17th Parliament · 3rd Session
Mr. Speaker (Hon. J. S. Rosevear) took the chair at 10.30 a.m., and read prayers.
– In view of the allegations of bungling in the distribution of fodder supplies, made against the Department of Agriculture of New South Wales in a recent issue of the Tumut and Adelong Times, will the Minister for Commerce and Agriculture ascertain from the Minister for Agriculture in that State whether transport permits were refused to dairymen in the Tumut district who had purchased quantities of wheat and oaten hay from the Gunnedah district? Will the Minister also ascertain whether hay purchased by sheep-owners has been transported under permit whilst the department has refused transport for hay purchased by dairymen?
– I shall take up the matter immediately with the Minister for Agriculture in New South Wales. There must be some misunderstanding, because, in the distribution of fodder, the dairying industry is recognized as having No. 1 priority. I shall endeavour to obtain an explanation for .the honorable member.
– Is it a fact, as reported, that the Minister for Labour and National Service made a statement to the effect that, if the State industrial courts gave fourteen days annual leave, the federal courts should do so, failing which there would be a tendency by workers to return to State jurisdictions? If the Minister denies having made the statement, does he intend to ask Mr. Mundy, who representedthe Amalgamated Engineering Union in court on this occasion, to let him have the source of his information, which may lead to the discovery of another leakage from a conference thought to be held in camera? If the report is correct, has the Minister considered the invitation alleged to have been proffered to him by Judge O’Mara, to attend the court and give evidence to this effect?
– There is nothing for me to deny. I said in this House that, if the legislature of New South Wales had granted fourteen days leave, with pay, to workers employed under State awards, loyalty to Federal awards would be difficult to maintain unless they contained a similar provision.
– That must have been very embarrassing to the judges of the Commonwealth Arbitration Court.
– Not at all. I expressed the hope that the judges of the Commonwealth Arbitration Court would try to make the same provision on an Australia-wide basis. There is nothing wrong with that suggestion, and I am certain that no judge in Australia would be so thin-skinned as to resent it.
– Does the Minister propose to accept JudgeO’Mara’s invitation to attend the court?
– I have not been invited to do so.
– The invitation was issued through the press.
– I shall be glad to accept any invitation, request or order that maybe issued to attend the court and answer any questions that may be put to mo.
– Will the Treasurer consider removal of sales tax on babies’ requisites such as feeding bottles, soap, powder, teats for feeding bottles and biscuits ?
– The matter of taxation generally, and particularly the application of the sales tax, is constantly under review.In any future review, I shall see that the items mentioned by the honorable member shall be given consideration.
Power of Veto
– In view of the fact that the world security organisation may be doomed to failure unless the “Big Five “ powers are full and free partners in it, and the statement by Mr. Stettinius that criticism of the veto proposals was not justified, indicating that the “ Big Five “ were determined to retain their power of veto, will the Acting Prime Minister request the Leader of the Australian delegation (Mr. Forde) to instruct Dr. Evatt, first, to cease holding unhelpful press conferences attacking the veto power, and, secondly, to withdraw his opposition to the “ Big Five “ powers on this proposal because of the likelihood of imperilling the whole success of the conference and the ultimate creation of a world peace body?
– I do not intend to instruct my colleagues in this matter. They are senior members of the Cabinet, and one of them is Deputy Prime Minister. They were sent to the conference with a general outline of the views held by the Government. We rely upon them to use their judgment in dealing with any details that arise from time to time. Of course, when a point is raised in this House by an honorable member from either aide, I am always willing to bring it to their notice when I am having consultations with them; and whenever I consider that I should express an opinion, I do so. I cannot say more than that at the moment. I hope that this House will have an opportunity to deal with the subjects raised at the conference, upon the return of the Australian delegates to this country.
– I ask the Minister for Commerce and Agriculture whether, as the press reports, the Commonwealth Government has invited Dr.
Hugh H. Bennett, of Washington, to advise on soil erosion? If so, can the Minister say whether the committee foreshadowed by him some time ago, to advise on soil conservation, has yet been appointed? If not, will it be appointed in time to take part in consultations with Dr. Bennett when he comes to Australia?
– I am not aware that Dr. Bennett has ‘been invited to visit Australia. Any invitation to him on behalf of the Commonwealth would be extendedby the Minister for Postwar Reconstruction, who is in charge of the Council for Scientific and Industrial Research. Quite recently, my department and other departments concerned held an inter-departmental conference, at which the all-important matter of soil erosion was discussed. I have instructed the Director-General of Agriculture to convene an early meeting of representatives of the States concerned, and I hope that the committee on soil erosion will be functioning shortly. . I shall be only too pleased to consult and! co-operate with Dr. Bennett when he arrives in Australia.
Death of Lieutenant P. C. Derrick, V.C., D.C.M. - Withdrawal of Longservice Troops
– Has the attention of the Minister representing the Acting Minister for the Army been directed to a letter from an Army officer, which the Melbourne Herald published yesterday, stating that all sections of the community had learned with sorrow and shock of the death in action of Lieutenant P. C. Derrick, V.C., D.C.M., and adding that it must have come as a shock to the community to learn that, notwithstanding all his brilliant and arduous service, Lieutenant Derrick should once more have found himself at the post of extreme danger? Will the Minister comment on the further statement of the writer that, so far as he knows, the Australian Military Force is the only Imperial force in which citizen volunteer soldiers continue to serve year after year in campaign after campaign, suffering wound after wound, without any hope of qualifying for a job that will give to them a chance of at least bare survival. Can the Minister saywhat action is proposed by theGovernment to give to long-service men some relief from continuous, arduous service in battle zones?
– The Acting Prime Minister yesterday made it clear that this matter was under consideration, and that a pronouncement in regard to it would be made very shortly.
– Last week I addressed a question to the Minister representing the Minister for the Army based on a speech by Brigadier Cremor, at a meeting of the LegacyClub in Melbourne, about the war weariness of members of the6th Division, and the need for the early release of those men if they so desired. Other questions on the matter have been asked since, and I believe that it is under consideration; but, in considering it, will the Minister take into account the claim for release of the members of the 7th and 9th Divisions, and also members of the Royal Australian Air Force and the Royal Australian Navy in combat units? Will he also consider the practice prevailing in the United States service of granting an increase of pay to those who wish to remain on long service in combat units ?
– All aspects of the problem of discharging menwith long service has been considered, and, as the Acting Prime Minister has already stated, an announcement regarding it will be made shortly.
Effect of Drought
– Has the Minister for Commerce and Agriculture seen the statement by the Leader of the Australian Country party (Mr. Fadden) that drought has had little effect on Australian food production? Is the Minister aware that the right honorable member for Darling Downs has argued, in effect - if his reported statement be correct - that plans could have been substituted for rain in the production of food? Will the Minister inform the right honorable member that his strictures on food production . are on State governments, which retain sovereign rights in that respect, and’ on the farmers who produce food, not on food control? Can the Minister say whether any State Department of Agriculture, or any section of farmers, has refused to co-operate in meeting the Commonwealth’s request for maximum food production? If State Departments of Agriculture and farmers have cooperated to the best of. their ability, will the Minister ask the right honorable member to make amends for his utterance?
– The statement attributed to the right honorable member for Darling Downs (Mr. Fadden), that the drought has had no effect upon food production, is ridiculous. Quite recently, it was estimated that upwards of 3.000,000 bushels of grain sorghum would be harvested in the right honorable gentleman’s electorate, but I have been reliably informed by the Queensland Department of Agriculture that, because of the dry conditions during the growing period, the harvest will be not more than 250,000 bushels. Thus, the effect of seasonal conditions on food production has been right under has eyes. It is well known throughout the Commonwealth that the States are responsible for [primary .production. They have worked magnificently in conjunction with the Department of Commerce and Agriculture since I have been in charge of the department, and have co-operated fully in the whole of the planning by the Commonwealth in relation to food production. It cannot be denied that, on the basis of population, primary production in Australia is greater than in any other allied country.
– What rot!
– That is a stupid statement.
– Despite the effect of the drought in curtailing primary production, which will become more hazardous the longer the drought lasts, Australia is still in a more favorable position than any other country with regard to food supplies and the quantity of food it is able to contribute to the Allies and to the fighting services.
– Has the Acting Prime Minister read the report of the promise by the Government of Canada that 80 per cent, of the war-time controls of business and industry will be lifted within the next few weeks, that restrictions on the manufacture of .a wide range of household goods has been removed, that a revision of motor tyre rationing will make 35j000 car-owners eligible for new cars immediately, and that the petrol ration has already been increased by 25 per cent.? Has he read the further report that the Government of Canada has already taken steps to introduce a gradually widening policy of tax reductions, and, if so, will he obtain full details of Canada’s policy, with a view to taking similar action in Australia to enable private enterprise to play its part in post-war development m this country, and in competition with Canada in the overseas markets?
– I have read a newspaper report that a member of the Government of Canada, I think Mr. Howe, had made a statement about the removal of a certain number of war-time controls. Canada may be in a much more fortunate position than Australia with regard to the total war effort. Australia is a considerable distance from the sources of supply of some essential materials, and the shipping problem becomes one of paramount importance to this country in considering whether any relaxation with regard to certain goods can be made. Several members of the Government, including the Minister representing -the Minister for Supply and Shipping, have made it clear that when it is .possible to relax the restrictions to any degree that will be done. I have already informed the House that the Government does not wish to retain controls which could reasonably .be removed. I have not read the portion of the alleged statement referred to by the honorable mem’ber which relates to the reduction of taxation. The Treasury and the Taxation Department keep in touch with developments with regard to taxation in all countries, but I find that those who advocate tax reductions usually want the best of both worlds. They want all of the benefits that other countries are giving, whilst retaining the best features of their own laws. However, I shall inquire regarding the point raised by the honorable member, and if I ‘can obtain any further information about it I shall be pleased to let him have it.
Motion (by Mr. Chifley)proposed -
That the House, at its rising, adjourn to to-morrow, at 10.30 a.m.
– Can the Acting Prime Minister give an assurancethat, if we meet at 10.30 a.m. to-morrow, the House will rise at a reasonable hour at night? We should not be required to sit for more than twelve hours a day.
. -Yesterday, I discussed the matter with the Leader of the Opposition (Mr. Menzies), who expressed the view that on the days when the House meets at. 10.30 a.m. it ought to adjourn about 11. p.m., not only to suit the convenience of honorable members by enabling them to get a night’s rest, but also in the interests of the parliamentary staffs. If an honorable member began a speech at, say, 10.45 p.m., he ought to be allowed to complete it, or be given the option of obtaining leave to continue his remarks next clay. I shall be glad to assist honorable members to get a fair night’s rest, if they will put forward their best efforts to enable the lengthy legislative programme before us to be completed. During this week, in accordance with the agreement reached with the Leader of the Opposition, the adjournment of the House will be moved at 11 p.m., subject to the honorable member who happens to be speaking at the time having the right to complete his remarks.
Question resolved in the affirmative.
– Will the Minister for Commerce and Agriculture consider the practicability of making a grant of wool to appropriate women’s organizations throughout Australia to enable their members to make woollen garments as a free gift to the stricken people of Europe? This would serve the twofold purpose of popularizing Australian wool and providing clothing which war sufferers sorely need?
– I shall immediately take the matter up with the authorities concerned. I presume that I shall first have to consult the Treasurer, because the scheme would necessitate a grant of money in order to make the wool available. I recognize the value of the work done by women’s organizations in the contribution of articles to the Australian Comforts Fund and the Red Cross Society, and anything I can do to promote that good work will be done with pleasure.
– A promise was recently made by the Minister for Commerce and Agriculture to representatives of the wheat-growers of Australia that he would refer to the Cabinet their request that a first advance of 5s. 2d. a bushel he made in respect of the 1945-46 harvest. Is the Minister yet in a position to inform the House whether he has consulted the Cabinet on that matter? If he has, what decision was reached ?
– I promised the deputation of representatives of the wheatgrowers which recently visited Canberra that I would submit their request to Cabinet at the first opportunity. The submission has been prepared but has not yet been considered by cabinet. The matter will be discussed with the Acting Prime Minister, and then I shall make an announcement with regard to it.
. -by leave - The Prime Minister (Mr. Curtin) on his return from overseas promised that a paper would be presented to the House outlining the Government’s employment policy for the post-war period, and it is now my privilege, as Minister for Post-war Reconstruction, to present that paper to the House. In doing so I wish to draw the attention of honorable members to the importance of the document and the fundamental character of the policy outlined in it. First, it sets forth boldly and unequivocally the Government’s intention to secure full employment for the people of Australia after the war. Secondly, it outlines the method by which the Government proposes to achieve this aim. Thirdly, it examines the special problems which will face the Australian economy in the transition from war to peace.
The policy outlined in this paper should be considered in relation to other measures which this Government has placed before the House in the present and preceding sessions. It is closely linked with the proposals for the reform of the banking system put forward by my colleague, the Treasurer (Mr. Chifley). Indeed, it may he said that the basic purpose of the banking legislation is to ensure that no out-worn financial prejudices or the resistance of vested interests will ever again be a bar to the achievement of full employment. It must be linked also with the measure now before the Parliament for the reestablishment and re-employment of service men and women. That measure is a comprehensive plan for the special treatment which will be required to rehabilitate service men and women. But the Government believes that that measure can be fully effective only if the economy as a whole is functioning in a way to provide adequate employment for all. It is our duty to see, not merely that the serviceman is given every assistance to find again for himself a place in the civil community, but also that the economic and social system functions in a way which ensures that there is a place for him to fill. Finally, it must b’e linked with that series of social security measures which have from time to time been introduced by my colleagues, the Treasurer and the Minister for Health and Social Services (‘Senator Fraser), since this Government took office. The policy of full employment is the Government’s positive contribution to the security of the individual. Full employment spells opportunity, and opportunity opens the way for achieve- ment. At the same time the Government recognizes that this needs to be supplemented by social security measures which protect the less fortunate from hardship and supplement standards of living of those in greatest need.
There is no need for me to traverse again the evils which have followed in the past from the failure to maintain N full employment. In Australia, as in other industrialized countries, mass unemployment has been the rule rather than the exception. During the twenty years 1919-39 an average of more. than 10 per cent, of men and women desiring employment were unemployed. In the worst period of the depression well over 25 per cent, were left in unproductive idleness. Indeed, unemployment has come to be accepted as characteristic of the capitalist economy.
Mass unemployment means the waste of resources. By utilizing the men and materials which la.y idle in the depression we could have had more houses, better food and new equipment devoted to raising the standards of living of the Australian people. It should be emphasized that the waste of -unemployed men and women is a waste which can never be recovered. The opportunities for production and development, which are the products of human labour, are lost for ever if they are neglected by leaving men and women idle. Many of the difficulties and hardships we have had to bear during the war could have been mitigated if the fullest use had , been made of our resources in the decades which preceded it.
Let me give one example: There is no problem which gives this Government more concern than our inability to provide resources to meet the desperate housing shortage which faces this community. That housing shortage, however, is not merely a product of the diversion of our building labour and materials to war-time purposes. It is a relic, also, of the collapse of the building industry in the great depression, and of the failure of ‘governments to use the then idle labour to build houses on the scale needed by the community.
To the individual thrown unwillingly into idleness .by the failure of the economic system to provide employment, this failure meant poverty, frustration, disillusionment, and bitterness. Even those who wen- fortunate enough to remain in their jobs were threatened by a sense of insecurity.
The policy outlined in the paper is that the ‘Commonwealth and State governments should accept responsibility for stimulating spending on goods and services to the extent necessary to sustain full employment. It will be the object to maintain such a pressure of demand on resources that for the economy as a whole there will be a tendency towards a shortage of men instead of a shortage of jobs.
The evils of unemployment do not stop at the borders of the country directlyaffected. Unemployment in Australia or in any other country means declining world trade. It means an intensification of economic rivalry and of political animosities which derive from economic causes. In a very real sense it was unemployment which made possible the growth of Hitlerism and led inevitably to this war.
The Government has, therefore, proposed in international discussions at which my colleague, the Vice-President of the Executive Council (Mr. Beasley) has played an important role, that an employment agreement should be concluded whereby each country would undertake to do all in its power to maintain employment within its own territories. It appears, from press announcements made during the week-end, that our efforts in this direction at the San Francisco conference have achieved a large measure of success, due, no doubt, to the excellent work of my colleagues, the Deputy Prime Minister (Mr. Forde), and the Minister for External Affairs (Dr. Evatt). We are confident that a domestic policy of full employment in Australia will prove of great benefit to other countries. The Government does not pretend that a full employment economy will not have its own problems. In the paper I am presenting, however, those problems are faced frankly and honestly and a clear indi.cation is given of. the lines along which the Government believes their solution can be found.
As I stated earlier, the paper deals also with the problems of the changeover from war to peace. It emphasizes that, whilst in the long nin the maintenance of full employment is dependent primarily upon adequate expenditure by individuals, firms and public authorities, there will in the immediate post-w.ar period be no lack of potential expenditure. The problem of maintaining employment in that period rs a physical and organizational one. The problem is to bring together the worker and his job, organized to a stage where his labour is required. To a large extent our capacity to ensure that these organizational problems are overcome depends upon our capacity to divert resources to carrying out preparatory work - the preparation of production plans, the adaptation, and tooling up of machinery, the re-grouping of skilled workers, the re-establishment of peacetime commercial organizations, and so on. It is clear that the Government can make no more rapid progress in transferring resources for these purposes than is consistent with our commitments to our Allies and with pressing the war against Japan to the speediest possible conclusion.
I believe that this White Paper constitutes a charter for a new social order. The old order of the inter-war years had as its prime objective, rigid adherence to a certain financial policy. If this entailed 30 per cent, unemployment and dwindling world trade, then, according to the pundits of that day, these were necessary evils. What a miserable social structure they built on their own false foundation ! Millions of God’s creatures condemned to enforced idleness; goods and services for ever lost to the use of mankind ; a great nation so despairing as to succumb to the wiles of a demagogue, thus sowing the seeds of the world struggle from which we are now emerging victorious, but at terrific cost to humanity in blood and sweat and tears. Yet out of evil cometh good. “ The stone which the builders refused is become the headstone of the corner.” The world is well on the way to the acceptance of this profound truth, that the welfare of all the people in all lands depends primarily on full employment. This White Paper is an affirmation by the Government of
Australia that it intends to pursue that policy with the utmost energy and determination.
Finally, and particularly to those who will say with Lord Keynes, that “ It does not seem possible to secure full employment under capitalism, except in time of war”, let me make it clear that constitutional and other limitations have circumscribed our avenue of approach to this great problem. But whatever difficulties may confront us in giving effect to the policy outlined in this White Paper or to any adaptation of it which constitutional and other changes may from time to time permit, I make for all my colleagues on this side of the House this declaration, paraphrasing Blake-
I will not cease from mental fight,
Nor shall my sword sleep in my hand.
Till we have built Jerusalem
In “ Australia’s “ pleasant land.
I commend the paper to the House. I lay on the table the following paper: -
Full employment in Australia - Government policy. and move -
That the paper be printed.
Debate (on motion by Mr. Menzies ) adjourned.
– In order to stop the dangerous decline of dairy production caused by drought and low prices for milk, will the Minister representing the Minister for Trade and Customs cause a decision to be reached immediately regarding the new prices to be paid, and have it announced as soon as possible?
– I noted in last night’s press that Professor Copland had made a statement on this subject to a conference of accountants in Melbourne. Frankly, I was amazed that such a statement should be made by an officer of the Government before being brought, to the notice of the Government itself. It appears that the inquiry instituted by the Prime Minister into this subject has reached a certain stage. The contents of the document have not been made known to me, and I do ‘not know whether the Acting Prime Minister’ is aware of them or not. I shall have inquiries made into the matter.
– I understand that the subsidy promised to the dairying industry for this year was to be £7,500,000 on condition that 180,000 tons of butter was produced. The Minister has himself admitted that the drought has seriously curtailed production, and involved the farmers in heavy costs for the purchase of feed. Therefore, seeing that the estimated production of butter this year will be sufficient to qualify for less than seven-ninths of the proposed subsidy, will the Minister ask Cabinet to arrange for the payment of the full amount of £7,500,000 in order to compensate producers for the heavy cost involved in the purchase of feed for their stock?
– I have been informed by the Acting Prime Minister that the whole matter of the payment of a subsidy to the dairying industry is being reviewed by responsible officials, and I hope to be able to make a statement on it at an early date.
– Recently, under an agreement between the Governments of the United Kingdom and Australia, an additional sumof about £2,250,000 is to he. paid for the butter made available to Great Britain by this country. Pending the review which I understand is to be made of the dairying industry, with a view to increasing the price of dairy products because of the higher costs of production, will the Acting Prime Minister releaseh is grasp of that money, and distribute the amount to the producers?
– The position was that the Commonwealth was paying a subsidy in respect of butter fat, a considerable portion of which was exported to the United Kingdom, where it was sold at prices lower than the cost of production in this country. The Commonwealth Government was paying that subsidy pending certain discussions with the United Kingdom Government as to the price tobe paid for butter and other commodities.
– The subsidy was being paid before prices were increased.
– The increased prices paid to the producers for butter fat sent to Britain represented a loss to the Commonwealth Government. Finally, the United Kingdom Government agreed to increase the payment to the Commonwealth, which hitherto had been bearing the loss. My colleague, the Minister for Commerce and Agriculture (Mr. Scully), has stated that discussions are taking place in connexion with the dairying industry. I wish to make it clear that two different classes of reports have been called for - one from Professor Giblin in relation to the dispute inNew South Wales, and the other from the Prices Branch and the Stabilization Committee in relation to prices throughout Australia for dairy products, including whole milk and butter fat. I do not propose to go into these matters at length now, but when a review of the situation has been made, a statement will be presented to the House.
– In view of the long duration of the drought, and the great losses which it has involved in New South Wales and other parts of the Commonwealth, will the Acting Prime Minister arrange for the Commonwealth Bank to make long-term loans at low rates of interest to pastoralists to enable them to restock their properties?
– I shall arrange to have the proposal examined. In some of the States arrangements already exist for the making of loans in special circumstances to primary producers through the State Savings Bank or the Rural Bank, or through boards appointed for the purpose by the State Government.
– I desire to ask the Minister representing the Minister for External Affairs a question concerning an organization known as the International Youth Committee, and I direct the attention of the Minister to a circular being distributed by the committee in which an appeal is made for funds with which to send to a conference in London two delegates allegedly representing the youth of Australia. The members of the committee are the following: -
Joy Sheely (C. of E. Fellowship). Phil Vanry (Austrian), Fifi Mitsos (Greek), George Watson ( A.E.U. Youth ) , M. De Preville (French), Gordon Bergman (Y.M.C.A.). Ted
Fairfield (A.E.U. Youth), Percy Yan (Chinese), Walter Fischer (Jewish), Arthur Filson (Eureka), Ken Hacker (Austrian), P. Vaidyanathan (India), and F. Kolinac ( Yugosla v ) .
That is the committee of thirteen, whichhas elected two members to represent Australian youth in London. Before accreditation is given to these delegates on behalf of the Commonwealth Government and before permits are granted to them to go abroad, will the Minister have made a full investigation of the circumstances, in order to determine whether those two young men of military age should notbe serving their country in some other capacity?
– As I indicated last week, no application had been received at the central office of the Department of External Affairs, so far as I know, nor has it any knowledge of any intention on the part of the members of this organization to attend a world conference. I shall ascertain whether an application has been made to any other department. The matter will be fully investigated before any action is taken.
– In order to save transport, will the Minister see that two members of the 13,000 aircrew personnel now in Great Britain, or some of the repatriated prisoners from Germany, are nominated to attend the International Youth Conference?
– The Government has no power to determine who shall represent the youth of Australia at that conference.
– In view of the probable introduction of the Unemployment and Sickness Benefits Scheme on the 1st July next, will the Minister representing the Minister for - Social Services gave consideration to the issue of a brochure setting out the benefits to be granted to the general public under such scheme?
– I shall ask the Minister for Social Services to give consideration to the honorable’s member’s suggestion.
– As transport difficulties have prevented the International Labour Office conference from having the benefit of the advice of Mrs. Tenison- Woods in its deliberations in Canada on child welfare, will the Minister representing the Minister for External Affairs consider the practicability of arranging for that lady to be appointed as one of Australia’s delegates to the pending International Labour conference at Paris?
– The claims of Mrs. Tenison-Woods f or -such .an appointment will be taken into consideration with those of other persons.
Metropolitan Water Sewerage and Drainage Board.
– Has the Acting Prime Minister seen a statement in the press that neither the Commonwealth Government nor the Government of New South Wales will subsidize post-war works to be undertaken by the Metropolitan Water Sewerage and Drainage Board:, .and will not allow the hoard to borrow the money required for works already planned, which would involve an expenditure of £3,000,000 a year? Will the Acting Prime Minister make a statement on this matter?
– ‘Generally speaking, the provision of funds to carry out works is a matter for the Loan Council, either under its constitutional powers, or under the “ gentleman’s agreement “, which the State Premiers have entered into with regard to semi-governmental bodies. The proper course for such bodies is to submit their requests to the State government concerned. Then, if thought desirable by the State government, the requests are forwarded to the Commonwealth Co-ordinator General of Works, and ultimately they come to the Loan Council. There is no reason why that should not. be done. If in any period between meetings of the Loan Council, any State government thinks that money should be made available for an urgent undertaking, there is an arrangement by which the State Premiers are consulted by me as Chairman of the Loan Council. I shall have prepared a statement setting out the whole procedure.
– Has the Acting Prime Minister seen the press announcement that Mrs. Pitt, a 76 years old poetess of Melbourne, has won the Australian Broadcasting Commission contest for a national song, with a composition called “Ave Australia”? If this song is as good as critical reports say it is, will he see that this patriotic Australian is suitably rewarded by a money grant from the Commonwealth Literary Fund, in addition to the paltry £70 prize from the Australian Broadcasting Commission? Further, will he approach the States with a view to having the song sung in the schools?
– I shall give consideration to the honorable member’s request, because as I have listened to some of the songs that have been broadcast I have realized that there was something wrong. I am now beginning to understand the reason.
– Has the Acting Attorney-General seen a reported joint statement by Mr. W. Campbell, the acting chairman of a break-away meeting of the Balmain ironworkers, and Mr. C. Thompson, who acted as secretary, that the attitude of the meeting called by the Ironworkers Union on Sunday last was tantamount to fascism in its worst form ? Has his attention been drawn to a challenge by those two gentlemen that Mi’. Hopkins, the acting secretary of the Ironworkers Union, should be asked to prove that the union has members of the Australian Labour party among its officials? Is it a fact, as represented, that al! paid officials of the Ironworkers Union, including members of the federal executive, belong to the Communist party? In order to maintain industrial peace, will the Minister have inquiries made, and a statement prepared for the information of honorable members, setting out the party affiliations of all paid officials of the Ironworkers Union?
– It would be difficult to ascertain the party affiliations of the persons mentioned by the honorable member.
– The Government could utilize the services of national security officers.
– I am informed that in the Communist party there are public members and also underground members. I shall look into the matter; but I fear that it will be difficult to obtain the information sought by the honorable member.
– Can the Minister for Post-war Reconstruction say whether it is a fact that the Department of Postwar Reconstruction is peeved because of a decision by Judge Storkey in regard to the right of the Tweed Rutile syndicate to operate after his department had refused it permission to do so, and whether that hostility has grown to such dimensions that his department will not sponsor the claim of this syndicate for additional man-power? Further, can he say whether the Department of Labour and National Service is directing men away from the Tweed Rutile syndicate to an American syndicate which is operating on the same mineral sands? Is it also a fact that his department has sponsored to the Division of Import Procurement a request by an American syndicate, which is a competitor of the Australian syndicate mentioned, to import an electro-static unit, which will further separate these mineral sands? If so, does he not think that the Australian syndicate has been sufficiently harassed during the past three years?
– The remarks of the honorable member are the first suggestion I have heard that the department has harassed any industry, or any particular firm connected with an industry. The department has tried to develop the industry in an orderly way. Had certain things been allowed to take place, the industry might have got into a chaotic condition in that production might have been far in excess of the requirements of industry generally, and also because certain valuable minerals might have been exported in a raw state instead of being used in Australia. These are aspects of a most difficult problem. The honorable member for Hunteris a little behind the times, because the control of this industry was handed over to the Department of Supply and Shipping some time ago.
– Only after the Minister’s department had nearly crippled it.
– I shall discuss this matter with my colleague, the Minister for Supply and Shipping, but I am confident that the syndicate to which the honorablemember has referred has received proper treatment from the department and has nothing to complain of.
Mr.CONELAN.- In view of Australia’s need for population, will the Acting Prime Minister give urgent consideration to assisting discharged members of the American forces, who comply with the conditions of entry to Australia, to return to this country? Some of them have married Australian women and are desirous of returning, but on account of shipping the American authorities are trying to induce them to take their wives to America instead.
– I shall examine the matter and confer with the honorable member.
– Was the Acting Prime
Minister correctly reported in the Sydney Morning Herald to-day as having said in reference to the union delegates who attended the convention in Melbourne about a fortnight ago that “ they got exactly the same rate as that fixed for all other conferences arranged by the Government with the representatives of outside organizations”? If the report is correct, how does he reconcile it with the fact that the representatives of the manufacturers, who attended a conference with the Government at Canberra on the 5th and 6th February last, received no expenses of any kind?
– I cannot make myself responsible for all statements in - the press. The Trade Unions convention in Melbourne was called on exactly the same conditions as previous trade union conferences have been held. The Minister for Labour and National Service made a request to Cabinet that the convention be called on the same lines as previous conventions of the kind. That was done. I did not go into all the details, .because I assumed that the normal procedure would be followed. I find that that was so. I think the representatives of the manufacturers asked the Prime Minister to confer with them. I do not know that any request has been made by them for expenses. If it is made it will he examined.
