12th Parliament · 1st Session
Mr. Speaker (Hon. Norman Makin) took the chair at 3 p.m., and offered prayers.
– In view of the newspaper reports that sweeping economies are to be made in the Defence Department - according to one journal, even to the extent of abolishing the Royal Australian Navy as a separate unit - will the Minister for Defence inform the House of the Government’s intentions ?
– Economies have been effected in the Defence Department, and others are contemplated, but at the present moment I am not in a position to indicate the form they will take.
– Will the Minister for Defence state whether a committee has been appointed to investigate proposed retrenchments and economies in the Defence Department? If such a committee has been appointed will he state the names and positions of the officers serving on it?
– Certain investigations have been made by officers of my department and, if practicable, I will let the honorable member know their names.
– Is the Minister for Defence aware that certain staff officers, who are officers of the regular army, and for whom, provision was made for their absorption in the Public Service, when rationing was introduced into the Defence Department, arc now under notice of discharge?
– I am not aware of the details of the matter, but I shall look into it, and furnish the honorable member with a reply.
– Does the Prime Minister propose to lay on the table immediately a copy of the sugar agreement?
– I shall do so at the earliest opportunity.
– The Sydney MorningHerald of yesterday stated -
Melbourne bankers do not confirm the statement from Canberra that the banks have given the Ministry an undertaking that they will carry on the Government’s overdrafts on condition that the decisions of the Melbourne conference are curried out. There has been no recent meeting; of the banks at which any such decisionhas been arrived at, and such ah undertaking could not he given without a consultation between all the banks.
Will the Prime Minister say whether the banks are willing to carry out their obligations as readily as they impose obligations on others?
– No authority, except some bankers unnamed, is given for the paragraph which the honorable member has read.
– Under the heading, “ How They Voted “, the Maitland Mercury, of the 13th June, published certain information regarding the meeting of the Parliamentary Labour party last week to consider the resolutions of the Melbourne conference. Arising out of that paragraph, I ask the Prime Minister whether it is true that the honorable members for Bourke (Mr. Anstey), Indi (Mr. Jones), Grey (Mr. Lacey), Hindmarsh (Mr. Makin), Melbourne (Dr. Maloney), South Sydney (Mr. E. Riley), Cook (Mr. 0. Riley), Kennedy (Mr. Riordan), Adelaide (Mr. Yates), Bendigo (Mr. Keane), and Corio (Mr. Lewis), and Senators Hoare and Kneebone, were the only members of the party that had the courage to vote in caucus against the proposed reduction of pensions.
Question not answered.
– The Canberra Times of to-day published the following telegram from Sydney: -
Steamer Loaded by Female Labour.
The British motor ship, the King Ludd, arrived in Sydney to-day from Vladivostock, with886.000 cubic feet of Russian timber consigned to Sydney. An even larger consignment isbooked for the Argentine. Officers on the vessel say the people in Vladivostock work practically without pay, being given ration tickets for their services. The Government enlisted in its services mothers and children over twelve. Girls worked on the wharf stacking timber.
To-day I received the following telegram from Mr. E. W. Quinn, manager of the Hardwood Millers Association of Victoria : -
Saw millers disturbed at arrival Russian timber in Sydney. We cannot compete against slave labour and request you bringmatter before House to-day and try get prohibition further shipments.
Will the Prime Minister have immediate inquiries made as to whether the labour conditions obtaining in the Russian timber industry are suchas are reported ; if they are, will he prohibit any further shipments from that country under those conditions ?
– Instructions have already been issued that a full investigation be made.
– I ask the Prime
Minister when the Government proposes to lay on the table the latest waterside regulations under the Transport Workers Act?
– The Senate disallows the regulations before the Government has time to table them.
– In view of the political agreement which has been arrived at between the United Opposition party and the supporters of the Government, can you, Mr. Speaker, continue to recognize the honorable member for Wilmot (Mr. Lyons) as Leader of the Opposition ?
– I have no official cognizance of the circumstances alleged by the honorable member.
– Will the Minister for Trade and Customs undertake, when submitting future tariff items to the House which propose increases of duty, to supply to honorable members the names of the persons or firms who have requested those increases?
– “When the honorable member was Minister for Trade and Customs, he did not give such information; but in Opposition he plays an entirely different role. I shall give his suggestion the fullest consideration.
– During the week I have been reading the report of the debate upon the now defunct Fiduciary Notes Sill. I find that the honorable member for Perth (Mr. Nairn) said -
I defy any honorable member to point to any public work of the kind upon which this money would be spent, which would be reproductive at the present time or within a reasonable number of years.
The honorable member for Fawkner (Mr. Maxwell) interjected -
The honorable member for Adelaide (Mr. Yates) propounded the extraordinary proposition that all Government expenditure was reproductive.
– What is the date of the Hansard from which the honorable member is quoting?
– The 19th March last. Has the honorable member been asleep since then ?
– The honorable member is not entitled to quote from the report of a debate of . the current session.
– The honorable member for Adelaide^ by giving the date of the report of the remarks to which he was referring, compels me to remind him that it is not permissible to quote from Mansard of the current session.
– On what standing order do you, sir, base your ruling? I am aware that in debate I cannot quote from Hansard of the current session; but I have risen to make a personal explanation, because my remarks on the Fiduciary Notes Bill were misrepresented by the honorable member for Fawkner. I did not hear the interjection, and I am taking this, the earliest, opportunity to refute it. I wish to correct the false impression conveyed, and I suggest that, in the circumstances, I am not in any sense transgressing the standing order you have referred to.
– If the honorable member will refer to the Standing Orders he will . see that, in making a personal explanation, he may read from the Hansard record for the present session only by the indulgence of the House, and it is evident, because of the objection that has been raised, that the House is not prepared to give permission to the honorable member.
– Has the attention of the Minister for Trade and Customs been drawn to the paragraph in to-day’s issue of the Sydney Morning Herald about the duty imposed on some cotton tweeds from Japan, to the effect that under the 1928 tariff £73 7s. would have been charged whereas under the new duty £1,079 16s. 3d. was charged, an increase of a little over 1450 per cent.? Will the Minister inquire into this matter, and let the House know to what extent the statement is correct?
– I have not yet had time to read to-day’s issue of the Sydney Morning Herald; but it was decided that cotton tweeds in transit should be exempt from the increase in duty, so that cotton tweeds which had arrived in Australia or were on the water could not have been affected.
– Has the attention of the Minister for Markets been drawn to the statement in the press that Mr. Henry Ford, of America, has .purchased a farm of 2,000 acres, on which he is employing 100 farmers at a wage of £1 a day of eight hours ? Will he arrange to obtain full particulars of this experiment?
– I have noticed the statement in the press, and I shall endeavour to obtain the information which the honorable member requires.
– As the Australian Labour Party of Western Australia, Victoria, and South Australia, and the Trades and Labour Councils of Victoria and South Australia have expressed uncompromising hostility to the Government’s financial policy, the outcome of the Premiers Conference, will the Prime Minister abandon that policy?
– I suggest that it would be much better if honorable members would reserve what ammunition they have for the debate when it takes place, and not beguile me into meeting their propaganda in the form of questions with other propaganda.
– Has the Postmaster-General received any complaint respecting the inferior nature of the programmes of the “A” class stations, and if so, is it proposed to take any action to improve the programmes.
– I have received no such complaint.
Statement by Attorney-General.
– Yesterday the Newcastle Herald published the following statement, under the heading - “Mr. Lyons objects - Attorney-General’s speech - Fiduciary issue extolled “ -
A speech at Geelong yesterday by the Federal Attorney-General, Mr. F. Brennan, in which he extolled the virtues of the Fiduciary Notes Bill, was objected to by Mr. J. A. Lyons, the Leader of the Federal Opposition, to-day. Mr. Lyons said it was essential that the representatives of the Government should cease such talk if they desired “to retain the support of all sections for the Premiers Conference plan.
Will the Attorney-General, with a view to upholding the dignity of his position, consult with the honorable member for Wilmot before he makes any further utterances, and thereby safeguard himself against any further attacks through the press by that honorable member ?
– It was not unnatural that the Leader of the Opposition (Mr. Lyons) should offer criticism of the speech that I delivered at Geelong, nor is it to be wondered at that he disagreed with it in some particulars. As to the specific question asked by the honorable member for Hunter, I cannot promise that close co-operation between the Leader of the Opposition and myself which he appears to desire.
– I desire to address a question to you, Mr. Speaker. Is there any rule prohibiting persons other than members from having meals in the members’ dining room? Are persons attending the political conference of any party, who are not members of any Parliament, entitled to have meals in the members’ dining room, either as the guests of members or otherwise?
– Honorable members ought not to introduce into certain parts of this House which are set aside for their private use persons who are not members of other legislatures. I do not know that any definite rule has been laid down, but that is generally regarded as the correct procedure for honorable gentlemen to observe. I shall make inquiries to ascertain whether a breach of that practice has occurred, and if so, I will take steps to make the position quite clear, so that there will be no further offences.
Occupation of Committee Room - Use op Telephones.
– Are you aware, Mr. Speaker, that certain individuals are in occupation of a committee room at the Federal Members’ Rooms, Melbourne, who are not members of any parliament. and not secretaries of opposition leaders?
– I am not aware that that is the case. The Federal Members’ Rooms at Melbourne and other cities are under the control of the Commonwealth Department of Works.
– Will the Government make provision at the Federal Members’ Rooms, Melbourne, for honorable members to speak privately on telephones if they desire to do so. This is impossible at present, because all the telephones are in public rooms.
– I will look into the matter with a view to doing as the honorable member desires.
– Is it a fact that a treaty between Canada and Australia is in contemplation? If so, what stage has been reached in the negotiations? If the terms of the treaty have been determined when, if ever, will the document be submitted to this Parliament?
– It is difficult to understand that the honorable member can be unaware of the answers I gave on two occasions last week to similar questions. I have already informed honorable members that the treaty has been signed, and that signed copies are now in transit between the two countries. When our copy reaches us it will be presented to Parliament.
– Will the Minister for Markets explain why the terms of the Canadian Trade Treaty are known, and are being acted upon in Canada, but are not known in Australia?
– The details of the treaty are not known in Canada, except by the Minister for Commerce and the Prime Minister who were directly concerned in the negotiations.
– A shipment of lumber is coming to Australia under the treaty.
– I have already corrected the honorable member in one mistake. He should not make such wild, loose statements. There is no foundation whatever for the statement that publicity has been given to the details of the agreement. The terms of the treaty are not known to the public in either Canada or Australia.
– In view of the fact that the Minister for Markets has expressed the definite opinion that the f.o.b. and c.i.f. methods of selling Australian butter in Great Britain should be abolished, on the ground that it has had the effect of undermining our whole system of marketing, has the honorable gentleman taken any action to bring about an alteration of the practice?
– I have made a statement on the subject to the Butter Board, and indicated what I thought would be a better system of marketing. This subject is at present being considered by the board, and also by the Department of Markets.
– In view of the fact that Captain W. H. Fisher, of the British
Bloodstock and Cattle Company, Balsall Heath, Birmingham, has claimed that he has discovered a specific cure for tuberculosis in cattle, will the Minister for Markets instruct the Commonwealth officials at Australia House, London, to make a full investigation into the subject, and inform him of the result?
– I will look into the matter, and inform the honorable member later.
asked the Treasurer, upon notice -
How much money was borrowed for purposes of (or arising out of) the war from
– The answers to the honorable member’s questions are as follow : -
In addition, an amount of approximately £5,376,000 has been expended since 1918-19 as discount and expenses of flotation of loans.
asked the Minister for Defence, upon notice -
– The answers to the honorable member’s questions are as follow : -
asked the Treasurer, upon notice -
New South Wales be retained to fill up all withdrawal notices and forward same to the branch at which the depositor now has to attend in person in order to effect a withdrawal; agents to be empowered to act as inspectors to report on withdrawals, and be empowered to refuse any application if same is not considered to be a case of necessity?
– The answers to the honorable member’s questions are as follow : -
Mr.FORDE.- The honorable member for Corangamite (Mr. Crouch) has asked a number of questions upon notice regarding the importation of Oregon. The information is being obtained.
– On the 11th June, the honorable member for Corangamite (Mr. Crouch) asked the following questions, upon notice -
I am now in a position to inform the honorable member as follows: -
– On the 22nd May, the honorable member for Bendigo (Mr. Keane) asked the following question, upon notice: -
What were the total salaries and wages bill of the Commonwealth Government for the years 1924 to 1930, inclusive?
The answer to the honorable member’s question is as follows : -
The following figures indicate the approximate amounts paid for salaries and wages during the years in question to employees under the Public Service Act. To obtain the information regarding employees not subject to the provisions of the act would involve considerable time and labour.
– On the 28th May, the honorable member for Bendigo (Mr. Keane) asked the following questions, upon notice: -
The answers to the honorable member’s questions are as follow: -
– On the 11th June, the honorable member for Swan (Mr. Gregory) asked the following questions, upon notice : -
The answers to the honorable member’s questions are as follow: - 1. The amount received during 1929-30 from the special duty on petrol imposed for the purposes of the federal aid roads, agreement was £2,207,000.
– On the 11th June, the honorable member for Corangamite (Mr. Crouch) addressed to me the following questions, upon notice: -
I am now in a position to inform the honorable member as follows : -
– On the 21st May, 1931, the honorable member for Bendigo (Mr. Keane) asked the following question, upon notice : -
What are the names of the industries which ‘ received tariff protection from this Government, and have since joined in the applications for the 10 per cent, wage cut ordered by the Federal Arbitration Court?
T am now able to furnish the honorable member with the following information : -
It is difficult to link up the applications for reduction of wages with the particular industries that have received protection from this Government, but the attached list of applicants received from the Industrial Registrar will furnish what information is available: -
Mr. COLEMAN, as chairman, brought up reports of the Joint Committee of Public Accounts on the finances of Tasmania and the finances of South Australia as affected by federation.
Ordered to be printed.
Resignation FROM Ministry.
– by leave - I announce that Mr. E. J. Holloway, M.P., has tendered his resignation as a member of the Commonwealth Government.
The following papers were presented : -
Commonwealth and State Ministers - Conference held at Melbourne, May to June, 1931 - Proceedings and Decisions.
Ordered to be printed.
Canned Fruits Export Control Act - Regulations amended - Statutory Rules 1931, Nos. 65, 66.
High Court Procedure Act and Judiciary Act- Rule of Court -Dated 18th May, 1931.
Northern Australia Act -
Central Australia - Slaughtering Ordinance - Regulations amended.
North Australia - Public Service Ordinance - Regulations amended.
Papua Act - Ordinance of 1930 - No. 13- Public Service (Deduction from Salaries).
Seat of Government Acceptance Act and Seat of Government (Administration) Act - Ordinance of 1931 - No. 10 - Pharmacy.
– It is necessary that the House should to-day, if possible, pass a bill through all stages to authorize the Commonwealth Bank to ship to London a quantity of gold to meet treasury-bills falling due there on the 30th of this month. The Government wished to send copies of this bill by post to honorable members so that they might have an opportunity to examine it before our meeting to-day, but, unfortunately, that was found to be impossible. I now suggest, Mr. Speaker, that with the concurrence of the House you might leave the chairfor an hour to afford honorable members an opportunity to examine the measure. Its passage will thus be facilitated. The Government is most anxious to have the bill passed without delay.
-If there is no objection, I shall suspend the sitting for one hour. I shall resume the chair at 4.35 p.m.
Sitting suspended from3.35 to4.35 p.m.
Motion (by Mr. Theodore) - by leave - agreed to -
That he have leave to bring in a bill for an actto amend Part II. of Part VIa. of the Commonwealth Bank Act 1911-1929.
Bill brought up by Mr. Theodore, and read a first time.
– by leave - I move -
That the bill be now read a second time.
A similar bill was introduced a few weeks ago. It provided for the requisitioning of gold in the possession of the Commonwealth Bank for the purpose of discharging certain short-term indebtedness in London, which was causing grave anxiety to the Commonwealth Government, and to the Governments of the States interested. Certain overdraft accommodation had been granted by the Westminster Bank to certain State Governments, and an acute difficulty had arisen in connexion with this, and also in regard to treasury-bills held by the public in London, and maturing there on the 30th of June. The former bill passed this chamber, but was rejected in another place. Since then satisfactory arrangements have been made, at any rate temporarily, with the Westminster Bank, the Commonwealth issuing to that bank treasury-bills to cover the amount of the overdraft. These bills mature on the 30th of September. We are still faced, however, with the difficulty of meeting the treasury-bills held by the public in London, which mature on the 30th of June, definite provision in. regard to which must be made. The position in regard to our short-term indebtedness in London has not changed since I gave particulars of it when introducing the earlier measure, but I shall again place the facts on record. They are set out in the following table: -
The immediate need is to provide for meeting the treasury-bills held by the public which mature on the 30th of June. Until March last the total of the treasurybills held by the public in London was £10,000,000. This amount was represented in two issues - the first of September, 1929, maturing in September, 1930; and the second of November, 1929, maturing in June, 1930. The second issue was renewed in July, 1930, and matured on the 31st of December last. This second issue was again renewed, and now matures on the 30th of this month. The first issue was renewed for six months, from September, 1930, and matured on the 2nd of March last. It was impracticable to renew the March bills in the open market, but an arrangement was made with the Commonwealth Bank under which the bank paid off the bills with the resources it then had in London.
After the rejection of the first measure relating to the requisition of gold for the discharge of treasury-bills held in London, a letter dated the 15th of May was forwarded by me to the chairman of the directors of the Commonwealth Bank. 1 shall read this letter in order that honorable members may be aware of the Government’s view of the position after the rejection of the bill in another place. It is addressed to Sir Robert Gibson, and is as follows : -
I desire to invite your attention to the difficult position now existing in regard to the treasury-bills for £5,000,000 falling due in London on 30th June next. For the last three months it has been clear that difficulty was likely to be encountered in renewing these bills. A warning to that effect was contained in your letter of 0th March, as well as in advices received by the Commonwealth from London.
As you are aware, the Government some time ago introduced an amendment of the Commonwealth Bank Bill to enable gold held in the Australian Notes Reserve to be used for discharging government liabilities in London in the event of such a need arising. This bill would have provided means of paying off the bills maturing on 30th June if it proved to be impracticable to renew those bills.
Last week the Senate called you as a witness to give evidence regarding the Commonwealth Bank Bill. I do not desire to traverse that evidence, but wish to refer only to your statements to the effect that it would undoubtedly be better to ship the gold rather than to default, and to your statement that there was a third alternative.
