level. In my opinion it is at an abnormally high level at the present Mme.
The exchange on a bushel of wheat is worth to-day approximately what it was at the beginning of February, and an official of the South Australian Wheat Pool has furnished me with figures which show that the exchange at that time was worth 6¼d. a bushel to its wheat sales. It is proposed to pay the wheatgrower 4jd. a bushel and to regulate his exchange. The Treasurer does say that it will be so regulated as to allow for any difference in price levels in Australia and overseas. The Treasurer declares that he believes the present rate to be abnormally high, so the chances are that if he gets his clutches on the exchange, it is likely to be regulated down. At the present time the exchange on a bushel of wheat is worth a shade over 6-Jd., and he proposes to take a certain proportion of that amount away from the grower. These are real funds which the wheat-grower, or his pool, gets in Loudon, and it is proposed in place of them to palm off on the grower 4-d. in a debased currency. If the exchange is regulated down for the wheat-grower, of course it will be regulated down for every other industry. At the time when these figures were handed to me, the exchange was 6¼d. on a bushel of wheat, and also a proportionate amount on a pound of wool or a pound of butter; but there is no proposal to give the exporter of butter, wool, minerals or fruit any of this fiduciary currency to make up for this regulation of the exchange.
The exchange is regulated at the present time by the ordinary laws of supply and demand, following a period of pegging and control, which began when the Treasurer was previously in office. For the purpose of raising 4£d. a bushel for the wheat-growers, and a certain amount for the unemployed, the Treasurer proposes to start on this dangerous course, and he is prepared to introduce a system of licensing of exports. But it is very doubtful whether this Government will be able to obtain control of the trade of the country. Such a policy would open the way to all sorts of additions to government regulations, and to the list of government officials. During the late war, owing to the shortage of shipping, exports were, for a time, controlled. At that period practically the whole country was making a united effort to bring about the success of various government activities that were necessary for the carrying on of the war. There was probably more goodwill and combination then to help the Government to carry out that policy effectively than could be expected at any other time. If such control were exercised to-day, to take a certain amount from the exporters and bribe a few of them with the spurious money contemplated under this bill, it would certainly not produce the same goodwill as was shown during the period of war-time control.
– There was no objection to control during the war period.
– It was necessary at that time because of the shortage of shipping; but even then it was not entirely successful. In one case a shipping clerk received a bribe to allot space for the transportation of a racehorse from Adelaide to Perth. That is the sort of thing to which an extension of government control is liable to give rise. This form of control leaves openings for evasion. It would be possible for an exporter, when he received the proceeds of the sale of his goods overseas, to buy goods or sell his London funds to another person. That might easily be done under a licensing system. The goods might have a certain inflated price which would leave part of the proceeds which could be left overseas in the form of exported capital. Although that would not affect the exchange rate, and the Government might still be able to get its money at a fictitiously low rate, there would be something in the pocket of the consciously corrupt exporter-
– The honorable member is discussing the Wheat Bounty Bill.
– No. That bill contains no provision for the control of the exchange. The Treasurer’s reference to that subject occurred in his secondreading speech on the bill before the House. If I were allowed to read from Hansard of the current session I could give particulars.
– If the Treasurer (Mr. Theodore) was permitted to refer to this matter, the honorable member may continue.
– It would be impossible to control exchange without licensing exports. I object to the bill, first, because it is dangerous ; secondly, because, in order to carry it out - if it can be carried out - all these objectionable regulations and subsidiary regulations will be necessary; and, thirdly, because I do not believe that the legislation, if passed, will be effective or successful. There will be opportunities for evasion; but worse than that will be the further loss of public confidence. Once the value of currency begins to fluctuate, it will be possible for privileged individuals who have access to the right information to make profits amounting to tens of thousands of pounds. No government should be placed in such a position. When all sections of the community are actuated by patriotic motives, the public is prepared to vest special authority in certain individuals; but in times of peace to give such powers to a government which only a few months ago expressed itself as being entirely opposed to inflation, especially when one of its members is under the shadow of grave findings-
– Cut that out!
– The remark is relevant because the measure . before us asks the House to place individual members of the Government in a position in which they could make profits by dealing in exchange. The honorable member for Flinders (Mr. Holloway) spoke at length about banks and those in control of them. Bankers are only human ; they have their failings. But, taken as a whole, they are individuals whom the public can trust, I know of no banker that I would not rather trust than the gentleman to whom my remark to which the Attorney-General (Mr. Brennan) objected had reference. That gentleman will be at the head of the Treasury if the Government is successful in piloting this measure through Parliament. The bill risks the savings of the most deserving section of the community, among whom are many persons with small means, and it will further reduce the prices of our main exportable commodities. Moreover, effect could be given to it only by the issue of further regulations, an increase in the number of public servants, and the introduction of processes for which there is no need and which Australians do not like.