Press Reports of Speeches
– The Sydney Morning Herald this morning, in its report of the debate on the banking legislation in this House yesterday, gave four columns to the right honorable member for Cowper (Sir Earle Page) and less than one column to the Minister for Transport (Mr. Ward). It devoted 36 lines in the summary of points made in the debate to the right honorable ‘ member for Cowper and nine to the Minister for Transport. Does the Minister for Information think (1) that that is fair and equitable, and (2) that it is in accordance with the principle of freedom of the press? Is it true that the Sydney Morning Herald once printed an article by an overseas editor in which he said, “ Freedom of the press ! It stinks “.
– I am not sure that that is a matter of public importance, but T will pass it.
– Some honorable gentlemen opposite stupidly interjected that the question was a “ Dorothy Dix “. It was not inspired. I knew nothing about it until the honorable gentleman asked the question. Answering his last question first, he kept the good wine to the last, as it is true that an overseas editor of far greater distinction than the editor of the Sydney Morning Herald did make the remark quoted by him. I heartily subscribe to the sentiment expressed therein. Freedom of the press, under capitalism, as you, Mr. Speaker, well know, exists only for those who own and control the press. Accordringly, the right honorable member for Cowper was more than generously reported in to-day’s edition of that journal because his sentiments agree with the sentiments of those who own and control the press. It is true that the newspapers, big business, the banks and all those other institutions that dominate our social, political and economic life are interwoven and that when the press speaks the banks speak. That the right honorable gentleman is the mouthpiece of the banks in this chamber was demonstrated in 1924, when he emasculated the Commonwealth Bank and made it a- banker’s bank.
– On a point of order, Mr. Speaker, is it permissible for the Minister to introduce debatable matter?
– I was just about to call him to order when you rose. The Minister is getting wide of the question asked by the honorable member for Hume.
– To return to the question, the Sydney Morning Herald, of course, dismissed, in its usual contemptuous fashion, the lucid, eloquent and brilliant exposition of the Labour party’s policy on banking given by the Minister for Transport; but, as I said in reply to the honorable member for Bass (Mr. ‘ Barnard) the other day, no matter what the press does, we can trust the sturdy common sense of the Australian democracy to repeat in 1946 the tremendous victory given to the Labour party in the 1943 general elections.
Motion (by Mr. Scully) agreed to - That leave be given to bring in a bill for an Act to amend the Wine Overseas Marketing Act 1920-1930.
Debate resumed from the 29th May (vide page 2225), on motion by Mr. Chifley -
That the hill be now read a second time.
Upon which Mr. Fadden had moved by way of amendment -
That all the words after “That” be left out with a view to insert in lieu thereof the following words: - “ the Bill be withdrawn as a direction to the Government that it be redrafted, to provide, inter alia -
1 ) That the Commonwealth Bank Board be maintained in accordance with the decision and recommendation of the royal commission appointed to inquire into the monetary and banking systems in Australia.
That the note issue should be limited by statute.
That the Commonwealth Bank be so constituted that each of its constituent parts shall be provided with separate management, and with whatever liaison as is necessary to ensure a co-ordinated policy.
That the Commonwealth General Trading Bank and Industrial Finance Bank be treated, insofar as their relationship to the Central Bank is concerned, in exactly the same way as other trading banks.”
– The bill presently engaging the attention of the House is, no matter from what point it is viewed, one of extremely great importance to the future of this country. It is conceded that monetary and banking policy can have the most far-reaching consequences not only to those who now inhabit this country but also to future generations. Accordingly it is essential to give the utmost scrutiny to this measure. Four main matters require consideration. The first is the control over the monetary and banking policy, which, under this bill, is to be reposed in the Executive. The second is the abolition of the note issue reserve, particularly in relation to our overseas funds. The third is the industrial provisions of the bill, the powers given to the Commonwealth Bank to lay down conditions under which it will advance money to industrial concerns. The fourth is the extent to which the Commonwealth Bank proposes to compete with the trading banks - under what conditions and with what results to the shareholders of those banks. At the outset, before dealing with those matters, I say that this bill marks a fundamental departure from sound democratic practice. It has always been a clear democratic rule that before any contentious measure is brought before Parliament it has to be put before the people for approval. In other words, political parties aspiring to power must go before the people and specify the general nature of their proposed legislative programmes, and the people have the right and the duty to say whether they approve. It is obligatory upon us all to preserve as far as we possibly can that very wholesome practice.
– That was done.
– In no sense can it be said that there is a warrant from the people for this measure. It is true that banking policy on the lines of this bill has been the policy of the Labour party for a long time, but I deny that at the last general elections the people were asked in any form whether they desired, during the lifetime of this Parliament, to have legislation of this far-reaching character enacted. It is rather extraordinary that in these days we are slipping very easily away from that democratic rule. If Parliament is to prevail, it will depend on the men within it and public opinion, but primarily on the men within it to preserve its rights. But bit by bit we are surrendering our democratic practices. We are refusing to consult the people whom, after all, we represent, and surrendering more and more power to an Executive already swollen with power. So it is obligatory to point out that this legislation was never put to the people for their approval. It cannot be urged that an emergency has suddenly arisen requiring parliamentary action, because it is plain that regulations made under the National Security Act are quite sufficient to control the financial policy of this country until well after the expiration of the life of this Parliament. It cannot be urged that the Government is justified in bringing this most contentious measure before Parliament when we are engaged in the most difficult conflict that we have ever fought. It seems that the key to this can be obtained from the approach to all parliamentary matters of those who stand behind Labour. I say that in no terms of polemics. I say in terms of objective fact. It is obvious to all those who receive communist propaganda - and we all do - that the communists very cordially support this proposal. The militant industrial unions also support it.
– And so do the farmers.
– Maybe. I am just pointing out who do support it. Perhaps moderate Labour supports it. I do not know. I do know that the militant sections of Labour support it.
– Not many Labour men support it in the House at present.
– No. That is characteristic of the Labour party. The Executive brings before caucus measures which it imperfectly understands, and which caucus does not understand at all. The subject is later brought before Parliament, and when Opposition criticism is poured upon it the Government and its supporters retire to some corner or other, and so the prestige of the Parliament is lost.
– Only two Ministers and two members of the Labour party are in their places listening at the moment.
– “While the right honora’ble member for ‘Cowper (Sir Earle Page) was making important remarks on this subject last night only three Government supporters were present. I .make this point because it is germane to my observations- on the power which it is proposed to vest in the Treasurer. I assert the right of this Parliament over the Executive at all times, yet no one can deny that the power of the Executive is becoming increasingly plenary and the power of the Parliament is being shorn away day by day. We have only to consider the manner in which budgets are presented in these times to realize that the Parliament has no real control left over the expenditure of money. It is proposed in this ‘bill that complete power over banking policy shall be vested in the Treasurer. This power is one of the most important that can he exercised over the life of the community. I cannot see how any .party which claims to be democratic can justify 1ihe introduction of this measure. I assert that the Parliament must ultimately be responsible for the monetary and financial policy which is applied in a country, and it does not discharge this responsibility by delegating the power to a member of the Executive.
It has been conceded by honorable members opposite and it is also obvious from the speeches of honorable members on this side of the chamber that financial policy can exercise an enormous effect on the welfare of the people. Those who control financial policy can irretrievably harm, if they so wish, the financial system and the form of society under which we live. The Minister for Home Security (Mr. Lazzarini), who is sitting at the table, has made such a statement.
– That is not true. I challenge the honorable member to produce any evidence to support his remark.
– I am prepared to admit that it is often difficult to know what the honorable gentleman says, or to interpret his remarks.
– What about the honorable gentleman’s book on hanking? No copies of it are available in these days.
– It is true that the book is unprocurable. -In any case I could indicate, in a few words, the proper place for it. Last night we listened to a well-reasoned speech on this measure by the ‘honorable member for Perth (Mr. Burke). I disagreed with most of the conclusions of the honorable member, but the many quotations made by him as the result, no doubt, of great research, were for the purpose of establishing the proposition he was advancing that those who control financial policy control the life of the community.
– That is true.
– That being the view of Labour, it is remarkable that the Parliamentary Labour party, which claims to be democratic, should be prepared to place in the hands of the Treasurer complete control over the finances of the country. What may be the result of this procedure? 1 direct the attention of honorable members to clause 8 of the bill which provides that the ‘Commonwealth Bank shall pursue a monetary and banking policy directed to ensure - [a) the stability of the currency of Australia;
No one will disagree with those objectives. The important questions are, however : How isthe stability of the currency to be best ensured ? By what monetary and financial policy may full employment be best maintained? What economic policy will best ensure the prosperity and welfare of our people? I would have assumed that in so far as these are purely banking matters, they need not be discussed in this chamber, but in so far as they are matters of policy they should not be left wholly to the central bank or to the Executive, for Parliament itself should consider them. I believe that there should always be an overriding authority in the Parliament. The point I am. seeking to make is that in respect of such matters of policy it should be almost academic to urge that, in a democratic country, Parliament should preserve its authority. But under this bill Parliament will be deprived of its authority, for clause 9 provides - (1.) The Banksh all, from time to time, inform the Treasurer of its monetary and banking policy. (2.) In the event of my difference of opinion between the Bank and the Government as to whether the monetary and banking policy of the Bank is directed to the greatest advantage of the people of Australia, the Treasurer and the Bank shall endeavour to reachagreement. (8.) If the Treasurer and the Bank are unable to reach agreement, the Treasurer may inform the Bank that the Government accepts responsibility for the adoption by the Bank of a policy in accordance with the opinion of the Government and will take such action (if any) within its powers as the Government considers to he necessary by reason of the adoption of that policy. (4.) The Bank shall then give effect to that policy.
Under that provision the Parliament will not be required to function at all, for the power of decision will rest with the Treasurer. I cannot understand how a Labour Government, which claims to be the protector of democratic rights, should deny to the Parliament the opportunity to debate and determine such important matters. After all, what is policy? No one is capable of defining the real content of policy. Clearly, in relation to hanking, it. would cover the types and amounts of advances that could be made. Indeed, having regard to the subsequent provisions of this bill, it would cover every matter in relation to banking policy and all details of administration.
– Especially the volume of the note issue.
– Yes. The matter is clinched by clause 189 which reads -
The Governor-General may make regulations, not inconsistent with this Act, prescribing all matters which arc required or permitted to be prescribed, or which are necessary or convenient to be prescribed for carrying out or giving effect to this Act, or for the conduct of business by the Commonwealth Bank or the Commonwealth Savings Bank.
When that provision is read in conjunction with the provisions of clause 9, it becomes obvious that the whole banking structure of this country is intended to be placed under the control of the Executive. Surely Parliament will not surrender its rights in that way!
I wish to make my position quite clear. I do not say that central banking should be left entirely to the banking authority, and that the whole of the operations in regard thereto should be completely free from outside direction of any description. My view is that the control of the central bank should be removed as far as possible from day to day political interference. It should be removed as far as possible also from political pressure. In the determination of policy, however, the Parliament has a right to be consulted. It should determine the broad lines of the policy to be pursued, but under this measure that will not be the procedure, for policy will be determined by the Treasurer. The people may have confidence in the sense of responsibility and financial views of the Treasurer of to-day, but they may have no confidence whatever in those of the. Treasurer of to-morrow, although they may respect him personally. The members of his own political party may have no respect whatever for the financial views of a Treasurer. We see, therefore, that it may happen, if this measure should become law, that a Treasurer could enforce the adoption of his own personal views in banking and monetary policy. He could disregard the Parliament altogether and compel the Com-, monwealth Bank to give effect to his own ideas.
– And there is no provision to oblige him to report to the Parliament upon his actions.
– That is so. It is quite clear from the provisions of clause 9 that, in the event of disagreement, the Treasurer’s views must prevail. It will not be necessary even for the Treasurer to put his views in writing. We all know very well that matters of this description are dealt with chiefly in discussions, and a Treasurer, under this power, could oblige the bank to adopt his policy without his even referring the matter to Cabinet. Seeing that this subject so vitally affects the whole community, and that the Labour party has often claimed that control of finance is the key to the future, it is essential that the rights of the Parliament shall be preserved. It may be said that Parliament, ultimately, will be able to give approval to, or withhold it from, the budget, but as we all know Parliament, in these days, has very little control over the budget. In fact, its financial power, in that respect, has almost disappeared completely. I therefore take this opportunity to urge, with all the force at my command, that the power of the Parliament to control finance he restored, and that provision be made to ensure that whenever conflict arises between the Treasurer, or the government of the day, and the Commonwealth Bank, the Parliament shall be consulted. It is highly necessary that such matters should be brought to public attention and that criticism should be voiced in the Parliament. Are we to understand, however, that the Labour party, which has always urged that subjects of international importance should be discussed in the open, now intends to force through the Parliament a measure which will result in matters of supreme domestic importance being determined in private? In my opinion to do so will be completely to deny democratic procedure. The Parliamentmust be given the right to debate any issues that arise in consequence of a conflict of opinion between the Treasurer and the Commonwealth Bank. The Treasurer should be required to make his submissions to the bank in writing, and to report forthwith upon the whole matter in writing, to the Parliament. That at least, is essential unless we are to sur render this vitally important power and to deliver banking into political control.
I pass now to some other observations on the authority of the Parliament in respect of banking and monetary policy. I have said that that is the body which primarily and ultimately is responsible for it. I go further and say that it is obvious that full or maximum employment depends principally on the volume of purchasing power in the community. That, in turn, depends upon the amount and rate, at different times, of public and private revenue and capital investment, and upon foreign exchange. All of these matters are of the very essence of any approach to full or maximum employment in the days of peace. Are they to be dealt with behind the back of Parliament, or at all times to be subject to the continuous control of the Parliament? I can do no more than say that the proper course is to delegate to either a body or an individual competent to discharge them, the duties of central banking policy, subject always to the overriding power of the Parliament. The delegation by the Parliament of authority to competent experts is not an abrogation of the sovereignty of the Parliament, but on the -contrary is an assertion of it.- Provided the delegation is subject to provisions which will preserve the authority of the Parliament, whatever the Parliament, delegates it can withdraw at any time. I urge that, at the committee stage, provision shall he made that, when the Treasurer seeks to exercise his authority under clause 9, it shall be exercised in writing, and shall forthwith be reported to this Parliament. Such a provision would impose some control. Lacking it, the Parliament would make a complete travesty. of its functions as a democratic institution.
It has been said that the Royal Commission on the Monetary and Banking Systems gave support to this proposition. It did. But it did not direct itself to any of the details of drafting, along the lines I have just mentioned. I should have thought that, having regard to the abuses of executive power that have been revealed all over the world in the last twenty years, and particularly in this country in the last two or three years, if the members of that commission were called upon to-day to draft a report, it would not be in the form of the report that they presented in 1937. In any event, I do not regard their findings as the Alpha and Omega of hanking and monetary policy. .Indeed’, the first part of paragraph 530 contains the expression of two concepts which seem to me to be quite separate. They are these -
The Federal Parliament is ultimately responsible for monetary policy, and the government nf the day is the executive of the Parliament.
I agree that the .Parliament is ultimately responsible for monetary policy. But the contention that ‘because, “ The government of the day is the executive of the Parliament”, therefore all power should be given to the Executive, is a complete non sequitur.
– Does it not naturally follow that the Executive is responsible to the Parliament?
-!1 hat is so, in democratic theory. I aim seeking to establish that, by proper provision, the Executive should be placed always under the control of the Parliament. For that reason, I have suggested the insertion of certain provisions. This recommendation of the royal commission does not support, as a matter of reasoning, the conclusion to which it came; because it goes on to make a statement which 1 find difficult to understand, namely, that this must not imply that there should be at any time interference ‘by the Government, or any member of it, in the administration of the Commonwealth Bank. I cannot see how policy is defined with any clear content; and it is much more difficult to delineate the respective fields of policy and administration. The bill, as drafted, gives to the Treasurer complete power over policy to the last detail, and the whole life of the community could he affected by it in the most revolutionary way, behind the backs of the Parliament and the people. That is exactly the meaning of totalitarianism, as it has been developed in the last generation.
I agree that the Commonwealth Bank should he a trading hank. If the matter were to be decided de novo, it might be said that it should function as a central bank. It is not of much use to proceed on that basis now, because it has been a trading bank ever since its inception. So 1 do not disagree with its trading activities. But militant Labour, if it is enabled to do so- and this bill will give to it the power to do so - seeks to plunder the private banks. When I speak of private hanks, I refer to their shareholders; because it has been well said that neither a bank nor a company has either a body to be kicked or a soul to be damned. Militant labour proposes that the Commonwealth Bank, free from all the burdens of taxation, shall compete against the private banks. I do not object to the fact of their trading. But it also proposes that the funds of the private banks shall be frozen to the prewar limit, that their permissible operations shall be drastically restricted, and that certain depositors shall he prevented from dealing with them. The reduction of permissible funds to the pre-war level, in actual monetary terms, would mean a reduction to 20 per cent, below the prewar level in real tennis, having regard to the increase of the cost of living. The placing of a limit upon the funds which the private banks could make available to those who sought to borrow from them would reduce the amount available for borrowing by the public, and increase the amount available for borrowing by the Commonwealth. A further consequence would be to compel many persons who wished to deal with a private bank to go to the Commonwealth Bank for accommodation. By restricting the operations of the private hanks, by providing that loans must, not be made to businesses of certain types and that all loans must have certain conditions attached to them, and by prohibiting the acceptance of the deposits of certain people, their capacity to compete would be restricted, ultimately their goodwill could be destroyed, and they could be exterminated. If an attempt were made to take the goodwill of the banks or any part of it under the Constitution, compensation on just terms would have to be paid. This is merely a way round the Constitution to achieve the same objective, without paying one penny by way of compensation to the people whose property will be abstracted piecemeal. Some members of the Government may regard that as fair play, but it does not appear to me in that light.
Because of the limited time allowed for the debate, which I regret, 1 must deal as quickly as I can with the note issue. The bill proposes to make it unnecessary to hold against the note issue a specified amount in sterling reserve. 1. do not object to that as a matter of reasoning; for the reasons given by the royal commission, it is a correct approach to the matter. In other words, I do not believe that an expanded note issue is a greater element in causing inflation than are inflated deposits in the trading or savings banks; each of them has an explosive quality which, if not properly controlled, could generate inflation. Therefore, the mere fact that the note issue was not protected by sterling reserves would not of itself, in my opinion, lead to any greater danger than is inherent in large deposits in the trading and savings hanks. But I draw attention to the overseas position, which is vital; because, although I am in favour of the recommendation of the royal commission, it seems to me that a reserve should be. maintained overseas to meet commitments. In the absence of such a provision, any government, in the exercise of its judgment, might reduce the overseas reserves to a perilous level. It might consider that the export prices of goods would rise in the succeeding term, and replenish funds that had been depleted. That assumption might prove to be incorrect. An incoming government - or, for that matter, the same government - might suddenly be called upon to deal with imports that were essential to maintain our economy. In order that our overseas position may be protected, as it must be, our reserves should not at any time be reduced below a specified minimum amount, which I place at ‘the arbitrary figure of £50,000,000 Australian, “without first consulting this Parliament. The maintenance of these reserves is of vital consequence, not only to our overseas position, but also to our internal economy. The amount that I have stated might require to be modified either up or down. The Government would then be provided with a danger signal, and would know that when the minimum was being approached the Parliament would have to be consulted. Our overseas funds must be preserved to meet the cost of essential imports, and they must not he used extravagantly. Some protection is necessary.
I agree that the general purpose of the Industrial Finance Department is a very good one. It is necessary, however, to study closely the provisions in relation to this matter, in order to determine their probable effect. The most complete powers are to be given to this department to make advances, and to the Government to invest in shares or other securities in the concerns to which advances have been made. This needs to be watched very carefully. We have had previous experience of the Government becoming interested in industrial concerns to which money had been” advanced; but it has always been obliged to obtain the approval of this Parliament. Two examples come to mind - the Newnes shale oil venture, and. the aluminium company in Tasmania.
– The Commonwealth Oil Refineries Limited is another.
– That is so. The Amalgamated Wireless Australasia Limited is another. Huge sums could be so invested. A limit should be fixed, so that no money beyond a certain amount could be advanced in return for shares in an industrial or commercial concern, except with the approval of the Parliament. At all times we must retain the right of the Parliament to control the Executive. I am sure that the Treasurer will admit that all of the wisdom of this House does not repose in him or any other Minister or member. I should think that at some time it will be contended that a law enabling the Commonwealth to advance money for the purpose of taking up securities in companies is unconstitutional, as that cannot be regarded as “ banking “ within the meaning of the Constitution. That, however, is a matter for a court to determine. But some limit should be laid down in the bill to prevent a government department from financing proposals which, should normally be submitted to the Parliament for approval. Protection should be provided in the bill itself to ensure that the power of the Parliament to watch the public purse shall be preserved.
The general manager of the Industrial Finance Department is to be appointed under clause 92 ; but no minimum period of service is guaranteed to him. Apart from the pressure which could be exercised under clause 9, which gives to the Treasurer authority to impose his will upon the person who is to manage the bank, he is to have no security of tenure whatever. At the will of the Executive, he can be kicked out at a week’s notice.
– Why not., if he is not doing his job?
– I should not object to his dismissal if he were not doing his job properly, provided the matter were first brought before the Parliament for approval, but we should not enable a Minister, who might not be so scrupulous as the present Treasurer, to exercise his authority in such a case, or for the Executive to say to the general manager of the department, “ This is the way you have to go “. We know that the Australian Broadcasting Commission has, more than once, been subjected to political pressure. Is it to be assumed that in the control of the Commonwealth Bank such pressure will not be exerted in a matter in which the ideologies of the Labour party have greater influence over it than in respect of broadcasting? The general manager of the industrial section of the bank, and also the Governor of the bank, are to be given no security of tenure at all. They should have a minimum period of office, and provision should be made so that they could not be removed from office unless resolutions to that effect were passed in both, branches of the legislature. That would prevent their dismissal behind the back of the Parliament, and the people.
– Is the honorable member in favour of the principle of security of tenure being applied to industry generally?
– I. am discussing the rights of Parliament, but the honorable member for Martin (Mr. Daly) has in troduced an entirely different issue. The point I am considering is whether certain powers should be handed to the Executive without safeguards. Under the industrial provisions of the bill, savings bank deposits could be used without limit. There is no limit at all to the degree to which pressure could be brought to bear upon the governor of the bank by the party in power. With respect to every division of the bill political pressure could be brought to bear to compel the bank to carry out the will of the Government. Honorable members should not readily accept bills without scrutinizing them in order to ascertain whether they give effect to principles of which they approve. I urge private members to support parliamentary control over the Executive, and to insist that provision shall be made for that in all measures brought before us. “Members of the Ministry are becoming too resistant to criticism, and they are reluctant to tell the people what they are doing. The people are becoming so many bodies divorced from soul, to be shifted from one place to another. Here is a chance to retain control by the Parliament. We should have a totalitarian system, if this Parliament met merely to place a stamp of approval upon measures which had already . been determined by the Executive-.
– The honorable member’s time has expired.
, - The honorable member for Warringah (Mr. Spender) is associated with a profession, the majority of whose members, earn their largest fees by smothering the truth so that criminals may escape, and injustices be done, and he has just given us the best exhibition that has yet been seen in this debate of the art of smothering the real issues before the House. The honorable member, who is on his hobby-horse when shouting about the rights of Parliament and the control of the. Executive, states that when this bill becomes law, the Treasurer of the day may be a despot. Probably we have all said that, explaining of course, we did not wish to apply that description to the present occupant of the office. I myself have said it a hundred times ; but what are the facts about the power of the Parliament over the Executive? Under our democratic system of government, no Ministry can carry on unless it commands a majority of the votes in the Parliament. We might discuss any matter for a month, but if the Government had not the necessary support in the House it could do nothing. The honorable member came into this House as an independent candidate and joined a political party in order to get a job as a Minister. He was as strong a party man as anybody else, and I do not criticize him on that score. If any Treasurer has a majority of his party behind him, his proposals will be carried in this Parliament, irrespective of debate, so of what use is all the talk about the control of the Executive ?
The honorable gentleman also said that I had stated on one occasion that by control of the banks the economy of the country could be destroyed. I may have said that those who control the banks could destroy the economy of the country, and that is true. The honorable member desires that the power, which, if wrongly used, could destroy the country, should be put into the hands of private individuals instead of the elected -representatives of the people. If any Prime Minister attempted to use such powers improperly, his government would have a short life. All the shouting about what the Government would do to destroy the economy of the country is so much “ hocus-pocus “. I am astounded that a member with the intellectual attainments of the honorable member for Warringah should say that a power so dangerous that it could be used to destroy the economy of the country would he safer in the hands of private persons than in those of the elected representatives of the people.
I pass on to the arguments advanced by members of the Opposition, whose main contention was that it would be dangerous if the powers conferred by the bill were wrongly used, because of the risks of inflation. The right honorable member for Cowper (“Sir Earle Page) said that the present Government would print notes, and turn them out of a machine like sausages.
– A hundred millions would be nothing to this Government.
– The honorable member should know that the issue of further notes would be useless, immediately sufficient bad been printed to meet the currency needs of the people. Therefore, the argument that the Government will take advantage of this banking legislation to flood the country with banknotes is just so much nonsense. I have always maintained that the only effective way to prevent currency inflation is for the Government to control the monetary policy of the country. The Leader of the Opposition, in an attempt to bolster up his case, quoted the words of Mr. Andrew Fisher, who was responsible for the creation of the Commonwealth Bank. AntiLabour politicians frequently resort to this device once the Labour man is dead. I ask those who would invoke Andrew Fisher in support of their arguments against this bill to remember what Andrew Fisher’s opponents said when he proposed to found the Commonwealth Bank. They called the Commonweatlh Bank notes “ Fisher’s flimsies “, and. .Sir George Cook said that they would not be worth 5s. six months after they were issued. I remind honorable members that it was a good thing for Australia that, the Commonwealth Bank was in existence during the last war. The private banks at that time offered to float loans at a cost of £2 7s. 6d. per cent.; the Commonwealth Bank floated loans for 5s. 7d. per cent. This indicates the kind of service which the private hanks were prepared to render to their country, and it is in striking contrast to the service rendered by the national institution created by a Labour government.
The honorable member for Warringah (Mr. Spender) spoke as if from a brief for the private banks. While he was speaking, I was reminded of the words of one of the most prominent, bankers in the world who said that the bankers had evolved a language that nobody understands, least of all themselves. The honorable member’s speech consisted of a mass of verbiage that meant next to nothing. During this debate, we have heard once more the old story about the danger of depositors losing their money, and of the people losing their sayings. As a matter of fact, if_ the Government wanted to take the savings of the people or to interfere with the deposits of- hank clients, it could not do so unless it sent a 10-ton truck down to the bank to take away the ledgers. The deposits have no existence except in the form of entries in the ledgers. The associated banks owe £120,000,000 to their depositors at current account, but they do not hold more than £15,000,000 in currency to meet that obligation. They know that, in the ordinary course of trading, more currency flows in each day than goes out, and they pay the withdrawals of to-day out of the deposits of yesterday. It is -just plain humbug to talk of robbing the depositors.
Reference has been made during the debate to the closing of the New South Wales Government Savings Bank, and I remind honorable members that the Royal Commission on Monetary and Banking Systems has stated in its report that that bank was closed for political reasons. The late Sir Robert Gibson was chairman of the Commonwealth Bank Board at that time, and he gave a fine example of political control of banking. He declared that he could do nothing to help the New South Wales Government Savings Bank until the bank closed, but that when it closed its doors he would take it over. At this very time, there was a mild run on the Government Savings Bank in Western Australia where an anti-Labour government was in office. Sir Robert Gibson did not hesitate, but flew over to Perth and assumed control of the bank there before it closed. This wa.? in sharp contrast to his attitude towards the New South Wales Government Savings Bank.
The primary producers have no reason to feel grateful to the private banks and other financial institutions of the kind. We know that such firms as Goldsbrough Mort Limited, and the New Zealand Loan and Mercantile Company Limited and others are closely- allied in their operations with the Associated Banks. The banks do not wish to draw attention to themselves by charging high rates of interest on advances and so, it often happens that when a farmer approaches a bank for assistance he is told to go to one of these great firms, where he may be charged up to 10 per cent, for an advance. The Royal Commission on Wheat said that it was the burden of interest which was crushing the primary producer. It pointed out that even if farmers were to obtain for nothing the labour which they required it would make little difference, -because debts and high interest rates were gradually forcing them off the land. Until this Government came into power all that the primary producers were able to get from previous governments was something in the way of a bonus or subsidy to enable them to pay their interest to the banks. Even when Sir Joseph Cook guaranteed a price of 5s. a bushel for wheat, he made a first payment of only 2s. 6d., and gave vouchers, payable in twelve months, for the other 2s. 6d. I pointed out to him that wheat, once it had been produced, was itself wealth against which credit could be issued. He replied, “ Yes, but I don’t know where the money is to come from “. The financial institutions cashed those vouchers at a discount of 2d. for 2s. 6d. Honorable members opposite are opposed to this legislation because they know that, once it is passed, the banks will never again ‘be able to do things of that kind. They know that even if they get back into power they will not dare to interfere with this measure, once it has become an integral part of the economic structure of the country.
The right honorable member for Cowper told us what he had done in 1925. Well, what did he do in 1925? I shall inform honorable members, and I ask the so-called representatives of the primary producers to listen. He gave the private banks the right to draw upon the Commonwealth Bank for £20,000,000 worth of notes at 4 per cent., in order to finance seasonal operations.
– Did the Minister say notes?
– Yes, but of course the honorable member for Wide Bay (Mr. Corser) would not understand.
– I certainly could not understand the Minister’s book.