The Senate has now rejected the bill which would have provided means for paying off the June bills by the use of gold in the Notes Reserve. As a result, the plans made by the Government for redemption, if necessary, of the June bills cannot be put into operation.
The Leader of the Opposition in the Senate (Senator Sir George Pearce) after referring to the evidence given by you before the Senate, stated, inter alia - “ Assuming that no gold is shipped default can only occur if (1) The money or credit being available in Australia, the Australian banks from cash or credit resources at their command in London, either cannot or will not provide the requisite exchange facilities; or (2) The money or credit not being available in Australia, or the Australian banks being unable to provide exchange facilities, the credit of Australia is such that no financial assistance of any kind or for any period is available from any source in London, notwithstanding that its refusal means default by the Commonwealth.”
As the Senate rejected the bill after hearing evidence from you, as chairman of the Commonwealth Bank, I shall be glad if you will be good enough to advise me whether in the opinion of the Commonwealth Bank Board, it is possible for the Government to provide for the treasury-bills maturing in London by adopting either of the courses of action referred to in the above extract from Senator Pearce’s speech in the Senate on the 13th May.
In view of the evidence given by you before the Senate, I should also appreciate advice as to the course of action which the Commonwealth Bank Board considers should now be taken by the Government to cover the treasury-bills in question.
It is perhaps unnecessary for me to stress the urgency of this matter and to ask that it should be given immediate consideration by the bank.
I may add that the treasury-bills of £5,000,000 which mature in London in June were raised on behalf of Australian Governments as follows: -
In. reply to that communication, I received the following letter, dated the 18th day of May, and signed by Sir Robert Gibson as chairman of the board of directors of the Commonwealth Bank: -
I have to acknowledge your letter of 15th instant with reference to the treasury-bills falling due in London on 30th June next, amounting to £5,000,000.
My board has given consideration to your communication, and it is desired that I convey to you the following as representing the views of my board: -
The board refers you to my letters (2) of 6th March and desires to say, that, in so far as the bank is concerned, the position remains unchanged in respect of the inability of the bank to take up these bills, and, further, adheres to the view that the matter is one for government action.
The position in regard to these bills cannot be disassociated from the whole question of national finance in respect of which my board has called the attention of the Government on many occasions over a long period.
Neither I, nor my board, propose to enter upon discussions which took place in the Senate, nor to traverse the evidence submitted by me before the Senate. The board supports me in the view expressed before the Senate that it would be preferable for Parliament to authorize the shipment of £5,000,000 gold, rather than default. The alternatives to this course which I had in mind, I purposely refrained from indicating when before the Senate, for the reason which is obvious to every one, that it would involve myself and my board in matters touching on government policy and, therefore, assuming political aspects.
In view of the position, therefore, and the absence of any likelihood of alternatives referred to being practicable as matters now stand, my board is unable to see any solution of this immediate problem through the mediums suggested in your communication. Assuming, therefore, that Parliament decides that £5,000,000 gold be shipped to meet this obligation, my board is in a position to say that acting with the authority of Parliament, the Bank Board could arrange for the necessary assistance in London to meet the bills pending the arrival of the gold in London; such gold to be definitely hypothecated by the Commonwealth Bank for the purpose of discharging the obligations incurred by such temporary assistance. To carry this into effect, it will be necessary for Parliament to create the authority for disposal of the gold prior to the middle of June.
Unhappily, the Government has not been able to move as quickly as it desired in presenting this bill, and, if the measure is passed, it will be a little later than the middle of June before the necessary authority is created. The latest advice received by the Commonwealth Treasury is that it is impractical to renew the bills in London.
– Will that offer hold, even though we shall be ten days late with our gold?
– If the bill is passed authorizing the Commonwealth Bank to use the gold for this purpose, arrangements can be made to discharge the bills on their maturity date by hypothecating the gold in favour of a new creditor in London.’ That will be quite a convenient method, but it necessitates preliminary negotiation between the Commonwealth Bank and financial authorities in London, which may take some days. For that reason the Commonwealth Bank desires the necessary statutory authority to be given to it as early as possible.
The matter was brought before, and carefully considered by, the Loan Council, which is intimately concerned in the handling of these securities, for it was that body which issued the treasury-bills in the first instance to cover the requirements of the Commonwealth and the States concerned.
– Were the bills issued mainly to meet State obligations ?
– They were issued on account of the Commonwealth and State Governments to these amounts -
After the Loan Council had considered the matter at its meeting last week it passed this resolution -
In view of the responsibility of the Loan Council in respect of the conversion, renewal and redemption of the public debts of the Commonwealth and the States, and of the difficulties existing in regard to the renewal of £5,000,000 of treasury-bills maturing in London on 30th June, 1931, the Loan Council is of opinion that, if it be found impracticable to renew the said treasury-bills, authority should be obtained to enable not more than £5,000,000 of the gold held in ‘the Australian notes reserve to be made available for the purpose of meeting the said treasury-bills.
I do not think that any one will seriously contend that the Government ought not to take the action provided for in this bill. The only alternative is default.
– Similar bills were renewed on previous occasions. Why cannot that be done now?
– The Government has been advised that it is impracticable to renew these bills in London.
– On previous occasions political conditions in Australia were more favorable than they are now.
– I do not wish to enter into a controversy on that subject, although I could fully justify what has been done. The expectations of even the wildest representatives in the House will, probably, be satisfied with the controversial opportunities that will be afforded to them in the course of the next few weeks. Only thirteen days remain before these treasury-bills mature in London, so that this is now a critical matter. If by any mischance the bill were rejected, there would be no means available for meeting the bills in London, even if an exorbitant rate of discount were offered. Honorable members must bear in mind that these bills are not held by any institution; they were issued to the market, and until they are presented for payment on the 30th June, it will not be known by whom they are held. It would be most unfortunate if, when they were presented, the money was not available to pay them off. I commend the bill to the earnest consideration of the House.
.- The Treasurer (Mr. Theodore) has stated that the Commonwealth Government is facing a critical situation, and that this is emergency legislation. Because we recognize the extreme urgency of the circumstances in which the measure is introduced, because we have to choose between this proposal and default, and not because we are in sympathy with the diminution of the gold reserve as a general policy, the members of the Opposition are prepared to give favorable consideration to the bill in order to assist the Government to meet its obligations.
– The members of the Opposition opposed the last proposal for the shipment of gold.
– The circumstances obtaining then were vastly different from those of to-day. That is emphasized by the changed attitude of Sir Robert Gibson. When asked at the bar of the Senate if there was an alternative to the proposal then under consideration for the shipment of the gold reserve, he replied in the affirmative, but his disinclination to enter into a political discussion prevented him from indicating the nature of that alternative. We have, however, a shrewd idea that the Government has adopted the policy which Sir Robert Gibson had in mind. To-day, with the approval of the Prime Minister (Mr. Scullin), we communicated with Sir Robert, and asked him if there is an alternative to-day to the shipment of gold; he replied that there is not. The seriousness of the financial position of the Commonwealth overseas has been indicated by the Treasurer on several occasions. The unfunded debts of the several Australian Governments in London amount to more than £38,000,000, and the Commonwealth must within a few days take up £5,000,000 of treasurybills held in London by various people whose identity, the Treasurer states, will not be known until they present the bills for payment on the due date. The seriousness of the position must be apparent to honorable members, and it is with a desire to help the Government out of its difficulties that we approach this measure.
– What guarantee have we that the export of gold will stop al £5,000,000?
– The previous proposal submitted by the Government did not provide for any limitation. The intention of the Government was to utilize the whole of the backing of the note issue, and even to remove the note issue from the control of the Commonwealth Bank. The bill now before us provides for the export of only £5,000,000 of gold, which is to be applied to a specific purpose.
– Until another bill for the export of a further amount is introduced.
– When such a measure is before us Ave shall deal with it on its merits. For the time being, we have to choose between defaulting in London and exporting sufficient gold to meet our immediate liabilities there. The financial outlook has altered considerably since the previous bill relating to the export of gold was before the House. There was then no proposal for economy in government expenditure.
Mr Beasley interjecting,
– The financial proposals which will come before us in a few hours may not meet with the approval of the honorable member for West Sydney (Mr. Beasley) and his supporters, but they give very great satisfaction to me, because they represent the adoption by the Government of the policy I advocated. When the Government previously proposed to export the gold reserve there was no definite scheme for putting our financial house in order. Parliament was merely asked to authorize the shipment abroad, million by million, of the gold held as a backing to the note issue. The honorable member for Wimmera (Mr. Stewart) seems to regard this hill as merely the first instalment of a similar policy, but I remind him that all the governments of Australia have agreed to a definite plan for the restoration of financial stability, and we may confidently expect that that policy will restore confidence in Australia within our own community and overseas as well. We can visualize a great improvement in. the financial position.
– The honorable member is an optimist.
– If we cannot expect ari improvement we are merely wasting our time in attempting to cope with the immediate circumstances. I am not so optimistic as to believe that while the present ministers occupy the treasury bench Australia will get out of its financial difficulties, but surely an effort by any government to square the ledger must have a healthy effect upon the money market. I am confident that there will be no need for other bills such as that now before us. The Government’s original policy of merely shipping gold, and taking no other steps to balance the national ledger, would have got us nowhere. But the proposals that are to come before the House this week will achieve something practical, and substantially improve the outlook. In recent weeks an important conference of Commonwealth and State Ministers has been held in Melbourne.
– The get-together movement.
– It was a good thing for Australia that they did get together.
– Rats and mice and the Opposition cat.
– I remind the honorable member for Adelaide (Mr. Yates) that the Leader of the Opposition (MrLyons) has the call. I ask the honorable member not to interrupt again.
– I am somewhat relieved to find that, whereas when I last spoke from this side of the House I was assailed by interjections ‘from all honorable members sitting on the ministerial side, on this occasion the hostility comes from only a small section. My position is improving. As a result of the conference in Melbourne the seven Australian Governments have determined to put into operation a plan that i3 designed to restore the financial integrity of the Commonwealth. That must improve the money market, and. therefore, we may confidently anticipate that there will he no further need to ship gold from Australia. Indeed, if the Government had time before the £5,000,000 worth of treasury-bills matures on the 30th of June, to negotiate for a renewal of the bills, and to put into operation the policy agreed upon by the Melbourne conference, there would be no need to ship abroad any gold at all.
Although members of the Opposition, recognizing the urgency of this measure, will offer no obstacle to it, we do not wish our attitude to be misunderstood. We are opposed to any permanent reduction of the proportion of gold to be held against the note issue. If, following the funding of the Australian portion of the national debt, we are to take the next step of funding at least a portion of our debt overseas, the confidence of investors must be restored. One thing that would do more than anyother to prevent that restoration of confidence would be the removal or substantial reduction of the gold hacking of the note issue. The members of the Opposition will oppose any proposal to reduce permanently the gold reserve from 25 per cent, to 15 per cent, of the note issue. If we agree to this emergent measure to ship £5,000,000 of gold, it must be clearly understood that it is a temporary ex’pedient; the hill itself must state that unambiguously, and express the determination of this Parliament that the gold reserve shall be restored to the normal basis at the earliest possible moment. I understand that the central banks which have been established in Europe under the aegis of the League of Nations started with a comparatively low gold backing to the note issue, but gradually increased it to a substantial proportion of the total issue. Those countries which produce no gold find the building up of a gold reserve more difficult than it should be in Australia. On behalf of the Opposition I now suggest to the Treasurer that when the bill is in committee a definite provision shall be inserted requiring that the gold backing must be restored by annual stages from 15 per cent, to the original 25 per cent, within three years. If the Government will accept that amendment, no opposition to the passage of the bill will be offered ; but if the Government declines to agree to those conditions, it will be our duty to move the amendment, and endeavour to have it inserted in the bill. I repeat that we are opposed to any permanent reduction of the gold backing of the note issue. “We are agreeing to a temporary reduction as an expedient to meet a condition of extreme emergency, and subject to express provision that the ratio of the gold to notes must be restored to 25 per cent, in three years.
.- The Leader of the Opposition (Mr. Lyons) has, consciously or unconsciously, let the cat out of the bag. We see now why there is unanimity between the Government and the Opposition. The Treasurer (Mr. Theodore) has told us that he consulted Sir Robert Gibson about this proposal, who agreed with him. The Leader of the Opposition now says that he, too, consulted Sir Robert Gibson, with the same result. We have the spectacle of the Treasurer and the Leader of the Opposition accepting the dictation of Sir Robert Gibson.
– Why does not the honorable member obtain a little sensible advice?
– I certainly should not go to the honorable member for advice. The Leader of the Opposition has told us that he expects that this country will return to the gold standard in three years’ time; but I contend that we shall not revert to it in 300 years’ time. The gold standard, as a backing for currency, is a thing of the past. The honorable member spoke as if this country had now a gold-backing of 25 per cent. Is he so ignorant as to contendthatthe note issue forms the currency of Australia, and. that we have a gold backing of 25 per cent, to our currency ? Why, we have not a. gold backing of even 2 per cent. The currency of this country is the cheque. Honorable members may laugh, but let me tell them that every economist of any note supports my contention. Would honorable members, with their puny intelligence, laugh, at a man like Mulhall, who, in 1887, advised the British Governmentthat 97 per cent, of the currency of Great Britain was composed of cheques? The Leader of the Opposition is talking idle nonsense when he says that we shall return in three years to a currency backed with gold. The gold standard has gone for ever, and the quicker we realize that, and make the necessary economic adjustments, the sooner will Australia recover from its financial difficulties. I have no doubt that this legislation will be passed, and that, within three months, we shall be asked to agree to a similar proposal. I have no objection to the shipping overseas of £5,000,000 of gold.. I have no more objection to the shipping of £20,000,000 worth of gold than to the shipping of £20,000,000 worth of wool or wheat, provided that it is necessary to ship the gold in’ the interests of the country generally. I amconfident that this measure will pass this House and another chamber.. We have now no party. We have reached a state like that of ancient Rome, as described by Macaulay -
Then none was for a party;
Then all were for the state.
Macaulay’s Rome was a Rome of paganism, in which thewealthy few obtained the good things of life while the rest of the community starved. The Government and the Opposition have united to-day in an effort to bring again the conditions of pagan Rome. The union will last while this Government toadies to the Opposition.
– Is the honorable member adopting the role of Horatius ?
– A loud laugh denotes a vacant mind. The bankers and the heelers have won the day. The shipping of a few million pounds of gold abroad means nothing. The golden god has fallen It was placed on a pedestal by previous governments, and this Government has allowed it to remain there for nearly eighteen months ; but now that the money lender wants gold, the Government is, at the dictation of vested interests and bankers, prepared to pull this god from its pedestal and to ship it piecemeal overseas. Sir Robert Gibson is a politician as well as a banker, and this Government is accepting his dictation. It took office with a definite policy. It took up a certain position, from which it has since made a series of cowardly and base retreats. It has hoisted the white flag in abject surrender in respect pf every phase of its policy as enunciated on the hustings. Honorable members opposite have also repudiated their policy of the maintenance of the gold standard. They, too, have made an absolute surrender of principle and like the Government, have hoisted the white flag. In the process the Government is making some concession to the Opposition, but together they form a united party to oppress further the already oppressed people of this country. The party to which I belong has been telling the Government for the last eighteen months that it was rapidly approaching the position in which it now finds itself. This country is in a financial bog, and is likely to sink deeper into it. In three months’ time another Premiers Conference will be called, another reduction in salaries and wages will be proposed, and further gold will be shipped abroad. It is a- process of retreat after retreat by the Government from the position that it took up when it assumed office.
– The honorable member is keeping this Government in office.
– Whenever honorable members opposite join us on the big issues, but not on this issue, we shall put the Government out of office. But honorable members opposite will keep the Government in office so long as it accepts the dictates of vested interests. Only the other day the Leader of the Opposition (Mr. Lyons) was the political rat and a traitor to his party-
– I ask the honorable member for Werriwa to withdraw those remarks.
– I myself am not saying that the Leader of the Opposition is a political rat or a traitor to his party.
I was about to say that honorable members on this side who described the Leader of the Opposition in those terms have to-day consulted him as to the policy that should be adopted. I welcome the necessity for the bill, because it is a further evidence of the complete overthrow of the golden god. The position in the civilized world to-day is that the existing means of currency is diminishing, while population and production are increasing, and it will be gross stupidity on our part if we do not take some steps to readjust the position. Every economist of any note contends that the gold standard for currency is a thing of the past. Honorable members, by ignoring that fact, are adopting the attitude of an ostrich, which, stupidly, hides its head in the sand, believing that when it does so its body is unseen. Irving Fisher who wrote a book dealing with the American crash on the Stock Exchange stressed the point that, while the supply of gold was diminishing, the population of the world and its production were increasing. Surely any person of reasonable intelligence will admit that the system of exchange has broken down throughout the world. The shipping of £5,000,00.0 worth of gold does not affect the position one iota. Ultimately we must adopt a system of currency which will allow of the fixation of a proper ratio of production to consumption otherwise this civilization will die out. I welcome the necessity for this measure because it concedes at least five points of the fifteen points necessary to bring about the destruction of the gold standard. We are now proposing to ship £5,000,000 worth of gold out of a total gold backing of £15,000,000. I wish that the Government had realized the stupidity of the position in regard to the gold and the currency of this country earlier in its existence, and had challenged the Opposition to go to the country on the platform of the Labour party which up to that time had remained unchanged for twenty years. The Government has run “away from every position it has taken. It has suffered defeat after defeat, and now it is making a cowardly surrender. To-day its policy is nothing but shreds and patches.
.- The honorable member for Werriwa (Mr. Lazzarini) has approved of this bill with great hostility, much animosity, and a wealth of zoological simile. Apparently, in spite of his attitude towards the Government which has introduced the bill, he intends to support it because he thinks that it will be a step in the direction of the realization of the financial policy which he approves. I also support the bill i not with the satisfaction and gladness shown by the honorable member for Werriwa, but with very deep regret that the necessity for it should have arisen. Although the honorable member for Werriwa said that he welcomed the necessity of the bill, I am sure that he did not mean that he was glad that the condition of the country was such that the introduction of such a bill should be deemed necessary.
– Not at all.
– Doubtless he meant no more than that to the extent set out in the bill the gold standard was being abandoned. I support the bill with entirely different motives, and with the deepest regret.