Debate (on motion by Mr. Keane) adjourned.
Press Misrepresentation - Wool Freights - Price Fixing: Personal Explanation - Interest Payments by New South Wales.
Motion (by Mr. Scullin) proposed -
That the House do now adjourn.
– I desire to draw attention to a matter of urgent public importance. In yesterday’s issue of the Labor Daily it is stated that Mr. Cusack, the honorable member for Eden-Monaro, had sent to that paper a copy of his speech as “ doctored “ by Hansard. I regard that statement as an improper insinuation against the reporting staff connected with this Parliament.
– Read the whole statement.
– The Labor Daily alleged that I made a bitter attack on the Beasley group. Statements of that kind, in the public press of this country, should not be tolerated. It is evident that certain sections of the press are out to damage the prospects of honorable members who support the Government. The Sydney Sun also alleges that I made a “bitter attack on Beasley”. These reports are published with an ulterior motive; they seek to damage the prospects of Government supporters. The Labor Daily, which allegedly supports the Labour cause, has written a leading article based on a falsehood without first getting definite information as to whether the report on which it is founded, is true or otherwise. It is a cowardly thing for any newspaper to make an attack on the reporting staff of this Parliament. The report of my speech in Hansard is correct; there is no justification for the allegations contained in the Labor Daily. Ever since this Government came into office, that newspaper has done its utmost to embarrass it. There seems to be plenty of space for the reports of speeches which either criticize or disparage the Government. Recently, the Labor Daily devoted almost a full column to a speech of the honorable member for Werriwa (Mr. Lazzarini), in which he criticized the Government. On the other hand, the speeches of those honorable members who have spoken in support of the Government have scarcely been referred to. Although the late Mr. West was in this Parliament for twenty years, I do not think that the Leader of the Opposition (Mr. Latham), or any other enemy of the Labour party, ever quoted his remarks in an attempt to injure the Government of which he was a supporter. But the first speech made by his successor (Mr. Ward) was quoted by the Leader of the Opposition the next day, because in it he criticized the Government. Things have almost reached the stage that certain members of this Parliament have only to sneeze in this House to have their photographs in the Labor Daily the next day. Every remark they make against the Government is broadcast by this alleged Labour journal. I understand that the Labor Daily has not any member of its own staff in the press gallery, that the reporter for the Canberra Times is its representative in Canberra. That view is borne out by the fact that the same garbled reports of what is alleged to take place in caucus, appeared in both publications. It may be part of a conspiracy to make it difficult for this Parliament to function ; but why that should be so I am at a loss to understand. As one who is endeavouring to put the press of this country in its right place, so that it will not be an influence on behalf of any one section of the community, or an instrument to do an injustice to any other section, I protest against these incorrect reports. Already, there are enough papers opposed to the present Government without the Labor Daily joining their ranks.
– The most effective paper against the Government will be the fiduciary note issue.
– The Government should see that the press representatives who are responsible for such reports are deprived of the privileges which they enjoy. It appears to be their policy to assist those political cannibals who are preparing flesh-pots for certain honorable members who they contend cannot much longer retain their seats. These political cannibals, who are waiting to secure the body of the Treasurer (Mr. Theodore), are also anxious to obtain mine. I understand that the necessary receptacle for the body of the honorable member for Gwydir (Mr. Cunningham) is under construction at Cockatoo Island dockyard. Reports of the speeches of certain honorable members who criticize this Government are given considerable prominence in the Labor Daily, whose principal objective appears to be to encourage those belittling the Government. If the representative of the labor Daily wishes to obtain an accurate report of what transpires in the party room he should consult the Prime Minister or the Government Whip, and. in that way obtain an authoritative report, instead of publishing an untrue record which is of no value. I also protest against what appears to be an alliance between the Canberra Times and the Labor Daily, and if, as I suggest, the one person represents both newspapers, it is time that a change was made. Whatever the motive, it is clear that this Government is not going to get a fair deal from the leading newspapers in this country, and by that means assisted in the passage of its legislation for the benefit of the Australian people who are anxiously waiting for some relief. Practically the whole of a speech of the honorable member for Warringah (Mr. Parkhill) in condemnation of this Government, consisted of extracts taken from the Labor Daily and from the speeches of Federal Labour members. I do not know if the Prime Minister is prepared to do something in the direction I have suggested in order to protect this Parliament. A speech which I delivered after an all-night sitting was faithfully recorded by the official reporters, and I regret that they should be maligned by a representative of the Labor Daily. In the circumstances, the Government should take some action in the matter, as there is no reason why the representative of that paper should abuse the privilege which he enjoys.