– Of course not; it wasn’t written for goats like the honorable member. As a matter of fact, the private banks never drew one note from the Commonwealth Bank under the arrangement. They had sufficient till money with which to finance the wheat crop and wool clip for the season, and they gave the primary producers accommodation at rates of interest ranging from 2 per cent. to 4 per cent. They paid no interest to the Commonwealth Bank, but on the Commonwealth’s guarantee of £20,000,000, they built a pyramid of credit amounting to £60,000,000, and on this the primary producers paid interest.
The history of private banking in Australia is a sorry one. The land boom of the nineties, and the subsequent crash were engineered by the banks, and out of the operation they acquired for themselves the best pastoral lands of Australia for next to nothing. I was a boy then growing up in the Young district, and I know that all the best country around Young, Boorowa, Binalong, Yass and right through to Orange was in the hands of the banks, the various stations being managed by men appointed by the banks.
Sitting suspended from 12.45 to 2.15 p.m.
– I have already re ferred to what the Commonwealth Bank did during the war of 1914-18. Let us now see what the British banks did at that time. Had things been left to them, there would have been no Britain to fight against Germany in the war which began in 1939, because immediately war was declared the private banks in the Old Country closed their doors, thereby creating a financial crisis. Those doors did not again open until the British Government printed paper money amounting to £350,000,000 and handed it to the- banks, and then borrowed it back from them at 3½ or 4 per cent. interest. That was done in Great Britain to spoon-feed these institutions which honorable members opposite say can he depended on in time of trouble! When war broke out in 1914 the British bankers held waterlogged German securities with a face value of £400,000,000. The British Government had to add £400,000,000 to the national debt of Britain and issue bonds to the banks of England for their bad debts and pay interest on those bonds in order to bolster up institutions which, according to Opposition members, guarantee a nation’s security. I shall quote from a number of authorities which not even the Leader of the Opposition (Mr. Menzies), who professes to know all there is to know about all things, will question. Mr. Mulhall, an eminent British statistician, said as far back as 1897 -
Ninety-seven per cent. of all payments in Great Britain are made by cheques and not more than 3 per cent. by coins and bank notes.
Another person whose views I shall quote was Chancellor of the Exchequer in the Lloyd George Government, president of the Midland Bank, and at one time a director of the Bank of England. I refer to the Right Honorable Reginald McKenna, who said -
The amount of money in existence varies only with the action of the banks in increasing or diminishing deposits. Every bank loan creates a deposit, the repayment of a loan destroys a deposit or money. In June, 1914, the banks in England held £75,000,000 of currency. Lust December, 1919, this figure stood at £191,000,000. The banks therefore held more currency to the amount of £116,000,000 and, to this extent, the increase of aggregate deposits is accounted for by payments of currency into the banks. But it is estimated that, since June.. 1914, bank deposits have risen by £1,230,000,000. If £116,000,000 of this amount is accounted for by the payments of currency into the banks, there remains £1,114,000,000 which we must attribute to bank loans. To whom have these loans been made? It is impossible to give precise figures, but my estimate is that, of the total, £800,000,000 have been lent to the State.
The money, which was lent at varying rates of interest, was the creation of the banks themselves. Some figures were written in books, but there were no deposits behind them. They were, however, backed by the wealth of Great Britain. The private banks then expanded credit, instead of the work being done by banks owned by the people. Mr. G. D. H. Cole, a prominent English economist, said -
There is nothing more inflationary in creating new money without interest than in adding to the volume of bank advances.
Honorable members opposite will not claim that the London Times is in the habit of supporting the Labour party. They will, therefore, be interested in the following extract from the Times of the 30th September, 1942-
When the community needs to make a more intense use of the goods and services it is capable of providing, and when for that purpose it needs to bring into being more claims (money) upon those goods and services, it certainly seems preposterous that the only way to get this new money should be by allowing private institutions to create it, and then by borrowing it from thom and paying interest on the loans.
I propose now to read a fairly lengthy extract from The Hole of Money by Professor Frederick Soddy. After dealing with the early banking laws of England, under which the £1 was backed by gold, Professor Soddy went on to say, under ibo heading “ The sprat to catch a mackerel “ -
Hut, as already indicated, this is not the real issue at all, which is the right of the banks by a bookkeeping trick to create twenty or so times as much .money as the amount for which legal tender receipts are issued. So long as physical tokens exist it is nut possible, to make them less than zero. But by bookkeeping, this obvious limitation can be got round, and in figures it is just as easy to count in negative numbers as in positive, and there is, then, no fixed number, such” as zero, from which the counting starts. Money accountancy should start from the zero of no money. The real quantity of money is perfectly definite, for it is, in units of money, the worth of the real things the aggregate citizens are owed and entitled to receive on demand in exchange for the money. The fiction that only legal tender is “ really “ money, and that cheque accounts arc not money but claims on demand to be paid money, does not in the least affect the quantity of goods the citizens have given up for it and are owed on demand. The cheque system preserves the zero of no money for legal tender or physical tokens, but extends the accountancy to an indefinite and continually varying extent below zero into the region of minus quantities, or debts of the banks for non-existent money. Making banks keep pound for pound of . national money tokens against their liabilities to their current account holders would at once stop this fraudulent accountancy.
The same writer, under the heading “Banks gave no security whatever”, stated - lt is the strangest perversion of common justice that whereas the banks’ ‘borrowers have to deposit with the banks valuable securities, in the way of the title deeds to houses, farms, factories, or investments, amply sufficient to cover the eventuality of their default, the banks, trusting no one, themselves give no security whatever of any kind to their depositors. In the one case, when it becomes impossible for the creditors to fulfil their bond they are sold up and bankrupted. In the other case the banks are granted a moratorium and sufficient national money is then printed to enable them to avoid ruin. The pound for pound of national money would be the nation’s security for their solvency and it could be issued to them as required, against suitable collateral security in the way of the banks’ assets to cover the loan. But as a matter of fact the mere substitution of a national money for the present fraudulent private money system would produce such an almost instantaneous increase in real national prosperity that it would not be long before industry and agriculture got out of debt to the banks and were able to create and accumulate their own capital without the aid, for the most part, of either genuine or fictitious loans.
A further quotation is taken from Henry Dunning McLeod’s The Theory of Credit, which is regarded almost as the Bible of private financiers -
The invention of cash credits (overdrafts) has advanced the wealth of Scotland by centuries. We have an enormous mass of exchangeable property created out of nothing by the mere will of the bank and its customers, which produces all the effects of solid gold, and silver, and when it lias done its work it vanishes again into nothing at the will of the same persons who called it into existence. Hence we see the mere will of man has created vast masses of wealth out of nothing and then, having served their purpose, they were de-created into nothing from whence they came, melted, into air - into thin air. But their solid results have by no means faded, like the baseless fabric of a vision, leaving not a wreck behind. On the contrary, their solid results have been vast tracts of moor, converted into smiling fields of waving corn, the manufacturers of Glasgow, Dublin, Dundee and Paisley, the unrivalled steamships of Clyde, great public works of all kinds, roads, canals, bridges, harbours, docks, railways and many others, and poor young nien raised up into princely merchants.
Ho could have added, “while the masses grovel in poverty and destitution “. Recently, in a book published by the Historical Society of New South Wales, I found references to the threat of Mr. McKell, the Premier of New South Wales, to abolish the Legislative Council. In dealing with the history of that chamber and constitutional developments in New South Wales, reference was made to an Englishman in New South Wales who sent a letter to his people at home. He said that the country was suffering from a depression, the result of which was that, although there was plenty of food, sheep were available for purchase at ls. a head. But, he added, nobody had the1s. That is what happened since the last war when the banks, following the time-honoured policy of banking institutions all over the world, caused a depression. In this connexion I shall quote the words of an eminent banker, Sir Herbert Holden, who is still, I believe, a director of the Bank of England. Addressing a meeting of students at Oxford some years ago, he asked the question, “ What caused the depression? “ and then answered it by saying -
Every one knows what caused the depression. Thebanks caused the depression by following their time-honoured custom of refusing advances and calling up overdrafts.
On previous occasions I have mentioned in this chamber that at the same time as the private banks were making advances to companies to build palatial picture palaces in our capital cities, they were calling up overdrafts of primary producers and manufacturers. One manufacturer of cotton goods told me that he had to put 1,000 bales of Australian cotton on a ship and send them to Liverpool so that he could get an advance against, the shipping documents. The policy applied in Australia and other countries started the tobogganing into the depression from which we did not. emerge until this war took place. It is an everlasting disgrace to human civilization that the world was in the throes of a depression when war broke out, and would still have been, but for the war. Any one who in the name of humanity had taken to any government the blue prints of the miraculous achievements of the Allies that culminated in the sweeping of the Germans back from the channel ports into Berlin, and demanded that something similar be done to defeat the depression, would have been put in the “ Black Maria “ and taken to a lunatic asylum. Governments and economists alike told us that we could not get even £20,000,000 from the Commonwealth Bank to stop the dry rot of depression. Now we are spending that amount every few days on war. I do not object to that. What I do object to is the defeatist attitude that brought the depression about. God help any government that tries to tell the Australian people again that it cannot do things because it has no money. Honorable gentlemen opposite try to justify the depression here because there was a depression in Great Britain, America and everywhere. Of course there was, because the same evil economic and financial system operated everywhere. Is murder in Australia justifiable because murders are committed elsewhere? Are industrial strikes justifiable in Australia because they occur elsewhere ? No ! Economic crimes should be equally punishable, and the peoples of Australia and other countries will see that governments which commit economic crimes shall incur appropriate penalties. Who caused the depression? Will honorable gentlemen opposite blaspheme and say “God caused it”? No! It was a man-made depression. It could not be else. I remind honorable gentlemen of Bishop Burgman’s harrowing description of hungry men lying alongside silos bursting with grain. There was a depression, not because men refused to work, but because they had worked too hard and over-filled the storehouses. That was the reason for the depression, and none other. Labour members witnessed the effects of the depression because they went amongst the people. We saw men take flour bags to dole dumps. We saw little children in rags. We saw their mothers trying to make garments for them out of scraps of cloth. We saw single men subsisting on a dole of 6s. 9d. a week.
– A dole of 2s.10d.
– It must have been higher than that in some States. Those conditions were the result of the application of outworn economic doctrines and theories by the capitalistic private financial institutions. The Labour party, which I am confident will remain in office, will ensure against a repetition of those tragic days. Such things the laws of God forbid : for ever accursed and double damned be the laws of man that allowed them.
– The Commonwealth Bank Bill and the Banking Bill are probably the most important and far-reaching measures which this Parliament has considered for many years. The weird ideas expressed by the Minister for Home Security (Mr. Lazzarini) will not find favour with the people of Australia. Listening to the honorable gentleman, I was reminded of the song “ The Old Grey Mare She Ain’t What She Used to he”. I am fearful that if these bills are passed in their present form they will shatter the confidence in Australia’s banking activities that is so paramount a part of the financial structure. Mistrust and suspicion will be engendered in the minds of the people once political control of the currency is brought about. Hitherto both the private hanks and the Commonwealth Bank have not occasioned mistrust because they have been free from political interference, .but these proposals will make it quite easy for this country’s banking policy to be the football of party politics. A former Labour Treasurer, placing his views of this matter before a Sydney audience a few years ago, advocated placing. - thu management of the bank in the hands of men chosen by the Government . . . Such mcn could be appointed for a. term which would bc concurrent with the life of Parliament in order to leave untrammelled the incoming Government whose mandate may necessitate a change of monetary policy.
That declaration postulates political domination of the banks, under which it would be possible for banking policy and customs to be changed at every general election with disastrous chaos resulting. ‘Stripped of all technicalities, these bills are simply the first step towards the Labour party’s objective of socialization of the means of production, distribution and exchange. Ever since the first public bank was founded in Venice in the middle of the twelfth century, banks: have been conspicuous targets in times of adversity; and now, because the Government has been captured by extremists and Communists, the Australian banks are being made the subject of attack. The Labour party wants socialization of credit and industry, but, whilst I have no personal brief for the banks and frankly admit, if it will please honorable gentlemen opposite, that our banking system is not perfect, I am not prepared to jettison it until we can be assured of a better system in which the people will have the confidence that is so essential in the foundation of any -financial structure. The constitution of the Commonwealth Bank was framed in such a way as to safeguard it from political domination in order to ensure continuity of policy, but that cannot be the objective of this Government, because it plans to make the bank the plaything of party politics. I remind Ministers and those who support them that in 1930, when the Scullin Labour Government attempted to tamper with the Australian currency by introducing a bill for the provision of millions of pounds’ worth of fiduciary currency without the slightest backing-
– How many millions?
– Eighteen million pounds. The then Treasurer said, “ We will print more and more as the occasion demands When Australia’s name was being besmirched throughout the world, the people rose in their wrath and swept that government from office and elected a new government which righted Australia in the eyes of other nations and restored confidence in it at home and abroad. I warn honorable gentlemen opposite that next year history will repeat itself and that this Government will be swept from office by an angry and wronged people. Nothing is more certain. The extremists in the Labour movement, the Communists and other militants, who have captured the Government are insisting that it shall give effect to Labour’s socialistic policy, notwithstanding the pledge of the Prime Minister (Mr. Curtin) and other men holding high rank in the party that such legislation would not be introduced during the war. I intend to say something more about that in a moment. Meanwhile, I wish to deal with some of the provisions of the bills. Clause 9 of the Commonwealth Bank Bill provides for political domination of the Commonwealth Bank, for it obliges the bank to give effect to “.a policy in accordance with the opinion of the Government “.
– And in accordance with the recommendation of the Royal Commission on Monetary and Banking Systems.
– I will not he diverted from my attack. Other provisions in the Banking Bill will put an end .to privacy in business relations with the banks. Nothing in the future will be safe from political prying. The Commonwealth Bank Bill empowers the Government or the Commonwealth Bank under the control of the Government to requisition any or all of the private banks’ future assets or foreign currency. Is it any wonder that reactions overseas are alarming. The Minister for Home Security (Mr. Lazzarini) quoted the London Times in support of his argument, but that journal has more recently said -
Thu hills will impose a control on the Australian hanking: system more complete than that prevailing in Nazi Germany. The bills open the doors wide to inflation far more than they provide safeguards against it. . . . Thu Banking Bill constitutes the most inequitable and retrograde step, which it is puerile to justify, as Ifr. Chifley does, in terms of avoiding post-war inflation. 1 know that honorable members opposite will say that they wish to avoid inflation, but if that is so, why are they seeking to remove the safeguards that would prevent it? Why are they seeking power to make inflation possible?
The socialist ideal is surely achieved in clause 21 of the Banking Bill, which, without any doubt, provides for political control and dictatorship in regard to advances and investments. Clause 40 of the same bill requires that balance-sheets and statements shall be furnished by the trading banks to the Commonwealth Bank and that details of customer’s, accounts, including loans and deposits and any other prescribed particulars shall be included in the information so furnished.
– That is terrible !
– It would be a truly terrible state of affairs if the citizens of the country are unable to regard as secret and confidential the business they transact with their bankers.
– The business will still remain secret and confidential.
– Not if the Minister has anything to do with it. The Government’s proposals have been submitted to Parliament in spite of the fact that it bad no mandate from the people to implement this policy. On the hustings, during the last general election campaign, honorable gentlemen opposite said that they would regard as their supreme task the winning of the war, and pledges were made on their behalf that no steps would be taken to socialize industry during the war period. Consequently the introduction of the measures now’ before us amounts to the breaking of solemn election promises.
The Government has endeavoured to create the impression that it has adopted the recommendations of the Royal Commission on Monetary and Banking Systems, but it is most incorrect and misleading to say that these measures implement the proposals of that commission. Where it suited the Treasurer to do so, he embodied recommendations of the commission in this legislation, but he has not scrupled to include other provisions which are directly opposed to the commission’s recommendations. For example, the proposal to abolish the Commonwealth Bank Board cuts right across the conclusions of the commission, for that body considered that the retention of the board was essential. The commission also recorded the view that the private banks were an essential part of our system of credit control and distribution, but the Treasurer will have none of it. and he is even seeking power to compel some of the clients of the private banking companies to transfer their accounts to the Commonwealth Bank. It appears that our whole banking institution is to he refashioned in accordance with the secret deliberations of the Treasurer and the Labour caucus, and. not along the lines recommended by the commission. The commission did not recommend the abolition of the bank board, but the Government is seeking to abolish it. The removal of the board will undoubtedly open the way for serious manipulations of the people’s money by inexperienced politicians. The commission did not recommend unlimited and uncontrolled inflation, but the Government is seeking power to abolish all reserves held against the note issue. The commission did not recommend the continuance of the wartime control of investments of the trading banks and the limitation of their range of activity, but the Government is insisting on the retention of this procedure. Recently the Sydney Bulletin stated -
There is to be a Commonwealth Bank coercion of the trading banks instead of the cooperation with them which is recommended by the Banking Commission.
That statement is perfectly true. The proposal that the hank should be placed under the sole control of a governor with the assistance of an advisory board of five public officials was unanimously opposed by the commission. The present Treasurer (Mr. Chifley), who was a member of the commission, was one of those who opposed it. So much for the assertions made on behalf of the Government that it is implementing the findings of the commission.
In all essentials, the bills now before us ignore the emphatic advice of the commission that the Commonwealth Bank should be free from political control. If these measures become law, the private banks will be under the thumb of the Commonwealth Bank, and the Commonwealth Bank will be under the thumb, of the Treasurer.
– And the Treasurer will be under the thumb of the caucus.
– The Treasurer, under these conditions, will become a financial dictator who will have the whole of the people’s money at his disposal. The control of the currency will be in the hands of the political party in power for the time being, through the Treasurer. The people’s savings, and all their investments, will be involved in this reorganizing of our financial system, and the results may be disastrous by reason of inexpert and reckless administration. Under political control of the banks, the Government will be able to interfere in every sphere of business and industry, and a stage may be reached when depositors may withdraw their money from the hanks only after numerous inquisitorial forms have been filled in and sent to Canberra, and even then only if it suits the government of the day to permit such withdrawals. In those circumstances, citizens may be prevented from transacting any business whatever with private banking institutions. In other words we may reach a position of complete socialization of the means of exchange.
– To-day, the banking companies control the country. Give us something fresh; we heard all this twenty years ago.
– One would need the wisdom of a Solomon, the eloquence of a Demosthenes, and the integrity of the most, notable people of the age to satisfy the morbid ideas of the honorable member for Wannon (Mr. McLeod). I object most strenuously to one-man control of the Commonwealth Bank, under the direction of the Treasurer.
– The honorable member did not always object to it.
– No business of any magnitude in this country is controlled by one man. Big businesses are always controlled by boards of directors. Yet tinGovernment is proposing that probably the most important business in the Commonwealth, which influences the whole of the financial affairs of the country, shall be controlled by one man, who, in his turn, will be subservient to the Treasurer of the clay.
– The honorable member was once a member of the Labour party and he believed in this policy.
– The Minister, as usual, ie. quite wrong. I can only state the facts of the case. If the Minister for Information has insufficient mental capacity to comprehend them, I am sorry for him. What is’ proposed is, in effect, that oneman shall control all the activities of our banking system including those of the Central Bank, the Rural Credits Department, the Mortgage Bank Department, the Note Issue, the Industrial Finance Department, the Housing Loans business and the Commonwealth Savings Bank. That is far too great a power to be placed in the hands of one man. Nowhere in th»: world is one individual entrusted with such enormous responsibilities.
The proposal to abolish the reserve of 25 per cent, security against the note issue is alarming, and is a complete departure from the recommendations of the royal commission. That body recommended that the note issue should be limited by law to a fixed maximum of “for example, £60,000,000”. When the Menzies Government was in office the note issue stood at £48,000,000, but to-day it totals between £130,000,000 and £190.000,000, which is £120,000,000 or £130,000,000 in excess of the figure mentioned by the commission. In the circumstances, is it any wonder that the Government desires to abolish the reserve? If this proposal is agreed to, it can easily be imagined that when the extremists who have captured the Labour party and the Government demand the carrying out of some pet scheme and the Treasurer says, “ I am sorry, gentlemen, but there is no money available for the purpose the extremists will at once reply, “ Why don’t you print somenotes, then? You have the authority to do so “. Bo. honorable members not. visualize the Minister for Home Security (Mr. Lazzarini), working overtime on the printing press turning out. notes like sausages from a machine? We must take cognizance of the fact that every note which is printed without adequate backing reduces thevalue of the notes already in circulation, and thereby seriously depreciates the currency. The adoption of that policy would amount to pure and unadulterated inflation. The Government has declared that it desires to prevent inflation, but it is strange reasoning to assert that the best way to prevent inflation is to remove the safeguards. It would be just as reasonable to say that the best way to prevent a vehicle from rollingdownhill would be to release its brakes.
Wherever inflation has been tried in other countries it has had disastrous results. It is easy enough to print notes but it is extremely difficult to cope with the ruinous effect of such a procedure. Inflation has been tried in Germany,. France, Russia, Austria, Belgium, Italy, Argentina and other countries, and in every instance it has resulted in chaos, confusion and disaster to all sections of the community. There is. no reason to suppose that the policy would have any other effects if applied in this country. The poor and middle classes always suffer most when inflation occurs. Inflation has ruined the middle classes of every country where the experiment has been tried. There should be no need for me to deal in any detail, with the. results of the orgy of inflation that occurred in Germany in the years following the last war. I merely observe that whereas normally the German mark was worth between10d. and1s. in English currency, 50,000,000 German marks were worth only 6d. in English currency at the zenith of Germany’s inflationary period. Very great fluctuations occurred during that period; one week themark stood at 5,000 to the English £1, but six or seven weeks later, owing to continued inflation,, 38,000,000,000 marks were reckoned to be the equivalent, to the English £1. It is, ofcourse, almost impossible for us to comprehend such colossal figures. A situation was reached in Germany when the people were paying a million marks to purchase a postagestamp. In all countries where inflation has been tried as a remedy for economic, ills the nation concerned has been obliged, sooner or later, to cut its. losses and return, to a sound and stable currency, but. while the experiment was; in progress the peoplesuffered in varying degrees from hunger, destitution, strife, and the complete breakdown of their social andliving standards. I have read in this House previously a letter written by Dr. Harris, of Sydney, who was in Germany during its period’ of most unrestrained inflation!. As the letter is pertinent to the subject under discussion,, I shall read it again. It is as follows: -
I have neverseen such miseryin my life as I saw in Germany during the period of currency inflation. I was in Germany in 1921 when currency inflation was at its zenith. Once one got away from the (quarters where foreigners, who hadmoney to spend, congregated, conditions were appalling.. Affairs were in a. chaotic state, and one scarcely knew what would happen next. Uncertainty andinstability held undisputed sway, and the mark fluctuated to the most extraordinary degree-. One day a 50,000,000 mark note mightbe worth £1, while the next day its value would not exceed sixpence. Amidst all this contusion it was the working and middle classes which fared worst. When, I arrived in Germany the mark stood at 5,000 to £1, while six or eight weeks later it stood at 38,000.000,000 to £1.
Wage-earners suffered great hardships owing to the inflation. Those on monthly salariesfared even worse than those who drew their salaries weekly. Salaries were reviewed each week or month. A man engaged at a. monthly salary of £50 might find at the end of the month, when he drew his money it was not worth more than1s. A. cabinet-maker or piano-polisher engaged at a wage of 200,000 marks a. week would probably find that when he received his wages they were not sufficient to buy½ lb. butter. Nobody knew what the price of an article would be from one day to another. The man who had something to sell could protect himself to some extent by raising the price of the article in accordance with the slump in the value of the mark, but the wage-earner had to wait for his wages, and when he received them found himself a week behind the price movement.
I saw bread queues in Berlin three miles long, and then three-quarters of a, mile of the queue, after waiting twelve hours, would have to go without, as there was no more brea’d. Butter and sugar were unprocurable. Bus fares were 5,000,000 marks or more a section. After my experience in Germany 1 do not want to see currency inflation here.
Rent-fixing was tried by the government. A tenant desired a few minor bath-room repairs. The landlord refused to have them done. Tile tenant reported the matter to the Government, who ordered the landlord to have them carried out. The repairs cost the landlord the rentals of a terrace of houses for live years. The postage stamp used by the landlord in replying to the Government, cost the rental of one house for eighteen months.
The first week I was in Berlin it was a veritable nightmare. I did not know what was going to happen next - whether I was going to get my dinner free, or what it was going to cost; The man working for a wage “ got it in the neck “ all the time. He had nothing to eat, nothing to wear, and could not afford to go anywhere. I have seen working men, not unemployed, but men in constant work, going round the garbage tins at the rear of the hotels picking out food to eat. Never have 1 seen so many beggars. They were to be seen in every street. The idea of currency inflation was to inflate only a little, yet this is the extent to which it went once it started. It would mean a terrible plight for Australia if currency inflation were adopted.
Every country that has adopted the policy of inflation has done exactly the same as many honorable members opposite probably would suggest. At first, inflation is applied only to a small degree, but the practice grows at such a rate that eventually it becomes unmanageable. We must adopt the slogan “Hands off the people’s savings ! “ I do not suggest that the Government proposes to confiscate the people’s savings; but the result of the depreciation of the currency will have the same effect, because it will reduce the value of £1 to 2s. or 3s. After all, the purchasing power is what matters. If prices rise so greatly that £1 is needed to purchase what one could previously purchase for 5s., one is so much the worse off. I commend the admirable and lofty sentiments expressed by the right honorable member for Yarra (Mr. Scullin) when, as Prime Minister of this country, he definitely and strenuously opposed inflation that had been suggested by his own party. This is what he said -
To create credit for £20,000,000 for loan work is unsound, and I expect the banks to refuse to do so. Such a proposal means permanent inflation which could not be checked as is implied and would demand further inflation. All this talk about creating credit and inflation is most damaging. Since inflation was suggested efforts are being made by men in England to withdraw their money from Australia as they would lose by payment in the depreciated currency. Depreciation in currency would decrease values of savings banks deposits, property would increase in price, there would be a rush to sell bonds for investment in property mid financial panic mar result.
The use of bank credit must gradually lower the value of money, raise prices, and affect the poorer section of the community much more severely than those in better circumstances. Mr. Theodore, an ex-Premier of Queensland and an exCommonwealth Treasurer, while occupying the former office, deprecated talk about inflation. This is what he said -
Australia should make every effort to maintain a sound money basis. The world has many salutary lessons of confusion caused by unstable money. Trade is paralysed, commodity prices soar sky high, wage standards are lost and national bankruptcy ensues. It is a misconception to think that by adding paper to currency any additional wealth is created. To merely pay higher wages in paper achieves only disappointment, as the purchasing power of paper money will be less than the purchasing power of gold by the amount which corresponds to the extent of the inflation. By inflating the currency we get into a vicious circle. Once the issue of paper exceeds the currency requirements of the community the value of money is depreciated, and commodity prices commence to soar. None suffers more than the workers because their wages are paid on the assumption that commodity prices are in gold and not inflated paper prices. Wages are always less than they should bc in countries that practise inflation.
Surely I have said enough to demonstrate the disastrous effects which follow the adoption of a policy of inflation! Even, the Government itself, in its prepared pamphlet urging the people to invest in the recent Third Victory Loan, said -
Inflation simply means that the person with the most money and the most time to wait in shops would get the lion’s share of available supplies. It makes the strong stronger and the weak weaker.
Yet the Government is taking power to do the very thing that would be so dangerous ! Another serious result of the adoption of inflation would be the serious reduction of the value of the gratuity of ex-service personnel, the insurance policies and bank savings of the workers, arid all investments. Why ask for power to inflate the currency if that is not the intention of the Government? Not in any circumstances should the safeguard against such a course be removed. The Government has no mandate from the people to introduce this legislation. It was never placed before the people. Indeed, the Prime Minister (Mr. Curtin) and others said that the Government would not introduce legislation of this description, its only concern being to use the utmost strength to defeat Japan. The people at the recent referendum gave a very clear indication that they do not want political control of banking or of any other institution. Why, then, is the Government breaking the definite promise that it made? The only conclusion to which I can come is that the extremists have captured control of the Labour caucus. Caucus controls the” Cabinet and in turn is controlled by outside, irresponsible influences. Government supporters must do as they are told. Only recently we had the shameful spectacle of the Government going cap in hand to an outside authority, seeking permission to introduce the Defence (Citizen Military Forces) Bill and to give a measure of preference to ex-service personnel, in which matter the compromise was reached that any preference granted should operate for only seven years. It is for outside bodies to give orders and for government supporters to obey them. A Sydney newspaper published this statement under the heading “A.L.P. Dictates to Caucus”-
Hie State Executive of the Australian Labour party has taken action to prevent motions from Labour leagues being discussed by the State Parliamentary Labour party without the permission of the executive.
The edict of an outside organization -went forth and members of the Parliamentary Labour party of New South Wales were unable to discuss certain matters “without its authority. The honorable member for Kennedy (Mr. Riordan) said on the 27th May, 1942-
Ever since this Government (Labour) has been in office I have rendered to it every possible support, and many times I have voted as a majority of the party caucus has decided, but against my personal convictions. However, on this occasion the principles involved are such as to force me, for the first time since I entered this Parliament, to oppose a measure submitted by a Labour government.
Notwithstanding that outburst, the honorable member was disciplined by caucus and voted against his personal convictions. On the 30th April, 1942, the honorable member for Reid (Mr. Morgan) said -
I do not agree in principle with this regulation which is repugnant to mc, and opposed to what I believe to be the fundamental principles of democracy for which we are fighting … I envy the honorable member for Bourke because on this occasion he can not only speak, but also vote as he honestly thinks proper … I am convinced that there are other honorable members on this side of the House who feel on this matter as I do: but as pledged supporters of the Labour Government, they regard it as their duty to vote for such measures as the Government introduces. As the Americans say. “My country right or wrong”; on this occasion it is “ My government right or wrong “.
It is interesting to note that the official Labour 01:gan in Sydney, the Standard, said in February of last year -
At a recent Federal Labour conference it was resolved that a nation-wide campaign for socialism be started immediately.