A measure was introduced into this House in March which dealt with the same subject-matter as this bill, but in a very different manner. I voted against it, and I propose to explain why, although I did so, I shall, nevertheless, support this bill. The last measure dealt with all the gold held in reserve by the Commonwealth Bank, and authorized the Treasurer to send it abroad at his own discretion.
– To discharge indebtedness.
– That is so. This bill is confined to the immediate necessities of the case. It contains a provision which will permit the shipping abroad of a certain amount of gold to discharge an indebtedness specifically mentioned in the bill. The gold is designed to meet treasury-bills which mature on the 30th June. This bill, therefore, is limited to the meeting of a particular emergency, and does not confer upon the Treasurer the power to control all the gold possessed by the Commonwealth Bank. That is an important distinction between this measure and that with which we dealt earlier this year.
Another important difference is that while the previous bill conferred upon the Treasurer alone the power to determine whether the gold should be shipped away for the discharge of Commonwealth indebtedness generally, the Government has indicated that it is prepared to accept an amendment to this measure which will provide that the Commonwealth Bank Board shall be associated with the Treasurer in determining when and how much gold shall be shipped away.
– Does that mean that if the Government wishes to export £5,000,000 worth of gold and the Bank Board says no, the gold cannot be sent away ?
– Yes. The Government’s financial advisers will be associated with it in doing what has to be done in this way. I suggest that it is a very desirable thing for the credit of the country that the whole of the responsibility for the shipping away of our gold shall not rest upon the Government of the day.
The third important distinction between this bill and the measure we dealt with in March is that, whereas the previous measure provided for the complete abolition of the gold reserve, and proposed to place an arbitrary limit , of £60,000,000 on the note issue, this bill merely provides for a reduction of the gold reserve and not for its abolition. The principle of a gold reserve is still recognized, although it is deemed advisable, in “view of the immediate necessities of the position, to utilize a portion of the reserve for the discharge of a specific indebtedness.
The honorable member for Werriwa spoke of currency and finance generally, but I did not hear him say how, apart from the method suggested in this bill, he would meet our liabilities which fall due on the 30th June.
– That is legal tripe.
– The honorable member merely waves his hand and produces a simile derived from the butcher’s shop ; but even so powerful a contribution to this debate cannot be regarded as an answer to the question that I have put. Either we must meet the liabilities, which become due on the 30th of June, or we must default. The honorable member did not indicate how he would avoid default other than by shipping our gold abroad.
In March last the bill which the Government introduced was not associated in any way with other measures which I felt were necessary to restore the financial and economic position of the country.
– There is nothing in this hill which specifically associates it with any such measures.
– That is so; hut we have been given to understand that tomorrow the Government will place before honorable members precise proposals which will involve certain radical changes in Government policy and effect’ large economies in expenditure - proposals which are along the lines that for many months past I have advocated as being unfortunately necessary.
– The honorable member has won all along the line, and he should be the leader of both the Opposition and the Government.
– “When the House was discussing the last measure of this kind, no effective proposals for meeting our obligations generally were before us; nor were we informed specifically by the financial advisers of the Commonwealth that the course then proposed was necessary. To-day such information has been placed before us, and the Government agrees, the Opposition agrees, and the party in the corner opposite - I do not know what name to call it by - also agrees that there is no other means of meeting our overseas obligations on the 30th of June than that proposed in this bill. For these reasons I very regretfully support the bill in order to prevent immediate default, the results of which would be disastrous to every class in the community.
I consider, however, that provision should be made in- the bill for the restoration, as soon as possible, of a gold reserve of 25 per cent. It would probably be unwise to provide that the reserve should he restored to this percentage at the end of twelve months; for that would almost inevitably involve a violent contraction of the note issue just before the end of that period. But there should be some provision in the bill for the gradual reestablishment of the reserve. For this reason, I propose in committee to move an amendment designed to restore the gold reserve to 25 per cent, by the 30th June, 1934. The steps by which I propose that this shall be done are, 18 per cent., 21£ per cent., and 25 per cent.
– How does the honorable member propose to get the gold ?
– I do not believe thai any government can extract gold from the air, although the honorable member appears to think that cheques can be extracted from a cheque book almost without limit. The possibility of reestablishing the gold standard depends upon the gradual restoration of financial and economic prosperity in the Commonwealth.
– From where is the gold to come?
– It is a matter of gratification to us that the production of gold in the Commonwealth is increasing very greatly. I hope that it will continue to increase. I do not regard a proposal for the restoration of the gold reserve, to the extent of £1,250,000 per annum, as beyond the reach of practical attainment. For this reason I shall, in committee, move the amendment that I have indicated. Subject to the acceptance of this principle, I shall support the bill.
.- After listening to the speeches of the Leader of the Opposition (Mr. Lyons) and the Deputy Leader of the Opposition (Mr. Latham), I feel,’ as a Government supporter, very much humiliated. The Opposition is “ rubbing it in “ very hard. It is indeed a case of “woe to the conquered “. Although the Government has a majority of the House behind it, the Opposition has indicated that it intends to impose three conditions before it will support this bill. Although the Treasurer read the definite consent of the Governor of the Commonwealth Bank to the proposal to ship 5,000,000 sovereigns abroad in order to meet our obligations on the 30th June, the Opposition intends to demand that an indication of this consent shall be included in the bill. That is its first condition. The second is that our gold reserve of 15 per cent, shall be gradually added to by annual accretions until it is restored to 25 per cent. The third condition, at which both the Leader and the Deputy Leader of the
Opposition have hinted, is that their support of the bill is contingent upon the introduction to-morrow of certain other measures which will provide, at their instance, that all old-age, invalid and war pensions and social services of the Commonwealth shall be reduced.
– Is that not a complete surrender ?
– That interjection reminds me of » the dreadful position into which we have fallen. The reduction of pensions is the heart of their proposals. Although the people of Australia, in October, 1929, put this party in power with the greatest majority that a government has ever had in the history of the federation, we now find ourselves in a position somewhat analogous to that of the British House of Commons some years ago. The Liberal and Labour parties in Great Britain knew that, no matter what legislation they might pass through the House of Commons, a large Conservative majority in the House of’ Lords would always thwart the will of the people. Similarly the Conservative party in this Parliament, although the people have definitely placed the Labour party in office, has a majority in the other branch of the legislature, and, therefore, it threatens that unless the Government accepts the amendments to be proposed by a party that is in the minority in this chamber and accepts its pension reduction proposals it will secure the defeat of the bill in another place, even if it means default at the end of the month. Is that not an ignominious position for a democratic community ? Does it not show that members in another place are out of touch with the people, and are prepared to bolster up the money power? , The Opposition virtually declares that, unless the Government accepts these amendments, it will see that Australia does default, because it says, “ Unless our conditions are accepted, this legislation shall not pass “. It is well that the country should realize that the Government has been brought to this position through the reduction of its majority owing to the action of the Leader of the Opposition and of certain other members who have deserted from the Labour ranks.
I do not agree to the suggestion of the Opposition regarding the amendment of clause 2. If members took a reasonable view of this matter they would not insist on a gold reserve of 25 per cent, of the total note issue, but they would declare that the Commonwealth Bank should be empowered to issue notes in accordance with the requirements of Australia. The bank has shown that it isunder strong management, and that it is not subject to political control. It still has* power to issue an additional £15,000,000 worth of notes, but is that sufficient in a great crisis? Let me remind honorable members of what has been done in Great Britain. I believe that some ^Opposition members, when they are walking the streets of Melbourne, would tuck up the bottoms of their trousers if they thought that rain was falling in Piccadilly. “ It’s English, quite English, you know!”
– I have seen the .honorable member wearing his hat in the chamber, because that practice has been observed at Westminster.
– The honorable member does not understand my reasons. There are some members who will never remain quiet until they are in the cemetery.
– The honorable member has quoted more English precedents than any other member of the House.
– That is so; I prefer to meet the arguments of my opponents by referring to British practice, knowing that they would take little notice of Australian customs. They must have overseas precedents. The latest returns of the Bank of England show that the notes in circulation amount to £406,279,504, in addition to which there is a fixed amount of fiduciary notes to the value of £260,000,000, making a total of £666,279,504.
– From what source has the honorable member obtained that information ?
– From the Melbourne Age, of the 2nd May last.
– Those figures are wrong.
– If so, the honorable member will have an opportunity of correcting them. The notes issued and in circulation in Great Britain amounted on the 22nd April to £348,000,000, and on the 29th April to £439,000,000. The. notes in the banking department on the 22nd
April totalled £57,000,000, and, on the 29th April, £56,000,000, making the totals £405,000,000 on the 22nd April, and £406,000,000 on the 29th. April. The fiduciary issue on the 22nd April and also on the 29th April totalled £260,000,000, which together represented £15 19s. per head of the total population of Great Britain. The note issue in Australia since 1920 has been as follows : -
On the English basis, the note issue in Australia for our 6,500,000 people would be £103,675,000; but the present limit is £66,000,000.
Many countries have no gold backing for their notes. I much regret that only £5,000,000 worth of gold is now to be shipped to Great Britain. If we also sent away the remaining £10,000,000 worth, we should effect a saving in our annual interest bill of £550,000. The Commonwealth notes now on issue amount to £51,000,000, and, since we shall have a gold backing of only £10,000,000, it must be admitted that Australia is completely off the gold standard. I hope that honorable members will realize the wisdom of repealing the legislation that insists upon a gold backing for our note issue. I put those figures before members of the Opposition, who have had so much to say about honesty and honour, as if those virtues were not to be found on this side of the House at all ! Those who went into my constituency, and said that theirs was the party of honour and honesty shockingly abused the right of free speech, and grossly slandered honorable members on this side of the House. It is claimed by some that the followers of the Leader of the Opposition possess a monopoly of honesty and honour, but not one honorable member opposite dare stand up in his place and say, as has been insinuated in my constituency, that I am not a man possessing honesty and honour.
– No, no.
– The Leader of the Opposition says “No,” but it has been reported in the press that Mr. Kenneth Henderson, Secretary of the All For Australia League, actually made such a statement.
– Does the honorable member 3ay that those were the words used ?
– That is the substance of it; that is enough. i
– I will justify my assertion later. For the benefit of the honorable member for Fawkner (Mr. Maxwell) I shall have the report, which was published in the Melbourne Herald, which is the official gazette of the Leader of the Opposition, here for him after dinner, and he may use it on the adjournment if he wishes.
I want Australia to prosper. The Leader of the Opposition must admit that when he was on this side of the House I fought hard for the ideals which he now defends. Upon occasion I had to stand up for principles which the Leader of the Opposition now professes, but upon which I had to fight him then. He knows that to be true. I believe in Australia paying her way and not defaulting. T believe that it is a matter of honour that this money should be paid, and, believing this, I have the right to ask the Leader of the Opposition to consider whether the amendment which I propose to move, to the effect that no gold backing shall be retained, is not worthy of attention. If he does not know that such a provision is worthy of serious consideration, he knows little about the financial position of Australia to-day. Unless the Commonwealth Bank has power to issue a greater amount of notes than is legally provided for, the trading community and the financial institutions of Australia is threatened with a monetary debacle which is very imminent. The Leader of the Opposition would rigorously restrict the issue of notes by the Commonwealth Bank, but I suggest to him that he should reconsider his attitude before this bill is taken in committee. Then, perhaps, he may see his way to support those of us who would ensure safety for the finances of Australia by allowing a greater freedom of action to the Commonwealth Bank.
.- The bill now before the House provides for the reduction of the gold backing to our note issue in order that some of the gold may bc shipped overseas to meet part of our short term indebtedness in London. I do not know whether I shall be the only one to raise my voice against this proposal, but I intend to oppose it, and if another can be found to “ call “ me, I shall vote against it.
– That is because the honorable member knows that that bill will be passed.
– It certainly does seem that the bill will be passed, but I remind the honorable member that if he is a party hack I am not. I use my own judgment on these matters, and intend to use it in this instance. The last speaker complained of the action of the members of another place, and also upbraided certain honorable members on this side who, he said, had abandoned their previous policy.
– I did not refer to the honorable member for Angas.
– Those who sat with me in the Labour caucus know what I proposed in regard to facing up to another place. I repeatedly urged that before the end of October last the Government should take a stand, and if those who supported the Government had done their duty by the rank and file of the Labour party, the Senate would have been challenged, and the result of the New South Wales elections showed that the Labour party could have won at that time. As for deserting a policy to which .one is pledged, let me advise the honorable member for Corangamite (Mr. Crouch) to be careful before levelling charges against any one. I shall wait until the other bills which we have been promised are before the House, and then we shall see whether honorable members opposite will stick to the platform they signed. It seems to me that much of the financial policy recently adopted in Sydney is being abandoned now, and before we are finished much more of the Labour “platform will be discarded, plank by plank. I regret that there is a tendency in this House, particularly on the part of members of the Opposition, to be stampeded in regard to this bill. The Prime Minister said that he wanted this bill to-day if possible. He urges such haste in respect of a measure which really provides for the institution of political interference in regard to the currency of the country.
– Oh, nonsense!
– Whoever said nonsense has not read the bill. Whatever amendments may subsequently be made to the bill, the fact remains that, as it now stands, the right of interference with the currency of the country is to be granted to the Government. I am dealing with the bill as it is now, and it will permit of political interference in regard to the backing of our note issue. That leads directly to interference with the currency itself. Why should we be stampeded? The Treasurer said that it might take some days to make the necessary arrangements for meeting the position overseas, even after the bill is passed; but I protest against this undue, and one might say, indecent haste. The Deputy Leader of the Opposition said that this measure is linked up with others, but there is no reference to that in the bill itself. Members of the Opposition ought to remember the character of the Government they are dealing with. They ought to remember that this Government, ever since the Prime Minister returned from abroad, has in season and out of season, put party before country. The Opposition proposes to trust the Government, regardless of its past. I remind honorable members of the Opposition that to-morrow a meeting is to be held of the federal executive of the Australian Labour Party. The honorable member for Werriwa (Mr. Lazzarini) has already informed this House that the executives of the Australian Labour Party in three of the States have decided against the adoption of the proposals agreed to by the Melbourne conference of Commonwealth and State Ministers, and I shall be very greatly surprised if the Tasmanian executive does not fall into line with them. The position that honorable members have to face up to is this : What is going to happen to-morrow ? Because of what may happen, the Government is attempting to bulldoze them into pushing this bill through to-day; and it appears that they are prepared to acquiesce in that arrangement. There is not the slightest need for this tremendous haste. I say to the Opposition, that if they are working with the Government, and with the Treasurer in particular, on a basis of trust, it is as sure as that I stand here that they will be out-manoeuvred. The position that develops to-morrow will have to be met. Decisions will have to be made. I speak with some authority regarding the federal executive of the Australian Labour Party, because I was a member of it for several years. I know what power it possesses. On one occasion it nearly succeeded in expelling me, while recently it succeeded in doing so. If to-morrow it decides upon a line of action, the bulk of the rank and file sitting behind the Government will abide by that decision, so as to safeguard their endorsement. Honorable members are hastily removing this obstacle from the path of the Government, not knowing what may happen to-morrow.
An Honorable Member. - The bill could be stopped in the Senate.
– The bill is going through this House fairly quickly, and I am somewhat afraid that it will pass another place almost as quickly. Honorable members may rest assured that if the Senate deals with the bill to-morrow, the members of the federal executive of the Australian Labour Party, who are not fools, will prolong their deliberations to the following day. If this measure, is passed, the Treasurer and the Prime Minister will be able to say to those gentlemen, “ We sent to the Senate a bill providing for the export of £5,000,000 worth of gold, but it blocked us. Now we have them in the bag to this extent at any rate; and if you leave the matter in our hands we shall he able to do a little more manoeuvring.” It is difficult to prophesy where we may eventually land ourselves if we give way to the Government at this stage. I am not so gullible as to believe that we have heard the last of the fiduciary note issue proposal. I know that in their hearts the bulk of the rank and file of honorable members on the . Government side believe that that proposal should be “given effect.
Government Members. - Hear, hear!
– Listen to the chorus of “Hear, hears!” The honorable member for Werriwa (Mr. Lazzarini) and the honorable member for West Sydney (Mr. Beasley) may attack the Government to-day; but I tell the Opposition and the people of this country that before we are. through with this business there is every probability that the Lang party and the Theodore party will coalesce, and that we shall have to fight them on this very issue. I am confident that that position will arise within the next twelve months. When treasury-bills amounting to £5,000,000 fall due next September, how will they be met? The method then adopted will be identical with that which is now proposed. Then, when we go out to the constituencies to fight the Government on the fiduciary note issue, what sort of a wicket shall we be on? I can visualize the question being asked at public meetings. “ Why have any gold at all, seeing that only £5,000,000 is left as a backing for £50,000,000 worth of notes”? What will be the answer of honorable members who sit on this side, when they have been a party to the shipment of gold abroad? I regret that this position has arisen, and that honorable members are agreeable to such a weapon being placed in the hands of our opponents. When this £5,000,000 worth of gold has been shipped away, only one note out of every five in currency will have a gold backing. If, under the stress of emergency conditions, we, who are opposed to the fiduciary note proposal of the Government, give way bit by bit, will we not make our position an exceedingly difficult one in the fight that later is to take place outside? It would be unkind of me to quote from speeches that were delivered last March, and I shall not do so, but there are others who will not so scrupulously regard the feelings of honorable members. They will compare statements that were made then with those that are made now, but they will keep sedulously in the background the explanation given to-day by the Deputy Leader of the Opposition (Mr. Latham), in which he enumerated three distinct differences that exist between that time and the present. We are giving to the Government a very dangerous weapon that will be used against us.
– That is all you are afraid of - political tactics.
– I know just how much value is placed on political tactics by the party to which the honorable member belongs; and that knowledge has been gained inside the party. I could, if I chose, mention a few of the things that the Treasurer said in regard to the Commonwealth Bank Bill when it was about to be brought down. He did not tell honorable members of this House what he then said was to be done under it. It is of no use to attempt to disguise the fact that political tactics are persistently resorted to. I am somewhat afraid that the tactics of the Treasurer and the Prime Minister in relation to this bill may be crowned with success.
Sitting suspended from 6.15 to 8 p.m.
– There has been indecent haste on the part of the Opposition to fall in with the wishes of the Government. It may be said of me, and, indeed, it has been interjected, that I desire Australia to default. There is no such desire in my mind. What is running through my mind is that there are yet thirteen days before these treasury-bills have to be met. The honorable member for Corangamite (Mr. Crouch) claims that the Opposition, is compelling the Government to “ eat the leek.” The eating of leeks is good for the health, and I should like the Opposition to give the Government and its supporters still more by saying, “ We understand that other measures are to accompany this bill, but our experience has made us not quite sure of you. You must, therefore, first of all deliver the goods.” We want to make sure of those other bills, and there is no reason why we should not sit continuously during the next thirteen days in order to get them as well as this measure.