– During question time to-day the Prime Minister (Mr. Scullin) outlined the attitude of the Government with respect to the wool industry. In reply to certain questions submitted by honorable members on this side of the chamber he indicated that he did not propose to take action along the lines that had been suggested until the matter had been further considered by the representatives of the wool-growing industry. I should like, however, to know if there is any possibility of anything being done to assist the industry in the matter of freights. During the last sitting of the Parliament it was said that an attempt was being made to make some arrangements with the shipping companies in the matter of freights, whereby the wool industry, which at present is labouring under such serious disabilities, could be afforded some relief. It is on record that Australian meat is being shipped overseas at fd. a lb. while the rate for wool is fd. more. I ask the Prime Minister if there is any possibility of the negotiations with the shipping companies being brought to a successful issue. Notwithstanding the improved prices for wool at present ruling some assistance should be given. That is clearly demonstrated by the action taken by the South African Government to assist the wool-growers in that country. At present the rate on wool from South Africa is½d. per lb. less nine-sixteenths per cent, exchange, while Australian wool-growers pay1d. per lb. plus 30 per cent, exchange - almost equivalent to l½d. per lb. Can the Prime Minister say if the negotiations, if not completed, will be expedited, or will he take some action that will result in some degree of relief being given to the wool-growers?
.- I desire to make a brief personal explanation. On Thursday last I attended a deputation to the Prime Minister with respect to the wool industry. On Friday, 20th March, the Sydney Morning Herald ina report under the heading of “ Wool Industry - Stabilization Plan - Fixing Minimum Prices” - gave a fairly accurate account of one of the several requests made by the deputation. The report indicated the lines along which a a resolution concerning the fixing of minimum prices had been carried by certain wool-growers, and which had been submitted by the members of the deputation. At the deputation I made it quite clear that I could not support any policy of price fixing, particularly with respect to a commodity such as wool. Unfortunately, my pronouncement on the matter of price fixing was inadvertently omitted from the report. I do not blame any one for the omission, but 1 merely wish to make my position in the matter quite clear.
– I direct the attention of the Prime Minister to a questionI asked some days ago with reference to the interest payments of New South Wales. I raise the question at this juncture because in this morning’s Sydney Morning Herald a paragraph appears to the effect that the New South Wales Government has defaulted in respect to the sum of £600,000 in its payments to the Savings Bank of that State as well as in respect to certain interest payments due to the Commonwealth Government. I should like to ask the Prime Minister if he is yet in a position to make a statement as to the exact position of New South Wales finance in relation to Commonwealth finance, or, if he is not, when he will be able to do so?
– In regard to the question raised by the honorable member for Darling Downs (Mr. Morgan), whether negotiations have been completed in the matter of shipping freights, and, if not, would they be expedited, I wish to point out that the Government is not entering into any such negotiations with the shipping companies, and has not at any time done so.
– Was not the general question a matter of negotiation?
– The only part the Common wealth Government played in the matter was when the Overseas Transport Association, which consists of representatives of the shipowners and shippers, the latter including wool-growers, came to us to ask us to bring down amending legislation to enable them to enter into an agreement fixing freights. 1 introduced a measure, and it was passed through the House, enabling them to enter into such an agreement. The fixing of freights and the regulation of shipping are subject to agreement between the representatives of the shippers and the representatives of the ship-owners, who form the Overseas Transport Association. It is a matter of arrangement between themselves.
– Could not the Government intervene in some way to help the wool-growers ?
– When they approached the Government they had practically arrived at a tentative agreement to fix reasonable freights, and the wool-growers associations were well represented upon that committee. I understand that a number of things have happened since then ; but at the beginning of the negotiations they were not anxious to have any provision compelling them to have freight charges fixed. The Government, however, would not agree to bring down the amending legislation unless such a provision was included. We brought down the bill and it was passed, and now the matter is entirely one for the shippers and ship-owners themselves. The Government has no power to make any rules in regard to freights. It can make representations if they are of any value; but the woolgrowers themselves are represented on the Overseas Transport Association, and can make their own representations.’
With regard to the personal explanation made by the honorable member for Wakefield (Mr. Hawker), it is quite true that he was on the deputation, and that he dissociated himself from the proposal put forward. I, however, had no responsibility for the report which appeared; I supplied no report of the deputation.
In regard to the question raised by the right honorable member for Cowper (Dr. Earle Page), the Commonwealth Government is not at present able to make a statement as to what the exact position is in respect to the interest payment to which he has referred. As soon as the matter is clearly defined a statement will be made to the House.
– Does that cover the question I asked this morning?
– Yes, and a question asked previously by another honorable member.
Question resolved in the affirmative.
House adjourned at 11.35 p.m.
Cite as: Australia, House of Representatives, Debates, 24 March 1931, viewed 6 July 2017, <http://historichansard.net/hofreps/1931/19310324_reps_12_128/>.