Is that the reason why the Prime Minister and the Government are breaking their promise - because they have received an edict from the Labour conference that socialization is to be placed in the forefront of the legislative programme? Has that instruction by an outside body caused the Prime Minister to break a solemn pledge? It is apparent that the Government, desires to have political control of banking as the first step in its socialization programme. On the eve of the last elections the Prime Minister said -
The Government considers itself bound fo> the next three years by the programme outlined in the policy speech.
I have examined that speech, but it contains no reference to radical changes in banking legislation nor to the implementation of a socialist policy. The people of this country are sick and tired of being “ booted “ around by arrogant officials. Their whole lives are regulated. Men are restricted, and man-powered, and crushed by taxes, as well as threatened by socialism. We must endeavour to retain the liberties which we enjoyed before the war, and which have been handed down to us from time immemorial.
.- It is incumbent upon honorable members to consider the issues which these banking bills involve with a deep sense of responsibility to the people. The honorable member for “Wilmot (Mr. Guy) referred to the period when a, proposal by the Scullin Government to raise £18,000,000 was rejected by the Senate. He told us that when that Government went, to the country it was defeated, but he did not remind us of the tragic effect which the rejection of that measure and the defeat of that Government had on the people. He did not say that during that period 800,000 persons were walking the streets in search of employment. The honorable member read an article about, events in Germany during a period of currency inflation, when there were bread queues three miles long, but he refrained from mentioning the fact that bread queues were seen also in Australia. Soup kitchens were provided in that period, and children from various public schools throughout the Commonwealth queued up at midday to get a plate of soup to sustain them. They also formed queues in order to obtain left-off clothing, which they needed to provide a little warmth for them during the winter months.
– The Lyons Government rectified all that.
– It did not. The honorable member should not tell us what happened in Germany and other countries overseas during the depression, in view of the fact that similar conditions prevailed in Australia during the life, not of a Labour government, but of a Ministry formed by the present Opposition.
For many years, the manner in which the privately owned banking institutions have manipulated the finances of the Commonwealth to suit their own dubious ends to the detriment of the mass of the people has been publicly denounced by an ever increasing number of people.
The large quantity of critical literature directed against these institutions grows almost daily, and must be regarded as prima facie evidence of public disquiet at the results of their manipula tions of the currency and credit structure. Airily waving aside these strictures as of no consequence, as in the past, no longer suffices. Moreover, so much of this criticism emanates from disinterested sources that it must be heeded. This cannot be said on behalf of the counterpropaganda indulged in by the banking institutions and their chosen mouthpieces, since that propaganda is to a large degree inspired by interested motives. The full bench of the ‘Commonwealth Conciliation and Arbitration Court in a written judgment of recent date delivered itself of a comment on the private control of credit in these words -
Under the world’s banking systems it has become an instrument for controlling the future production of wealth. Whether this control is for ever to be left in the hands of profit-making institutions has become a question which has been agitating the minds of thinking mcn in all parts of the world. Many eminent economists and statesmen to-day support the idea that the control of money should be a State function rather than a field for dividend making.
It cannot be suggested that the criticism emanates from interested sources, and it certainly does not com-3 from any group of “ currency cranks “. The Right Honorable Reginald McKenna, of the Midland Bank, in England, has commented as follows : -
The English people will not like to be told that the banks, by their use of the deposit principle, can create credit and destroy money.
Again that was a statement so obviously disinterested that it must bs examined with great care before being discarded as worthless.
Without multiplying like opinions in a variety of forms which could be advanced, I shall content myself by adding that from whatever angle the critics of the privately owned banks consider the problem, they all see finally the same thing. They realize that these institutions have, by their concentration of financial power into their own hands, undermined even the power of governments; indeed, in effect, they have become the government, to all intents and purposes. War-dime regulations have curbed and reduced the power of these institutions to such popular advantage that the present Government intends to prevent them from regaining it with the return of peace. The core of the problem which these bills seeks to solve is to be found in the answers given to the following questions: Is it the duty of the Commonwealth Government to accept responsibility for the economic condition of the nation at large, or is the Government to stand aside and allow private enterprise to perform this task through the free play of individual cupidities? Honorable members opposite who oppose the bills, however much they may qualify their attitude, are forced in the last resort to support an affirmative reply to the second question, whilst honorable members supporting the measures favour an affirmative answer to the first.
This blind faith in the free play of individual cupidities, or, in plain words, unrestrained greed, turns out to be in fact an admission on the part of honorable members who champion private enterprise that they have no policy at all on economic matters, since they deny, in effect, that .the duty of the Government is to have an economic policy. It- may be said that opposition to these bills does not involve such a denial, that financial policy is only one aspect, or one part, of the economic framework of society, and. that to leave the control of finance and credit in the hands of private financial houses does not preclude the adoption of other measures at other times which seek to impose control over, or to secure an expansion or development of, other aspects or parts of the economic framework of society. In short, they oppose the bill before us to-day, but may support another measure to-morrow which aims ito secure to the people of Australia increased control over their economic destiny.
I have listened to the arguments of honorable members opposite most carefully, and it seems to me that I have not done violence to their views. Unfortunately, when to-morrow comes, we shall still find, them in opposition to the next measure, and so on with the next and the next. No proposal that puts a check on private greed is to their liking, except those that strike at greed when exhibited by working people. But, in the case of the present bills, this attitude cannot bc maintained with any degree of logic, for of all the economic pulls, pressures and powers possessed by various groups within the Australian economic structure, the key power of the whole edifice is financial power. It has been well said that “ economic policy determines political policy, and since financial policy determines economic policy, the control of national policy rests with those who control financial policy”.
I do not desire to refer in detail to many clauses of the bills, but I draw attention to certain major results that will ensue from the passage of this legislation. It may be said that the ultimate effect of the Banking Bill falls far short of complete nationalization. The bill deals with the regulation of the banking system, and not with its nationalization. It accepts the continuation of privatelyowned banking institutions as part of the general structure of the banking system. It is of interest to point out that the bill itself has automatically invalidated the propaganda being circulated by interested parties against the measure. That propaganda was based, and is still based, on inaccurate promises, a fact that the general public has not been slow to appreciate. In my own .State strenuous efforts have been made to arouse public opinion against the measure. However, notwithstanding these efforts, the result has been nugatory. Except for some resolutions passed by sparsely attended meetings in country centres, resolutions which were never debated at those meetings, it may be said that the result was extremely disappointing to the sponsors. The people generally are at one with the Government in its efforts to bring these institutions under more rigid control. Indeed, the chief criticism of the bill, comes from a wide section of the people who believe that this measure does not go far enough. It is held that the private banks have long since forfeited their claim to consideration by the people of this country, because of their past ineptitude and the use of the national credit in their own interest without regard to the interests of the nation.
That view is very widely held, yet the Government has, in effect, been generous with the private trading banks in the framing of the present measure. It has not sought to do more than insist on the fulfilment by the banks of certain clearly defined conditions in the conduct of their business. One of those conditions, and an important one, is to the effect that the banks shall follow a lending policy in the post-war years in conformity with the real financial and economic needs of the nation. Surely that is not too much to ask? After all, the process of reconstruction in industry generally that must be envisaged immediately the actual hostilities cease is one that cannot be left to the haphazard operation of the desire for quick profits by certain fortunately placed groups. That is the direction in which chaos lies. It is obvious to any thoughtful person that the rebuilding process must take into account, and largely he determined by, long-term results rather than by the impulses of racketeering elements in the community. Unaided, the private banks are unable to pursue, nor are they equipped to pursue, such long-term policies. The functions they perform, however poorly they may have performed them, depend on the maintenance of an extreme liquidity particularly applied to the type of security held against advances. This basic necessity entirely unfits the trading banks for the task involved in financing post-war reconstruction, much of which will, of necessity, require the use of loan money by industrial, fanning and pastoral concerns for long terms and on conditions within the financial capacity of the industries involved. This is quite apart from the large sums that will be required on long terms for housing purposes.
No one who is acquainted with the financial problems that post-war conditions will present, dare risk entering that period without providing, to the best of his ability, the means for their solution. In this regard, the present bill gives the very minimum of power to the Commonwealth. Bank commensurate with the performance of the tasks that it will have to perform.
So, also, with the provisions regarding the foreign exchange pool. Here, again, we shall be faced with a post-war situation which, for some years, will be so fluid that the responsibility must be placed on the shoulders of the Commonwealth Bank as the representative of the Government in such matters of mobilizing our foreign exchange resources in order to ensure that the importation of necessary goods shall take precedence over the importation of luxury goods, that our national commitments are provided for, and that credits due to this country by foreign peoples or governments are collected. No one at this date can forsee with any degree of accuracy what the foreign exchange position is likely to be during the first ten years after the cessation of hostilities. No one knows what the French franc is really worth to-day, and certainly cannot guess at its value five years hence. Does any one know to-day what form of currency Germany, Yugoslavia, Norway, Italy, or any other European country devastated by war, is likely to adopt in. the post-war period ? Yet it is with these uncertainties overshadowing the conduct of any large scale resumption of international trading that opponents of the present measures would leave in the hands of private banks the power to fish in troubled financial waters, using the national produce of Australia as the bait for their hooks. I say quite definitely that if any fishing in this muddy pool is to be forced upon us - and I am afraid it will be - it should not be left for a group of private banks to manipulate everything in their own interest, leaving the Australian people to carry the losses.
Perhaps the best way in which to indicate the effects of these measures is to remind the House of the results that, must follow should the proposed controls not be extended to cover the post-war period. The Treasurer has referred to the £230,000,000 deposits unmobilized in the special accounts of the private hanks with the Commonwealth Bank, and has stressed the danger of an uncontrolled secondary inflation should these huge sums be placed freely at the disposal of the private trading banks. That such a danger exists is probable, although, if the policy of these same banks during the period from 1918 to 19’29 is to be regarded as a guide to their future policy, I am more concerned with the possibility of deflation than of inflation. Like the Bourbons, the private bankers “forget nothing and leant nothing”. Their policy will aim again at the same result that they achieved before. Their methods may differ, but their objective will be the same,and’ that objective is ito reimpose their stranglehold on the productive resources of the Commonwealth.
Remembering this, let us see how they are likely to proceed to achieve their objective. They will first turn their attention to Government bonds, war savings certificates, and the like, held by small investors. During this war, private banks have not been permitted to buy large blocks of war loan bonds or other publicsecurities. Should the National Security Regulations lapse, and the banks be again free to buy up these securities, it is easy to see the method they would employ. In the absence of controls, there would be in the immediate post-war period such acute disorganization of industry and trade that many holders of small parcels of securities would be forced to realize on them at almost any price in order to secure ready money. Added pressure by the private banks through outright deflation, or a sharp rise of interest rates on overdrafts, would force holders to sell with ever-increasing urgency, and funds available in the special accounts of the banks could be used to make the purchases. Members will recall the disastrous fall in values of Commonwealth securities in 1930-31 when they were quoted on the Stock Exchanges at around SO per cent, of their real value, and sales at lower rates “ on the kerb “ were the order of the day. “Who were “ buffers “ then ? We know the answer. What was the result? The small holders were deliberately fleeced of upwards of 20 per cent, of their savings. I suggest that the same policy would be applied again. Fresh demands being made by the financial institutions upon the Government to cut social services, and under threat- of national bankruptcy - whatever that may mean - Governments would be forced to concede more and more to these money lords at the expense of the people.
I shall be told that this view does not coincide with that advanced by the Treasurer. There is no contradiction. It is probable that a deliberate inflationary policy would be followed for a few years, with a land boom, building boom, and the rest, all leading to a reinstitution of the liens held by the banks on the real assets of the community. But once the net had been spread, and the victims safely in the toils, there would follow the delicate process of “ deflation with the consequences I have outlined. It is this disastrous cycle of events that the present hills seek to prevent. Therefore, it is proposed to retain the existing controls of the private banks, controls that have operated during the war with considerable success, and prevented violent changes of monetary and credit policy by interested groups within the Commonwealth.
The Treasurer has rightly said that the Government must accept responsibility for the economic condition of the nation, and no government could discharge that responsibility unless it were equipped with the necessary financial sovereignty to make its policy effective. In the immediate post-war period, the nation will be faced with many grave problems of reconstruction, not the least of which will be the enormous task of placing approximately a million people in peaceful avocations as they are discharged from the services or from purely
The proposition has been advanced that it will probably require as great an expenditure on capital goods to reequip industry with the means to provide peaceful employment for these people as it took to fit them for war purposes. So staggering was this estimate that at first I considered it far too high. Yet, the more the subject is examined, the greater the probability is that the estimate given was perhaps conservative. This much is clear: The people of Australia will not accept readily any semblance of a return to the depressed conditions that prevailed immediately prior to the outbreak of war. Moreover, tempers are likely to be volatile and easily aroused.
If then, Australian policy is to be determined upon the general basis of “full employment”, a financial responsibility must be thrown upon this Parliament that could not he accepted unless the Government has ample power and unchallenged authority to control the banking, currency and credit facilities of the nation. Moreover, I do not believe that these problems can be met at all without some such control as envisaged in these banking bills. The pre-war depression years demonstrated beyond all doubt the inability of the private banks to handle the currency and credit facilities in such a way as to ‘provide full employment. They failed miserably, and the effects of that failure upon the people of Australia were disastrous. “We dare not, as responsible representatives of the Australian people, trust them again. For that reason alone, these bills should be passed. But the major reason transcends a mere lack of faith in the private banks. In modern communities the banking system is, in effect, a financial dynamo. Its function should be to distribute financial energy throughout the community so that the economic system shall run smoothly and be fully employed. The aim should be to enable industry to throw off a continually expanding volume of goods - not so much with a. view to finding export markets in which to dump them - but in order to permit of a general improvement of living standards. An increase of leisure in which to enjoy that improvement would be a natural corollary.
The attraction to this country of any considerable number of people from overseas is intimately connected with the establishment of a higher living standard, coupled with definite social security. Any instability that is allowed to develop would be immediately reflected in a decline of the numbers of people who might look to this country as a place in which to establish themselves.
The aim of the private banks is not to democratize leisure and the necessaries of life, but to confirm and strengthen a plutocracy. “When I support these bills I have in mind the duty of the Government to see that, in the post-war period, the nation shall begin with an even chance of achieving a development in the art of living which will not only recompense this generation for its present tribulations, but also make the dark days of the economic depression appear as remote as the Middle Ages.
Before concluding, I wish to refer to a persistent propaganda, based on deliberate misrepresentation, that has been sponsored by the private banks and their spokesmen. I refer to the charge that this Government sought control over the accounts of the customers of private banks. Much harm has been done by this propaganda. The bill has given the lie direct to this propaganda, for while it is within the province of the Commonwealth Bank to ensure that advances shall be made by private banks to their customers for purposes consistent with current economic and financial needs, yet power is specifically denied to the Commonwealth Bank to enable it to direct that a bank shall or shall not make an advance to a particular customer. The honorable member for “Wilmot repeated this charge, but clause 27 3a of the bill effectively disposes of propaganda of that kind. I recommend all honorable members who may be tempted to follow the lead of the honorable member for “Wilmot to read that clause.
It is incumbent on every member of this Parliament to support the bill. Some honorable members opposite have -tared that the Government had no “mandate from the people to amend the Commonwealth Bank Act. I do not agree with that. During the election campaign, I frequently announced from the public platform that if I were returned to Parliament, I would regard it as my duty to do everything in my power to bring about a reform of our banking system, and to make the Commonwealth Bank a people’s bank that would operate in the way that was intended when the hank was first instituted.
– There can be only one mandate, that given by the people in response to the invitation of the Leader of the Labour party.
– Our leader never said that the Commonwealth Bank would not be reorganized. Ever since the Fisher Government went out of office, the Labour party has said that, when it was returned with full power to govern, financial reforms would be instituted. “Without such reforms it would bc impossible to rehabilitate in civil life all those men and women now in the services or employed in war industries. The Government must assume control of the finances of the country. In one generation we have been through two wars. It will be remembered that just before the last war seasons were bad and there were some lean years. Money could not then be obtained to finance various useful projects which would have provided work, but during the period from 1914 to 1918, when the country was at war, millions of pounds was raised for war purposes. There was no difficulty about finance then. For a time after their return from the war the men who had been told that Australia would be “ a place fit for heroes to live in “ got along fairly well because they had their deferred pay and their savings with which to maintain themselves and their families, but when those funds were expended they suffered greatly during the depression. Once again money was said to be unobtainable; there were no millions of pounds with which to provide the needs of the heroes who had fought for their country.
– A Labour government was in power in 1931-32.
– That is not so; the Scullin Government, had a majority in this House, but not in the Senate. Honorable members would do well to remember that when the Scullin Government asked for £18,000,000 in order to provide food, clothing and other requirements of the men to whom the country should have been everlastingly grateful, the money was not forthcoming because the Senate would not pass the necessary legislation. “When war broke out again in 1939, men who were asked to fight were told that they would be well treated on their return, but now, when the Government brings forward legislation to amend the Commonwealth Bank Act in order to make possible the fulfilment of that promise, it is charged with attempting to exercise political control over the financial institutions of the country. I remind honorable members opposite that the proposals of the Government provide for the Commonwealth Bank being placed under the control of a governor, as it was during the Fisher Administration. All the talk of control being exercised by the Treasurer of the day is so much political propaganda. This attempt to provide a measure of security for those who have suffered in the war raises a howl by honorable members opposite, whose desire is to protect, not the men who fought for their country, but those who would crush them as servicemen who returned from the previous war were crushed. Fortunately, however, on this occasion the Government has the numbers in both Houses, and so those bills will pass, despite the opposition to them. Do honorable members opposite suggest that I, the member for Adelaide, will tell the Governor of the Commonwealth Bank what he has to do ? If so, they are displaying great ignorance, and underestimating the intelligence of Australian electors. This measure and the Banking Bill will be on the statutebook before the next elections, and I confidently predict that their presence there will not prevent the Government from being returned with a majority as big as it now has when the next appeal to the electors is made.
– Before I discuss particular aspects of this legislation, I desire to make some general observations as to the motives underlying it. This bill is designed either to perpetuate in times of peace the controls of finance which have been found necessary during the war, or it is the first step towards the complete socialization of finance. It is important to determine which is the correct interpretation, because some provisions of the bill might be tolerated if they were the ultimate objective of the Government, whereas they could not be accepted if they were stepping-stones towards the complete nationalization of banking - if the Government were attempting by subtle means to reach an objective which it has not the courage to seek by straight-out methods at this stage. Even if this bill be merely designed to continue certain war-time controls after the end of the war, that of itself would constitute a breach of an undertaking given by the Prime Minister (Mr. Curtin) to the Parliament and the people of Australia. The right honorable gentleman has repeatedly stated that restrictions which, although they irked the people, have been borne patiently because of a belief that they were necessary in war-time, would be removed as soon as hostilities ceased. A couple of weeks ago the Minister for Labour and National Service (Mr. Holloway) told a Labour conference in Melbourne that war-time restrictions in relation to man-power would be terminated, not when the National Security Act would automatically cease to operate six months after the war, but before that time. He said that the Government would not take advantage of the six months’ grace provided for in the act. Arc we to understand that those war-time controls which irk the supporters of the Govern ment are to he dropped immediately the war ends, whilst other restrictions which may not irk that section of the community but are distasteful to other sections are to be perpetuated in legislation? In determining which of those two objectives is the one sought by the Government, we have not to depend upon the pledge to which every honorable member opposite subscribed before he was endorsed as a candidate at the last election - a pledge which binds members of the Labour party to work for the complete nationalization of finance. Nor have we to depend on such statements as the Minister for Transport (Mr. Ward) made last night, when he expressed disappointment that the measure of control which this legislation would give did not reach the standard of complete nationalization of finance which he and the Minister for Information (Mr. Calwell) have not hesitated to urge time after time. We have the testimony of the Acting Prime Minister (Mr. Chifley), who is also Treasurer of the Commonwealth, to help us to determine vhethcr this legislation is merely a continuance of certain existing controls, or is a first step towards the complete nationalization of banking. The Acting Prime Minister was a member of the Royal Commission on Monetary and Banking Systems which was set up some years ago. In a minority report, to which lie alone subscribed, he said -
In the opinion of the other members of the commission, the achievement of the objectives of the monetary and banking system outlined in the report is most likely to result “in the present circumstances of Australia”, from a system in which there is a governmentowned central bank, regulating the volume of credit and currency, and “ as an integral part of .the system “, privately-owned banks, which distribute that volume, and which may be advised generally by the central bank as to the direction in which the distribution should be made.
With this opinion I am unable to agree. The evidence given before the commission, and .personal observation and -experience., lead me to believe that there is no possibility of the objectives being readied, or of any “wellordered progress being made in the community, under a .system in which there are privatelyowned trading banks which have been established for the purposes of .making profit.
In my opinion, the best service to the community can be given only by a banking system from which the profit -motive is absent, and thus, in practice, only by a system entirely under national control.
In .the light of that statement by the present Treasurer we are justified in concluding that this legislation has the more sinister objective. Indeed, the bill itself contains many evidences that it is designed to destroy private enterprise, not courageously, but in a way which will enable the trading banks ultimately to be acquired by’ the Commonwealth Bank -under conditions which will not be favorable to the banks. The Government would have acted more courageously had it introduced legislation in complete ‘con* formity with the pledge by which all honorable members opposite are bound. In connexion with this bill I find myself^ somewhat surprisingly I admit, of the same opinion as the Minister for Transport. It is not often that we agree, and the very fact that we seem to agree on this occasion raises doubts in my mind.
– This hill is in complete conformity with the Labour party’s platform.
– Last night the honorable member for Perth (Mr. Burke) attempted to justify the elimination of private trading banks on the ground that profits made by the Commonwealth Bank go into Clon solid a ted Revenue and thus ease the burden on the taxpayers of Australia. Surely the honorable member is not unmindful of the fact that the Commonwealth Bank does not pay income tax, whereas all other private financial institutions are heavily mulct in order to provide their share of the revenues required by the Government. The Government must not be astonished if the people assume that this legislation is a first step towards complete nationalization. It is not my purpose to plead the cause of the private banks. Indeed, I do not think that they would expect me to hold a brief for them, although I have a great deal of sympathy with them, inasmuch as I have suffered from legislation similar to this - legislation directed against the competitors of national undertakings. I do not claim that the private trading banks have been impeccable, that they have not made grievous mistakes, or that they have not been unduly harsh on some people who have required temporary financial accommodation-, but a lot of nonsense has been spoken by soap-box orators about exploitation of the people by these institutions. We have been told time and rime again that this legislation is largely based on the recommendations of the Royal Commission on Monetary and Banking Systems. That commission investigated the profits of trading banks, and recommended that a reasonable rate of profit on shareholders’ funds was 5 per cent. Official statistics, not prepared by the banks, show that in 1939 the return on shareholders’ capital was, not 5 per cent., but 4.2 per cent. In 1943, it had declined to 3.6 per cent. So statements that trading banks have watered their stocks and are exploiting the public are nonsense. Showing the lengths to which these propagandists will go, a Labour senator, addressing the Feminist Club in Sydney a couple of weeks ago, after having made some of the statements that I have enumerated, said that the small dividend distributed to the shareholders of the Bank ofNew South Wales was evidence of inefficient management.I do not know whether his suggestion was that the affairs of the bank would be better conducted if its control were transferred from Sir Alfred Davidson to Mr. “ Montagu “ Lazzarini. The taxpayers of Australia have memories long enough to enable them to apprehend that the fate of other State enterprises like State brickyards, State timberyards, State butcher shops and State collieries like Lithgow and Coalcliff, to which the Acting Prime Minister (Mr. Chifley) referred as the “ sad and sorry story of Lithgow and Coalcliff “, will be the fate of this government monopoly which will play “ ducks and drakes” with the financial structure of Australia. One of the features of the Commonwealth Bank Bill is the elimination of the Commonwealth Bank
Board, which honorable gentlemen opposite have praised as a return to what they describe as the ideal conditions under which the bank was instituted whena governor was in control. They seem to forget that then the Commonwealth Bank was a small entity. It grew quickly as the result of responsibilities thrown upon it duringthe Great War and again as the result of responsibilities given it by the Bruce-Page Government, which translated it into something of the nature of a central bank with control of the note issue and foreign exchange and those other activities undertaken by a central bank. To-day, the bank is a different structure quantitatively from the one which was administered by Sir Denison Miller. This legislation proposes that the bank, which is really a central bank, shall be a trading bank, and that the trading section, the Mortgage Department, the Rural Credits Department, the Industrial Advances Department, the Housing Department, and other departments shall he administered by one man. It is true that it is proposed to set up an advisory council. Presumably this is a concession to the plea that I am now making that the supervision of those various activities is toobig a job for any one man, however expert he may be. So it is proposed to set up an advisory council consisting of the Deputy Governor of the bank, two other subordinate members of the staff and two representatives of the Commonwealth Treasury.The council is to meet monthly under the presidency of the Governor, who will have no vote in its deliberations. I should have thought that, it would be unnecessary to ask the Deputy Governor and two members of the staff to meet the Governor monthly in order to tender him advice, and that that advice would have been available to him every hour, every day and every week without their needing to be placed on this puppet advisory council. Even if there were any virtue in the placing of all these powers and controls in a governor, properly chosen, with all the qualifications for the post, that virtue is destroyed by a subsequent clause. The honorable member for Adelaide (Mr. Chambers) rather decried the idea that the Commonwealth Bank
Bill vested in the political authority of the moment control over the Governor and the affairs of the bank. It becomes necessary, therefore, for me to remind him, and other honorable gentlemen with a similar misapprehension, that that, is so by referring to clauses8 and 9. which are relevant to this point. Clause 8 says - it, shallbe the duty of the Commonwealth Bank, within the limits of its powers, to pursue a monetary andbanking policy directed to the greatest advantage of the people of Australia., and to exercise its powers under this Act and the Banking Act 1945-
It would not be touch out of step with the opinion of the Opposition if it stayed at that, but. then the bill goes on in clause 9 to point out that if the opinion of the bank differs from the opinion of the Treasurer certain results will follow.
-Read the royal commission’s report on that point.
– I will read its report on other things, too. The relevant part of clause . 9 to which I now direct attention is sub-clause 3. which reads -
If the Treasurer and the Bank are unable to reach agreement, the Treasurer may inform the Bank that the Government accepts responsibility for the adoption by the Bank of a policy in accordance with the opinion of the Government–
Not the opinion of the bank - and will takesuch action (if any) within its powers as the Government considers to be necessary by reason of the adoption of that policy.
Sub-clause 4 provides that -
The Bank shall then give effect to that policy.
Honorable members have directed a good deal of attention to that provision, and I have noticed that the authorities that they have cited and their own authoritative statements are directed to claiming that in respect of matters of major national importance the voice of the people expressed through the Government should be supreme even over the Commonwealth Bank. But there is no limitation in this clause. It is competent for the Treasurer to direct the
Governor of the bank not only in respect of the mobilization of foreign exchange, the note issue, or any other major matter, but also to carry out even the most menial duty in accordance, not with his judgment, but the judgment of the Treasurer. It would be possible under that provision for the Government to penalize any person who dared to cross its path. We have seen commercial enterprises which have dared to challenge government regulations. They have exercised their right of appeal to the Privy Council. I refer, for instance, to the dried fruits case which resulted in the Privy Council declaring that certain legislation was ultravires section 92 of the Constitution. It. would be competent for the Government under this legislation to say. “ Very well, we have one more shot in our locker. We will direct the private banks through the Commonwealth Bank that no financial accommodation is to be found for distributors of dried fruits”. Thus it would be competent for the Government to upset the findings of even our highest tribunal. One other important aspect of this legislation - and the Minister for Works (Mr. Lazzarini) will not find much comfort in this part of the commission’s report, although, subtly, it has been said by some that even this clause has the benediction of the royal commission - is the clause relating to the removal of the security reserve against the note issue. It is true that the royal commission did advise a variation of the existing law which provides for a 25 per cent. reserve, hut it recommended another ceiling, an issue of about £60,000,000. The point is that it recognized that there should be a ceiling. This legislation recognizes no ceiling. It places power in the hands of the Treasurer so to direct the Governor of the bank that the note issue shall be inflated to unlimited dimensions. I ask the honorable gentleman whether he derives much comfort from the royal commission’s report in that regard. Other clauses of the Commonwealth Bank Bill provide for the setting up of an Industrial Finance Department. I notice that the Government has retained power under clause 94 to appoint by executive action the head of that branch. There may be some significance in that when, we think of some other appointments that the Government has made. The relevant clause reads -
The functions of the Industrial Finance Department shall be -
If is a most excellent clause, one in which most of us would concur, but I wonder what would have happened a few months ago if that provision had been law. A certain broadcasting stationwas for sale at Newcastle. I do not. intend to refer to all the unsavory earlier aspects of that. sale but, ultimately it was acquired on behalf of the Labour party. There was a little difficulty, because the Labour party apparently did not have sufficient money. So capitalists like the honorable member for Lang (Mr. Mulcahy) were brought in. Had this bill been law, it would not have been necessary for the Labour party to place itself at the tender mercies of capitalists like the honorablegentleman, because it would have been able to say to the Treasurer, “ There is a station up here which the party can acquire, but we want so many thousands of pounds, and we want you to direct the Commonwealth Bank to provide us with the necessary finance “, and the governor, whether he liked it or not, would have had no option but to obey. Speaking as a Methodist, I should have been pleased had that provision been in force a little earlier, because it would have obviated some of the nastiness associated with a transaction in which a certain Methodist organization in Adelaide figured. The Adelaide labour organization might have been enabled to obtain finance under this provision without assistance from the Methodists. Another provision, alleged to be new, is that under which the Commonwealth Bank will provide finance for housing. I know definitely that the Commonwealth Bank has been providing finance for houses to both private individuals and building societies to a very sub stantial degree. Therefore, the allotment of a- special division in this legislation to housing is just so much sweetness intended to impress the unwary. However, in respect of the amount of finance that can be made available for this purpose, there is not much difference between the authority to be given to the Commonwealth Bank and that which it already possesses. Advances in respect of housing are to be limited to 85 per cent. of the security, and the security will be valued by the bank’s officers. Some building societies have already been doing better than that, so that in respect, of housing this legislation is much on all fours with the unsatisfactory housing provisions of the Re-establishment and Employment Bill.