And while the lamp holds out to burn, The vilest sinner may return.
The Government should “bring forth works meet for repentance” and not words alone. We should then have some concrete scheme before us, such as it is alleged is to be proposed, for paying our way as a nation. Once a genuine effort has been made in that direction, once the Government has proved its bona fides by bringing down legislation which will show that, as a nation, we are trying to live within our income, London, I think, will not turn us down. The Treasurer says that the Commonwealth Bank Board has informed him that there is no alternative to the shipment of gold. Who would expect anything else after the way in which the Government has been acting during recent months? First we had the August conference, called by some the Niemeyer conference, after which the Prime Minister said that he proposed to do this, that and the other thing. But he squibbed; and it is not a matter- for wonder thai the financial interests on the other side of the world are now hot prepared to accept this Government’s word. They look not for words, but for deeds. It is within the power of the Opposition to’ compel the Government to “ deliver the goods,” and if the goods are delivered within the next thirteen days I am sure that the financial accommodation required overseas will be provided. Neither the Treasurer nor the Commonwealth Bank Board can make me believe that the people in London who have their money invested in Australia will squib on us when they find that the Governments of Australia are making honest and sincere efforts to meet the position. How has the money they have invested been squandered ? There was the £25,000,000 war gratuity bribe provided for out of loan money. Not far from Parliament House the sum of £50,000 has been sunk in foundations which have never been built on, and interest is being paid on that amount of idle capital. In Canberra, this far-flung capital of an almost bankrupt nation, three magnificent hotels, which have been fully furnished, are unoccupied. Is it any wonder that our creditors overseas should ask us for sure evidence of our professed desire to meet the position? I believe that if we do make a sincere effort to meet it we shall get the financial accommodation required in London by the 30th June next. The Treasurer may not have actually blamed the previous Government, but “he said that the first issue of these treasury-bills was made in September, 1929, when the Bruce-Page Government was in office. I do not attempt to defend the extravagance of that Government, or the even greater extravagance of the Hughes Government. I was a member of this House at the time and knew what was going on. The point is that we must meet the position as it is to-day. For the last eighteen months the present Government has been issuing these treasury-bills, and there has been- no real effort on the part of this Parliament or the nation to meet our commitments. We have been too prodigal altogether. I remind honorable members opposite of the appeal made to them by the Prime Minister twelve months ago to consent to reduce their salaries. On that occasion only seven members of the party stood by him. He has now been compelled to resort to these economies. The pity of it is that he was not strong enough then to stand up to his own party and say, “ We must give a lead to the country; we must make some sacrifice.” Had he done so, there would not have been the chaos and trouble there is in the Labour party to-day. According to the Treasurer, the Bank Board says there is no alternative to the shipment of this gold, but the Treasurer knows that even if the board regarded national economy and retrenchment as an alternative it would not say so. When Sir Robert Gibson was before the Senate he would make no statement which had a political bearing. It is against the policy of the Bank Board to do so. Nevertheless, an alternative exists. A government, which has broken its word and honoured not the agreement previously made, should be told by the Opposition to deliver the goods on this occasion. I feel sure that their delivery will be of great benefit to the people.
When in March last a bill was before this Parliament to authorize the exportation of our gold reserve, three reasons were advanced by the Opposition for keeping the gold in Australia. The first was the psychological effect the export of the gold would be likely to have upon the people. Is there not more danger of an adverse psychological effect on the people to-day than there was in March last? People are hoarding silver. I have come across instances of it. Many of them are not banking silver coins. There is to-day greater need than there was in March last to pay heed to the psychological effect of sending gold out of the country. The second reason advanced was that further exportations would be necessary. I believe the same argument applies to-day. In September next other bills have to be met. I am well aware that an amendment has been moved by the Opposition providing that over a period of three years periodic payments shall be made co enable this £5,000,000 to be replaced in the vaults of the Commonwealth Bank. I shall vote for that amendment ; but for good reasons I am not expressing my opinion upon the efficacy of the proposal at the present moment. The third reason advanced was that sooner or later Australia must return to the gold standard. I may be .oldfashioned, but I believe in the gold standard. Many countries that had got off it have been obliged to get back to it, and others which were not on it are trying to get on it. My firm belief is that sooner or later this country must get back, if not to the full gold standard, at least to a partial gold standard, or sink to the position occupied by some of the South American republics to-day.
I regret very much the crisis that has developed in Australia. My regret goes further than that expressed by the Leader of the Opposition (Mr. Lyons) and the Deputy Leader of the Opposition (Mr. Latham). If the Opposition in another place is prepared to thrust on this Government the onus of delivering the goods in the matter of meeting our overseas obligations by bringing forward proposals to achieve that result, I believe there is still time to arrange for accommodation on the other side of the world, and avoid the three ill effects which I have mentioned.
– Why should we ask anything from the people overseas when we can pay them,?
– We cannot pay them. We have gold valued at £15,000,000. It is not nearly sufficient to enable us to meet our obligations overseas, yet honorable members would ship it to London, and in doing so break down the faith of the people of Australia in their own Commonwealth Bank and in their own currency, without any corresponding benefit being secured in return.
The honorable member for Warringah (Mr. Parkhill) has inferred that I am opposing the bill because I realize that it will be carried. I may tell the honorable member that when the Opposition was meeting in caucus this morning I was in my own room preparing my speech, and was unaware of the decision arrived at by the Opposition party. I am answerable to my constituents. I have thought this problem out for myself, and having come to the conclusion that the Leader of the Opposition is adopting a wrong attitude, 1 have pluck enough to tell him so.
.- I am surprised at the vehemence with which the honorable member for Angas (Mr. Gabb) expressed his resentment of this first phase of the great surrender. It is only a small commencement of a verymuch greater surrender - the most pitiable occurrence in the political history of Australia, that of a big party that was brought into being to rectify the anomalies and shortcomings of the economic system under which we live. Those of us who are prepared to stand by the faith we have always professed, and to give effect to it in spite of all opposition, are asked what our alternative is. The Labour party was always ready with alternatives.
– One every week.
– Yes, or as often as was necessary to meet the kaleidoscopic changes of the financial robbers whom honorable members opposite are supporting. Every time the Labour party increased wages to ease the conditions of the workers, the thumb-screw was applied through the private financiers as it is being applied to-day. The Labour party has had to change its tactics very frequently, but its political strategy has never changed. Its principles and objectives are what they were. The Deputy Leader of the Opposition may laugh, but his position, too, is pitiable, for he has had to step down from the leadership of his party in order to make way for a “ blow-in He was the leader of the big National party, which has taken a prominent part in the public life of the Commonwealth, and put forward a policy for its guidance. The Country party was brought into existence to protect the big rural interests, and according to their lights, the members of that party have done their job well. But a former leader of the anti-Labour forces did something that was outside the party pro gramme, and the electors “fired” him. Now the Government has gone outside the Labour party’s platform, and adopted a policy every feature of which has been dictated by the parties that sit in opposition. “We who oppose the Government’s stand are asked for an alternative. I suggested a preventative twenty months ago, and it is one which honorable members will have to accept, however greatly they may spurn it now. I have told the Prime Minister and the Treasurer repeatedly that they are playing the game of political chess to suit their opponents. The preventative I suggested was not new; nor did it originate with me. It was promulgated, put into operation, and proved by the right honorable member for North Sydney (Mr. Hughes) when he was Prime Minister. If he had never been cornered by gold, and were on this side of the House, every principle he then put into operation would be reaffirmed now, as applicable to the present financial situation. The leaders of the “ spare parts “ party are supporting this proposal to send £5,000,000 worth of gold overseas to meet maturing treasury-bills which were issued during the regime of the present Government. The Ministry has borrowed altogether £35,000,000. Of the £70,000,000 falling due last year, £40,000,000 was converted. Because the money was rapidly subscribed at 6 per cent., the balance of £30,000,000 was left for conversion later. While the Prime Minister, the Attorney-General, the Minister for Markets, and the honorable member for Reid (Mr. Coleman) were overseas, some members of the Labour party proposed to defer the recurring problem by asking the bondholders to wait a further twelve months for their money while we were endeavouring to adjust the financial position. That proposal was met with hysterical outbursts against repudiation. As a supporter of that proposal, I was accused of being a repudiationist. I warn the Government that I shall not vote for a reduction of the interest rates ; we incurred a debt, and we should pay it ; but I have consistently advocated a financial system that would obviate further borrowing. We are told that a reduction of the interest bill will help us to do this, that, and the other thing, but Australia will not be helped by breaking its contracts. Every day in the week some business man, when pressed by creditors, is obliged to ask that the bills he owes be renewed, and that is done. When we suggested that the Commonwealth should make the same request to its creditors in respect of the £28,000,000, we were accused “of advocating repudiation. The Leader of the Opposition, when Acting-Treasurer, decided to float a conversion loan, and asked for slogans. He posed as the heaven-sent saviour of Australia, and invested himself with a halo that looked like .the ring which appears about the moon as a presage of rain. I told him that he need not worry about raising the £28,000,000, and that he would get all the money he needed and more. Like a flea on the tail of a dog, the bondholders knew when they were on a good thing, and would stick to it. The £28,000,000 was subscribed less than six months ago, and those who provided the money were told that they would be paid 6 per cent, in respect of bonds having a currency of two years, 5f per cent, for ten years, and 5£ per cent, for twenty years. The patriots who profess to want to see Australia placed in a sound financial position did not lend their money for twenty years at 5^- per cent., or even for ten years at 5$ per cent; of the £29,000,000 actually subscribed £25,000,000 was lent for two years at 6 per cent. Within six months they are to “be told that their interest is to be decreased by 22£ per cent. What about repudiation in that regard? Whose word is to be taken now? Will the honorable member for Angas vote for this reduction of interest? He says that he is responsible to his constituents; let him explain to them his attitude on that proposal. I have been at least frank and honest, and have never supported, and never will, support repudiation of one penny of the public debt or the interest due on it. The Government is crying now to its political opponents “ Kamerad “. Like the Germans who surrendered, the supporters of this scheme should be thrown into a- “ P.O.W. “ cage. When £5,000,000 worth of gold is exported will the paper currency be affected? Will there be any diminution of production? Will any bank refuse to give an overdraft if the security and interest are attractive enough ? No ; if the security is good, and the bank can ,get a good rake-off, the export of gold will not make the slightest difference. We hear much of the gold that is said to be the backing to the notes issued by the Bank of England, but nobody has ever seen it. The bags in the vault may contain sand, for all that the public knows. During the war soldiers guarded the vaults of the Commonwealth Bank, because we feared that a few people of .German parentage might “pinch” our gold. But the guards, and even the Prime Minister and Treasurer of the day were not sure that the vaults contained ope sovereign. The gold reserve is a fetish, an,d it has been used to deceive the workers for many year3. The export of gold will provide the first opportunity for letting the public know how great a fraud the present financial system is. The export of £5,000,000 is merely a commencement, and, so far as I am con cerned, the Ministry can ship the last sovereign of the gold reserve. Let nobody tell me that in consequence our people will starve. Rathenau, when proposing the deflation of the German mark, said that if all the gold in the world were sunk in the sea the productivity of the people would not be affected. When the first Commonwealth Arbitration Bill was introduced, Mr. Glynn said that Labour always had the power to re-create and restore. The honorable member for Angas (Mr. Gabb) seemed about to have an apoplectic fit regarding the disappearance of the gold standard, which I predict will never be restored in his lifetime. He said that those countries which are off the gold standard are striving to get back to it. France and the United States of America will not allow them to get back. They could corner all the gold in the world to-morrow if they chose. Already they have an enormous proportion of it, and as a means of protection against theft they are smelting it into large ingots.
– Does the honorable member consider that those countries have an actual gold reserve ?
– -I; do not think that anybody can be sure that the gold is there. The authorities are dependent upon a man going round with a yard stick and measuring what is stowed in the bank vaults. The accumulation of gold is entirely foreign to present-day banking standards. If the gold reserves of (he world were dissipated, our monetary system would still go on much the same as at present, and the bankers would continue to call the tune in interest and exchange rates, if they were able to do so. It is calamitous that we should have to pay £9,000,000 in exchange in order to pay an interest obligation of £36,000,000.
– That is the disadvantage of being off the gold standard.
– That sort of thing will continue until we are able to pay off our indebtedness. According to Sir Robert Gibson, the existing exchange rate is the result of the demand for English credit.
– If it were not for that exchange rate the primary producers of Australia would not be able to carry on.
– Are not our primary producers getting the great bulk of the £9,000,000 that Australia has to pay in exchange ?
– They are getting a premium of that amount.
– They are getting the lot. The primary producers are being subsidized out of the coffers of the general community to the extent of the £9,000,000 per annum which we have to pay in exchange. I do not mind that so long as the money is going to genuine producers, to recompense them for their labour.
In one week the exchange rate jumped up 10 per cent. How is that rate fixed’ One gentleman tried to tell me that it was all a question of price levels in Australia and abroad. However, I had previously been informed, and I think rightly, that, the reason for the exorbitant exchange rate is that a lot of our big capitalists became fearful of what this Government might do, and bought up all the Louden credit that they could, drafting their money home for the purpose. That ;s an example of the pernicious practices possible under our existing financial system. In order to maintain this colossal thimble-and-pea business, we are to be asked to cut old-age pensions. The Government may send our gold overseas, but
I will not give my approval to the cutting of old-age pensions, nor will I support any project which is not aimed at conferring a benefit upon the workers of the country, who have for years suffered so much misery. This Government is taking the first step in the surrender of everything that Labour has stood for so steadfastly.
.- The attitude of honorable members on this side of the House has not changed with regard to the sending of £5,000,000 of gold to London in order to meet the current obligations of the Commonwealth. It is the same now as it was when tac Government was prevented in another place from sending a portion of our gold reserve overseas. Had the position been reversed, and the Government benches been occupied by the present Opposition, no such proposal would have been made. Long ere this, confidence would have been restored in Australia, and the count-y would have been on the high road to solvency.
The honorable member for “Werriwa (Mr. Lazzarini) said many things concerning finance and currency with which I am not in agreement ; but I am heartily in accord with his criticism of the Government. During the past eighteen months the Government, and the Treasurer (Mr. Theodore) in particular, has shifted from position to position, actuated apparently by one desire - to retain office. The honorable member for “Werriwa trod many paths of argument during his speech along which I shall not follow him. It is my object to indicate, in as few words as possible, how I stand with regard to this proposal of the Government.
– Tell the House how you will vote.
– I shall vote with the Government, provided that it accepts such amendments as the Leader and Deputy Leader of the Opposition have stated that, it is their intention to move. Those amendments represent the safeguards which we on this side of the chamber consider necessary. So far as possible, we want to take the matter out of the hands of the Government, and place it under the control of the Commonwealth
Bank Board, whose responsibility it is, and who, we consider, are best fitted to advise on the subject.
Had the Prime Minister, upon his return from Great Britain some months ago, advocated those things which the people of Australia, and of the world, had been led to believe he stood for, this proposal would not have been necessary. Instead of doing what was expected of him, the right honorable gentleman and those associated with him on the front bench, together with those who support him in this House, have done nothing but vacillate. They have tarried when they should have gone forward, and because of their dalliance the position has grown steadily worse, until it is evident that no other course is open to Australia but to send this gold overseas.
It is interesting to note the opinion that is held, on the other side of the world in this matter. I have here The Statist of the 9th May” last, the latest copy of that journal to reach Australia. As is well known, Tho Statist is a practical financial publication of very high standard. In its sub-editorial columns it refers to the appearance of Sir Robert Gibson in another place, and deals with the very subject with which this House is now concerned. The article reads -
Dealing last week with the likelihood of receiving further gold from Australia, as a result of the bill which is intended to free the Commonwealth Bank of the necessity of keeping any gold reserve whatsoever, we stated that this proposed measure would find the Senate a difficult obstacle to clear before reaching the statute-book.
That is a reference to the amendment of the Commonwealth Bank Act which was so effectually rejected in another place. The Statist continues -
In its consideration of this bill the Senate this week received valuable evidence from Sir Robert Gibson, the Chairman of the Commonwealth Bank. In giving evidence on this proposal, Sir Robert had an extremely delicate task to perform. He had to give evidence on the monetary and financial aspects of the Bank Amendment Bill, but in these days, when finance is at the root of the main political issues of the Commonwealth, he must have found it extremely difficult not to infringe upon the sphere of politics. That he succeeded in this delicate feat of balance is a great tribute to Sir Robert’s tact. The outstanding points brought out in his evidence were the fact that the Commonwealth Bank
Board disapproves of the bill and the statement that, in Sir Robert’s opinion, there is another alternative to the shipment of gold to London, or default at the end of June, when the Commonwealth bills mature.
Here let me pause to reiterate that it is because of the vacillation of the Government that it is now found necessary to ship this gold to London, it being too late to accept the advice that was tendered not only by Sir Robert Gibson, but by most, if not all, of the other economic experts in Australia. The article goes on -
Tho reasons that have led the Commonwealth Bank Board to express their disapproval of the bill will be widely appreciated in this country. The disappearance of the gold reserve would impair confidence both at home and overseas, in the stability of Australian currency. Sir Robert added that, since Australia was involved in transactions of international character, it would do well to try to maintain the monetary system still accepted by the leading nations.
That is entirely contrary to the advice that was tendered to the House this afternoon by the honorable member for Werriwa. The contribution proceeds -
Sir Robert naturally refused to develop his statement that there was another alternative to default or the shipment of gold to London, but none of his hearers can have failed to know what he had in mind. It is the gospel of hard work, retrenchment, and reduced costs and balanced budgets which is being so derided and sinned against by the politicians now in office. If a change of government were to take place, the alternative to default or gold shipment would no doubt be provided by a renewal of overseas confidence, which would make it possible to renew maturing obligations and to fund floating debt on reasonable terms. At present that confidence is, unfortunately, not present, and Sir Robert stated that if the Commonwealth bills maturing on 30th June, had to be renewed, a price would have to be paid which he regarded as prohibitive. If between now and the end of next month no change in the general situation takes place, apparently the only alternative will be that of default or gold shipments, and in that event Sir Robert is decidedly of opinion that the shipment of gold should be chosen.