A perusal of the Banking Bill, which deals with banking generally, and the trading banks in particular, confirms all that I have said regarding the motive of both measures. The Government’s objective is first to weaken and subsequently to destroy completely the private t rading bank system. This objective is being pursued in many and devious ways. The Banking Bill provides that the assets of the trading banks shall be restricted to the level at which they stood at the outbreak of war. This will deny to private banks the incentive and opportunity to build up their organizations by developing the administrative efficiency that has been a. feature of the private banking system. This objective is accomplished by compelling the trading banks to hand over to the Commonwealth Bank very substantial sums of money. Such a provision might have been justified in war as the means of skimming off the surplus spending power in the community in order to avoid competition with the Government’s war effort ; but to suggest that this should be a permanent feature of our banking legislation is to break faith with not only the trading banks, which willingly co-operated with the Government in our war effort, but also the people of Australia, who placed implicit confidence in the assurances given by the Prime Minister himself. Not only is this huge sum. of money to be hypothecated permanently, but, in addition, that sum is to be implemented month by month by such an amount as would in ordinary circumstances increase the assets of the trading hanks. Their assets are to “ stay put” at their 1939 level. No doubt, when an election is not in the offing, the Government, should it be returned to office, will proceed to take the final step in its policy for complete nationalization of banking; and as the result of this provision it may be able to secure the trading banks’ assets on a very much cheaper basis. However, this is not the only provision which shows that the intention of the Government is as I have indicated. Provision is also made that the Commonwealth Bank, which means the Treasurer, shall be able to direct the trading banks to whom they may lend, money, and for what purposes and to what degree they shall finance any commercial activity. The trading banks are to be prevented from investing in any government, or quasi-government, security. They arc to be prevented from conducting any banking business for any government or municipality. They are to hand over all. their foreign funds on demand by the Treasurer through the governor of the bank. And they are to give a ball-to-ball description of their activities and financial standing to their competitor, the Commonwealth Bank. I have no objection to that section of the legislation which enables the Commonwealth Bank to enter into full competition with the private banks, but I object to the unfair competition which all these limitations upon the private banks and the power to be vested in the Commonwealth Bank involve. I do not believe that this measure will mislead the people. They will not fail to realize that it is in flagrant breach of the undertaking given by the Prime Minister and other Ministers, and that this is one way in which the Government seeks to get behind the definite decision of the people at the referendum held in August last.
.- The honorable member for Parramatta (Sir Frederick Stewart) has received this measure with mixed feelings. He has analysed both bills and expressed agreement with some of. their provisions. Therefore, I presume that we shall have qualified support for them from the honorable member.
– I shall vote for some of the provisions.
– I disagree entirely with the honorable member’s contention that this legislation is designed to mislead the people, and that it is a breach, of an undertaking given by the Government at the last general elections. Before dealing directly with the measures., I should like to retrace early financial history in this country. These measuresinvolve the problems of money, currency and banking. The currency used in Australia in the very early days waa mixed. It. included the English penny, shilling, and guinea, and Portuguese, Indian, -Chinese, Spanish and Dutch, coins. The first money in any quantity to arrive in Tasmania was imported from America, and consisted mostly of dollars, which, in 1830, were converted into- “ holey “or ring dollars. It is believed! that a prisoner of the Crown first showed how the value of the dollar could be increased by punching a piece out of it. The dollar at that time was valued at 4s. 2d.,- and after the punching process the ring or “ holey “ dollar was valued at 3s. 9d. and. the “dump” at ls. - a total of 4s. 9d., a clear gain of 7d. Paper currency, in the form of promissory notes, was as freely circulated in Tasmania in theearly twenties as it was in the mother colony of New South Wales, and some specimens are to he seen in the museums. Tasmania, however, can boast of an issue unknown in any of the other colonies. It was a leathern one, issued by E. F. Dease, of the Golden Fleece, Brisbanestreet, Launceston, and was in denominations of Id. and 4d. Only one of theseis now known to exist. When the discovery of. gold in Victoria in 1850 gave such a sudden impetus to trade the need of copper coin was very much felt. At that time the colony had only the largepennies of George III., George IV. and Queen Victoria, and the quantity proved quite inadequate to meet the requirements of the rapidly increasing trade. The result was the issue of a large amount of tradesmen’s tokens throughout the colonies. Drapers, grocers, ironmongers, hotel proprietors, and toll-gate keepers, all in fact, to whom small change was a necessity used them. Large quantities were manufactured to order in England at first, but afterwards most of them were made by Thomas Stokes, of Melbourne, and were creditably engraved and neatly finished. The Australian tokens were a source of considerable profit to the issuer. One token that circulated freely in the colonies boldly stated on its face that “ the Australian tokens are very profitable to export”. The issues, therefore, had threefold purposes - utility, profit and advertisement. So long as these tokens were issued bona fide to supplement the copper currency they were of immense benefit to the colonies generally, but when some less conscientious tradespeople began to make a business of issuing them with a view to obtaining the use of the money represented by the number in circulation, and when others repudiated theirs, the benefits of the system became gradually less apparent, and the “ Bronze Monkeys Act “ of 1875 made the issue of tokens illegal in Tasmania. Perhaps the most interesting token was a silver shilling issued in Hobart, in 1S23, by Macintosh and Degraves, sawmill proprietors. The reverse represented, a kangaroo surmounted by the name Tasmania, used thus 32 years before the name of the colony was officially changed from Van Piemen’s Land.
Then followed the ‘bank crashes in the early nineties which caused untold suffering and misery. The Leader of the Opposition (Mr. Menzies) told the House something of what the late Mr. Andrew Fisher said when the first Commonwealth Bank Bill was introduced in 1911; but he did not tell us what his own political predecessors had to say about that measure. He carefully avoided any reference to the views they expressed. Therefore, I propose to mention a few of the statements made at that time by the political predecessors of honorable members opposite. The present criticism of the Government’s hank proposals is similar to the criticism levelled against the establishment of the Commonwealth Bank in 1913. For example the Adelaide Register, of the 17th November. 1911, in a leading article, said - -
If a Commonwealth Bank ie not required, it will be an expensive encumbrance fraught with possibilities of serious mischief to Australia. The proposal to create the bank un- justly conveys an implied reflection upon thi” business capacities of Australians, because it is undeniable that the banking facilities in existence are excellent in character and ample in scope. In the circumstances, the unnecessary introduction of a powerful rival institution, unfairly backed by political support, would be calculated to damage public credit and produce confusion and bickering. In explaining the savings bank clauses in the bill, Mr. Fisher indicated that his party - in spite of iiic referendum decisions - cling to their ideal of bureaucratic concentration.
They evidently intend and hope that the Savings Banks, which aru doing such splendid service for the wage-earners throughout the Commonwealth, will eventually be swallowed up bv a Federal rival. On this question the Stale Governments, as well as the citizens affected, sought to make their voices heard. In all .States the Savings Banks sometimes render help to the local administrations by purchasing, as thu Treasurers need money, parcels of Government bonds. Obviously, if the savings of the people are to be diverted to Federal purposes, the State Government will be gravely handicapped. Their difficulties in floating loans will be increased, and subsequently higher rates of interest will be demanded. The Federal scheme may also lend to a material increase in the interest rates for accommodation on mortgages and other securities, and thus involve loss to the whole community. From the standpoint of international law a Commonwealth Bank is open to objection - by no means merely academic - on account of being indirectly a menace to peace. Regulations under The Hague Convention expressly enact that “private property cannot bc confiscated “. They safeguard the moneys of a private bank, and enable its credit to endure, even through a military disaster; but they clearly show that the resources of a State Bank might he entirely confiscated by « raiding expedition. A successful invader of Australia could also legally appropriate the millions of golden sovereigns held as a reserve against the Federal note issue.
How wide of the mark these critics were! The Commonwealth Bank was established, and has since disproved all the arguments used against it. During the last war and during this war, it has proved a bulwark to Australia. I come now to Sir Joseph Cook, whose utterances in connexion with the establishment of the Commonwealth Bank have been overlooked by the Leader of the Opposition. When the Commonwealth Bank Bill was being discussed in Parliament in 1911, Sir Joseph Cook, representing the conservative element, including banking interests, declared that so far as the great masses outside were concerned, the proposal for the establishment of the bank was another piece of dead sea fruit that the Government was offering to them. He went on to say -
Those who will benefit from the proposed bank will be the capitalists who arc engaged in trading concerns and as speculators.
He drew a picture of how the poor workman would suffer, and said -
The people ask for bread and the Labour party give thom bricks and banks and does nothing to increase their welfare.
Another staunch conservative, Dr. Carty Salmon, said that the Government’s proposal would lead- in a downward direction, because it would not give satisfaction to the people. Those subtle comments were for the purpose of misleading the people as are similar statements now being made regarding the present banking proposals. It is interesting also to look at some of the cartoons which were used a.s propaganda in those days. I have before me a cartoon which was published in the Melbourne Punch of the 7th December, 1912. It depicts King O’Malley and Andrew Fisher wearing masks, carrying revolvers, and hiding behind a tree. Beside them there is an empty bag. Coming along the road is a portly gentleman - much more portly even than I - -carrying a bag marked “Savings Bank, £60,000,000 Deposits”, and wearing a “bell-top” hat. The caption is headed “ The Grabbers “, and an explanation in parenthesis states that in the Banking Bill the Labour party proposes to take over State banks deposits ;i mounting to £60,000,000. Then there- is the following comment: -
Fisher - “My! What a haul we can get here, O’Malley. We must grab this, as we have spent all our last raid.”
The object of this subtle propaganda, of course, was to damage the proposal to establish the Commonwealth Bank. It is very similar in character to the propaganda that is being used to-day by members of the Opposition and by a large section of the Australian press.
Strenuous opposition was directed also against the legislation providing for a Commonwealth note issue. Mr. “W. Massy-Greene declared that the proposal would not be suited to Australian conditions and that it would not provide any increase of revenue. In both instances he was proved to be wrong. Criticizing this Government’s proposals, the Leader of the Opposition at that time said -
People’s money will not be worth taking home.
He predicted that the value of the Australian £1 might be 5s. or 7s. This is a faint echo of the absurd prophecy of 34 years ago, when Sir Joseph Cook referred to the Australian notes as “Fisher’s Flimsies “ and declared they would not be worth the paper on which they were printed. That opponents were wrong in their predictions of Labour’s proposals in 1910-1.1 has been proved by the service that both the Commonwealth Bank and the Commonwealth note issue has been to the nation. They are just as wrong to-day. Despite the predictions referred to, the note issue has made a. profit of £23,000,000 and the Commonwealth Bank, £20,000,000. In addition to buildings and reserves, without cost to the people.
Another type of criticism of this legislation conies from quite a different source. Shortly after these bills were introduced into this chamber the Sunday Times of London, said that some features of the proposed legislation merely gave statutory cognizance to principles which were a matter of tacit acceptance in Britain, such as the subordination of central bani action to Government policy. The article continued -
The power it gives the Commonwealth Treasurer is a frank recognition of the actualities of modern government.
Abolition of the reserve requirements against the note issue is a reflection of a policy which in Britain expressed itself in a flexible fiduciary issue.
The more controversial are the provisions enabling the central bank to enter into competition with the commercial banks, since the modern trend is towards the increased aloofness of central .banking towards ordinary commercial business.
The provision that commercial bank? have to lodge with the Commonwealth Bank in the form of special deposits, the control of any expansion of credit, and the fact that these deposits cannot be withdrawn without permission, have excited much criticism in Britain. The Sunday Times added that active trading by a central bank represented continuous open market operation, and that some provision must be made to offset the pyramiding of credit latent in such action. The Australian proposal - the equivalent of compulsory treasury deposit receipts - was just one method. It was true that under this system Australia would have no safeguards against a government that might pursue a spendthrift, and inflationary policy, hut people labouring that point should ask themselves what safeguards except economic wisdom existed against the same thing in Britain.
There we have the answer to the very point which has been laboured considerably by some honorable members opposite including the honorable member for Parramatta. Some people are asking if, in view of arguments such as those advanced by the Sunday Times, we are not being too conservative in the proposals which, we have put forward.
Most of the major provisions of the Government’s hanking proposals are in conformity with the views expressed by the RoY.al Commission on Monetary and Banking Systems. This legislation provides for the abolition of the Commonwealth Bank Board, control over the Commonwealth Bank, control of trading banks and the taking over of hanks unable to meet their obligations, the establishment of a trading bank section, control of interest rates, housing loans, assistance to industry, State governments and local governing authorities to conduct their business with the Commonwealth Bank, control of note issue, a Rural Credits Department, and a Mortgage Bank Department. Surely, in the light of the experience of this war, very little objection can be taken to these proposals by any one who has a knowledge of credit, currency and the operation of banking practice. As the Minister for Works (Mr. Lazzarini) has pointed out if we do not do something to guard against another depression, we cannot hope for our democracy to survive. We cannot again have as we had during the depression years, a state of affairs in which there is an abundance of material wealth, and at the same time, many thousands of hungry people. The illustration given by the Minister of a hungry man lying alongside a full wheat silo is apt. Labour’s banking policy is designed to confer some practical benefit upon the people as a whole and to guard against economic depressions in the future. There is no disputing the fact that finance is the root cause of most of our economic ills and the question people have been asking for years is, “ Who is to govern? “ Is it to be the private banks with their policy of dividends first, irrespective of consequences, or the Government which has had placed upon it by the Constitution responsibility for matters involving public credit, currency and banking? The RoYal Commission on Monetary and Banking Systems was by no means satisfied with the part played by the trading banks during the depression, and after pointing out what they should have done to alleviate the position, said that they “must bear some responsibility for the extent of the depression” and accused them of failing to co-operate with the Commonwealth Bank.- At the same time, the report clearly indicated that the Commonwealth Bank could have assisted materially to relieve the position. Paragraph 519 of the report reads -
The central bank should be the Commonwealth Bank. Because its sole concern is the general public interest, the central bank should bc publicly owned and controlled.
Paragraph 530 states -
The Federal Parliament is ultimately responsible for monetary policy.
In 1931 Professor Copland declared that . banking was more than mere finance. It was a social function which should be controlled in the permanent interest of the people. He added -
It is inevitable in a federation that the Federal Government must be responsible ultimately for monetary policy as it is for defence.
Despite the gloomy predictions of those who opposed the establishment of the Commonwealth Bank, it has served Australia in a capacity that no other private bank could or would have done. The first Governor of the Commonwealth Bank, Sir Denison Miller, in a speech at a public function in 192-2 said that during the war of 1914-18, war loans were floated in Australia totalling £250,000,000. He pointed out that private banks charged £2 7s. Id. per £100 as flotation charges but the Commonwealth Bank did the work for os. 9d. per £100 and thereby saved Australia £5,170,000. It will also be remembered that during the last war, the primary products of Australia assisted considerably in keeping the Allied armies in the field. The fact that the primary industries of Australia were able to produce large quantities of foodstuffs was due to the arrangements made by the Commonwealth Government for financing them during the war. The total amount paid to primary producers during that period was over £437,000,000. When the right honorable member for North Sydney (Mr. Hughes) .purchased fifteen ships overseas on behalf of the Commonwealth, owing to the ruinous freight rates being charged by- shipping companies, the Commonwealth Bank immediately made £3,500,000 available in London for the purchase of those vessels. What is now being done by the Government is simply to modernize the bank in the light of experience. One could refer at length to what the bank has done for primary producers, in raising loans, and in the general conduct of Australia’s financial arrangements at home and abroad during the present war. What was done in the last war would be multiplied many times. Opponents of these bills claim that too much responsibility will be placed on one man in the person of the Governor of the bank. That contention may be arguable. However, I point out that in addition to the Governor, provision is made for an advisory council. The bills will, in the main, implement recommendations of the Royal Commission on Monetary and Banking Systems. My objection to the present bank board is that it is a creation of Toryism established as an upper chamber to veto, nullify, or defy the efforts of any government that may seek to enlarge the functions of the bank, to increase its powers, or to expand its operations. Let us consider the members of the original Commonwealth Bank Board. They were Mr. John J. Garvan, managing director of the Mutual Life and Citizens Assurance Company Limited, pastoralist, of Rochdale Station, Queensland; Sir Robert Gibson, R.B.E., vice-president of the
Associated Chambers of Manufactures, Victorian representative of the Central Coal Board, director of the Austral Manufacturing Company, the Lux Foundry, the National Mutual Life Assurance Company, the Union Trustee Company, Robert Harper and Company Limited, and of the Chamber of Manufacturers Insurance Company^ Sir Samuel Hordern, director of Anthony Hordern and Sons, the Australian Mutual Provident Society, and of the Royal Insurance Company, Mr. Robert Bond W. McComas, president of various wool-buyers associations, and proprietor of William Haughton and Company., woolbrokers; Mr. John McKenzie L Fellow of the Institute of Bankers. London, a former chairman of associated banks in Queensland and general manager of the Bank of Queensland and of the Bank of North Queensland; and Mr. Richard S. Drummond, who is described by Mr. D. J. Amos, F.A.I.S., author of The Story of the Commonwealth Bank, as “ an inconspicuous gentleman appointed for inconspicuous reasons “. These gentlemen, appointed by a government of the same political colour as our honorable friends opposite, either were associated with private banking institutions or had no banking experience at all. A different kind of board is now proposed. The Governor of the bank will be a banking man of many year; experience, and he will be assisted by an advisory council. I see no room for criticism of that form of control. The members of the original hoard appointed by the Bruce-Page Government had few qualifications for their positions, whereas the men proposed to be appointed under the Commonwealth Bank Bill are bankers and government officials who will have no outside interests to make a prior claim on their attention. The Royal Commission on Monetary . and Banking Systems wa? appointed by the Lyons Government and, except for the present Acting Prim* Minister (Mr. Chifley), it consisted of men who, by the greatest stretch of imagination, could not be classified as representatives of the Labour party. The commission recommended that, where there was a conflict between the Government’s view and the board’s view and where the differences were irreconcilable, the Government should give the hoard an assurance that it accepted full responsibility for the proposed policy and that it should then be the duty of the board to carry out the policy of the Government. It has been suggested by some honorable members opposite, including the honorable member for Parramatta, who laid stress on the point that the Commonwealth Government’s policy would dominate that of the Commonwealth Bank Board. Nothing of the kind would happen. It is inconceivable that the Commonwealth Government would interfere with a board following a progressive policy in the interests of the community. In the post-war years we shall need a system of banking control that will make money fit commodities instead of making commodities fit money. The supremacy of the private banks Las remained unchallenged for years. Thomas Jefferson, a President of the United States of America, denounced the banking institutions in these terms -
Already they have raised up a money aristocracy that has set the Government at defiance. The issuing power should be taken from the banks and restored to the people to whom it properly belongs.
I wonder what stand will be taken on this question by members of the Australian Country party. I have seen some of the press reports of the decisions made at a recent conference of the party, although scant publicity was given to the conference by the newspapers. One of these reports, dated the 12th April, is as follows: -
Sir Louis Bussau, former AgentGeneral in London, said at the United Country party conference yesterday, that the people should not bc hamstrung by the finances of the nation being in the hands of private individuals. If the Commonwealth Bank had not the necessary power over finance, the Commonwealth could not fulfil the promises of prices control a.nd rehabilitation that had been made, he said. The greater the powers the national banks had. the more benefits would the people on the land obtain. If the Bank of England were not controlled by the Government as it was to-day, England would have been in a bad state at present. The conference agreed to a motion that the Commonwealth Bank be not given power to control the lending powers of private banking institutions, but should have power to operate as a central bank, con- trol the note issue, compete with private- banks as a trading bank, and create ? rural banking section.
I notice that no representatives of the Australian Country party are present in the chamber.
– I am here.
– The honorable member is too democratic in his outlook to be an effective representative of the Australian Country party. I should like to know what attitude those honorable gentlemen will take when the bill is passing through the committee stage. Will they disregard the decision of the Country party conference that the powers sought in these bills should be granted, so that the Commonwealth Bank Board can do all of the things mentioned by Sir Louis Bussau in his statement which I have just quoted? When the Leader of the Opposition spoke on this bill, he said that if and when the Opposition again came into power in this Parliament, it would restore the status of the Commonwealth Bank to its present position. A newspaper report of his speech stated -
A warning that the present banking legislation would be overhauled and board control restored to the Commonwealth Bank, was given by the Leader of the Opposition (Mr. Menzies) last night, resuming the secondreading debate on the Commonwealth Bank Bill and the Banking Bill.
I wonder what the reaction of the electors will be when they consider this matter dispassionately. On the one hand, the Australian Country party supports the Government’s proposal to place control of credit and finance permanently in the hands of the Commonwealth Bank, and on the other hand the Liberal party proposes to place control in the hands of private interests once more. The electors will be able to decide which Ls the better policy, and they will remember the mess that was made of our financial affairs during the years of the depression. I agree with the sentiments expressed by the late President of the United States of America, Mr. Franklin D. Roosevelt, and I believe that the measures now before Parliament will do much to place banking in this country on a basis of equity witu private interests and will promote the welfare of the Australian people.
– There is scarcely sufficient time for honorable members to address themselves to every aspect of these bills. Indeed, one would be fortunate to select one or two of the main points and cover them adequately within the time allotted. However, before proceeding with my analysis of the measures, I wish to correct something that was said last night, by the Minister for Transport (Mr. Ward). In a characteristic speech, the honorable gentleman referred to the bank smash of 1893. He said, among other things, all of which in my opinion ought to be subjected to the closest scrutiny, that Mr. McConnan, the chief manager of the National Bank of Australasia Limited had not paid his depositors. That was a forthright statement, which should not have been made in this chamber unless it had been verified, because the man concerned has no means whatever of securing redress. What are the facts? They can be found in the Report of the Royal Commission on Monetary and Banking Systems. The royal commission was an authoritative body, which recorded the true position of the bank after making exhaustive inquiries. I shall read what the commission stated in the paragraph succeeding the one which was quoted by the Minister for Transport. It is significant that the honorable gentleman stopped just where he did. This is what the paragraph to which I refer states -
By the end of 1901 . . . the National Bank of AustralasiaLimited . . . had completed the redemption of its deposit receipts.
That gives the lie direct to the irresponsible statement by the Minister, and I am glad to have the opportunity to place it on record. In fact, the only existing banks which converted any of their deposits into capital were the English, Scottish and Australian Bank and the Queensland National Bank. What the honorable gentleman omitted to say was that those deposits, upon being converted into capital stock, immediately became saleable on the investment market, and the holders of the stock could obtain cash for it. That is another example of distortion and misrepresentation of facts by the Minister.
I wish to establish certain fundamentals. 1 was intrigued by the definitions embodied in the Re-establishment and Employment Bill. So that there may be no misunderstanding of whom 1 mean when I mention names, I say at the outset that, according to my definition, the Treasurer means the caucus, the caucus means the Australian Labour party, and the Australian Labour party means the Communist party. Therefore, if I say that the Treasurer has complete political control of banking, I mean that ultimately the Communist party has complete political control of it. My objection to the bill is that it is designed to destroy the system of trading banks, and to establish political control over the banking system in Australia. It has been introduced to oppose the will expressed by the people at the recent referendum, and must make for the complete socialization of industry. Much has been said in regard to the recommendations of the royal commission that inquired into the monetary and banking systems of Australia. Various interpretations have been placed upon them. It would appear that one can select a paragraph that gives one meaning, and with a little patience find another paragraph that is capable of an entirely different interpretation. As I read the report, the royal commission emphatically held the view that the Commonwealth Bank, and the hanking system generally, should be completely free from political control. That is the broad theory which characterizes the whole motif of its report, and it is unchallengable. Professor Mills, a member of the commission, said- -
The regulation of credit by the Commonwealth Bank will, in general, be best achieved through the exercise of existing powers, and the development of the practice of co-operation between the Commonwealth Bank and the trading banks.
If honorable members opposite are pinning their faith to the report of the commission, they have there a clear-cut charter on which to build. Obviously, however, they are using the report merely to suit their own arguments, and construe or misconstrue it as the occasion warrants. The proposals of the Government in relation to the Commonwealth Bank and the trading banks, which, for so long, have been shrouded in mystery, have at last been exposed in all their stark nakedness, and they become more obvious the more one studies the bill. As I view the matter, the first aim is slowly to strangle the trading banks, and to make the Commonwealth Bank another glorified government department. The whole business of banking is to be a government monopoly, under the control of the Treasurer - which means, eventually, the Communist party - who will be a dictator in his own right on finance and banking. We have been fighting against dictatorships during the last five and a half years of black and bitter struggle; indeed, men are still fighting in the same cause. Yet the Government is setting up a dictatorship which, in ray opinion, will be capable of exercising the widest and most tyrannical power over our monetary affairs, and the whole conduct of our daily Jives.
– Does the honorable gentleman remember when he was a member of the New Guard in New South Wales?
– I remember when the Minister was in the Red army. We “ dished “ him and his colleagues in no short order, and will always do so. Sheer justice demands that we consider fairly the trading section of the banking system. Notwithstanding the efforts of honorable members opposite, particularly the Minister for Transport, with his characteristic “muck-raking”, to defame the trading banks, their history is an honorable one.
Mi-. ACTING DEPUTY SPEAKER (Mr. Barnard). - The honorable member must not be provocative. If he is, I cannot protect him.
– I ask you, sir, to protect me against the provocative statements of the Minister for Transport.
– The honorable member instigated the provocation.
– Again I say that, in sheer fairness and justice - which honorable members opposite have not displayed - the trading hanks should be considered on their merits, and should be given an appropriate reward for the way in which they have faced up to financial administration in this country. They have made a major contribution to Australia’s remarkable growth in the last 150 years. Indeed, they were operating before either the Australian Labour party or the Liberal party was in existence. They have helped to develop the initiative of private enterprise in all its forms, yet their reward under this legislation is to be slow strangulation. What will be the effect of the forced lodgment with the Commonwealth Bank of all deposits in excess of those held in 1939? The lodgment of war-time deposits was a necessary measure, designed, I have no doubt, toprevent the trading banks from making exceptional profits out of the unavoidable expansion of currency during the war period. But such control goes much further in a peace-time economy, because it gives to the Commonwealth Bank and the Government a complete stranglehold on the funds of the trading banks. By giving to the Commonwealth Bank the power to enter into open and aggressive competition with the trading banks, the Government is endangering the whole of the economic system of this country. Continuation of the control of advances, in my opinion, is a matter of grave seriousness not only to the life of the trading banks, but also to the community generally. The existing controls are justified by the extraordinary circumstances of the war period, but immediately the war is over any restriction on borrowing will have an entirely different meaning, and will affect our ability to organize and expand our industries. Our progress in the immediate post-war period will depend on the degree of enterprise and initiative we apply to the problem. If we fail to take advantage of the conditions that will operate immediately the war is over, we shall be caught flat-footed in competition with our sister dominions and other countries, and shall be at a distinct disadvantage. If enterprise and initiative be curtailed in any way, the expansion to which we all look forward, and the reorganization we all demand, in order to ensure great strides in secondary and rural industries, will not be realized. The control of bank advances must lead to the control of other institutions and people- with money to invest. That would seem to be the natural corollary. This inevitably will lead to a black market in investments, with all its ramifications and hideousness. A black market operates in relation to every controlled commodity at the present time. In order to make the control of advances effective, the Government must, control all investments. New investment is the life-blood of any community. But a government that controls all investments applies a ligature which interrupts the life stream of the community, and isolates- a section of the economic body from the whole structure, with the result that that section must atrophy and drop off. “What does the control of investment mean? In broad terms, it means the regimentation of the individual, which must lead ultimately to the socialization of industry. Under these powers, the Commonwealth Bank will be able to issue directions as to the classes or purposes for which advances may be made by the trading banks. How could that power be exercised ? A. government which sought to take complete control of investments could exclude trading banks from the banking system, and regiment the individual, as well as businesses, in every way. The importer or the exporter could be controlled effectively. The Government could prohibit the importation or exportation of any commodity under this measure. It could prevent the trading banks from making advances to the manufacturers of any class of commodities, or to those who failed to comply with certain industrial conditions or requirements, such as the employment of only trade union labour.
– That may be necessary.
– I am glad that the Minister agrees with me that under this bill the Government, through the Commonwealth Bank, will have sufficient power to refuse advances to an industry unless it- employs only trade union labour. Examples of the effect of the exercise of that power could he multiplied. A builder could be told that if he did not erect a certain type of structure, or .build it in a certain locality, the money required to enable him to carry out his building programme would not be made available to him. This bill is completely a planner’s dream of Paradise; it makes the Treasurer a com plete dictator. The whole measure has been designed, first, to smash the trading banks and establish political control of banking, and eventually to achieve by back-door methods the Governments avowed purpose of complete nationalization of industry and complete control of finances of this country.
The breaking of the trading hanks could be effected by either the control of foreign exchange or the regulation of interest rates. If the Commonwealth Bank fixed the lending rates at too low a level it would ruin the whole structure of the trading banks, because it would be unprofitable for them to function. By that means alone it Could destroy those banks, not by a process of slow strangulation, but by the sudden destruction of the whole financial structure which has been built up after over a century of effort. Borrowing affects the man in the street more than honorable members may think. Clauses 16 to 22 of the Banking Bill limit the funds to be made available, to the trading banks for lending, and that, of course, would force borrowers to go to the Commonwealth Bank. Clauses 2-7 and 28 control the policy of the trading banks with regard to advances and investments. The lending is pegged to the 1939 level, but the value of money has fallen during the war. The cost of living has increased considerably, and the uppermost limit allowed for. lending by the trading banks would in these circumstances be about 20 per cent, lower than their pre-war holdings would permit them to lend.
– Does not the honorable member admit that that is a safe provision?
– No. I believe that there should be competition between the trading banks and the Commonwealth Bank, but this provision would prevent it. It would penalize the trading banks to the extent of’ a further 20 per cent. owing to the fall in the value of money since 1939. This, as I have pointed out, would force borrowers to go to the Commonwealth Bank, which would lend money only when the payment would conform with the Government’s financial policy. The Commonwealth Bank is able to demand as much information from a borrower as it wishes to have. The trading banks do not encroach more than necessary upon the private affairs of their customers, because the latter always have the right to transfer their business to another trading bank, but under these proposals the Commonwealth Bank could pry into the most intimate private affairs of a borrower and lay down rigid terms and conditions which must be complied with before advances were made. It would he able to give borrowers such directions as it thought fit, and the day may not be far distant when advances will be granted to members of trade unions and not to others. A man will bc successful in his application to the bank for a loan if he be a member of the Building Workers Industrial Union, birt not if be be a member of the Ship Joiners Union. It is true that clause 27 provides certain safeguards, but the trading banks will not be in a position to refuse demands made by the Commonwealth Bank. Who would have thought that when the man-power regulations promulgated under the National Security Act came into operation, they would be used for party political purposes? If the Government is prepared to use those regulations for its own nefarious purposes, will it balk at the provisions of clause 27? Of course not. This bill reeks with political control.
The Commonwealth Bank Board has been much criticized, and of course it may have made errors. Its members are not banking experts, but I should be prepared to accept their recommendations in preference to the regimented advisory council to be set up by this Government. The Bank of England has a board composed, not of banking experts, hut of men who have contacts with industry, so that that bank can frame its policy in accordance with the needs of industry. Australia came out of the last depression better than countries with older financial systems than its own, and established for itself some prestige in the world, but there is no justification for “ putting the hoot” into that commission because it suit3 the political ends of the party in power to do so. Did any trading bank board do better work in the last depression than the Commonwealth Bank Board? Yet the hoard is to be replaced by a governor, who will not be fully responsible for the job he is ito undertake, but will be under the direction of the Treasurer, who is under the direction of the caucus, which is tinder thedirection of the Australian Labour party, which is under the direction of the Communist party. There we have the. whole sorry set-up ! The unfortunate man who will be governor will not be able to exercise his own judgment with regard to financial policy, but wherethe policy of the bank is in conflict with that of the Government the opinion of the the Treasurer will prevail.
The granting of increased political power over the trading banks is dangerous. The credit policy of any country must be continuous and impartial. I think that that is fundamental. One government might, be enthusiastic over a policy of expansion, whilst the succeeding government might regard the previous policy as detrimental to its own political platform. Then there would be a sharp conflict over the credit policy. How could the economic structure remain stable in such circumstances? How could Australia compete in the markets of the world without a continuous and impartial credit policy? I cannot find any provision which ensures such a policy.
Under these proposals the Treasurer will he in complete control of the note issue. That is more than dangerous; it is a tragedy. How would lie be able to resist the pressure which the Minister for Transport, for instance, would probably bring to bear on him, and which the coal-miners would probably try to exert? He could not resist the pressure that an organization like the Building Workers Industrial Union would bring to hear in the industrial field. How could the Treasurer resist the demands of caucus when it asked that some millions of pounds be. made available for a certain project? He would not say, as many Treasurers have stated in the past, that the financial conditions were such that the money could not be granted. The trade union organizations would say to him. “ You have control of the note issue, and if you do not advance the money we shall find another Treasurer who will “. The result, of course, would be inflation. particularly as the whole of the safeguards against inflation found in the existing legislation will be removed. With the indiscriminate printing of bank notes and the inflationary trend of the Government’s policy, this country would, I fear, go down the slide to inflation which has been spoken of by the honorable member for Parramatta (Sir Frederick Stewart) as a condition under which the small man, including the worker, will be hit the hardest. I believe that the power to expand the note issue beyond the limits which are regarded as sufficient in normal times should never be surrendered by Parliament to any government. This Parliament has already surrendered too many powers to the Executive. Parliament, for instance, is not consulted regarding commitments entered into by the Government with other countries, but members of the Government will confer with the Australasian Council of Trade Unions regarding future legislation. I believe that this point is fundamental to the security of the country. No expansion of the note issue should be permitted without the consent of Parliament - and I do not mean merely the consent of the Government.
The bill provides for the creation of an Industrial Finance Department of the. Commonwealth Bank. Strangely enough, this is not to be administered by officers of the Commonwealth Bank itself, but by a general manager appointed by the Government. In other words, it will become another glorified Government department. Under clause 95, it is to he given power to purchase shares and securities, and to assist in the establishment and development of industrial undertakings. Under clause 97 the Treasurer will have power to borrow from the Commonwealth Bank against treasury-bills, and to lend the money for use by the Industrial Finance Department. It is also provided that bank deposits and savings can be pressed into service. These provisions provide for a back-door method of nationalizing industry, something at which it is evident the Government is steadily aiming. For example, the Commonwealth Bank may, under its proposed new powers, prevent the trading banks from lending to firms engaged in a particular industry. Those firms must then turn to the Industrial Finance Department of the Commonwealth Bank, which may lend money on its own terms, and those terms may include the giving of a share in the industry to the Government. This would be a first step to socialization and, as night follows day, the other steps towards socialization would rapidly follow.
In this way, control of industry will be effected without the consent, or even the knowledge, of Parliament. Once this legislation is passed, the Government will possess power, through the Commonwealth Bank, to assume control of any industry. Honorable members oppositemay say that the Government will no’ exercise this power. Let it be recalled that, not so long ago, the Prime Minister (M.r. Curtin) said that he would noi nationalize any industry during the war: but the Government is already taking steps to nationalize the interstate airways, banking and life, insurance. Under its lite insurance legislation the Government proposes to take power to set up a Commonwealth insurance company. Indeed, as the Minister for Information (Mr. Calwell) has said, it. is proposed to nationalize anything that is in competition with the Government.
In addition, this power to finance the establishment and development of industry will enable the Government to embark upon all manner of industrial undertakings. That power is inherent in the bill, and the. Government will be in a privileged position to compete on unfair term? with others engaged in the same industry. This threat of nationalization and socialization is no bogy; it is very real, as was made clear by the Minister for Information in his speech, and by interjections which fell from the lips of the Minister for Transport. In this bill, the Government is proposing callously to set aside the will of the people as expressed in the recent referendum. It is guilty of a gross violation of the confidence of the people, particularly having regard to the Prime Minister’; statement that there would be no socialization of industry in time of war. The bill is a definite instalment, of socialization, with all its implications.
A petition signed by more than 250,000 people protesting against the Government’s banking legislation has been presented fo the Prime Minister and the Treasurer. However, the Government is taking no notice of the people, nor will it take any notice of them so long as it remains in power. Rather, will it continue along its present nefarious course. If these bills are passed, the way will be open for radical politicians and trade union bosses to get their sticky fingers on the delicate financial controls which govern the economy of the .nation.
The members of the Bank Officers Association arc concerned for their future should this legislation be passed, and have asked that their interests shall be protected. The members of that association are good .unionists, and they are worried over what, may happen to them when the Commonwealth forces the trading banks to close their doors. Are they to become unemployed ? The Government has given no undertaking that their positions will be safeguarded. Therefore, they have ranged themselves against the Government on this issue. They say that what the Government proposes to do to the trading banks is grossly unfair, and strikes at the roots of an honorable and necessary occupation. It is no answer to say .that employees of the private banks will bc absorbed by the Commonwealth Bank, for it could not possibly absorb them all. Their discontent will become manifest at the next elections. These men have spent the best years of their lives in the service of the banks, and now all further incentive to improve their position is to be taken from thom. They will be robbed of all prospect of advancement, and many of them will be deprived of their employment. All this will he due to the extraordinary attitude of the Government to the trading banks.
My time is just about exhausted. I should have liked to speak about the proposed restriction of interest rates, of the controls which are to be imposed on foreign exchange, and of how this is likely to affect migration to Australia and the introduction of new’ money to the country. When we realize the tremendous industrial development that was brought about in the United States of
America by the introduction of new
Jil money from abroad we realize how the Government’s proposals .aTe likely to hamper the industrial progress of Australia. Evidentally, tile Government is prepared *o wreck the ‘Country in order to obtain some measure of .political control ‘Over finance.
– We have been treated to a characteristic speech by the Deputy Leader of the Opposition (Mr. Harrison), marked by vociferation, invective and extravagance of language. The fact is, however, that the people just do not believe him when he condemns this proposed legislation. For three .years, Australia has worked under the very provisions that he now denounces, and his dire predictions have already been falsified by experience. He will find it hard to convince the people that this measure will prove harmful to their interests. They have had bitter experience of the ill effects which flow from the control of the country’s economy by the private hanks. Last night, the Minister for Transport (Mr. Ward) mentioned the case of a returned soldier, now dead, who lost a leg during the last war, and who, after having worked himself into what might be regarded as a splendid financial position, lost everything to one of the private banks. The bank even took his war pension in payment of his indebtedness. That is not an isolated case. J. know of others in South Australia in which men who thought they were solvent were forced to give up their businesses, and even to sell their homes, in order to satisfy the claims of these rapacious institutions. The people are not likely to believe that the private banks are the friends of the nation. The attitude of honorable members opposite towards this legislation is characteristic of the parties to which they belong. When the Fisher administration introduced legislation for the establishment of the Commonwealth Bank in 1911, the then Opposition attempted to frustrate its purpose. Even before Mr. Fisher had said one word of his second-reading speech, Sir Joseph Cook, who was then the Leader of the
Opposition, in tones of stinging derision exclaimed, “Sovereigns for every one!” Everything possible was done to delay the passing of that legislation, attempts were made to adjourn its consideration, and. to persuade the Fisher Government not to proceed with it. Even the then honorable member for Richmond, Mr. Massy Greene, who I consider was one of the outstanding men of the Opposition of those days, and for whose ability I have always had the highest regard, could not see any future before the new bank. He made a most earnest appeal to the Fisher Government in the following words : -
I do almost beg of the Government, before they finally commit themselves and the House to this particular scheme, to have a thorough inquiry made, because I feel sure .that if it is made they will find good reasons for modifying their proposal. As the Prime Minister has pointed out, and as I indicated at the beginning of my speech, there are connected with the proposal questions the result of. which it is impossible for us to foresee. We cannot tell when this may be found to be the worstpossible proposal which Australia could have adopted.
That was the view of one of the foremost men of the then Opposition when a previous Labour Government proposed, to establish the Commonwealth Bank. No one can deny that had it not been fox- the Labour party, the Commonwealth Bank would never have been established. To-day, the Leader of the Opposition (Mr. Menzies) indicated that he would like to have been associated with the pioneers of this legislation. The right honorable gentleman is merely fulfilling a prophecy of Mr. Andrew Fisher, who, in his second reading speech on the bill to establish the ‘hank said that they would, live to see the day when many who refused to give sanction to thislegislation would come seeking to gain some credit for its introduction. If honorable members will read the speeches in Parliament at that time - some of them h-a.vo been quoted by the honorable meml>er for Bass (Mr. Barnard) - they will find that there was a persistent attempt by the then Opposition to frustrate the efforts of the Fisher Government and to deny to the people of Australia the benefits which the establishment of the Commonwealth Bank has conferred on them. I have tried to understand the reasons- which actuated the opponents of Labour in their opposition to the- Com.monwealth Bank, and I have concluded that had it not been for the right honorable member for Nor;th Sydney (Mr. Hughes), who was Prime Minister for many years prior to 19-22, the Commonwealth Bank would have been interfered with years ago. It was- only after the Hughes Government was superseded by the Bruce-Page Government that the charter of the Commonwealth Bank was altered, so that the bank, instead of being the institution which Mr. Fisher intended - a bank established and. functioning in the interests of the nation - it became a bank which served the interests of the private banking institutions. I well, remember that in 19.24,, when the right honorable member for Cowper (Sir Earle Page), who was then Treasurer, introduced legislation to alter the constitution of the Commonwealth Bank, members of the Labour’ party, then, in Opposition, fought tenaciously to prevent any interference with the bankHowever, the Bruce-Page Government was successful in having legislation, passed to amend the Commonwealth Bank Act to provide for control by a board, the appointments to which reflected the views of that government. That was inevitable, because no appointment by any government can do otherthan reflect the policy of that government. One of lie first conditions laid down by the Commonwealth Bank Board, established by the Bruce-Page Government was that the bank should* not enter into active competition with the private banking institutions. That meant that the Commonwealth Bank, instead of being able to operate as a trading agency, as was originally intended, became merely a hank to suit the convenience of private financial interests. The legislation of 1924 entirely defeated the purpose of the Fisher Labour Government when it established the Commonwealth Bank in 1911. Unfortunately, that amending legislation hascaused, grievous suffering- to many people, who have been deprived of the protection which the Commonwealth Bank.
Gould have given to them when they were being squeezed by the private banking institutions, particularly during the- last depression. I remember well the case of a man with assets to the value of about £30,000, who got. into the clutches of a private banking institution. His property was mortgaged for about £14,000, and the bank demanded that his overdraft be reduced. Accordingly, he sold all the assets on which he could realize and was able to reduce the overdraft to about £8,000. The bank, however, was not satisfied, and demanded that the overdraft be further reduced. The bank did that, notwithstanding that it held securities for assets to the value of £30,000 belonging to its client. Ultimately, because of the action of a private bank, that man was deprived of everything that he possessed. I mentioned his case to the manager of a branch of the Commonwealth Bank, who told me that he would have been glad to accept the business of that man, but could not do so because the policy laid down by the Commonwealth Bank Board would not permit him to rescue the man out of the clutches of the other bank. That incident is in keeping with what the Minister for Transport (Mr. Ward) told us last night. Thousands of similar incidents could he cited. Ear from being the institutions which honorable members opposite would have us believe they are, the private banks seem to be out for their pound of flesh. The time has arrived for the Commonwealth Bank to be, in fact, the bank of the nation - an institution capable of assisting and protecting the citizens of this country; not. one that will avail itself of every chance to rob them of their hard-won assets on which they rely for security in the future. Among the citizens of this country, there are not many friends of the private hanking institutions, because the people know how merciless those institutions can be in their treatment of those who get into their clutches. I strongly advise the people of this country not to put themselves in the power of the private financial institutions of this country, for if they do, they may suffer much at the hands of private bankers. Ft is well that by this legislation the Government should seek to protect the citizens of this country against the risk of ruin, suffering and distress, which may be their unfortunate lot should they get into the hands of rapacious private financiers.
Sitting suspended from 6 to8 p.m.
– Regardless of what honorable gentlemen opposite describe a.-: the objective of this legislation - nationalization, socialization or communism, or whatever else they may say - the people of Australia are convinced of its need. The honorable member forIndi (Mr. McEwen). moving for the setting up of the Royal Commission on Monetary and Banking Systems, was constrained to make some challenging remarks about the hanking system. He said -
The inert power of resistance of nervous or selfish vested interests, and the mediums of propaganda which they control have prevented a mandate from being received by those who have sufficient enterprise to act. We should explore every avenue of the system.
He then directed attention to the first Commonwealth Bank Act. passed in 1911, which, he pointed out, set forth the purposes to be served by the nations’ bank. He continued -
The intention of the Parliament that founded that institution was that it should carry on the general business of banking; and no later Parliament has expressed a contrary intention. The policy of the Bank Board however,either with or without the concur rence of the Government, has been to refrain from full and normal competition with the trading banks.
The daily overdraft rates of the Commonwealth Bank, by comparison with those of the trading banks, show that lower interest rates are provided by the bank established by the nation.
This Parliament should not set up a bank for the nation which gives certain of our citizens a better service than they are able to secure elsewhere, and restricts that service to a. limited number. If the nation is to establish a bank which is to confer certain advantages, they should be offered to all who are entitled to them: they should not be restricted to a fortunate tew.
If the Commonwealth Bank traded in a fully competitive manner, we should see no such discrepancy as is observed to-day in the overdraft interest rates that prevail.
The truth of his statement has been proved time and time again. This legislation is essential to progress. Australians will not be cheated out of the new order promised as an inducement to them to accept the sacrifices involved in war. They will not allow the private banks to deprive them of the benefits of that new order to which their deeds on the battlefields and in the factories have entitled them. I do not believe that the threat of the Leader of the Opposition to restore the Commonwealth Bank Board when his party again assumes office has any meaning, because I have not the faintest fear that there is the slightest prospect of a change of Government, but should a miracle happen and the right honorable gentleman does have and use the opportunity to re-establish the Commonwealth Bank Board, this party, when again in power, will re-enact this legislation, which ensures that the bank shall play its proper part in Australia’s economic life. I have very good grounds for forecasting that the Labour party will be more enduring in the life of this nation i ban lbc Liberal party will be. The Labour party has lived almost half a century as a political entity in this Parliament, whereas changes of name and policy on the part of honorable gentlemen opposite in the hope of beguiling the electors into returning then to power are commonplace. The Labour party moves with the times, as these bills indicate, but the reactionaries and conservatives on the Opposition benches would arrest progress. They have referred to what they describe as dangers in this legislation and have forecast that it. will have a dire effect on the private banks.’ It is remarkable, however, that the shares of the trading banks are at ceiling prices with no sellers. I defy them to reconcile that fact with their forebodings. They also claim that for the Commonwealth Bank to compete with private banks is unfair and wrong in principle. They say, “ Why, the Commonwealth Bank does not have to pay income tax and certain governmental charges”, but they neglect to tell the public that a part of its profits are paid into the National Debt Sinking Fund and that so far that fund has thereby benefited by £7,694,000. Whatever private banks pay in income tax and other governmental charges would not equal that contribution to the redemption of our public debt. Another quibble of honorable gentlemen opposite is that the private banks will be at a disadvantage with the Commonwealth Bank in the matter of rates of interest charged on accommodation. The people of this coun try are entitled to the lowest possible rate of interest and the very best financial accommodation. Why should they be required to pay high interest in order to satisfy the rapacity of the private banks? It is an outrageous proposal that the people of Australia should be eternally paying tribute to them when they have their own bank with which to deal at lower rare,? of interest and on generally better terms. No apology is required for that. None of the arguments advanced by honorable gentlemen opposite against this legislation are convincing, and the interest argument is the least convincing of all. They say, too, that. Government control of banking will be the prelude to inflation. During this war this Government has achieved stability of price levels to a degree equalled amongst the Pui ted Nations by only the United Kingdom. Therefore the charge that this legislation will lead to ruinous inflation has no substance. In the last war some remarkable things were done by private banks. They made a glorious holiday out of the sacrifices and wretchedness of the people. But they have not been allowed to do that this time. Their rapacious activities have been greatly curtailed. Even the right honorable member for Cowper (Sir Earle Page) could not refrain from commenting on one remarkable feature of finance in the lastwar. Moving the second reading of the Commonwealth Bank Bill in 1924, as Treasurer in the Bruce-Page Ministry, he said -
At this early stage of war finance, a stepwas taken which never has been explained, fully. I refer to the fact that the Government gave to the banks the right to get threepounds in notes for every sovereign presented by the banks at the Treasury. Two out of every three pounds of notes so issued were, treated as a loan to the banks, which were required to pay interest at the rate of 4 per cent, per annum., and to repay the principal not later than twelve months after the end. nf the war. The reasons for granting theserights to the banks are not recorded, and no good purpose would now bc served by surmising what the reasons were. Without beingunduly critical of action taken during a. period of great anxiety, however, I am permitted to say that this three to one arrangement was more doubtful in character than. any other act of war nuance. The grant by hanks of accommodation by way of overdraftnr otherwise makes money available for credit to current accounts and fixed deposits in banks. That is to say, increase of advances entails increase of liabilities. Banks usually keep on lending money until their liabilities are four or live times as much as their cash reserves, but here we see that the banks were given the power, first to multiply their gold reserves by three, and then to keep on lending until the multiplied reserves formed the base of liabilities equal to twelve or fifteen times us much as the original holdings of gold.
That indicates how the private banks, if they are allowed complete freedom, will extend their operations until, indeed, they imperil the very security and solvency of the nation. Well might every business man and every farmer take to heart the words which I have just quoted, and be warned of the wild orgy of inflation that would take place were private banks allowed to “rake off” unlimited profits by extending credit until the institutions themselves became financially insecure. Honorable members opposite must answer charges of that kind, and many other charges which have been made by their own colleagues. So far, however, they have not attempted to do so. They claim that it is wrong in principle to give to the Treasurer the right to guide the policy of the Commonwealth Bank, the financial edifice of the nation, in order that that institution may be enabled to serve the best interests of the nation. They say that given such power the Treasurer will be subject to ail kinds of ulterior influences. But they fail to point out that in this Parliament, the highest tribunal in the land, the Treasurer will be required to give an account of his action. He is required by statute to lay his report upon such matters upon the table of the House ; and, if necessary, such reports can be challenged by honorable members opposite. I have sufficient confidence in the elected representatives of the people to know that in regard to things which are so important to their interests and the welfare of the nation at large, this Parliament will ensure that everything is done in the interest of. the nation to conserve the stability and rights of the community. It is more likely that this duty will be done by this Parliament rather than by some independent board whose independence lies in freedom to act along lines contrary to the wishes of the people. Honorable members opposite. will find it very difficult to convince the people of their view in this respect ; because the Treasurer is required every three years to face the people, who are his master. He must submit to a review of his actions, and, therefore, no one could be in a better position to understand and heed the real financial requirements of the nation. As Treasurer he is also in the best position to know exactly the financial position of the -nation. Therefore, from whatever viewpoint we examine this legislation, we find that it is soundly based, wide in its conception, and essential if. we are to fulfil our promises to the members of our fighting forces when they return to civil life and require of Parliament fulfilment of the nation’s obligations to them. Honorable members opposite would do well to apply themselves to answering some of the points I have raised. They have endeavoured by subtle misrepresentation to lead the people to believe that this legislation will bring disaster and misfortune to this country ; but no matter how the moneylords endeavour through the press, over the wireless, or through their representatives in this Parliament to create that fear, they will not be able to confuse the conscience and common sense of our people who remember their bitter experiences under governments supported by honorable members opposite. The records of those governments are records of distress and disaster, doles and poverty, unemployment and wretchedness. Therefore, I urge the people to study this legislation, which indicates that this Government is prepared to fulfil its promises, and endeavour to establish a better condition of life for our people. Surely, we cannot be out to ruin them when we are the first to recognize how hard they are trying to develop this country. In such circumstances, we shall not seek to impose impossible conditions when drought, or disaster, falls upon them. On the contrary, we shall give to them a lending hand and mutual aid that will ensure to every man, woman and child full rights in this great Commonwealth so that they will feel that here, under the Southern Cross, there is provided for them a better condition of life than they have ever known before because of the progressive policy of this Government, of which this measure is characteristic.
.- Behind every bill introduced in this House stands a reason ; and when one believes, as I do, in respect of these measures that the motive underlying them is sinister, we should search for that motive. Both these measures deal with banking, and they have quite a lot to do with trading banks. One would imagine that at this stage of the debate specific examples would have been given to show why the trading banks should be dealt with in the way proposed ; but I have listened in vain for any example of that kind. I certainly heard the Minister for Transport (Mr. Ward) when speaking last night make an accusation against the National Bank of Australasia Limited. He alleged that, arising out of the crash in 1893, that bank had not up to the present paid its depositors; but, in line with most accusations made by the Minister, that accusation is completely false, and I believe that he knew it was false when he made it. The fact is that in 1893 the National Bank of Australasia Limited deferred payment for a brief period, but after a matter of days commenced to pay off its depositors, and by the beginning of 1900 had not only paid every depositor in full, but had also allowed interest at a rate from 4 per cent, to 4£ per cent, on its indebtedness to depositors over that period.
– That is wrong.
– That fact is mentioned in the report of the Royal Commission on Monetary and Banking Systems.
– That is the only specific accusation I have heard made in this debate against the private banks; and it is false. However, we shall not do much good by going back to 1893, or what Gladstone said in 1888. We must consider the activities of the private banks in the intervening period. No one can find cause for complaint against them in that period, or, particularly, during the war years. In spite of the fact that £230,000,000 of the private banks’ funds are frozen, we know that those institutions agreed to that course in order to avert the danger of secondary inflation and because they had no desire to derive pecuniary benefit from the nation’s difficulties. No one can point to a specific instance during recent years in which the trading banks have not played the game. Therefore, we must look for other reasons for the introduction of these measures. In doing so, we must study history, and find out what was the reason for the introduction of the Commonwealth Bank Bill in 1911, and what is the real reason behind the introduction of these measures at a time when we are still engaged in war. This takes me back to the conference of the Australian Labour party held in 1908 in Queensland. That conference passed a resolution which provided that when the Labour party attained office it should introduce a measure to establish a Commonwealth Bank. After so long a lapse of time, it is difficult to ascertain exactly the reason for that resolution. Possibly, the decision was a result of the colossal crash of banking institutions in the nineties. But in 1911, the object of the Fisher Government was not to establish the bank as we have it to-day. The bank is now a central bank which has complete control of the credit structure of this country. Such an institution was not in the mind of the Fisher Government. We come, however, to the conclusion that the proposal to establish a Commonwealth Bank was due to political philosophy. Let us study that philosophy. In those days the Australian Labour party was not a socialist body. Bather, its policy could be likened to a policy of liberalism, not unlike the policy that now actuates honorable members on this side of the chamber. With other honorable members I have endeavoured to ascertain what exactly was in the mind of the late Mr. Fisher when he introduced the first Commonwealth Bank Bill. On this point, I quote the following from his second-reading speech : -
This is the time to legislate - a time of prosperity and legislative power.
This Government has introduced this bill at a time of unprecedented industrial crisis, when enormous demands are being made on our available man-power and materials, when we are in the midst of the worst drought we have ever known, and when we are still engaged in war with Japan. Mr. Fisher continued -
The questionhas been asked me, andI express the hope that while the bank may deal in land securities and other securities, it will in time grow to be rather a bank dealing with ordinary bills of exchange and liquid securities of the kind - that it will ultimately become the bank of banks rather than a mere money-lending institution.
Therefore, it is clear that Mr. Fisher did not have in mind a central bank, but a bankers’ bank which would not be exposed to the risks run by trading banks. The Commonwealth Bank was to deal in certain liquid securities only. He sought to proceed along the safest possible lines, and steer clear of all risk of loss. At that time he laid down definitely the view that the bank was to be absolutely free from political control. It is interesting to read the debate which took place on that measure in order to ascertain whether any member of the Government of the day had any idea of establishing an institution which ultimately would become a central bank. So far as I can ascertain, the only honorable gentleman who offered such an opinion was Mr. Alfred Deakin, who made the following statement: -
We may soon find ourselves as a Commonwealth called upon to establish some kind of financial institution to protect the interests of the people of this country and to undertake these great dealings on the money market of the Old World and in our own markets.
That would appear to denote control of the volume of credit and exchange control. Mr. Higgs interjected -
The honorable member holds that we ought to have a national bank?
Mr. Deakin replied ;
In my opinion we must arrive at a stage in which a national bank will be an essential instrument of our national development.
Therefore, the idea that is in the minds of many people that the Commonwealth Bank in its present form was the work of the Fisher Government is entirely wrong. That government certainly established a bank - a bankers’ bank to deal only with certain liquid securities - but the real development of the Commonwealth Bank dates from the legislation passed in 1924 by the Bruce-Page Government. Actually, the establishment of the central bank of Australia as we know it commenced with that legislation. The Commonwealth Bank to-day is a monument to the BrucePage Government. The Minister for the Navy (Mr. Makin) gave an entirely false impression of what has transpired since 1924. He stated that the legislation enacted by the Bruce-Page administration virtually destroyed the Commonwealth Bank, and that this bill would restore the bank to its former position in this country. The honorable gentleman also alleged that the 1924 legislation took away the trading activities of the Commonwealth Bank. That is not the case. I shall quote some figures to rebut the Minister’s statement. In 1922 the assets of the Commonwealth Bank were ?134,000,000, but in 1942, that figure had risen to ?481,000,000. Branches increased from 62 in 1922 to 275 in 1942, and the staff increased from 1,800 in 1922 to 6,300 in 1942. Honorable members opposite are using false arguments in an endeavour to mislead the people of this country. Their statements can he proved untrue with very little research into the history of the Commonwealth Bank. I am convinced that if Mr. Fisher were alive to-day, he would commend the progress that has been made by the Commonwealth Bank, and would approve the Bruce-Page legislation of 1924. Judging by his remarks in 1911, I believe also that he would favour a bank free from political control. We find that with the passage of this legislation the Commonwealth Bank will be, not a people’s bank, but a politicians’ bank; not a bankers’ bank, but the only trading bank in Australia. That is the policy of the Government. Why is this being done? Why are we departing in this legislation from what was in the mind of the Fisher Government in 1911? The answer is to be found in the decisions reached at the Labour conference held in 1920. It was during the 1920’s that Labour became a socialist party. From that time on an entirely different political philosophy has been voiced by the party to which honorable members opposite belong. That is the real reason for the introduction of these measures. In speeches made by honorable members opposite we frequently hear the protest that we, on this side of the chamber, are endeavouring to link their party with the Communist party’s views in regard to banking. I sa.y that that link does exist. There is no difference between the declared objectives of socialist organizations such as the Australian Labour party and those of the Communist party. Both parties support the complete ownership and control of industry. They are natural allies. In fact, they are as natural allies as are the Australian Country party and the Liberal party. Let us go back a few years and see what Lenin had to say. Addressing the prerevolutionary Bolshevik conference of April, 1917, Lenin said -
We are all agreed that the first stop m this direction, i.e. towards communism, must be such measures as the nationalization of banks. Let us put into practice these and similar measures and we shall see. We cannot at once either nationalize the small consumers’ concerns, i.e. one or two wage-workers, or place them under real workers’ control. Through the nationalization of banks they may be tied hand and foot.