The Prime Minister (Mr. Scullin), the Treasurer (Mr. Theodore), and the Leader of the Opposition (Mr. Lyons) have each told us that Sir Robert is of that opinion ; that he considers that at the present time there is no alternative to the shipment of this £5,000,000 of gold overseas. Unfortunately, that seems to be the position. This Government alone is responsible for placing this country in its present situation, and it must for all time shoulder the blame. I support the bill most unwillingly, because I recognize that had the Prime Minister and those associated with him adopted the suggestions of the present Deputy Leader of the Opposition (Mr. Latham), which he made some eighteen months ago, this legislation would not now be necessary. I hope that in the committee stage honorable members on this side of the House will be able to induce the Government, to accept certain amendments designed to act as safeguards in the bill.
– The speeches on this bill have given some interesting side-lights, and I refer particularly to the speech of the honorable member for Oxley (Mr. Bayley): There is no doubt that the Opposition is finding it difficult to swallow a doctrine which it had been preaching for a number of years, and particularly during the last few months. That doctrine is the necessity of maintaining a gold backing of 25 per cent, for our note issue. Almost from every platform the representatives of the United party have argued that the restoration of confidence in Australia depends upon the maintenance df a 25 per cent, gold reserve; but now that argument is no longer used. The members of the United party are (faced with the alternatives of default with respect to our gold reserves or default to our creditors overseas. They have decided to default on the gold standard and the position must be somewhat embarrassing for them.
– Not at all.
– In many respects the Nationalist party, in its political outlook, can be likened to a corkscrew. Previously, it endeavoured to make the public believe that the restoration of confidence in this country depended on the maintenance of certain gold reserves, but now its members admit that they have been hoodwinking the public, and that the country can carry on even if the gold reserve is reduced by £5,000,000. The honorable member for Oxley said that this Government is entirely to blame for the circumstances in which Australia finds itself, and that were the Nationalist party now in office there would be confidence in the Government, and this legislation would not be necessary. Let me remind him that during the last nine months of the administration of the Bruce-Page Government oversea investors had very little confidence. That is shown by the fact that in respect of practically all loans floated on the London market during that period, 84 per cent, of the amount raised had to be carried by the underwriters. On the other hand, an opportunity presented itself even as recently as last October, for the people of this country to prove their confidence in this Government. We are all aware of the success achieved on that occasion.
– Not much use was made of it.
– That remains to be seen even at this late hour. It is certainly difficult to say what would have happened if my honorable friends opposite had been successful. We are pleased to have this opportunity to demonstrate to the public that the gold standard, the necessity for which has been repeatedly stressed by the members of the Opposition, is of no real value, and that this country can carry on with a gold backing of 15 per cent, to the note issue -just as well as it could with a gold backing of 25 per cent. I have no doubt that if the Government finds it necessary within the next twelve months to ship all our gold overseas, we shall still be able to carry on. The position in which Australia finds itself is not unknown in other countries. In last Sunday’s Sun I noticed a statement by Sir Basil Blackett, a director of the Bank of England, and chairman of the Colonial Development Advisory Committee, in which he points out that the great fall in prices is bringing the whole world face to face at least with partial repudiation. He said that not only Australia, but also other parts of the world, are unable to carry on under the system of currency operating to-day. The honorable member for Angas (Mr. Gabb) contended that if we would only face up to the position, if we were sincere in carrying out the. demands of the banking institutions, we could obtain plenty of accommodation from the Westminster Bank and the Bank of England. I road the other day of the position of Newfoundland, a country doing everything expected of it hy the financial interests, and one whose difficulties are similar to those of Australia. Apparently it is doing all that can be expected of it. yet a loan floated there to prevent default was only partially subscribed. The last I heard of the matter was that the Minister for Finance was making a special visit to New York in an endeavour to find accommodation. The position, boiled down, is that if we are prepared to accept the Niemeyer policy and reduce the conditions of living and wages in this country, we can obtain accommodation from oversea financial institutions. After all, neither the “Westminster Bank nor the Bank of England favours this country as against any other. Those institutions extend credit where they get the best return. They do not discriminate between British dominions and other countries. Their sole object is to encourage cheap labour conditions, so that they may make greater profits. The Leader (Mr. Lyons) and Deputy Leader of the Opposition (Mr. Latham) are rather pleased with the recent turn of events. It is quite clear from their speeches that they are satisfied that they have accomplished their purpose. Indeed, they have even said that this Government has gone further in its proposals than the Nationalist party was prepared to go, even as recently as last October. The honorable member for Adelaide (Mr. Yates) truly said that this Government had surrendered to the banking institutions. If it accepts the proposals of the Premiers Conference it will indeed be disgraced in the eyes of the Labour movement in Australia. I was. pleased to hear the declaration of the honorable member for Adelaide, and I am certain that other Labour members will refuse to sacrifice life-long principles by surrendering or hoisting the white flag to the banking institutions of this country. The United party is prepared to extend some consideration to the Government, because it feels that its efforts to force the Government to accept its policy have been successful, but time will determine whether the Government is prepared to accept the dictate of the Opposition. Its demand that certain amendments should be included in the bill only adds insult to injury. The bill provides that the Treasurer shall determine the quantity of gold to be shipped abroad, and the Leader of the Opposition proposes to insert an amendment in the bill to take this power from the Treasurer, and to place it in the hands of the Commonwealth Bank Board. It remains to be seen whether the Government will accept that amendment. If it does, it will crawl, not on its knees, but on its stomach.
– That was what the honorable member did when he was a member of the Ministry.
– The Ministry of which I was a member was satisfied that this country was being governed by the Commonwealth Bank Board and the private banking institutions. That opinion was expressed by me on more than one occasion and never at any stage did I bow the knee to these people ; but, on the contrary, it could be well said that the honorable member for Warringah had done so. I am hopeful that the Government will refuse to accept the proposed amendment, and that it will at least demonstrate to the people that this Parliament is prepared to exercise powers which the peoplebelieve it to possess. Surely, the Government and not the Commonwealth Bank Board, must decide how this legislation shall operate. I hope that the Government will not accept the amendment, and if an opportunity presents itself, my colleagues and myself will vote against it.
The other proposed amendment is to re-establish the gold standard within three years. Of course we may be able to collect gold from persons who have gold inlays in their teeth or by some other process, but I am satisfied that once we ship a portion of our gold reserve abroad, with the probability of further shipments, we will never return to the gold standard. I am concerned, not with the hoarding of gold, but with the provision of those things for which the people, particularly the unemployed, are clamouring. They require, not gold, but food, shelter, clothing.
– Gold is a useful commodity.
– Yes, but it cannot be eaten.
– The honorable member will not fill a hungry man’s stomach merely by talking.
– I do not deny that, but the hungry man is concerned, not with the question whether the percentage of gold backing to our note issue should be 25 per cent, or 15 per cent., but with the provision of food and other necessaries of life. My colleagues and myself support this measure, believing that it is along the lines pf the policy of financial reform which we advocate. It establishes the fact definitely that the arguments of our opponents in favour of the maintenance of a gold backing of 25 per cent, are futile, that the gold standard is unnecessary, and that it has been used for the purpose of manipulating the currency of every country in which it has been established.
.- The speech of the honorable member for West Sydney (Mr. Beasley) shows how divergent are the views of the various members who intend to support - some with enthusiasm and some with very little enthusiasm - the bill which is now before the House. At the outset of the Treasurer’s explanation of this measure, he said it is similar to the bill introduced some weeks ago. I submit that if his object had been to condemn the measure in the eyes of the Opposition he could not have chosen a more suitable expression. This measure, however, differs in several important respects from that which was introduced seven weeks ago ; if it did not, I would condemn it lock, stock and barrel. It amends the Commonwealth Bank Act 1911-1929 to enable the Government to meet £5,000,000 worth of treasury-bills maturing in London on 30th June next. The bill passed by this chamber several weeks ago, despite the strenuous opposition of honorable members on this side, and fortunately rejected in another place, gave the Treasurer (Mr. Theodore) authority to utilize the whole of our gold reserve as he thought fit from time to time to meet our overseas commitments. If it had been enacted, it would have resulted in the withdrawal of the whole of the gold backing of our note issue. This measure is less ambitious than its predecessor. If the bill becomes law, the gold reserve may be reduced by £5,000,000, but the exportation is restricted to that amount, and the gold is to be specifically used to meet the £5,000,000 worth of treasury-bills falling due in London at the end of this month. Instead of the total disappearance .of our gold reserve being provided for, that reserve can, under this bill, be whittled down only from 25 per cent, to 15 per cent. The. party to which I belong is absolutely opposed to any permanent reduction of a gold reserve below 25 per cent.; in fact we regard a reserve of 25 per cent, as insufficient. We would rather see the amount increased than reduced. I am only prepared to tolerate the temporary reduction of our gold reserve if it can be proved beyond doubt that the only alternative to the present proposal is default. I am loth to believe that this country with such tremendous resources has fallen so low in the esteem of its creditors that it cannot find accommodation for the comparatively small sum of £5,000,000. The amount is relatively small when we remember that our debt to Great Britain amounts to approximately £550,000,000, and that the value of the gold proposed to be shipped is, therefore, less than 1 per cent, of our total debt to Britain. We are loth to believe that it is impossible to find a means of taking up something less than an additional 1 per cent, of the existing debt.
– But we cannot borrow £5,000,000.
– This Government cannot borrow anything. I believe that if the economies which the Government now proposes had been adopted some six months ago, it would have been unnecessary for this Parliament to consider the shipment of £5,000,000 worth of gold. Our credit in London would have improved to a sufficient extent to enable us to overcome any embarrassment in regard to meeting £5,000,000 worth of bills falling due this month. We are told that, despite the new proposals of the Government to effect economies, it is now too late to meet the bills falling due on the 30th June by any other means than shipping gold. I have been very much impressed in this matter by the advice tendered by the Commonwealth Bank Board. I understand that that board has said that it is now too late to do anything to meet these commitments in London, and to avoid default, apart from shipping gold. I trust that the proposed reduction in the gold reserve will be only of a temporary nature, and I strongly support the amendment foreshadowed by the Deputy Leader of the Opposition (Mr. Latham), which provides that the Government shall take steps to build up within three years a gold reserve of 25 per cent. I would go further, and should be glad if the Government would incorporate an amendment for the automatic acquisition of the whole of the gold mined in Australia until our gold reserve had been built up to a substantial amount. I realize that there are many difficulties in framing such an amendment, and I realize thai the one suggested by the Deputy Leader of the Opposition goes a long way in the desired direction. The honorable member for West Sydney (Mr. Beasley) asked how gold could be obtained in order to increase our reserve. Surely he knows that approximately £2,000,000 worth of gold is mined in Australia every year?
– And the quantity annually produced is increasing.
– Yes. Even if the rate of production did not increase, and assuming that £5,000,000 worth of gold is shipped, we could, by acquiring all the gold produced, build up our reserve within three years to an amount £1,000,000 in excess of our present reserve. A sure source of supply is available provided . money can be found to pay for the gold, but by paying for it we would be relieved of the necessity to pay interest to the Commonwealth Bank on certain securities. I support the bill with a good deal of reluctance, and conditionally upon the Treasurer indicating his acceptance of the amendments foreshadowed by the Leader and the Deputy Leader of the Opposition. I am adopting this course as I regard it preferable to reduce our gold reserve, temporarily, than to default. The Treasurer also referred to the fact that certain other treasury-hills are falling due in London on the 30th September. I trust that between now and then this Parliament will, by legislative action, have done something to enhance our credit overseas, so that there will not be a repetition of the action of the Government in this instance in coming to Parliament and asking its sanction to ship more gold. The honorable member for Corangamite (Mr. Crouch) referred to the note issue of Great Britain as being £406,000,000, in addition to which, he said, there was a fiduciary issue of £206,000,000. I pointed out to the honorable member, by interjection, that he had apparently been misled by an inaccurate newspaper report. The honorable member, however, persisted in his statement, and inferred from that newspaper statement that the value of notes in circulation in Great Britain was £15 per head of the population. The position in that country is that the note issue is approximately £400,000,000, of which £260,000,000 represents a fiduciary issue hacked by securities, and £140,000,000 an issue backed by gold.
– What is the honorable member’s authority?
– If the honorable member for Corio (Mr. Lewis) will confer with the Treasurer, as the honorable member for Corangamite has since done, he will find that I am right. Great Britain has a 35 per cent, gold backing to her note issue, and a security backing of 65 per cent. What is the position in the Commonwealth to-day? Our note issue is approximately £50,000,000, and the gold reserve at this moment, which is £15,000,000, is equivalent to 30 per cent., thus leaving 70 per cent, to be backed by securities. From this standpoint the note issue of Great Britain is sounder than that of the Commonwealth. The inferences drawn by the honorable member for Corangamite with respect to the amount of notes in circulation per head of population were inaccurate. I trust that it Will not be necessary to actually ship £5,000,000 worth of gold as is now proposed, and that it will be possible to keep the gold in this country even if it passes out of our control. If we have to part with one-third of our gold the remainder will be equal to about 20 per cent, of our note issue.
– What is wrong with the proposal ?
– Our position is not nearly so sound as it would be if the percentage of gold backing were doubled, and the percentage of security backing reduced.
The contention of the honorable member for Adelaide (Mr. Yates) with respect to exchange was somewhat confusing. He seemed to be under the impression that certain persons were making a lot of money by sending money to England. I do not wish to do the honorable member an injustice, but that is the impression his remarks left upon me. He inferred that certain capitalists were sending money overseas and making a profit out of the exchange.
– That is not so. I said that they were safeguarding themselves by sending their money out of the country regardless of cost.
– I accept the honorable member’s correction. Exchange takes a heavy toll from capital sent out of Australia.
The honorable member for West Sydney (Mr. Beasley) also referred to a loan raised in 1929 by a previous Government, and rather gloated over the fact that, for a few weeks,84 per cent, of that loan was carried by the underwriters. Does the honorable member not realize that trust moneys become available for investment only at uncertain periods ? When a big loan is being raised sufficient trust money is not always available, and therefore subscriptions cannot be made immediately.
– That was not a big loan.
– In answer to the honorable member for Corio, whose appetite for information seems insatiable, I may say that it is more satisfactory from a government’s view-point if a loan is not subscribed too rapidly. If a Commonwealth loan were taken up within half an hour, the Treasurer would naturally feel that the conditions had been made too attractive. If a man has something to sell at a specified figure, and a purchaser accepts it immediately, the seller naturally thinks that he could have driven a harder bargain. When a portion of a loan is left on the hands of underwriters for some weeks, and is eventually fully subscribed, it is an indication that a hard bargain has been driven, whereas when money is subscribed with great rapidity, it shows that the terms were probably a little too generous.
Some honorable members opposite seem to have the idea that the Government will save interest by using our gold in this way.
– Of course it will.
– I am surprised to hear the honorable member say that. He does not appear to realize that although the Government will reduce its obligations to Great Britain by £5,000,000 it will incur obligations of like extent to the Commonwealth Bank. It will still have to pay interest on the £5,000,000. The debt is only being transferred from one authority to another.
– Is not the Commonwealth Bank a Commonwealth institution?
– If the honorable member will read the bill carefully he will see that the gold which is taken from the Commonwealth Bank must be replaced by other securities. The Government will still be under an obligation to pay interest on the money.
I have a good deal of sympathy with certain remarks made by the honorable member for Angas (Mr. Gabb). He said that the bill indicated that there would be some political interference with the Commonwealth Bank. If the measure were passed in its present form there would be abundant justification for that view; but I understand that the Government is prepared to accept an amendment to provide that the Commonwealth Bank Board shall be consulted in order to determine whether this gold shall be used to meet our indebtedness.
To sum up, my position is quite clear. If the Treasurer will accept the amendment foreshadowed by the Deputy Leader of the Opposition to provide for the building up of our gold reserve to 25 per cent, in three years, and also the amendment suggested by the Leader of the Opposition to provide that the Commonwealth Bank Board shall be given a voice in determining whether the gold shall be used, I shall support the bill, although I have not very much enthusiasm for it. I want a definite undertaking from the Treasurer when he is speaking, in reply, that our gold reserve will be built up from 15 per cent, to 18 per cent, to 2l½ per cent., and then to 25 per cent, by annual increases, and that the Commonwealth Bank Board will be called into consultation on the subject of the shipment of the gold. Failing such assurances, I shall vote against the bill.
.- I cannot see why the Deputy Leader of the Opposition should need a provision in the bill that the Commonwealth Bank Board shall be called into consultation, for, after all, the Treasurer is the representative of the Government, and the Government will he answerable for any mistakes that he may make. At present we have £15,000,000 in gold. Even on the basis of a 25 per cent, reserve we could issue notes to the value of £60,000,000. With £10,000,000 in gold we could issue, on the basis of a 15 per cent, reserve notes to the value of £66,000,000. To hear honorable members opposite speak, one would imagine that all we need is gold. Evidently they do not realize that the world was in existence for thousands of years before gold was discovered, and for ten times ten thousand years before it was minted. In those far off days the people did not suffer hunger and thirst for lack of money. Although Australia is teeming with wealth, many of our people are suffering untold privations. How long is this to continue? Our 10s. bank note contains a promise which is a bare faced lie. It reads as follows : -
The Treasurer of tho Commonwealth of Australia promises to pay the bearer a halfsovereign in gold coin on demand at the head office of the Commonwealth Bank.
Does any one believe that?
– The bank will pay the half-sovereign, but will demand the return of it.
– A member of parliament may know that, but the ordinary citizen does not know it. It is rank hypocrisy to continue to print that promise on our notes.
One great writer has said that when the ukase went forth that the gold standard was to apply throughout the world, 25 per cent, of the world’s population was sentenced to poverty and misery. The eastern countries, which contain twothirds of the world’s population, have a silver currency standard; but because of the machinations of a very few rich men, these people have been brought into dire poverty. The only country in the world which has left the old financial road, with its ruts and obstructions, is France.
The year before last there were many people who thought that the franc would descend to the abyss of the German mark ; but they did not reckon with the credit and wonderful financial power of the Bank of France. Poincaire was able, with the help of that bank, to stabilize the mark at 124.4 per English pound sterling.
– He came down to the gold standard.