During this war we have seen to a large degree the partial elimination of the middle man, the small shopkeeper, and the small business man employing perhaps one or two employees. In his book Preparing for Revolt, Lenin said -
It is essential to proceed immediately to the nationalization of banks, insurance companies and the most important branches of industry. . . . One state bank, as huge as possible, with branches in every factory - this is already nine-tenths of the socialist apparatus.
Mr. G. D. H. Cole, an influential British socialist, states -
Before a Labour government nationalizes any other productive industry, it should nationalize the banks. With the banks in our hands we can take over other industry at our leisure.
Similar sentiments were expressed by Mr. Lang. At the Metropolitan Labour Conference in Sydney in February, 1933, and at the 1933 Easter conference of the Australian Labour party, the following resolution was carried: -
The objective of the party is the socialization of industry - production, distribution and exchange - which means the social ownership of the means of life. For this purpose the transference of the control of public credit from private ownership to the people themselves must become the first step in the achievement of our objective.
The Treasurer, as a member of the Royal Commission on Monetary and Banking Systems, said -
I am of the opinion that the trading section of the Commonwealth Bank should be ex tended with the ultimate aim of providing the whole of the services now rendered by th, private trading banks.
So, the objectives of which Lenin spoke can be traced right through ths conferences of the Australian Labour party, the utterances of Mr. Lang, and the remarks of the Treasurer in the report of the commission. In the light of these quotations, we can see the motive behind this legislation. These hills not only hand over to whoever may he the Treasurer of the Commonwealth complete control of the financial structure of this country, but also they hand over the control of investment and direction of advances. They involve also control of imports and exports of this country. In fact, practically all the necessary steps for complete control of industry are implicit in these proposals. The aim is perfectly plain. All this is being done in the regime of one of the most pleasant and amiable Treasurers who have ever entered this chamber.
There is an important question which is causing a good deal of agitation in the minds of the people of this country, but it is one which any one interested in this matter must ask. It is, “ Who is to control banking in the event of a conflict regarding monetary policy ? “ Is it to be controlled by the banks, the people, through the Commonwealth Government, or the Commonwealth Parliament? We say at once that it should be controlled by the people. The supreme and final authority must be the people, speaking through their elected representatives; but are they to speak through the Government or through the Parliament - there is a wide distinction between the two? As I have said, once these measures become law complete control of banking and of industry will be in the hands of the Government and not of the Parliament. That is wrong. If control is in the hands of the Government, the people may not know what is being done, whereas if it is exercised through the Parliament, legislation must be introduced, and the Opposition is aware of what is proposed, the press is informed, and ultimately the public is aware of it. The people may, if they disagree with a proposal, send those who introduced it about their business at the next general elections. Under government control, what is being done may never see the light of day. We know that the Treasurer represents the caucus, and that behind the caucus is the Australasian Council of Trade Unions, which is really the power which rules this country. Therefore, I answer the question by saying that control must definitely be in the hands of the people through Parliament.
Nothing is more important in the interests of stability in this country than a properly constituted Commonwealth Bank controlling our financial structure. Such a bank is vital in any nation, but is even more important to a young nation occupying a lange country. Australia is a primary producing country, and the return from our primary products is irregular owing to seasonal conditions. All these things make a properly controlled central bank indispensable. There must be a smoothing out of national finance. We must avoid so far as is possible, instability. Our financial history shows the urgent need for a central bank. We have had no fewer than five bank crises, the worst of which occurred in 1893, when no fewer than 40 financial institutions, including twelve banks, crashed. Throughout Australian history, sixteen banks have failed to meet their liabilities. That is a fact of importance to any one who looks forward with unmitigated joy to unleashed governmental control of banking. The inescapable fact is that a well-planned and regulated central banking system could have saved many of the consequences of financial slumps. Such a bank could have foreseen the situations that were likely to arise, and taken action in time to correct excesses which occurred in those periods. That .was borne out in the period which is contemporary to all of us, namely, the years immediately preceding the depression of 1930 and 1931. The period between 1920 and 1930 was one of great prosperity, hut it was not a regu- lar prosperity, and in it were two distinct, although small, financial crises. I have a graph which shows the fluctuations in the price of wool during that period. Studying it, one would imagine that one was looking at a map of the Himalayas, so high are the peaks and so deep the depressions. A graph of the fluctuations of wheat prices, or the prices of any other primary commodity, would tell the same story. Had we developed the science of central banking more during those years, a good deal of the results of the depression could have been avoided. In 1929-30 there was a catastrophic collapse of the prices of our exports and the national income fell by £200,000,000. The Commonwealth Bank Board said that, in view of the collapse of the national revenue, there must be reconstruction. Had the Government of the day worked in a cooperative spirit with the board and set about reconstruction quite early, a great deal of the misery experienced during those years would not have occurred. Later, the Scullin Government took such steps, but by that time confidence had been lost, depression and unemployment were rife, and it was left to the Lyons Government to place the country on its feet. The Commonwealth Bank Board was right in its assessment of the need for reconstruction, because at no time up to the present have the prices of wool or wheat reached the old levels. As our economy depends on those and other primary products, there cannot be satisfactory conditions conducive to employment until the costs of primary industries enable them to expand and progress. There will be need for a central bank in this country after the war. We shall then face a boom period in which there will he a big demand for labour and capital, both public and private, for at least five or seven years, with satisfactory prices for primary products. A year after Japan has been defeated, Great Britain’s purchase of the whole of the Australian wool clip will cease, and when Europe begins to recover an entirely different set of circumstances will confront our primary industries. Therefore, as in the past so in the immediate future, central banking will bc all-important. The question is, who should control it - one man subservient to the Treasurer, or a bank board? Undoubtedly, a bank board. I do not say that men appointed to the board become experts in banking immediately. But they should be drawn from the different activities of national life and bring to the board room a vision of what lies ahead, so far as it can be seen, in relation to commerce, agriculture, manufacturing, and so forth. Having men representative of different interests in the one room, giving expression to views formed from their own knowledge, experience and investigations, it must be possible to evolve as wise a central banking policy as is humanly conceivable, the machinery of banking being left to the technical experts. For that reason, I believe in board control. There is also the further reason that a number of men are much more amenable to responsibility than is one man. A board would be as nearly as possible independent of political control and would be apt to resist an attempt by any government to use the nation’s finances for party ends. Therefore, a grievous mistake is being made in dispensing with the board and instituting one-man control. As my leader (Mr. Menzies) has said, when the Liberal party is in office it will repeal these provisions and reinstate a Commonwealth Bank Board. We know what any political party is apt to do during an election campaign. The tendency is to bid for popularity, and money is needed for that purpose. If the banking system becomes subject to political chicanery, or the influence of pressure groups, that will be the end of stable financial conditions and of real security for the money of the people. The influences that can be exerted on governments by pressure groups at the time of a general election are well known.
I pay a high tribute to the trading banks. I admit that, over the years, they have made mistakes. But as I travel throughout the country I cannot look at a home, a farm, a factory, or even a road, without visualizing the assistance which has been rendered in those connexions by the trading banks. Nearly every developmental work has been made possible by assistance from that source. Government supporters greet that state ment with laughter, because, in the main, they have never used and do not know how to use the trading banks. A. necessary part of the future education in this country must be to teach the people the rudiments of the operations of financial institutions. When I visited the coal-mining areas I was instantly impressed by the fact that, although the miners were very highly paid, in the main their money was squandered. It is easy to convince people to whom banking is a mysterious science known to only a few persons, that there is something harrowing in what takes place behind the closed doors of banks. Education would cure a great deal of that trouble. I. believe that, in the main, the trading banks, particularly in the last 30 or 40 years, have given really good service. They are to be, or can be, hamstrung under the special credit provisions of the Banking Bill, by having their advances pegged at the 1939 level and not being allowed to expand. They will not be able to grow as the country grows, and any financial accommodation needed will have to be obtained from the trading section of the Commonwealth Bank. That is one of the methods by which they will be strangled. In almost every primary producing district, there are branches of the trading banks which have been developed on a regional basis. The personal relationship in regard to credit which has been built up between banker and client, is very close. If the trading section of the Commonwealth Bank is to exist side by side with those branches of the trading banks, there must be duplication of banking, and the resultant expenditure throughout the length and breadth of the land will amount to millions of pounds. The only alternative* will be the use of the present private banking institutions as agents by the trading section of the Commonwealth Bank, or the centralization of banking in the cities. I should like to hear from the Government which of those three methods is to be adopted. If the trading banks are to be restricted to the 1939 level, they may lend only to the soundest institutions - in other words, the very secure industrial enterprises, home builders and the like - and neglect the primary producer, who frequently has to be carried through very lean periods, and whose accommodation is heavy during the process of production and light when his returns come in. This matter is of vital interest to the people of the country districts. At the present time, the private banks always retain certain reserves, so that they will be able to provide finance to the primary producer in case of a drought. If they are not to be allowed to expand, they will be unwise if they do not select their clients and leave the big risks to the trading section of the Commonwealth Bank. That will be possible under the provision which pegs at the 1939 level the advances that may be made by the private banks.
The Governor of the Commonwealth Bank will have the power generally to fix interest rates in this country. Does that mean that there is to be a rigidity of interest rates? I recognize that it is wise and necessary that the central bank should exert a strong and an intelligent influence on interest rates. But any attempt to peg a general rate would destroy the interplay between rates, which in the main are governed by the element of risk involved. A ready means of destroying private banks would be available, because unprofitable rates could be fixed. There is the danger of the political control of interest rates. Inflation politics might demand low rates, because of their popularity. These could stimulate a boom, and make for the continuance of many war-time controls - which the people of this country definitely do not desire. There are many other points with which I should like to deal, had I the time, particularly the effect of socialist legislation on migration and capital, both of which we need for the development of our country. The answer to the question “ What has interest to do with capital?” is that it is the price of capital. Interest rates are, and should be, affected by the law of supply and demand. During the war, all sources of investment have been closed by lack of man-power, necessary financial controls, and the filling of Government loans. In the post-war period a different situation will arise. Although, to-day, low interest rates appeal to the Government, a different set of circumstances which will require different treatment will have to be faced after the war. The interests of the Treasury and the longterm interests of the nation are not necessarily the same. Falling rates under boom conditions are inflationary, because they depend on supply exceeding demand. The main aim in the post-war years should be financial stability, and a great demand for labour allied with cheap money could easily begin an inflationary movement that could operate against the best interests of the nation. The main factor which the Government should keep in mind with regard to interest rates is not only how they affect it as a distributor of public money, but how they affect the country as a whole and how they affect the entry into Australia, of people and capital for the development of the natural resources of the country.
Let me summarize my views of these bills in this way -
Nothing more insensate could be inflicted on the people, who look to the coming of others to share their taxation burdens, who expect investment to open up new jobs, and who hope for both new citizens and new capital to protect them in future from a similar danger to that which has just passed.
.- I do not intend to answer the argument, if argument it was, advanced by the honorable member for Deakin (Mr. Hutchinson) even in his peroration, much less to attempt to analyse his speech as a whole. As a matter of fact, I shall say very little about the ‘Commonwealth Bank Bill, because I am of the opinion that a bill of such magnitude and undoubted importance should be considered either analytically, or it should be given one’s benediction and allowed to pass into law, that, is, if one agrees in broad outline with thu measure as I do, therefore I do not propose to deliver an analytical address upon it. I have listened to a number of speeches regarding it. Last night I heard the carefully prepared, and on the whole condemnatory, utterance of the right honorable member for Cowper (Sir Earle Page), and I listened also to the speech of the right honorable the Leader of the Opposition (Mr. Menzies). As to the former, I do not deny that for the limited class which he represents it was an admirable effort. It seemed to me that the Leader of the Opposition had prepared a compendious work on the subject. If it was not a book, it was at least a booklet. He submitted it to the House in the form of a speech, being assured of unlimited time for his purpose, for at that stage of the debate the restrictions now operating had not been imposed. He was not able to give any assurance of unlimited powers of endurance on the part of his auditors, but that was not his fault.
Having listened to a number of other speeches, including that of the honorable member for Deakin, I have to confess that I heard the latter for the same reason as that of a gentleman listening to a more or less celebrated lecturer, who found that his audience diminished from time to time until it wa6 reduced to one. The lecturer said, “ T am grateful to you, sir, for listening si’ attentively’ and remaining to the end “. The gentleman who then comprised the audience replied, “ I am the next speaker “. I listened to the honorable member for Deakin because I happened to be the next speaker, and I may add that I have been mentally improved by having done so. I have come to tha conclusion that most of the objections to the bill raised by honorable members opposite are political ones, though directed to the point that the bill itself is political in character. The claim on the part of members of the Opposition that the bill is of a political nature indicates a firm conviction on their part that Labour will be in office for a considerable number of years, and that from their point of view political interference with banking means Labour interference. I remember hearing the late Sir William Irvine when he was speaking in opposition to proposals submitted to the people by referendum for alterations of tha Constitution. He was bold enough to say that he opposed the measures because, if they were endorsed by the people, Labour would be implementing the additional powers being sought.
– A very good reason.
– A very bad reason, in my opinion. Proposals for alterations of the Constitution should not be made for party political purposes. They should be regarded as improvements in the arena for political contests. Comparisons have been made between the speeches delivered on the bills now under consideration and that delivered by the late Mr. Fisher in 1911. It is now pointed out that Mr. Fisher insisted in that speech that there should be no political interference with banking. Two things should be considered in that connexion. One is the attitude of Mr. Fisher to the Commonwealth Bank and the other is what we mean by political interference. As to the former it should be remembered - and I speak as one who knew and respected Mr. Fisher - that he -was a cautious Scot and a rather conservative one. The genius and inspiration behind the bank was not that of Fisher, but of King O’Malley. Fisher was a good trade unionist with little imagination, and he was completely under the domination of his Attorney-General, a man named Hughes. I am not referring to the right honorable member for North Sydney - I. am speaking of 34 years ago. This gentleman, to whom I have disrespectfully referred to as Hughes, was not much interested in banking. He was already preening his wings for the flight which was later to take place. The honorable member for Deakin referred to the Brisbane conference of 1908. He was not generous enough to state the fact, which is mentioned in this little book by Professor L. C. Jauncey, which I recommend to honorable members, that the motion for the establishment of the bank was moved by Mr. O’Malley, who made a speech in which he detailed his intentions and the scope of the bill to be introduced. I could tell a story about how the proposal was introduced to caucus, but I shall refrain because it would probably be regarded as irrelevant. In any case, I Ho not want to follow the evil example - if I may use so strong a term - of the honorable member for Wilmot (Mr. Guy) who, ha ving been a member of the Labour party, from which he deserted, comes into this chamber, and from the other side, and as a member of a different party, discloses the secrets of confidential conferences which took place in the party room. T do not want, to do that. I may say, however, that the bill was somewhat, coldly received - well, it was received, at any rate, with lukewarm enthusiasm by Mr. Fisher - but Mr. O’Malley, with great subtlety, engineered it, into its place, and with the aid of a majority of the party sot it on it? road.
As for political interference, it is quite true that Mr. Fisher insisted, in his speech, that there should he no political interference with the bank. However, at that very moment he, a politician and the head of the Government, was moving the second reading of a bill which showed in the utmost detail what the bank was to be and what it was not to be. To say that because a proposal is made that the bank is to bo subject to the rule of law, there Ls on that account political interference, is the height of absurdity. I do not for a moment believe that the Treasurer, and his invaluable assistant now at the table (Mr. Lazzarini), are likely to poke their respective noses unduly into the workings of the Commonwealth Bank. I have no doubt that the bank will be conducted by the Governor and his advisory council, with a properly equipped staff of expert tellers, ledger keepers, &c, without any interference from politicians, especially from members of the Government, whose time will be well occupied in other ways. Mr. Fisher, in moving the second reading of that bill, was himself declaring for political interference, in precisely the same way in his day and generation, as the present Treasurer, in his later day and generation, has done in introducing the bill which we are now considering. The truth is that currency and banking, with limitations which, in my opinion, should not be there, are committed to the Commonwealth Parliament by the Constitution. I would have thought that, the Leader of the Opposition (Mr. Menzies) would have welcomed the rule of law in this matter as in other matters. I have reason to believe that he favours the rule of law, and that he thinks that important matters within the jurisdiction of the Government should be governed by that rule. The importance of the rule of law was emphasized by the Minister for Transport (Mr. Ward) in the excellent speech which he delivered on this bill last evening. I am frankly just a little bit impatient with the Government for its dilettante method of dealing with a possible clash between the Governor of the bank and the Government. The bill should have provided that when a clash of opinion occurs the opinion of the Government shall prevail, and that is all there is to it. As a matter of fact, it is my recollection that the chairman of the Commonwealth Bank Board during the Scullin regime declared, I think rightly, that if Mr. Scullin presented him with an act of Parliament, he, Sir Robert Gibson, would give effect to it. And it was Sir Robert Gibson - I hope I am in order in disclosing the fact at this late hour - who suggested the fiduciary note issue of £18,000,000, a very moderate sum, indeed, for the purpose which the Government had in view. This was the proposal put forward by Mr. Theodore, which was so incontinently rejected by the Senate, “ Nats “ as they then were. Now, the right honorable member for Cowper speaks in glowi ug terms of the bill which Mr. Theodore introduced at that time. He finds nothing but virtue in the splendid work of Mr. Theodore; yet it was his “cobbers”, if I. may use that familiar expression, in the Senate who rejected the bill in which the light honorable gentleman now expresses such extraordinary confidence.
It is true, of course, that Sir Robert Gibson well knew that the political situation was such that the Government led by Mr. Scullin could not pass a measure of the kind he mentioned. At that time, we had a Senate which was heavily weighted against the Labour Government. Now, r.he political situation is entirely different, and the Treasurer is in the happy position of commanding a majority in both Houses of Parliament, so that he may do what Sir Robert Gibson challenged Mr. Scullin to do. It is only right to say, as a tribute to the memory of Sir Robert Gibson, that so far from being the most reactionary member of the Commonwealth Bank Board, he was the least reactionary, and he was more in sympathy with Mr. Scullin in his difficulties than was any other member of the board. The reason for my impatience with the language of the bill is that in a democratic country, where the rule of law is supposed to prevail, the bill overelaborates the obvious supremacy of the Parliament and, indeed, obscures it by camouflaging any possible disagreement by much useless verbiage, and only in the last resort making it clear that the Government must finally accept full responsibility for its measures. I would have thought that that was obvious; that that was the kind of thing - democratic institutions, parliamentary representation, government by the people - for which this dreadful war is being fought. I have a belief that it is not for governments to go cap in hand to bankers. Let there be discussion and consultation by all means, but I have yet to learn that it is the function of any banker or other person to dictate the policy of the Parliament. Therefore, I am a little impatient with the way that the matter of a possible difference of opinion between the bank and the Parliament is camouflaged by what I regard as a superfluity of words. The rule of law must prevail, as in this case, and in the last resort the people are the judges. I have not agreed with every detail of the Government’s policy, even in regard to some fundamental matters, but I have never disputed the right of the Government, so long as it is supported by a majority in this chamber, to give effect, within the too narrow limits of the Constitution, to its own views. Let us consider briefly the theory of government by board and government by a governor. In principle, I do not think that there is any vital difference between a board of six and an individual governor ; ii all depends upon the choice of the man or men who are to be given control. The right honorable member for Cowper thought that control by a board, wisely chosen from his point, of view but from my point of view not so wisely chosen, was the better plan. But the representatives that he chose were not likely to give effect to the interests of the masses, although they were, no doubt, highly respectable and thoroughly conservative gentlemen.
I apprehend that some care will be taken in the choice of a governor from time to time, as occasion may arise, and that much attention will be directed to the fact that the person to be placed in charge of the Commonwealth Bank should be one whose views are known to be not altogether out of harmony with the views of the Government. At least, I hope so. I suggest to the right honorable member for Cowper that the single representative of Trades Hall interests could have been out- vo ted in the company in which he was placed, and therefore might safely have been re-elected’ from time to time by his Government. That remark has special reference to the right honorable gentleman’s statement that previous governments had repeatedly re-appointed a representative of Labour on the Commonwealth Bank Board. The right honorable member said that we should hold on to things which have done well. The Commonwealth Bank has done well, and the fact that it was established by a Labour government does not make its achievements any the less admirable. The right honorable gentleman thinks that we must attract a large number of people to Australia after the war and provide for them the amenities to which they have been accustomed. I pass that statement by, because on such an argument no progress or change is possible. The right honorable gentleman also said that the bill imposes no limit to the note issue. I. think that it should not impose any such limit. There is no limit now that it is a matter for a watch-dog Parliament which is responsible to the people. There are other accepted limitations; the various controls, such as control by caucus, may he passed by without argument in the light of the historical fact that the Government has pursued its way - some times wrongly, but for the most part rightly, in my opinion - in scorn of consequences. We may especially pass by references to communist control of the Labour party, since no Communist is accepted as a member of that party. In my opinion, that exclusion is right and we are the only party that does exclude them.
During this debate, the pledge of the Prime Minister (Mr. Curtin) against nationalization has been laboured to distraction, because, whatever this bill . is, it certainly is not nationalization, as the Minister for Transport (Mr. Ward) pointed out last night. In my opinion, this bill is an essential part of post-war reconstruction, and I hope that when it has been placed on the statute-book it will be so regarded. It accepts as a settled policy what we have been waging dreadful -wars to achieve, namely, popular control of, and respect for, parliamentary institutions. The bill does not in any way violate any principle of any democratic government, and I am confident that the present Government is sufficiently conservative - I say that with great respect - to be relied upon not to be tempted into dangerous by-ways. In my opinion, the Government has interpreted the emphatic mandate of the people correctly, and it seems well qualified to steer a safe course between the twin evils of inflation and deflation. The honorable member for Deakin (Mr. Hutchinson) and other Opposition speakers, said that the Government had no mandate to introduce this legislation. That is a rather curious statement, be- cause the fighting platform of the Labour party has been available for those who run to read. The honorable member for Deakin poses as an authority on the history of the Labour party; he told us - rather inaccurately, it is true - when the party introduced socialism and when it did not believe in socialism’, and so it would appear that he must be thoroughly well aware of the policy of the Labour party in regard to banking. It is to be hoped that those who will in future stand as candidates for Parliament in Labour interests will, at least, be familiar with the terms of the platform, fighting and otherwise. Therefore, the electors have little excuse for thinking that the Government would lightly introduce a bill of this character. I am satisfied that a bill of this character or even a better one - because we cannot achieve perfection in a moment - is highly popular in the electorate, and will afford an excellent justification for the prognostications of honorable gentlemen opposite that we shall be in office for a very long time.
– I do not propose to refer to the speech of the honorable member for Batman (Mr. Brennan), because a dissertation on political history would, exhaust so much time that I should not be able to deal with all the matters in the banking proposals that require attention. The Commonwealth Bank Bill and the Banking Bill are so closely interlocked that I propose to’ speak on both. The Treasurer’s second-reading speeches were remarkable for the number of occasions on which he referred to the Royal Commission on Monetary and Banking Systems, and to whose terms of reference I direct the attention of honorable members -
To enquire into the monetary and banking systems at present in operation in Australia, and to report whether any, and if so what, alterations are desirable in the interests of the people of Australia as a whole, and the manner in which any such alterations should be effected.
It was appointed specifically to do three things : Inquire into the systems in operation, report whether any alterations were desirable in the interests of the people of Australia as a whole, and, if so, how they should be made. It held its first public session on the 15th January, 1936, and held 105 sessions. It took evidence in every State capital from 200 witnesses, representing a wide cross-section of the Australian community. Its report was submitted to the Governor-General on the 16,th July, 1937. Never before or since has there been such a close examination of the Australian monetary and banking systems. The royal commission made certain recommendations. To read the two speeches of the Treasurer one would imagine that in the bills the Government was adopting those recommendations and was proposing to implement them. Nothing could be further from the truth. It made many recommendations concerning the .Commonwealth Bank and the trading banks, hut they were made dependent on certain basic axioms, and, if those axioms are not to be observed by the architects of the new hanking structure, the recommendations founded on them must fall to the ground. Those fundamental axioms were - (1) That the Government of the Commonwealth Bank by a governor, the Secretary to the Treasury, and six directors was generally satisfactory and should be continued; and (2) That the Central Bank should regulate the volume of credit and currency and the trading banks distribute credit to credit-worthy borrowers.
If we examine those axioms, we shall see what was in the mind of the commissioners when they advanced them. I remind honorable members that, although the Treasurer dissented at some length from the majority report, he never suggested that the bank should he placed under the control of a governor without directors. In chapter VI. of the report, attention is drawn to the fact that -
The Australian economy is subject to external influences, such as movement of world prices for foodstuff’s and raw materials, which form our chief exports, and to internal influences in the form of seasonal fluctuations, which affect the nature of primary production. It is, therefore, essential that the monetary and banking systems which have to serve an economy of this kind should be kept as flexible as .possible to allow the necessary response to changes in those conditions.
How very greatly these influences of external price variations and internal seasonal conditions may affect the Australian banking system is shown by considering two tables in my addenda to the commission’s report. According to the
Macmillan Report, 1931, the classification of. advances on various dates from October, 1929, to March, 1930, of the London clearing banks showed that advances to agriculture and fisheries represented 6.9 per cent, of all advances, whilst a classification of Australian trading bank advances in 1936 showed that advances to the agricultural and pastoral industries represented 47.7 per cent, of all advances. Those figures show the remarkable difference between Great Britain and Australia; yet we must remember that agriculture is the United Kingdom’s third greatest industry whilst primary production is Australia’s second. A banking system, where almost half of the advances of the trading banks are to an industry whose prices are largely dependent on two uncontrollable factors of world prices and seasonal conditions in a country of very uncertain rainfall, must be as flexible as possible. The royal commission recognized this, and designed its report tq achieve it, although the commission fully realized and made it perfectly clear that the Australian trading hanks should not be allowed to operate uncontrolled. Control there must be, but it should be such that it will enable the greatest flexibility in the monetary system. The whole tenor of the Treasurer’s speeches implies that the Governor of the Commonwealth Bank, his advisers, technical officers and economists, both classes of men who have not had to contend with the practical affairs of life, will be endowed with some super-knowledge, which, enabling them to foresee the future, will fit them to navigate the ship of state free from all the economic perils and dangers that may lie ahead. It is easy to be wise after the event, and the whole band of economists, Treasury officials and others in the service of the bank, whom the Governor will have to advise him, did not show any uncanny prescience in forecasting events before the great depression of 1930. As far as I recollect, only one economist foresaw clearly the pending depression. He was the late Professor Shann, who wrote in 1927 The Boom of 1890 and Now The fact of the matter is that these theoretical gentlemen are no wiser than the bankers were before the depression in forecasting events; they are excellent economic coroners, and no one can hold post-mortems better than they. But if the Government wants the best advice as to what is likely to happen it must turn to men in contact with business all the time or with practical experience. I believe, as the royal commission recommended, that it is essential for the most efficient operation of the central bank that it should have a board of directors made up as the existing act has laid down.
The second axiom that the royal commission laid down was that the central bank should regulate the volume of currency and credit and that the trading banks should be responsible for its distribution. It suggested, however, that the central bank should advise the trading banks as to the types of industry in which investment should be encouraged. This naturally followed from what I have said about the necessity, which the commission saw, to keep the Australian banking system as flexible as possible owing to the peculiar circumstances of the Australian economy. The whole aim of the banking report, following on the terms of reference, was to make recommendations for such reforms and changes of the existing system as would be best for the people of Australia as a whole. The commission was not concerned with the preservation of the existing rights and privileges of the trading banks, or with the fetishes of any political party; all that it was determined to do was to make recommendations for the people’s benefit. The system of a central bank controlling the volume of credit and currency and leaving the distribution of it to the trading banks seemed the best way to maintain the flexibility so necessary to the Australian economy. What this system ensures is that the requirements and necessities of trade and commerce shall be met with the maximum of speed, that delays shall be minimized, and that in the event of the accommodation sought not being received from the original bank to which application may have been made, there are always others to which an applicant may turn. That that was an empty theoretical view, I am sure many honorable members will realize from their own experiences and the stories of others. The Treasurer makes great capital out of the fact that trading banks work for profit, and he claims that therefore they should not be trusted with the lending of money to people, because they will act in their own selfish interests and not those of the nation. I remind him that the unemployment numbers in this country are always lowest when the business activity of the community is at its highest, and that, although the banks may be institutions for making profits, they realize than their prosperity is bound up with that of the community and that if the community is not prosperous, neither will they be.
Under the Government’s proposals neither of those basic axioms is to be carried out. The bank is to be governed solely by a governor, who is to be the mouthpiece of the Treasurer of the day and is to accept the day-to-day policy that he lays down according to the views of the party in office. All the highsounding phrases of the Treasurer’s speeches are meaningless, or take from the people the very safeguards that the bills are supposed to protect. For instance, could there be anything worse than to have the sole controller of the nation’s financial affairs subject to the government of the day, not on great matters of policy,but on every-day banking details. That is political control of banking, naked and unashamed.
– I should like to know, Mr. Deputy Speaker, whether the honorable member is in order in reading his speech. If he is not reading his speech, I should like to know the name of the author of the document from which he is quoting.
– Under the Standing Orders no honorable member may read his speech. The honorable member for New England has copious notes, to which he appears to be referring.