– If the honorable member would favour the splendid financial policy of France I should find myself in agreement with him. As a result of the changed financial policy of France the gold reserve of the country was increased from £40,000,000 to £330,000,000 up to the end of the year before last ; and last year it was increased by another £100,000,000. If the Bank of England would leave the old financial methods advocated by Sir Otto Niemeyer, it would soon enjoy similar prosperity. May I say, in passing, that Sir Otto Niemeyer was treated very wrongly and rudely by many Australian people while he was here? He came out here as our guest, and at our invitation, though many of us did not know it at the time. I discussed these questions with him, and he recognized that, from my point of view, I was justified in asking that Great Britain should treat Australia just as generously as Britain herself was treated by America in regard to her indebtedness. She should also treat us at least as generously as she treated certain foreign .countries.
Honorable members must know that the economists of the world are to-day divided into two camps. One camp argues for the gold standard, and the other holds that the gold standard has failed. It must be apparent to honorable members that Australia is a wealthy country; but her wealth does not depend upon her gold. When the aborigines owned Australia it contained £600,000,000 worth of gold more than it does to-day, but the native people did not know that. That quantity of gold was equivalent to 4,500 dray loads each weighing one ton. If we had that gold to-day we could borrow £2,000,000,000 from any country in the world. But would any honorablemember say that the wealth of Australia is less to-day that it was then? A reference to our official statistics will show that in 1925 our private wealth was estimated to be £2,836,000,000. Since then it has increased by £400,000,000. The total wealth of Australia to-day is over £4,000,000,000. Why should we not base our note issue on that wealth? All economists agree that both inflation and deflation, may become curses. If we were to take an intermediate road, and base our note issue upon our great wealth, and increase the note issue as the population, increased, we should do well. In that case, the note issue would not be a fiduciary issue, for it would be based upon wealth actually owned by the country. That is my suggestion. As for the gold standard, I would not care if every sovereign we possessed were sent away. When the bondholders were demanding all their rights, I urged that the Government, in the name of Parliament, should tell them that if they wished to be paid in gold we would pay them in gold so long as we had it, and that as Australia grows wheat, meat, wool, butter, and other primary products, and also produces silver, zinc, lead, iron, and other minerals, those bondholders to whom we could not pay gold could be asked how much of these products they would require to discharge the country’s obligations to them. Having paid our debts in that way, we should determine never to borrow again. Honorable members will agree that if we had not borrowed money overseas, but had confined our borrowing to Australia, we should not be in the serious position in which, we now find ourselves. In that case, we should not have to face a discount rate of 6s. for every £1 sent overseas. If we had confined our borrowing to our own country we should have a greater trust in ourselves than we now have. I have asked university professors, bankers, professional men of all kinds, and particularly librarians in charge of our public libraries, if they could give one instance of a country so poor that it produced only a bare sufficiency of food for its people. I have asked them for instances of such a country where 20 per cent, to 25 per cent, of its people had experienced the want, misery, and privation which exists in Australia to-day.
My quest has been unsuccessful. The people of this country are suffering today because of the accursed system of the standardization of gold, which means that the wealth of the world is in the hands of a few persons. In This Age of Plenty, Hattersley states that a few wealthy financial men from the United States of America visited England and sold large quantities of English bonds, which were then quoted at a high figure, and with the proceeds bought largely of American stocks which were then low. The £11,000,000 in gold which they obtained from the Bank of England was sent to New York, with the result that the stocks of 300 English, companies decreased in value by £115,000,000. Even the Bankers’ Magazine could not say how many million pounds profit these few rich American financiers made out of that transaction. It has been stated by economists that seven men from the United States of America, together with five men from Europe, can, at will, financially embarrass any country. That is possible merely because of the standardization of gold. History shows that at different times the world has had many varieties of currency. Assuming that gold is the best form of currency, silver is the next best currency. When honorable members opposite speak of real money, they generally mean gold. I should like to see our currency based on a silver standard. Eastern countries which have a silver standard do not make the profit from their silver coinage that England and Australia make. Those countries have a coinage which corresponds generally to the value of the silver in the coins, with the result that in India, China and Japan a person does not know until he reads his newspapers how much his English pound is worth. I am authoritatively informed that 56 per cent, of the miners at Broken Hill are at present unemployed, simply because it does not pay to mine the ore and produce the silver and lead.
An ounce of silver, which costs ls., would provide 5s. 6d. in currency - a profit of 4s. 6d., or 450 per cent. Any business man would jump at a proposition to make a profit of 450 per cent. The issue of £1,000,000 in notes to coin a silver currency would prove a wonderful stimulus to the silver and lead mining industries, and provide, employment for thousands of men who are’ now idle. We shall not regain our financial stability until the unemployed workers in our midst are back at work.
The Government would do well to consider purchasing the wheat crop at 4s. a bushel and paying for it in silver currency. I have yet to find a farm worker or factory employee who would refuse to accept silver in payment for his services. Honorable members are aware that at’ the beginning of last season the farmers of this country were urged to grow more wheat, and thus help their country. They know, too, how well the farmers responded to that appeal. ‘ The farmers have, however, been left in the lurch.
– Woe betide the politician who again urges them to grow more wheat.
– I have always been willing to do what I could for the man on the land. That is, perhaps, largely due to my bitter experiences 59 years ago when I myself was on the Land. Some time ago I asked a big grower of wool what he considered would be a fair average price for wool, and he replied that an average of ls. 3d. per lb. would be satisfactory. When I suggested an average of ls. 6d. a lb. he said that that price would be welcome to most woolgrowers. The Government could buy the whole of the wool crop of Australia at ls. 6d. a lb., paying for it in silver currency, and sell it in England at 9d. a lb., and. still make a profit of 5d. a lb. Similarly, wheat bought with a silver currency at 4s. a bushel could be sold in England at 2s. a bushel, and still show the Government a profit of ls. 3d. a bushel. On the basis of an ounce of silver which costs ls. producing currency valued at 5s. 6d., the Government could pay the farmers 4s. a bushel for their wheat and incur an expenditure of only 8 8-lld. per bushel. That is to say. a silver coin valued at 4s. would cost the Government only 8 8-lld. When I have placed my suggestion before different persons I have sometimes been asked whether the profit would be continuous. I have freely admitted that the silver currency would make only the one profit of 450 per cent. That profit would not be continuous. To meet that objection I propose that all the silver which again got into the hands of the banks or of the Treasury should be held as a reserve against the note issue. That system is adopted in the United States of America. In 1818 Great Britain borrowed from the United States of America 80,000,000 oz. of silver. I am informed that there is £5,000,000 in silver included in the backing behind the English fiduciary note issue.
In 1920, Great Britain passed a Currency Act to provide for a reduction of the silver content of its silver coinage. At only one time in the history of England, since the reign of Edward the Confessor, had the silver content been so small- as it was in, 1920, and that was in the 37th year of the reign of Henry VIII., who reduced it to 33 per cent., but, in 1920, it was reduced to 50 per cent. Of the silver coinage minted in Australia, 925 parts in every thousand are pure silver. The English haN-crown which I now exhibit to honorable members, is only half silver. With silver al ls. per oz., Australia could mint silver coinage to the amount of £5,500,000 from £1,000,000 worth of silver; but in England that quantity of silver would yield £10,175,000 worth of currency. In 1920 silver reached the highest price ever known, namely, 7s. 5-Jd. per oz. It would he profitable, although illegal, to melt silver coin, and dispose of it as bulk silver. The main reason for the action taken in Great Britain in 1920 was that at that time the fiduciary note issue was approaching £300,000,000, and the people were becoming timid; wise members of the British Government realized that a big silver currency would create confidence.
The honorable member for Oxley (Mr. Bayley) has ascribed to the Labour Government responsibility for most of the ills from which Australia is now suffering, but let me remind him of the result of my inquiry as to the number of public servants receiving £1,000 per annum or more in 1913, compared with the number in 1929. When Mr. Bruce was Prime Minister he gave me inaccurate information’ on this subject. I do not attach personal blame to him for this fact, but I was much annoyed on discovering that I had been supplied with incorrect particulars, because I had circulated them among most of the principal newspapers of Australia. Mr. Bruce told me, in answer to a question in this House, that in 1913 there were six public servants in receipt of £1,000 or more per annum, and drawing, in all, £6,200 per annum, while in 1928 there were 33 such members of the Service. Mr. Bruce subse quently admitted to me that an error had been made, and he then supplied correct figures, which I have since had brought up to date by the present Prime Minister (Mr. Scullin). The following statement has been compiled from details published in Hansard of the 30th April, 1930, at pages 1246 to 1250 :-
– I ask the honorable gentleman to connect his remarks with the bill.
– I hope that I have furnished an effective answer to the criticism of the honorable member for Oxley (Mr. Bayley), who blamed the Labour Government for most of the ills from which Australia is now suffering. What will be the outcome of the present condition of civilization? In my opinion, the present trouble is but a preliminary skirmish to the fight which must occur in every country to determine whether money-power is to control the world, or whether humanity is to rise superior to it. Only one country that has adopted the gold standard has been fairly successful, and that is France. The only country that has placed the power of capitalism under control is Russia. I quote the following observations from an excellent publication which has been handed to me by a friend, who has placed it at the convenience of honorable members : -
Freedom of the press in a capitalist society means freedom to trade in the press and to influence the masses of the people. Freedom of the press means that the press, the mightiest instrument for moulding public opinion among the masses of the people, is maintained at the expense ‘of capital. This is the freedom of the press that the Bolsheviks destroyed; and they are proud that they were the first to free the press from capitalists, the first to build up in a great land a press that is not dependent upon a handful of rich men and millionaires - a press that is entirely devoted to the struggle against capital.
– I ask the honorable member to confine his remarks to the bill under consideration.
– This is practically the first time we have been asked to send gold from Australia to England, and I am endeavouring to show that one nation is prepared to rise above those who control the gold standard. I know of no peer of the newspaper from which I have quoted; it is not even equalled by the Scientific American. The Russians have shown the world that, in some respects, their example might be followed with advantage, although, if the newspaper reports be correct, I hope that we shall never emulate them in certain other directions.
.- I very much regret that the Government has been obliged to bring down this measure to provide for the export of £5,000,000 worth of our gold reserve of slightly over £15,000,000. As we owe approximately £1,200,000,000, this shipment of £5,000,000 in gold represents the payment of only l/240th of our total external and internal debts. If, in the near future, another demand is made for an additional £5,000,000 and if Parliament agrees to the shipment of that amount, we shall then have a gold reserve of only £5,000,000 for the payment of 238 demands of amounts equal to the treasury-bills which fall due at the end of this month in London. I submit that, in the circumstances, it is not fair to pay gold to creditors whose bills mature at the end of this financial year, possibly to the prejudice of ether creditors.
– Why not present each creditor with one sovereign?
– We have only one sovereign for every £80 worth of Commonwealth and State debts. The honorable . member for Melbourne (Dr. Maloney) a few moments ago mentioned that since the discovery of gold in Australia in 1851, the total amount produced in this country was slightly over £600,000,000. That would pay only onehalf of the national debt. I certainly blame this Government for not taking heed of the financial difficulties much earlier. The Commonwealth Bank issued many warnings to the Ministry, concerning the financial position of the Commonwealth. I heard the evidence given by Sir Robert Gibson, the Chairman of the Commonwealth Bank Board, in another place recently. He declared then that there was an alternative to the shipment of gold to meet our overseas obligations; but since his advice was not heeded, he considers now that there is no alternative. The Government has been dillydallying over this business so long that apparently this amount of gold must be shipped if Australia is to avoid default. In August of last year, a definite plan was agreed upon, and within the last two weeks the Commonwealth and State Ministers have, after long deliberations, agreed to practically the same scheme of economy. Unfortunately, this Government failed to take the necessary action nearly twelve months ago, with the result that Australia is now in a very grave financial position. If through blundering or negligence, the general of an army was responsible for a serious debacle, he would be promptly court-martialled. Similarly, if the captain of a ship, through neglect of his duties, endangered or lost his vessel, he would lose his certificate. This Government, which has been in charge of the affairs of Australia for the last eighteen months, has allowed the ship of State to drift dangerously, and it should not be allowed to escape its punishment. It is appalling to think that we are obliged to ship one-third of our present gold reserve in order to avoid default. It is a very great mistake to deplete our gold reserve because, whether or not we like it, international finance is based on gold, and since, in its overseas relationships, Australia is closely associated with other countries, we must pay due regard to the condition of our currency reserve. I am not sure that I can vote for the bill in its present form, because I consider that it is the first step towards the complete destruction of our gold reserve. I believe that, in the not distant future, there will be a similar demand for a further shipment to meet pressing overseas obligations. If another £5,000,000 worth of gold is -sent overseas, we shall then have a reserve of only £5,000,000. When the bill is in committee, an amendment should be inserted to provide for the progressive reinstatement of the amount now being withdrawn from the reserve. I should like to have an assurance that this will be done, because I wish to see the gold reserve strengthened instead of depleted.
– I am pleased to hear honorable members opposite announce their intention to support the bill, because recently, when the Government brought down a similar measure, they opposed it strenuously, not only in this House, but also in another place where, finally, it was defeated. They have completely and effectively somersaulted, and now are wholeheartedly supporting this proposal to ship £5,000,000 of the existing gold reserve. They declare that they intend to vote for the bill because it is the only alternative to default. We know, as a matter of :fact, that they would vote for it under any circumstances rather than allow the nation to default. I do not blame them for that, but I do protest against their declaration that their support of the bill is conditional. The Treasurer (Mr. Theodore) has assured us that the shipment of this amount of gold is necessary to relieve financial pressure in London. Therefore the bill must be passed or the nation will default. I congratulate honorable members opposite on their complete somersault. A few weeks ago they declared the Government’s policy to be dangerous. Now they are in complete agreement with it, and prepared to sanction the reduction of the gold reserve from 25 per cent, to 15 per cent. I have no doubt that, in the course of a few months, we shall be faced with the same position, and will have to take the same measures to meet it. Then we shall have to consider the issue of emergency credit, and whether or not honorable members opposite approve of it, they will have to support it rather than allow the nation to default. 1
– It is true that I opposed the measure introduced by the Government several weeks ago for the export of our gold reserve. That bill was quite different, in many of its structural provisions, from the one now before the House. Furthermore, it provided for the shipment of the whole of the gold reserve in payment of overseas obligations, and it contained no safeguard, of the nature suggested by the Opposition in the case of this bill, and which, I hope, will be inserted when the measure is in committee. On the previous occasion, I, in common with other members on this side of the House, opposed the Government’s proposal, because we believed, at that time, there was an alternative. If the Government had then faced the issue, we should not have been called upon tonight to consider this bill. I still view with abhorrence the despatch overseas of even a limited amount of the existing gold reserve ; but I have taken the trouble to satisfy myself that the only alternative is default, and I am prepared to take, almost any steps to avoid that catastrophe. Being satisfied, from personal inquiries, and from statements made by the chairman of the Commonwealth Bank Board and the chairman of the associated banks, that the shipment of this portion of our gold reserve is the only alternative to default, I shall vote for the bill irrespective of views which I may have expressed with regard to the previous measure. The situation when the last bill was submitted was entirely different from that which obtains at the present time. Some honorable members seem to regard default as a matter of no material consequence to the country. Nothing more serious could happen - to Australia than that she should default in her payments either overseas or internally. The honorable member for Adelaide (Mr. Yates) and the honorable member for West Sydney (Mr. Beasley), who claim to be the direct representatives and defenders of the working classes, seem to overlook the dire consequences which would fall upon their own class if the Government did not take these steps to meet our overseas obligations. They speak as if this arrangement were being made in the interests of financiers and wealthy people. That iB not so. The meeting of our obligations is of the greatest importance to the workers, and to the common people - to them, perhaps, more than to any other class.
– Who are the common people ?
Mr. ARCHDALE PARKHILL.The common people are persons like myself, and members of the working and. middle classes. I am glad that the honorable member asked the question, because it affords me the opportunity to make the position clear. It is pleasing to know that the honorable member for West Sydney (Mr. Beasley) and his group are going to support this bill. It is strange, indeed, that they should do so, seeing that they are supposed to be supporters of the Lang policy which, in its essence and application, is that no interest shall be paid to bondholders overseas. In this instance the honorable members I have named have indicated their support of the proposal to ship our gold overseas to pay interest in full on money we have borrowed.
– It is not to pay interest, but principal.
– If the honorable member had listened to the Treasurer he would have learned that this money is to be paid to individual British bondholders whose money is due to them on the 30th June next. It is not to meet the demands of the Bank of England, or any other financial institution, but to satisfy the just claims of individual bondholders.’ I am glad that the honorable member for West Sydney, and those associated with him, have seen the futility and dishonesty of the Lang plan, with its refusal to pay interest overseas, and that they are now prepared to support this measure, which is one of simple honesty,’ designed to pay the interest due to those from whom we have borrowed money.
We have had to listen to several lectures as to what members of the Opposition ought to do. To those who delivered the lectures I say that they might at least concede to individual members of the Opposition the same principles, freedom and common sense as they claim for themselves.
– Not the same principles, surely?
Mr. ARCHDALE PARKHILL.Yes, the same virtue of adherence to principles, at any rate. Surely members of the Opposition can look after themselves. Most of them have indicated by their attitude upon this subject, and on other measures, that they are quite well able to do without lectures from the honorable member for Angas (Mr. Gabb), and others. I was not able to follow the incoherent ravings of the honorable member for Angas in their entirety, but I suggest to him that he might choose his words a little more carefully. He made some reference to party hacks, because several honorable members of this Parliament vote in the same way when they happen to think alike on certain questions. I suggest to him that he might yet be very glad, at the next elections, of the party vote which can be influenced by a certain party in South Australia. The honorable member’s condemnation does not come with very good grace from one who will probably be glad of the support of those who are prepared to state publicly their belief in the party system. The Opposition can very well look after itself. It stands for certain definite principles, and for a certain definite course of action. If I believe that a particular proposal is in the interests of the country, and will lift Australia out of the morass in which she has been floundering, I shall vote for it with any party whatsoever. I do not care two straws about party or other considerations as opposed to the interests of the country. The honorable member for Grey (Mr. Lacey), and the honorable member for Corio (Mr. Lewis) are incapable of appreciating these sentiments. Their only response to such a declaration is the loud laugh which bespeaks the vacant mind. The time has long gone by when party interests- ought, to affect the votes of any honorable members in this House. A man with any patriotism at all should vote with any party, even one comprising his worst political enemies, if that vote will promote the welfare of Australia. For my part, I shall be guided by that rule of conduct, irrespective of the gibes of honorable members opposite, or the friendly badinage of those on this side of the House.
I believe that the present statutory gold backing for our note issue should be restored as soon as possible after this gold has been shipped away. That can be done with the gold which we are producing in Australia. Other countries, even those which are not gold-producing, are able to build up their gold reserves to the level which they think proper. We should take steps to restore our gold reserve to 25 per cent, of the notes issued. The constitutions of all the central banks of the world provide for a gold backing of the currency. To my friends in the corner opposite I commend the constitution of the Russian .Soviet Central Bank, which, lays it down that the gold backing shall be at least 25 per cent., and that loans to governments shall be strictly safeguarded. If that is good enough for those who are regarded as advanced thinkers by our friends in the corner opposite-
– That is a lie.
– I require the honorable member for Werriwa (Mr. Lazzarini) to withdraw that remark.
– The honorable member for Warringah (Mr. Parkhill) said that the members who sit in this corner referred to Russians as “ advanced thinkers “ in supporting the gold standard. I withdraw the word “ lie “ and say that that it is a deliberate misrepresentation of fact.
– I adhere to the statement that I have made. It is interesting, however, to have from this prominent member of the Lang faction a repudiation of any suggestion of alliance or agreement with the advanced thinkers in Russia. But it cannot be denied that these safeguards in regard to banking have been adopted by that nation as well as by Austria, Czechoslovakia, and every other country that has a central banking system. Therefore, we shall be justified in building up our gold reserves at the earliest available opportunity.
For the reasons that I have stated I propose to support this measure, reserving to myself the right to deal as I deem expedient with any amendments that may be proposed when the bill is in committee.
.- The honorable member who has just resumed his seat presented himself with a bouquet on the score of his patriotism. He is one of those pure-souled 100 per cent, patriots who is prepared to vote for this measure, because it is designed to deal with a national emergency, namely, to enable this country to meet its obligations, and also because, as a whole-souled patriot, he is willing to disregard his party allegiance and to vote as his conscience dictates. If the honorable gentleman were as whole-souled a patriot as he would have this House believe, there would be no necessity for him to make such a profession of faith at this stage of his career. The honorable member for Angas (Mr. Gabb) subjected him to a very severe chastisement, and on the ground of patriotism appealed to him not to trust this Government. That honorable member claimed that he was the only 100 per cent, patriot on the other side of the House. I hope that I have awakened long since to the necessity of serving my country as it should be served - with whole-souled sincerity and devotion. I support this Government and this party because I believe that they alone are 100 per cent, patriotic.
The speeches of honorable members opposite have consisted largely of mock heroics. With them it is a case of “ Letting ‘ I dare not ‘ wait upon ‘ I would.’ “ They have threatened that, unless the Treasurer informs this House that he is prepared to accept certain amendments, they wil) not support the bill. They know full well that such threats are merely a hollow sham and a pretence, and that they have no real intention of voting against the bill. They know that the amendments which they have threatened to insist upon will not be accepted, because the Government has the numbers necessary to pass the measure irrespective of whether they support it or oppose it. If the Government had not the necessary numbers, they would not make such threats. At this particular stage they dare not encompass the defeat of the Government, nor even of this measure, because this is one of the essential features of the plan that was agreed upon at the Premiers Conference, and it must be passed by both Houses of this Parliament. Therefore, all these protestations by honorable members opposite are so much mock heroics, designed to delude the people into believing that they are putting up a strenuous fight against the shipment of gold from this country. They say that any lowering of the gold backing would lessen the confidence of the people of Australia in the soundness of our currency. But what does Sir Robert Gibson say with regard to our gold reserves? He says that their effect is more psychological than real; that they possess no value beyond the fact that they create in the minds of the people the belief that upon presentation of their notes they can obtain gold in return ; and that a gold backing is not essential to the soundness or the security of our currency. All that the people of this country want to be sure of is that when they have received their wages they can take that currency, whether it be in the form of paper or of metal, to the tradespeople, and receive in return commodities that are essential to human existence; and that when they have satisfied the basic needs of human society they can secure other commodities that add to their standard of comfort and living by the presentation of an additional number of units of that currency. So long as we continued to produce sufficient to satisfy our own needs and to exchange our surplus for the products of other countries, we could have just as sound a currency in any other form. That is all that the people of Australia require of their currency. I say without fear of my statement being successfully challenged, that the Opposition dare not defeat this measure, because they know that tho effect of such an action would be far worse upon them than upon this Government. The suggested alterations will be carried in spite of their threats, even though they have emanated from the titular leader of that party, the man who is merely the occupant of the office and not the real Leader of the Opposition.
The honorable member for Angas (Mr. Gabb), in the course of his remarks, said that he proposed to vote against the bill.
– I shall force a division on the second reading if I can get some one to call with me.
– That is the honorable member’s responsibility. He intends to vote against this bill unless he can obtain an assurance from the Leader. of the Government that the remaining resolutions of the recent Premiers Conference will receive the legislative sanction of this House.
– An assurance is no good to me. I want something more substantial.
– The honorable member believes that if that is done the Bank of Westminster and other overseas financial institutions will not let this country down. The sublime faith of the honorable member in overseas institutions may be commendable, but it is of very little practical assistance to the people of Australia, or to our creditors in Great Britain, who expect their bills to he redeemed on the 30th June. It is essential that something practical should be done immediately, and the only solution of the problem that is worthy of consideration is the measure now occupying the attention of the House. If the honorable member for Angas (Mr. Gabb), in combination with members of the Opposition in this chamber and another place dare to emasculate or cast out this bill, they do so at their own peril. They will have something to answer for, not only to the people of this country, but also to the bondholders overseas. They will, therefore, have to be particularly careful as to the manner in which they treat this measure, which has been introduced ‘by the Government as a matter of urgent public importance. There is no other means immediately available. This measure provides a method whereby our debt that is maturing on the 30th June can be discharged. Although the gold cannot reach England before that date, the fact that the Commonwealth Government has passed this bill, and the gold will shortly he en route to London, will enable our agents in Great Britain to find the money wherewith to pay the bondholders. I, therefore, support the measure, and I have no fear that it will be rejected.
.- I am sure that there is no honorable’ member in this House, irrespective of the party to which he belongs, who does not deplore the circumstances that render the passage of this bill necessary.
There is one point that has not been touched by the numerous speakers on the measure, to whom I have listened attentively. The Prime Minister (Mr. Scullin) described the decisions arrived at by the recent Melbourne conference, which will be incorporated in bills to be presented to this and the State Parliaments, as a tremendous effort on the part of Australia to rehabilitate itself financially. That raises the thought in my mind, “ To what extent have our efforts enhanced our credit in the eyes of London financiers?” Evidently not to the amount of £5,000,000. When he replies, to conclude the second-reading debate, the Treasurer might state whether, since the Melbourne conference decisions, efforts have been made to renew these bills in London, pending the implementing of the proposals of that gathering. Those decisions have been broadcast, and commented upon favorably in London financial circles’. In view of those courageous resolutions to turn over a new leaf, it is remarkable to me that the powers that be in Great Britain should be unwilling to give Australia a little time to put its house in order. Particularly is that so when a project such as this means taking from Australia one-third of the gold that backs its note issue. It seems to me that the attitude adopted in London financial circles indicates a great lack of sympathy towards Australia’s present economic difficulties. The honorable member for Warringah (Mr. Parkhill) cannot refrain from introducing the party note on every possible occasion-
– The honorable member for Warringah is not a party man; he has just said so !
– He is well-known as a staunch adherent of the party system. I suggest that in discussing the position that has arisen through the introduction of this bill I shall be in order in saying that the party system of government in Australia has led to reckless bidding by one party against another for the favours of the electors - to promises of expenditure upon this, that, and the other scheme.
– Even upon wheat pools.
– And soldiers’ gratuities.
– And housing schemes.
– Yes, on a thousand and one proposals. Numerous illustrations can be provided to prove my contention that the reckless bidding for support that is a feature of our party system of government has been largely responsible for the unfortunate position that Australia is in to-day; when we have to advertise to the world, as this bill does, that the only thing that stands between Australia and default is the £15,000,000 worth of gold that is held in this country as a reserve against our note issue. It should be remembered that we owe over £500,000,000 overseas. One-third of our £15,000,000 gold reserve will disappear if this bill is carried. What is going to happen when that £5,000,000 of gold is sent overseas and our immediate commitments are met? What of the next commitment? Apparently the process is to be repeated. And - I ask this as a plain, unsophisticated farmer - when the whole of our £15,000,000 gold reserve has gone, what is to happen? I want some of the financial experts in this chamber to tell me. I do not know. Speaking still as a plain man, I say that if when we have shipped the last of our gold we are then compelled to hoist the flag of default we might as well hoist it now and retain our £15,000,000 worth of gold. Our people are accustomed to believe that the Australian currency is backed by a gold reserve; indeed, every note bears a printed affirmation to that effect. If the affirmation is false it is about time we told the people so. It seems to me that something is wrong, and soon the man in the street will begin to ask questions about currency and the gold reserve. I believe that we shall never straighten out our finances until we are again able to produce profitably and export competitively, exchanging our goods for others in the markets of the world. Until we are back to that basis we cannot be financially sound, juggle the currency how we may.
– What other primaryproducing countries are on a better footing?
– Australia, with a huge indebtedness overseas as a result of reckless borrowing, is in the desperate position which this bill indicates.
– How many other countries are like that?
– Every primaryproducing country is.
– Is Canada drawing upon its gold reserves and altering its currency laws in order to pay its debts overseas ?
– Will the Treasurer give the House some information on that subject?
– I could.
– Is New Zealand doing that? Is Denmark?
– Is not the Argentine doing it ?
– I am not saying that no other country is doing it; I am combating the statement that every country is doing it. Will the Treasurer say that every other country is adopting this policy?
– No; but every primary-producing country which is a debtor country is doing this or something equivalent to it.
– What is the inference behind the Treasurer’s statement? I thought that this bill was introduced as the result of circumstances which everybody deplored. But, apparently, there is no need for mental anxiety over the position of our country; we are assured that “ everybody is doing it now “.
That is a surprising statement, the correctness of which I doubt. Our people have been led to believe that the currency is on a gold basis ; the percentage of gold in reserve is low, but by a bill which is to be put through this House at one sitting, to meet only one small debt, one-third of that reserve is to be wiped out. That is something that will arrest public attention, and which the people will deplore, notwithstanding the suggestion that there is no need for worry, because we are merely doing what everybody else is doing. We all regret the need for this bill, but the amendments suggested by the Leader of the Opposition will help to make it less obnoxious to me. As sometimes happens in Parliament, I am not particularly concerned about the fate of the measure, because I cannot be sure what is the right attitude to adopt towards it. Without enthusiasm I shall support the bill in the hope that the Government will consider favorably the amendments suggested by the Leader of the Opposition.
.- This bill arises out of the fact that a debt of £5,000,000 will mature overseas at the end of this month, and our credit is so low that we have the choice of shipping gold to meet it or risking default while attempting to make some other arrangement. The usual fantastic alternatives advocated by some honorable members of the ministerial side, most of them involving the use of the printing press, are not at all helpful. An amount of money has to be found on the due date* nevertheless, the warning issued by the honorable member for Angas (Mr. Gabb) is timely. He was for many years a member of the Labour party; he has moved in its inner circles and attended many caucus meetings, and he warns us that this is only part of the big financial schemes that are in the mind of the Treasurer. The present Government has introduced many financial measures. The first was an amendment of the Commonwealth Bank Act, which Parliament approved, giving to the bank power to commandeer all gold held by the associated banks and private persons, and under which £24,470,000 has been already exported since December, 1929. The fact that we have now only £15,000,000 of the former gold reserve of 25 per cent, of the note issue indicates the perilous position into which the country is drifting. The second measure was that which provided for the establishment of a central reserve bank. That the Senate put aside, knowing that the £22,000,000 of capital proposed for it could not be provided at the present time, except by the calling up of all overdrafts by the associated banks. The Treasurer then, introduced the Fiduciary Notes Bill, which was more or less a bribe to the ‘farmers and the unemployed. The Senate, which is the bulwark against foolishness of this character, again adopted the right attitude and rejected the measure. The Government next brought forward a Commonwealth Bank Bill providing for the shipment of the whole of our gold reserve to the other side of the world which would have meant a purely paper currency for Australia and a depreciation in the value of our stocks, while the position of the country, bad as it is, would have been infinitely worse. The honorable member for Angas (Mr. Gabb) feels that the bill now before us goes part of the way towards bringing about that result, but it is here before us and we have to decide whether we shall pay an indebtedness overseas in gold or trust Great Britain to help us out of our present difficulty. I think that the honorable member for Wimmera (Mr. Stewart) has forgotten the resolutions recently carried at the Premiers Conference in Melbourne. If the principle of these is carried into effect confidence in Australia will, undoubtedly, be restored on the other side of the world, and the money we immediately require may be found by financiers in Great Britain. But we are really today in the position of a trader whose credit is so bad that his creditors insist on his making all his payments by cash instead of by cheques. In their attempts to work up a certain psychology against the banks the Prime Minister and the Treasurer have put out the suggestion that there is gold in the vaults of the Commonwealth Bank which should be distributed among the people. They know that the money belongs, not to the bank, but to the depositors. The gold in the bank can be likened to a number of hats in a cloak room. Yet as hatless tramps they wish to write their own tickets for the hats of other people. Certain individuals have deposited £15,000,000 in the Commonwealth Bank, and if we export this gold Australia will sink still further into the mire. An amendment has been framed by the Deputy Leader of the Opposition for the restoration of the gold reserve to the 25 per cent, basis within three years. It can be done. The resolutions of the Melbourne conference will help. The gold Australia is producing can be purchased by the Commonwealth Bank at the rate of £2,000,000 a year. My feeling is that I can support the bill if the amendments are incorporated, but not otherwise.
.- I shall join with the honorable member for Angas (Mr. Gabb) in calling for a division in opposition to this bill. Early in the session it was officially announced in this chamber that the right honorable member for Cowper (Dr. Earle Page) was leader of the Country party, and the honorable member for Gippsland (Mr. Paterson) the Deputy Leader of the party, but I regret to say that to-night the leader and deputy leader and another member of the United party and another honorable member sitting on this side of the House got the call from the Chair before the honorable member for Gippsland.
Some honorable members have justified their enthusiastic support of this bill because it means the end of the gold standard. Others who believe in the gold standard support it grudgingly, because they think it would mean a greater calamity to Australia if we did not send the gold away. Between these two extremes stands the Country party to which I am proud to belong. It believes in the retention of the gold standard, because the people it represents have to export their goods and sell them on the world’s markets and, whether Australia likes it or not, the standard the world has adopted for the exchange of commodities is gold. If the people of Australia choose to set aside that standard they will have to try to live by taking in one another’s washing.
Those who say that the shipment of £5,000,000 worth of gold overseas will prevent default by this country display a lamentable lack of faith in their country. Of our total indebtedness overseas it is less than 1’ per cent. Are we to deplete our already depleted gold reserve by dipping into it to the extent of 33 per cent, in order to create confidence in our country among investors overseas? I am too big an Australian to believe that Australia needs to depend solely upon taking such action. At any rate, I should like the Government to produce some evidence in support of its claim that it is the only action that can be taken in the present circumstances. I candidly say that I do not trust the Government; I have no belief in its declarations. Only last August the Prime Minister affixed his signature on behalf of his Government to a definite arrangement which has not been carried out, and a few days ago, at another Premiers conference, the Government entered into an equally binding contract, after which we were treated to a repetition of the declarations that followed the August conference. It is stated that this bill is urgent. To me it is strange that it should have been introduced before legislation to give effect to the decisions of the Premiers Conference. Had that legislation been brought down to this House to show the bona fides of the Government, I should be more easy in. my mind than I am at present. I sincerely trust that another chamber will not pass this bill until it has at least some evidence that the Government intends to carry out the agreement that it entered into at that conference. I have seen so many peculiar things happen during this critical period through which Australia is passing that I am rather sceptical of mere words. The group in the corner is supporting this legislation.
– Which group?
– The Lang group, which is keeping this Government in office, and which, if we are to believe the honorable member for Werriwa (Mr. Lazzarini), is prepared to put the Government out of office if the Opposition will assist it to do so. I no more believe the members of the corner group than I do the members of the Government. They have both twisted during this crisis. The Government has done nothing but twist since August of last year, and until I have some concrete evidence that it proposes to do more than place its signature to the agreement entered into at the Premiers Conference I am not prepared to agree to ship one-third of our gold reserve overseas. In the interests of our primary producers we should do nothing to disturb Our gold backing. The object of this bill is to reduce the percentage of the gold backing behind our note issue from 25 per cent, to 15 per cent. The Government has shown by the introduction of certain measures that it does not believe in the principle of a gold standard. When the honorable member for Angas (Mr. Gabb) was speaking to-night, honorable members supporting the Government, by their interjections, showed clearly that they were still in favour of a fiduciary, or rather a seduciary, note issue.
– The honorable member must not cast a reflection upon any legislation introduced into this House.
– I propose to vote against this measure. A gold currency is essential in the interests of our primary producers. This proposal to reduce our gold reserve by one-third is really an insidious attempt to introduce the principle of a fiduciary issue, which this Parliament has already rejected.
.- At first sight it would appear to any one outside of this House who does not follow the debates very closely that the Opposition, in supporting this bill after rejecting a previous bill which proposed to export £15,000,000 worth of gold, is turning a somersault.
– He is a poor Australian who cannot turn a somersault to meet an emergency.
– I agree with the honorable member, but no somersault is taking place in this instance. The difference between this bill and the previous legislation has been well established by the various speakers. The gulf between them is indeed wide. I am strongly opposed to the principle of the export of gold; but nevertheless I am supporting this bill. I believe in a gold currency, but the system that we have adopted in this country is really a farce, because we find printed on every Australian note a promise to pay on demand in gold although that promise cannot be fulfilled.
– A person can obtain gold in exchange for a note, but he cannot hold it.
– We have to consider the effect upon the man in the street of the removal of gold from Australia. He is satisfied that there is gold behind our note issue, and does not inquire as to the actual amount of gold reserve. But once he becomes aware, as he will tomorrow when he reads the press, of the proposal to ship overseas £5,000,000 of our gold reserve a doubt as to the wisdom of that course will enter his mind, and if we ship gold to any great extent, a panic may ensue. In supporting the bill, I am acting upon expert advice. Sir Robert Gibson has made it perfectly clear that we have no money in London with which to meet commitments falling due on the 30th of this month, and that the only alternative to default is to ship overseas £5,000,000 worth of gold.
– The Treasurer (Mr. Theodore) admitted that these treasurybills have been renewed previously. Why cannot they be renewed again?
– I do not know. The fact remains that the head of the Commonwealth Bank, the financial adviser to the Government, has said that the only alternative to default is to send this £5,000,000 overseas. We have to accept his advice. I thoroughly believe in him. I thank God that he is administering the Commonwealth Bank. I intend to support the amendment proposed by the Leader of the Opposition (Mr. Lyons), which, if accepted, will place a certain responsibility, not only upon the Government, but also upon the Commonwealth Bank. I also agree with the second amendment, the object of which is to restore at the end of three years the gold backing to 25 per cent of the note issue. Unless the Treasurer (Mr. Theodore) can give me an assurance that this will be done, I shall feel compelled to vote against the bill. According to the chairman of the Commonwealth Bank Board, Sir Robert Gibson, there is no other alternative unless we are to default. I trust that this dear land of ours will not again be placed in the position of being compelled to ship further consignments of gold in order to meet its overseas commitments. The action now proposed is, I am sure, regretted by every honorable member, and by every person throughout the country who takes an interest in the welfare of the Commonwealth. Deeply as I regret the necessity for it, I more deeply regret the fact that during the last nine months - since the Niemeyer agreement was reached - the finances of this country have been allowed to drift to such an alarming extent. What is known as the August Agreement, was signed by the right honorable the Prime Minister (Mr. Scullin) before he left for Great Britain, but for some reason on his return he stampeded from a courageous act and totally disregarded all the assurances given in speeches he made in Great Britain with respect to ensuring financial stability in Australia.
– During the course of the debate suggestions were made by the Leader of the Opposition (Mr. Lyons) and subsequently by the Deputy Leader of the Opposition (Mr. Latham) with respect to the desirableness of restoring the present gold reserve. An amendment has been drafted and handed to me by the Deputy Leader of the Opposition in which it is provided that the reduced reserve of 15 per cent, shall remain in operation during a period of two years ending the 30th day of June, 1933; that thereafter there shall be increases in the reserve bringing it up to 18 per cent, for the following year, 2l½ per cent, in the next year, and up to the original 25 per cent, in the fourth year. There can be no valid objection to the amendment on the ground that it is useless to have a gold reserve in any country. A gold reserve is not necessarily for the purpose advocated by those who have been speaking on gold reserves so freely to-night. In my opinion, it is not required as a backing to the paper currency, but is necessary for the purposes for which central reserve banks in every country in the world utilize gold reserves, and that is for meeting’ external debts - for making international settlements. To hoard it in bank vaults because of some mythical idea that it inspires confidence, in the local community as to the value of the notes used as legal currency is absurd. That idea has been exploded years ago. Central reserve banksaccumulate gold for upholding what is called the gold standard, and utilize it in connexion with the international movements of gold, for the settlement of international debts incurred by governments. Honorable members opposite may combat my view. I know that they disagree with the opinion I expressed earlier, that for the purposes of the safety of our currency a gold backing of any considerable value is not required, but it is useful to meet an emergency such as we have to face to-day.
– So long as we have it it does not matter for what purpose it is used.
– Surely the honorable member for Fawkner (Mr. Maxwell) does not think that so long as we have a gold reserve it is immaterial whether we use it or not. Does he assume that we ought to hold it and not use it to discharge our overseas indebtedness?
– It is a good thing that we have it now.
– Undoubtedly it is good to have a gold reserve, and to put it to the best use. I have never denied that.
– It is a good thing to replace it.
– Yes; provided it does not impose too onerous a duty on those responsible for replacing it. As Australia is producing nearly £2,000,000 worth of gold annually, and the production is increasing, it should not be impossible to restore the existing reserve. For that reason I have no objection to the amendment, but without unduly delaying the House, I should like to pursue the subject one step further. When the Government was proceeding with the Fiduciary Notes Bill, providing the Government with authority to create a fiduciary currency, a garbled report was cabled to the other side of the world, with the result that it was believed overseas that the proposed issue of fiduciary notes’ was a device on the part of the Government, in conjunction with the Commonwealth Bank, to extend the note issue without imperilling the gold reserve. This evoked some comment. I quote the opinion of Professor Edwin Cannon,
Emeritus Professor of Economy at the London University, who, in a letter to the Times, said -
The superstitious reverence for the sanctity of the minimum gold reserve which I deplore could he no better illustrated than by Australia’s decision to inflate her currency by £.18,000.000. This it is stated is being done to allow the Commonwealth Bank to help the Government without endangering the gold reserve. Australia is admittedly off the gold standard : her notes could not be converted at present, lt would be interesting to know for what greater emergency the Australian Ministry thinks gold should be preserved than to meet pressing debts. I fancy it would say that the reserve should never be used, and that it is there to inspire confidence. Confidence in what? “ Confidence in what?” he asks. That is a pertinent query. Are we to pile up gold in the vaults of the Commonwealth Bank to inspire confidence? How can we inspire confidence if we keep gold there and default in our external payments ?
– If our currency does not rest upon a gold basis, upon what basis should it rest?
– The real basis of any currency is the security of the nation - the wealth produced by the whole nation, and thereby the confidence of the people in its ability to have a backing for its currency.
– Who is to be the judge of that?
– For many months past Australian notes have been inconvertible. Yet they maintain the same value, and are used with the same confidence by traders and by the general community as if they were convertible into sovereigns-. When the Central Reserve Bank Bill was under consideration in another place, a select committee was appointed to inquire into the bill, and after months of delay, sought the opinion of a man whom it considered to be an expert and an authority on such matters. I am not questioning that opinion regarding the standing of the gentleman consulted, Sir Otto Niemeyer. The committee sought his advice, and the opinion he expressed to the select committee was that there was no real necessity to have gold as a backing for paper currency. Let me quote his own words which are contained on page IS of the select committee’s published report. I am not quoting the full text of his utterances, for he dealt with other subjects, but on this point he said -
The obligation to cash notes in gold coin in Australia (Section 33 (1) ) neither corresponds to present practice nor is it desirable in itself. It is likely to prove very embarrassing and expensive to Australia, and is quite unnecessary in modern monetary theory and practice.
Professor Gregory, who accompanied Sir Otto Niemeyer on his mission, and who is, himself, Cassel Professor of Banking at the London University, submitted a long memorandum to the select committee in which he dealt with gold reserves, and the gold backing of notes. The professor stated four tendencies which, he said, were apparent in recent central banking legislation. The fourth of these was stated in the following words : -
The bank is freed from the obligation to encash its notes, except in large amounts, and this not in gold coin, but in gold bar and/or. stable foreign exchange at its option.
That is particularly true of the Bank of England, which to-day does not recognize any obligation to cash its notes in gold coin unless its customers can show , that they have need to use gold for the settlement of external debts or the meeting of obligations under external contracts. Professor Gregory went on to say of these tendencies -
They are also in part a recognition of the circumstances that the pre-war gold standard - involving the domestic circulation of gold coin, and the holding of large masses of gold physically in the vaults of the bank - was extremely wasteful, not only from the minor stand-point of profit-earnings, but from the much more important stand-point of conserving the world’s supply of monetary gold. Gold economy, which in the pre-war days of rising prices, might have been neglected with impunity, has now become a problem of grave importance; and tho possibility of replacing holdings of physical gold by holdings of goldassets in some form is a contribution of the first magnitude towards the solution of the problem.
These are the tendencies in all gold standard countries, and they are recognized in all central banking legislation. It should be recognized that we cannot apply to the solution of the problems which are confronting us to-day, the ideas which prevailed twenty years ago, when our own banking legislation was passed, and our gold reserve established. To-day tendencies are changing, and the problems which we have to face are of a different character. We can recognize to-day that the greatest utility of a gold reserve is that it can be held to meet external obligations, and that it is wasteful not to use it for that purpose.
– Is the gold reserve not also a measure of value?
– It can still be a measure of value even though it is not held in vaults. The paragraphs which I have quoted from this report, and also the opinions of recognized authorities on central reserve banking practice, show that it is well to keep gold, or the equivalent of a gold reserve, not to hold as a mass of gold in a vault, but perhaps as gold security in some other country. If Australia had used her gold reserve in that way in the past, or if she does so now, and continues to do so in the future, instead of holding possibly £40,000,000 in gold in idleness in the vaults of the bank, she will enable the money to earn interest. A considerable portion of the gold could be used for the purchase of gold securities in New York and London, where it would serve exactly the same purpose as if it were held here. After all, the real necessities are that it shall be used to earn interest, and that it shall be readily convertible, if necessity arises, for the discharge of external obligations. If it is not used for that purpose, it is wastefully held, as shown by Professor Gregory. For these reasons I am quite willing to accept the amendment suggested by the Deputy Leader of the Opposition. It will not impose an impossible task upon the bank. It should be easy for us to acquire enough gold from our local production to re-establish the gold reserve in the manner suggested.
– Does the Treasurer suggest that the authorities which he has just quoted say that there should be no relation between the gold reserve and the paper currency?
– I do not suggest that. But it happens that the authorities that handle the settlement of international money matters in various countries are the central banks, and that in almost every country they also control the currency. For that reason there has been an undue significance given to the accumulation of gold by central reserve banks. Many people believe that the gold reserve is held merely as a backing for the legal currency of the country, whereas, in fact, it is held for an entirely different purpose. Some honorable members have run away with the idea that the gold standard simply means the holding of a gold reserve for currency. I point out to them that the gold reserve is very much more than that. We need a gold reserve, though not necessarily a metallic reserve, not as a backing for our currency, but as a means for the settlement of our overseas obligations, and the maintenance of trade equilibrium. These ends can be achieved by movements of gold.
– We cannot use gold for this purpose if we have none.
– We can use our gold reserve for that purpose, but we do not need it for the purpose of backing our paper currency. The differences between some honorable members opposite and myself seem to be on that point. Gold is useful for performance of some functions, because it can be used with greater facility than some other commodities. Lead, or wheat, or wool, could be used for the meeting of overseas obligations; but none of them could be moved with such facility as gold. Wheat and wool, if stored, are liable to deterioration. Gold furnishes a much more suitable medium for the purpose of settling our trade balances and international obligations.
I shall accept the amendment suggested by the Deputy Leader of the Opposition, and I shall myself move an amendment to clause 2, the purpose of which I will explain when we come to that stage of the bill.
Question - That the bill be now read a second time - put. The House divided. (Mr. Speaker - Hon. Norman Makin.)
Majority . . . . 55
Question so resolved in the affirmative.
Bill read a second time.
Clause 1 agreed to.
After section seven d of the Principal Act the following section is inserted: - “ 7e. The Treasurer may, from time to time, by notice in writing addressed to the board, require the board to use for the discharge of the indebtedness of the Commonwealth in London in respect of treasury-bills maturing on the thirtieth day of June one thousand nine hundred and thirty-one such amount of gold held by the bank or by the board as is specified in the notice as being necessary for that purpose, and the bank shall, upon the receipt by the board of any such notice, cause the gold specified in the notice to be used accordingly in exchange for Commonwealth securities of an equivalent amount:
Provided that the amount of gold which may be used under the authority of this section shall not exceed Five million pounds.”.
.- I move-
That proposed new section 7e be omitted with a view to insert in lieu thereof the following new section: - “ 7e. The Treasurer may, from time to time, notify the board in writing that it is, in his opinion, desirable that the board use for the discharge of the indebtedness of the Commonwealth in London in respect of treasury-bills maturing on the thirtieth day of June, One thousand nine hundred and thirty-one, such amount of gold held by the bank or by the board as is specified in the notice, and the board may, if it agrees with the opinion notified to it, cause the gold specified in the notice to be soused accordingly, and the Treasurer shall, in exchange for any gold so used, issue to the bank Commonwealth securities ‘ to an equivalent amount:
Provided that the amount of gold which may be used under the authority of this section shall not exceed Five million pounds.”.
The phraseology is better than that in the bill. Moreover, the proposed new section casts some responsibility on the bank as well as on the Government.
Amendment agreed to.
Clause, as amended, agreed to.
Clause 3 -
Section60k of the Principal Act is amended by omitting from sub-section 1 the word “ one-fourth “ and inserting in its stead the words “fifteen per centum”.
.- I move -
That after the word “ amended “ the letter “(a)” be inserted, and that the following words be added to the clause: - ; and (b) by omitting from sub-section (1) the word “issued” and inserting in its stead the words “on issue during tie two years ending on the thirtieth day of June One thousand nine hundred and thirty-three, not less than eighteen per centum of such notes on issue during the year ending on the thirtieth day of June One thousand nine hundred and thirty-four, not less than twenty-one and one half per centum of such notes on issue during the year ending on the thirtieth day of June One thousand nine hundred and thirty-five, and not less than twenty-five per centum of such notes on issue after the thirtieth day of June One thousand nine hundred and thirty-five “ ‘. The amendment will make it obligatory to maintain, as a minimum, a gold reserve of 15 per cent, up to the 30th June, 1933. There will be two full years during which the minimum reserve will he 15 per cent.For the year ending the 30th June, 1934, the minimum gold reserve will be 18 per cent., in the following year, 21½ per cent., and thereafter, 25 per cent. I do not propose to address myself at length to this amendment, seeing that the reasons for it have already been indicated. I content myself with stating that it does not impose a sudden and great strain upon the gold reserve of the couutry. Should it be found impracticable to carry out these provisions, which I sincerely hope will not be the case, there will be ample opportunity for their reconsideration.
– “Why allow four years for a return to the gold standard?
– It has been urged that, in the present circumstances, so short a period as twelve months would cause a strain, and that the position would ease if the period were extended to four years. The amendment recognizes the principle of the re-establishment of the gold reserve on its present basis as soon as possible, and it does not prevent the bank, if it can, from restoring the gold reserve within a period of less than four years.
.- While I agree in principle with the rebuilding of the gold reserve, and deplore the necessity for depleting it, I desire to emphasize that we are merely expressing pious opinions and wishes unless we adopt a policy that will enable us to produce, export, and exchange our goods upon a competitive basis in the markets of the world. Otherwise, the bill, as amended, will not be worth the paper on which it is printed. The tariff legislation that the Government has brought down is having the very reverse effect to that desired, and is making it more difficult than ever for the primary producers, who are carrying the great part of the burden of keeping Australia solvent. In the interests of producers, therefore, we should reverse the tariff policy, which has a vital bearing on production costs, and, consequently, on our financial position overseas.
– The circumstances in future will necessitate amendment of the act from year to year, and, therefore, the Opposition, in submitting its amendment, is merely playing to the gallery. A new Parliament will be elected before the expiration of the period contemplated under the amendment, and every one knows that we cannot bind a future Parliament. Nevertheless, I am glad to notice that the Opposition is coming round to the Labour party’s platform, and is recognizing that the gold reserve is not required.
.- I regret that the Deputy Leader of the Opposition (Mr. Latham) has gone beyond the period of three years contemplated by him in his second-reading speech. I consider even three years too long a time for Australia to be off the gold standard ; but the amendment allows four years. The few members who have spoken on the amendment have recognized what a hollow sham it is. I would much prefer a definite statement in the bill that there should be a return to the 25- per cent, basis within twelve months. If the Commonwealth Bank, in meeting our commitments overseas, did not find it necessary to use the whole of the gold that is to be shipped, it would be possible for us to remain definitely off our present gold basis for the next three years, and it would be a distinctly retrograde step for Parliament to do that deliberately. To me, the four-year period seems most objectionable, despite the statement of the Deputy Leader of the Opposition that, under the terms of his amendment, a return could be made to the gold standard within a shorter period.
– Does the Government intend to accept the amendment?
– I am surprised to hear that. If the financial requirements of the Commonwealth are such that notes to the amount of £66,000,000 have to be issued, the limit will have been reached. Under the amendment it will be necessary to find about £2,000,000 in gold in the first two years, and about £3,000,000 in gold in the second two years, and a great deal of financial embarrassment may occur. There are no sanctions in connexion with this matter.
– There never have been. There has merely been a direction that the gold basis should be maintained.
– Suppose that notes to the value of £66,000,000 were issued, and that, in 1935, gold to the value of £2,000,000 did not come to hand. In the past, the Note Issue Board has strictly observed the direction that there shall be a gold reserve of 25 per cent., but the board cannot make gold. To me the amendment seems farcical. If the Government thinks that the other branch of the legislature, because of its conservative majority, will desire such an alteration as is made under the amendment, why not pass the clause as it stands, and let that chamber accept the responsibility for any such alteration? This House should not accept dictation from the Opposition here merely because the conservatives supporting and controlling it are in a majority in another place. In this chamber we should not come down before we are shot. If I can persuade another honorable member to vote with me against the amendment I shall call for a division, because I feel sure that, if it is carried, it will cause inconvenience to the Commonwealth Bank.
Amendment agreed to.
Clause, as amended, agreed to.
Title agreed to.
Bill reported with amendments ; report - by leave - adopted.
Bill - by leave - read a third time.
Motion (byMr. Scullin) proposed -
That the House do now adjourn.
– Before putting the motion, I desire to make an explanation with regard to a statement made by the honorable member for Richmond (Mr. E. Green) during the debate on the Commonwealth Bank Bill. The honorable member commented on the fact that I did not give the honorable member for Gippsland (Mr. Paterson) priority over another honorable member when he rose to address the House. I have no desire to offer a slight to any honorable member, and certainly not to one who has been elected to a position of responsibility. I would, however, remind the House that it is the universal practice of the Speaker to give official recognition to only two sides in debate - the ministerial and the opposition. The Speaker cannot possibly recognize parties or groups. This afternoon I gave priority, in the call, ‘to the Leader and the Deputy Leader of the Opposition, by reason of their official positions. If, in the course of the subsequent debate, the honorable member for Gippsland had risen with the honorable member for Angas (Mr. Gabb), he should have received priority of call; but not because of his position as deputy leader of a certain party. Having given the call to the honorable member for Angas, when he resumed his scat I observed the usual custom and called an honorable member from the ministerial side.
– I am not making a complaint, Mr. Speaker.
– I am aware of that. Nevertheless, I feel it is desirable that I should offer this explanation, because some honorable members might feel that a slight was offered to the honorable member for Gippsland. If he had risen with the honorable member for Angas, as an ex-Minister he would have received priority of call. If there is a feeling among honorable members that I overlooked the honorable member for Gippsland I express my regret, and give my assurance that no slight was intended.
Question resolved in the affirmative.
House adjourned at 11.55 p.m.
Cite as: Australia, House of Representatives, Debates, 17 June 1931, viewed 22 October 2017, <http://historichansard.net/hofreps/1931/19310617_reps_12_130/>.