– Let us look at what the great leaders of Labour of the past thought and those of to-day think of political control of banking. The British ex-Minister for Labour, Mr. Ernest Bevin, speaking of the Bank of England, said, “it should remain free from political influence “. The first plank of the scheme for a national bank put before the Labour conference at Brisbane in 1908 by Mr. King O’Malley was that the hank should he absolutely free from political control. The essential condition laid down by Sir Denison Miller, for his acceptance of the Governorship of the bank was “ that the bank was to be absolutely free from political control “. Australian Labour has departed far from its early principles and those of Labour in other parts of the Empire. The royal commission laid down certain conditions with regard to major differences on policy between the Bank Board and the Government. Where differences were irreconcilable, the commission recommended that should the Government give an undertaking that it accepted full responsibility, the bank should then carry out the policy of the Government. Again, I come back to the basic principles of the report, which were that a recommendation like that was made only when the bank was governed by a board of directors. There is much force in that for, if the directors believe that the policy of the Government is inimical to the interests of the nation, they can resign and bring the matter before the public. The Government would then have to decide whether to continue its policy in the face of public opinion or abandon it. The directors can do this, since they are free men not dependent on their position on the Bank Board. They are not the employees of the Government, as are members of the bank staff and public servants like Treasury officials who would have the very reasonable fear that they might imperil their whole future if they had to sacrifice their present careers by resigning because they differed with Government policy. How very far the Government has diverged from the recommendation of the commission with regard to the distribution of credit by the trading banks is shown by an examination of clause 27 of the Banking Bill. Absolute power is given to the Commonwealth Bank to direct the trading banks as to the purposes for which advances may be made and the policy in relation to advances. This is very different from the recommendation of the commission, which was that the Commonwealth Bank should cooperate with the trading banks and advise them as to how they should shape their advances policy. The matter was one for mutual discussion, but the trading banks were not to be coerced. One wonders why the Commonwealth Bank should be any better judges than many others in the Commonwealth as to what is necessary in the interests of the people. The experience with regard to the working of other Government institutions, particularly the recent one with the housing trust, is not going to make people believe that there will be such wonderful capacity shown by the Commonwealth Bank, plus the Treasury, regarding the policy best suited to the Australian people.
When we consider the matters of which I have already spoken, and the hypocritical quotations from the commission’s report to make the people believe that the bills now before the House are in line with the views of the commission, and are only being brought down by the Government to implement those recommendations, then we can see that there is another objective in the mind of the Government which it has not explained to the people up to the present.
The objective, of course, is to destroy the present banking system and nationalize it by making it impossible for the banks to carry on. This is a much simpler and cheaper method of getting rid of the banks than to pay them compensation for their existing businesses, as would have to be done if the Government took them over now. The policy of the Government was very clearly put by the Treasurer in his memorandum of dissent to the report of the royal commission, for he stated that there could be no progress for the community while there were privately owned trading banks.
– I rise to order, Mr. Deputy Speaker. I suggest that the honorable member has ceased quoting from copious notes, and is now reading his speech.
– It is true that the honorable member for New England is reading certain passages at length from his notes, but he is in order.
– I propose now to look at some of the specific provisions of both bills. But before doing so, I would like to mention that, whilst the Government was denied certain powers at the referendum last year, it is now attempting to use those powers through a perversion of the banking power which it possesses under the Constitution.
I propose to deal first with the Commonwealth Bank Bill. The bill says that the bank shall act as a central bank, and then proceeds to show that it will act in many other ways besides, and whether all these other activities will be beneficial to the Constitution in its central bank capacity is hard to say. I agree with the following passage in the report of the royal commission which states : -
It is not to lie expected that the regulation of iiic volume of credit in Australia could be achieved by a central bank which merely copied thu methods appropriate to a different and much more highly specialized monetary and banking system.
Further, many of the powers and means which the Commonwealth Bank may have to use over the control of credit are not considered necessary in other countries. Under the bill the Governor of the Commonwealth Bank is instructed to develop the general banking business of the central bank.
– I rise to order, Mr. Deputy Speaker. I have reason to believe that the honorable member is reading his speech entirely. Roneoed copies of his speech have been circulated to the press. Is the honorable member in order in reading his speech?
– The Chair has no knowledge of the circulation of copies of any speech to the press. The Chair has already ruled twice that the honorable member for New England was referring to copious notes; he appears to be still doing so. The Chair will restrain the honorable member if he should appear to bc reading his speech.
– The trading bank power in an economy like that of Australia is a very necessary one for a central bank to have, but whether it will be an effective power if it is used in violent competition with trading banks instead of merely as an adjunct to the central banking powers is very doubtful. Evidence given before the royal commission by the Commonwealth Bank representatives showed that the general banking powers were regarded “ as a favorable adjunct to central bank control in the power they confer to influence interest rates, to expand advances, if necessary, and to provide facilities which the trading banks may refuse or may not be in a position to supply:’ The commission stated that, in its opinion, Mr. Chifley dissenting, “ This is a proper practice for a central bank to adopt”.
If a central bank in its trading department enters into full competition with the existing trading banks, then a time will arrive when either the banks will be destroyed and no longer function, or they will he functioning and the effect of the competition of the central bank’s trading section will be lost, for the purposes of implementing central bank action. Being in full and open competition all the time, such action as a rise in the deposit rates of the general banking division of the central bank to alter the cash position of the private hanks would not be as effective as if the central bank were not in direct competition, but suddenly stepped into competition. On the other hand, if the central bank desired to make the position of the trading banks more liquid, it would be able to do so more effectirely by giving extra credit to the borrowers from the Commonwealth Bank or by making direct loans to the tradingbanks. How few customers it is necessary to help in order to have great results from the point of view of a central bank is shown by the action of the Commonwealth Bank in the years of the depression, when it was necessary to bring down the rate of interest on loansfrom pastoral houses to their clients.
– I rise to order, Mr. Deputy Speaker. I have been observing the honorable member for New England. He has just read every word from a page which he has just turned over, and1 he is proceeding to read continuously from a speech which has obviously been prepared for him, or ‘by him, before hecame into the House. I submit that thetime has arrived when the honorablemember should be restrained.
– TheChair has already given three rulings on the point raised by the Minister for Information. Apparently, the honorablemember for New England has copiousnotes to which he is constantly referring. I ask him not to be so constant in his; reference to his notes-
– In New South Wales very few of the wool-broking firms bank with the Commonwealth Bank, but it was only necessary for the bank to lend money to those firms at a rate below the ruling rate charged by the other firms, and straightaway the latter had to come into line or else see their clients going to those firms which were prepared to lend at cheaper rates. That was done with very little cost to the central bank, and was purely a central bank operation to lower the rate of interest, for wool-growers or farmers borrowing through the firms; it must also have influenced all interest rates for primary producers. Had the central bank been vigorously pushing its trading bank operations as against private banks, then it might easily have hesitated to do something, which was going to cost the trading bank division of the central bank a lot of money; done in the way it was, it cost the central bank very little indeed, but had the effect of causing all other financial institutions lending money to primary producers to lower their rates. Actually, the instruction in the bill to make the central bank enter into competition with the other banks may cost the borrowers more in interest rates than if the central bank used its trading powers as an adjunct to its central bank business, and not as a weapon to destroy the private banks.
Finally, let me say that there does seem to be a great element of unfairness in using the trading banks’ own funds to compete with them. I know that the Treasurer recognizes .that, if the general public realizes this, it may have a bad effect on public opinion, for the Australian is above everything a sportsman, and hates to see unfair play, whether in politics or in sport. The Treasurer has made the statement, which is not true, that the deposits of the trading banks with the ‘Commonwealth Bank will not be used in competition with them.
– I rise to order, Mr. Deputy Speaker. Is the honorable member in order in stating that what the Treasurer has said is obviously untrue?
– The honorable member would not be in order in saying that a statement made by the Treasurer was obviously untrue.
– I did not say that a statement made by the Treasurer was obviously untrue. In his speech the Treasurer said -
It is provided that the deposits of the trading banks with the Commonwealth Bank shall not bo kept with the general banking division, and consequently, this will remove any grounds for complaint that competitive activities may be conducted with funds deposited by the trading banks.
– I rise to order. The honorable member for New England has not withdrawn the words which the honorable member- for Eden-Monaro alleges he used, namely, that the statement by the Treasurer is obviously untrue.
-The . Chair asked the honorable member for New England whether he made that statement, and if so to withdraw it. The honorable member for New England said that he did not make the remark to which exception was taken. Therefore there is nothing for the honorable member to withdraw.
– I rise to order. Honorable’ members opposite are raising frivolous points of order to waste the time of the honorable member for New England.
– The honorable member has not raised a point of order, and I ask him to resume his seat.
– I ask that the honorable member for Balaclava be requested to withdraw the statement that honorable members on this side of the chamber are raising frivolous points of order. The points that have been raised have been serious. The honorable member foi New England is reading his speech from a prepared document, and that is contrary to Standing Orders.
– Order ! The honorable member for Martin ‘ has not raised a point of order. I ask the honorable member for New England to continue his remarks.
– Under clause 13 of the Commonwealth Bank Bill, the bank has power to lend and ‘borrow money and under clause 16 the general’ banking division has all the powers which are conferred on the central bank under clause 13, so that the central bank can lend any amount of the trading banks’ deposits with it to the general bank for purposes which may be in direct competition with those banks. It seems to me that if the Government desires to exercise to the full the functions of the general banking division of the Commonwealth Bank, and not merely as an adjunct to the central bank powers, it should set up an absolutely separate bank to conduct general hanking business. That bank should have applied to it the same rules and regulations as apply to any other trading bank. For instance, it should be compelled to make deposits with the central bank; but if the Government desires to do this, the central bank will have to forgo its trading bank activities.
– I rise to order. Is the honorable member for New England in order in reading a speech prepared for him by the private banks?
-The Chair has already ruled on that point.
– A most disquieting feature of the Commonwealth Bank Bill is that the Government has decided to abolish the statutory reserve which was held against the note issue, and not to substitute anything for it. This matter was fully dealt with in the report of the royal commission, and the conclusions which the commission reached and the recommendations which it made, were in no way similar to what the Government proposes. The commission considered that the necessity to have a reserve against the note issue had ended with the passing of the convertibility of notes into gold, and that as the reserve consisted of practically all sterling, this might be used to better advantage in times of stress than in being locked up to prevent a greatly expanded issue of Commonwealth Bank notes by requiring the holding of 25 per cent, of sterling against the amount of notes issued. The commission considered that this would not be an effective check because if the Government desired to expand the issue, it had only to raise the rate of exchange which would immediately allow an expansion, since the value of the sterling cover would be increased in. Australian currency. But the commission recognized the extreme danger that has existed in all countries, at all times, since the invention of paper money, of permitting unrestricted issues of currency. It recommended, therefore, that there should be a strict limit placed on the note issue. When the commission made this recommendation there were also two other checks which this hill will remove, first, the fact that there was a board of directors, and, secondly, there was no political control of the bank. These were valuable safeguards. The true value of a paper issue lies in the confidence which the people have in it. If this confidence be lost, then the currency rapidly becomes valueless, and there is a flight from it, shown in terms of rapidly rising prices with the destruction of the real value of all wages and savings. A curious fact about all these monetary depreciations which have taken place so often throughout history is that the authors of the schemes always believe that their particular kind of tinkering at the currency is quite harmless and will only act in a beneficial way to the nation. For instance, the Treasurer said -
It must be appreciated that in modern banking policy more emphasis needs to be placed on the control over that part of the credit base which consists of deposits with the central bank, rather than over the mote issue, which is only a reflection of credit policy.
The same kind of rubbish has been uttered in all countries. In banking, whether modern or old, there are certain laws which, if broken, will exact the same penalty. For a moment I desire to take honorable members back to some phases of the great inflation which took place in Germany in the years 1920 to 1923. I propose to make some references to the presidential address delivered by Lord D’‘Abernon to the Royal Statistical Society on the 16th November, 1926. The title of the address was the “ German Currency : its collapse and recovery 1920-3926 “. In his introductory remarks. Lord D’Abernon said -
A striking proof that an impartial account of what occurred in Germany may be of use is to be seen in the fact that, although the German crisis is only three years old, similar errors of currency policy are being committed in other countries.
If one studies Lord D’Abernon’s address, one finds that the point which he makes most strongly is that the disaster to the Germany currency is attributable to two prime causes, firstly, inadequate appreciation of the danger involved in an ill-regulated issue of banknotes, and, secondly, reparation payments. However, he is careful to explain in a footnote that the first was the initial cause, as inflation had been re- sorted to in Germany during the war years. On the 7th August, 1923, Dr. Havenstein, then President of the Reichsbank, speaking before the Reichstag Said -
The Reichsbank to-day issues 20,000,000,- 000,000 of new money daily. The note issue at present amounts to 63,000,000,000,000; in a few days, therefore, we will be able to issue in one day two-thirds of the total circulation.
The theoretical advisers to the Government of Germany in those days stated that the amount of internal currency in circulation had little influence on its external value. The latter was determined, so they contended, mainly by the passivity or activity of the trade balances. Their modern prototype is the Treasurer, and his theoretical fawners and flatterers give him some equally silly reason why there is no danger in doing what the Germans did and why the results will not be the same. On the 15th November, 1923, the final catastrophe came and the mark had lost all value. After that came the recovery, with the new Rentenmark. The reason for this, according to Lord D’Abernon was that the public had, apparently, received a currency in the intrinsic value of which they had confidence, and of which the issue was strictly limited by law. The lessons of the German inflation should not be forgotten. Even now the Treasurer should realize that to leave the note issue without a reserve and without limitation is just laying the foundation stone for some future collapse of the monetary unit. This would re-act with disastrous results on the savings of the poorer sections of the community and the wages of the toilers. Inflation is the cruellest scourge which any government can inflict on its people, and, therefore, to bring about a set of circumstances which may easily lead to this is to show a complete lack of regard for the welfare of the people. The commission did not at any time envisage a note issue without either reserves or limitation. That would mean national suicide, because inflation would occur on the first occasion when a weak government found itself embarrassed by budgetary disequilibrium, or, put plainly, by failing to make ends meet. Already one government financial authority, the former Assistant Treasurer (Mr. Lazzarini), has explained to the people, in his booklet TheHowin Post-war Planning, how governments will raise money for their programmes by simply writing a credit in the books of the Commonwealth Bank, against which notes will be issued in payment for services and goods. This simple process will be carried on until the issue becomes valueless, as it did in Germany.
In the Banking Bill, under Divisions 4 and 5 and Part III. - foreign exchange - the most rigid controls and restrictions are laid down for the absolute control of advances and investments, mobilization of foreign exchange, and the prohibition of imports and exports. Clause 29 provides, inter alia -
Where the Governor-General is satisfied that it is expedient so to do, for the protection of the currency … he may make regulations . . . for and in relation to.
– I rise to order. Will you, Mr. Deputy Speaker, permit other honorable members to read their speeches, and thus have the same privilege as the honorable member for New England?
– The honorable member for New England is referring to copious notes, and is quite in order.
– There are two things which should he remembered about this power : First, it is to be exercised by a bank without directors, at the whim of the Treasurer of the day, and without the matter having been brought up in Parliament; and, secondly, this power will enable the Treasurer to demand from a foreign corporation established in Australia whatever foreign funds or securities it may have outside Australia, whether the funds for their purchase had or had not been made in Australia. In these circumstances, is there any likelihood of the Commonwealth obtaining that investment of outside capital which the Deputy Prime Minister (Mr. Forde) has told the people of Britain and the United States of America we are so anxious to obtain?
The safeguards which the bill contains for the alleged protection of the currency are, to use the words of Lord D’Abernon, “ ineffective correctives of a fundamental error “. His Lordship said -
The measures which history shows that embarrassed Governments invariably resort to . . and which are of more than doubtful efficacy . . . may ,be classified as ineffective correctives of a fundamental error. They were (1) the .policy of the so-called mark intervention, whereby the Reichsbank succeeded in losing the main portion of its gold reserve. (2) The legislation to control dealings in foreign exchange, whereby a whole network of artificial measures was built up in the vain hope of establishing some species of equilibrium.
This is exactly the power which the Australian Government proposes to give to the Governor of the Commonwealth Bank for use on the instructions of the Treasurer. Public confidence in the currency is a fundamental requirement. Copernicus, in 15.26, wrote to King Sigismund of Poland : “ Money loses its value when it has become too much multiplied “. That lesson, so clearly stated more than 400 years ago, has not yet sunk into the minds of the members of the Government. I regard the failure to place any limit on the issue of notes as one of the worst features of this legislation, and one likely to do more harm to the people of Australia than will any other part of the bill.
Another matter on which I desire to touch is the provision for special accounts to he established with the Commonwealth Bank. This is making permanent what was created for the purposes of war, and was a necessity ‘because of the conditions arising out of the conflict. Honorable members will recollect that the Fadden Government made an undertaking with the trading banks concerning war-time profits, and for preventing a secondary inflation- Later, the terms of. this agree- ment were embodied by the present Government in National Security Regulations. Under section 19 of the Banking Bill, there must be transferred to the special account of each bank established by it with the central hank the amount then standing to the credit of that bank’s special account under the National Security (War-time Banking Control) Regulations.
Under regulation 9, the trading banks must lodge in a special account with the Commonwealth Bank such part of their “ surplus investible funds “ in accordance with a plan approved by the Treasurer. It will be noted that under the National Security Regulations the plan had to be approved by the Treasurer. At the time of the issue of the regulations, the bank was governed by ,a board of directors. In future, there will be only the Governor, and he will have to do what the Treasurer says; therefore, the formality of approval .by the Treasurer has been removed. What this provision means is that the Commonwealth Bank may call on the trading banks to deposit with it all their surplus assets above the total assets of the balancing days in August, 1939. Thus, the trading banks will not be able to increase their advances at any time beyond the investible funds which they bad at that date, either in totality, or as individual holdings. Therefore, their businesses, in effect, will be limited to what they were at the date mentioned, and the business of one bank must not expand at the expense of that of another. Any business which a .bank loses must pass to the Commonwealth Bank alone. This system will apply a rigid control, which will entirely abolish the flexibility of the banking system.
The royal commission recommended that the Commonwealth Bank Board, with the consent of the Treasurer., should have the power to fix a percentage of a trading bank’s liabilities to its depositors in Australia, which amount the bank would have to deposit with the Commonwealth Bank. Each trading bank was to keep on deposit the same percentage of its liabilities. The authority to requisition should not remain in force for more than six months after the consent of the Treasurer had been given, but the Treasurer should have the power to consent to its extension for a further period of twelve months. In any period of two years, the power should not be exercised for a longer period than eighteen months. I submit that this was a much better proposal than that embodied in the bill. It did not prevent the development of the banks’ businesses in competition with each other. It provided for the same percentage to be deposited by each bank, so that there could not be discriminatory action by the political party in power against any bank that was not regarded favorably. Under clause 20 of the Banking Bill, the discretion lies with the Treasurer to give differential treatment to individual banks. This may lead to all manner of corruption and the most spiteful use of political power. In addition, the recommendation of the royal commission differed very greatly from the present proposals, in that it did not recommend that control of this type should have any permanency. It will be noted that it could not continue for a longer period than eighteen months in two years.
The commission considered that if this power had not achieved in eighteen months what it set out to do, then the whole matter should be brought before the Parliament.
Division 3 of the .Banking Bill makes permanent the present rigid controls on the banking system. It hands to the control of the bureaucracy and the politician the whole of the banking system of Australia. Time and again the royal commission in its report emphasized the necessity for a flexible banking structure. Under these proposals, Australia is to have one of the most rigid and inflexible banking structures that the world has ever seen.
The only other matter to which 1 wish to refer is the proposed control of foreign exchange by the Commonwealth Bank. I agree that the central bank of the nation should be responsible for the control of the external value of the nation’s currency, so far as it ‘> able to do so. It is most important, however, that, the controllers of the central bank shall be representative of all classes in the community, so that they may view the exchange picture through the eyes of the whole community, not only through those of the politician, the Treasury official, and the theoretical economist. I remind honorable members that the royal commission expressed the view that one of the factors which, above everything else, had led to the betterment of economic conditions in this country and thus had eased the depression, was the smashing of the bank exchange rate during the regime of the Scullin Government. That administration, as well as the Treasury and the Commonwealth Bank, did everything possible to pin down the currency of Australia, first to gold and then to sterling. Action taken by the Bank of New South Wales, through its manager, Sir Alfred Davidson, smashed the exchange rate. My friends opposite, who claim to represent pastoral areas, should tell their constituents that under the proposal of the honorable member for Calare (Mr. Breen), that the exchange rate be restored to par, the price of every primary product in Australia will be reduced by 25 per cent. If the economy of Australia is to be tied to a fixed exchange rate, the people will be screwed down and depression will be brought to their homes as they were in 1929 and 1930, owing to the excesses of the Scullin Government.
– The honorable member’s time has expired.
.- The bills now before us are among the most important that this Parliament has been asked to consider for many years. I desire the electors of Hume and the people of Australia generally to know where I stand on the subject of banking reform, because, unless these proposals be implemented, chaos and confusion will reign after the war. I advocated reform pf the banking system as contemplated in these bills from every public platform from which I spoke during the election campaign, and I am convinced beyond the shadow of a doubt that .the people will welcome them. I intend to quote from a report published in the Melbourne Age of Friday, the 16th March last, of a conference of the Victorian Wheat and Woolgrowers Association, in order to convince the people that the Labour party is not alone in its support of the measures before us.
People whom the Opposition claims to represent have stood four square in supnort of these proposals in the first test of public opinion regarding them. The press of New South Wales completely blanketed the proceeding at the conference to which I have referred.
– What did the farmers of Hume say?
– Before proceeding to remind the House of what was said at the conference in Melbourne, I shall read from a letter which I have received from a wealthy squatter living at Tarcutta -
My husband and I were unable to listen to your broadcast from Canberra, and hoped to read some report of it in the local paper, the Wagga Advertiser. However, we were disappointed.
Of course, one would not expect to read much about the broadcast in that journal, because it is tied up with the same interests as those represented by the Opposition. The letter proceeds -
We think it would be splendid if parliamentary speeches and debates were broadcast, as in New Zealand. We are keenly interested in matters now before Parliament, particularly the new banking legislation. We would like YOU to know that you have our keen support. We think, too, that the majority are in the mood to see this legislation put through and consider it important and necessary.
Unfortunately, this majority is in the main inarticulate, or, apparently, indifferent, and we hope that, through not expressing their approval you will not be discouraged into giving way to criticism by the Opposition, which is so powerfully supported and organized by a wealthy and alert minority. Though for the most part the public is fairly ignorant of banking policy, this public majority has come to be quite sure that something is quite wrong with present methods, and that it is necessary to make some drastic alterations.
That is not the only letter which I have received from my electorate on this subject. Telegrams from vested interests and all the baits held out have no effect on me, because unless these proposals are implemented we shall be only playing with the people. The present Government has been returned to do the right thing in the interests of the nation.
What did the representatives of the primary producers of Victoria say at their conference in Melbourne? The report published in the Melbourne Ac/e is headed “ Farmers support bank bills - Financial continuity considered essential “. It is as follows : -
Delegates to the Victorian Wheat and Woolgrowers Association Conference decided unanimously last night to support the Federal Government’s proposal to establish the Commonwealth Bank on its original charter and to abolish the bank board as a necessary measure of post-war rehabilitation. It further urged that a representative of rural industries should be appointed to the proposed Commonwealth Bank advisory council.
More than 200 delegates voiced their approval of the bank bills in their speeches or by applause. This is the first test of opinion in Australia by an organized body of primary producers.
We know how the forces of the Opposition went into their dug-outs when the farmers of Victoria spoke. The report of the conference continues - “ Control of banking is especially necessary in the post-war period “, declared Mr. F. W. Mitchell (Lalbert).
He said that unless the National Government had continuity of financial policy, it could not run the country. If credits were cut off, depression would follow. The national credit of Australia must be used for the benefit of the people. If financial policy was not stabilized, then the prices for primary products could not be stabilized.
Mr. A. C. Everett (Brim) said he wanted to remind wheat-growers that when they were offered a stabilized price in 1930, the Commonwealth Bank refused the Government the money to pay growers. The result was that wheat sold at ls. 6d. a bushel. No stabilization plan was safe and no Government could live up to its promises unless it controlled the banking system.
When the war was over, he said, the trading banks would follow a policy of deflation to use up their excess deposits, which now amounted to £500,000,000. “ Bankers are dealers in debt “, he added. “ No uncontrolled banking system is going to pay good prices for commodities so that we farmers can pay off our debts. If we are to have stabilization, we must have stabilized bank.”.
After the last war, it was said that nothing was too good for the soldier. “ And nothing was what they got “, he added. “ This was due to depression caused by an unstable financial system.” “ The farmers’ very existence, other than as peasants, depends upon the success of their battle with purely metropolitan interests “, said Mr. J. C. Gorman (Rennie).
Successful city businessmen were usually appointed to a board and usually went from one board to another. They did not think of the interests of rural industries on a wide basis. He urged the appointment to the proposed Commonwealth Bank Advisory Council of a representative of rural industries.
Mr. W. N. Pearse (Donald) said enough propaganda hud been sent through the post and published in newspapers by the banks to convince him they had something to lose by the proposed legislation. For that reason alone, he would urge conference to support the policy behind the bills.
That is exactly what the farmers of Victoria and New South Wales are thinking. 1 now quote from the publication, A New Charter for Australia, by Stanley F. Allen, as follows: -
A Banker’s Confessions should Count.
Since the above Charter was first circulated, The Daily Mirror, Sydney, published a series of articles from Sir Vincent Vickers which exposes the money trick. Portion reads -
Unless we can contrive to design and establish an improved and reformed financial system, which is the first essential towards a new and better economy in our own country, no satisfactory outcome of the war is possible.
It would have been wise to have expended some of our energies in strengthening our home defences by placing democracy in an impregnable position under a money-machine managed and controlled by its Government and worthy of the public confidence. The Daily Mirror, (24th October, 1941 ).
Sir Vincent C Vickers, November, 1939, after 22 years a director of Vickers Limited, a director of the Bank of England from 1910 to 1919, and a deputy-lieutenant of the City of. London, has lifted the lid off the bankers’ box of tricks in his book Finance in the Melting Pot. “ I hold views “, he says, “ which the London press would not publish “. Let us recognize that great social change is coming to this country also, and that a serious social upheaval, even in this country, is not impossible; that prompt action only can ensure that the future shall bring reform and not revolution.
I have watched for ten years every move, every wriggle, of financial policy; I have seen the effects of the greatest financial blunder the world has ever known - our return to the gold standard after the war.
It is mainly the money system which is dragging us hack, because it remains fundamentally as it was a hundred years ago. As long as the present system is allowed to remain unchanged, nothing can permanently alter the present tragic state of affairs or resolve this devastating economic paradox.
It is the same story wherever you turn. Reform and progress, development in every field of human activity is being held up by want of money and the persistence of an outdated money system.
In a book written just prior to his death, viz., Economic Tribulations, he says - “ If once we can decide what it is that constitutes a barrier between the producer and the consumer, whilst both remain dissatisfied, we shall have discovered not only the main cause of the world’s discontent and of the existing enmities and jealousies among the nations, but at the same time the true road to the peace of the world “.
Of the Enemy Within, he say. “ Are we now fighting to uphold freedom and democracy, or are we fighting to uphold and strengthen the dictatorship of international finance? But this world power, with its permitted control of the national money supply and with its support of a monetary system that has plunged every nation into the miseries of irretrievable debt and the world into economic strife, should not be under estimated “.
The Government’s proposals will, I believe, be the salvation of Australia. Orthodox financial institutions, and the big money powers, have been the real rulers of Australia in the past, and they have wielded their power unscrupulously in their own interests. During the depression they were merciless. As a business man, I remember that my store was choked with goods in which only the silver-fish and moths seemed interested. Every second man who entered the store wanted an old pair of strides or a pair of old boots. Every day we saw dole queues lined up. Farmers were driven to the wall through the operation of the banking system as we know it to-day. The banks are using every device of propaganda to confuse the people, because they know the Government intends that finance shall be the servant of the people instead of their master. The private banks have, in the past, issued 90 per cent, of the community’s money, and have been in a position to dictate to manufacturers, farmers and governments requiring loans or overdrafts. The bill before us will make Parliament supreme, and will enable the people to derive benefits from the banking system, which, until now7, have been practically monopolized by the private banks.
The hanks have issued circulars and poured out a stream of misleading propaganda. They may succeed in deluding some of the people, but it is gratifying to know that the Primate of Australia, Dr. le Fanu is among the many honest thinkers who have recognized the evils of unrestricted private banking. In his monthly diocesan letter, commenting on the circular issued by the National Bank of Australia, he said -
The circular is protesting rather too violently. I am afraid it did not convince me. The banks are so closely allied to each other that they are virtually a monopoly, and I find it hard to see why they should bc considered more disinterested than the popularly elected representatives of the people in Parliament . . . lt is quite true that the amount of regulation in Australia has increased markedly owing to the war, hut there is no doubt that at all that a great deal of control over private affairs will have to continue for many years, and that the so-called freedom under which we have- lived for the last 150 years or so, has, as a matter of fact, provided a civilization which for poor people, at any rate, was very far away from Christian standards.
The great financial institutions which have dominated the world for so long want to continue to dominate Australia, and they have no regard for Christian principles. They have not changed their practices since their prototypes were driven out of the Temple nearly 2,000 years ago. The outstanding provision of these bills is that the private trading banks must not do business with a State or a State authority, or a local governing body, except with the consent of the Treasurer. That means that taxation can be progressively reduced, because it will be possible for all public works to be financed by the Commonwealth Bank at the cost of issuance only, plus a small administrative change, and this issue will be backed by .the nation’s resources and the productive capacity of the Australian people. It has been well said that the Bruce-Page Government in 1924 changed the Commonwealth Bank from a people’s hank to a bankers’ bank by transferring its control from a governor to a board. Since then the bank has exclusively served private interests to the detriment of the people of Australia. But from now on, because of the action of the present Government, the interests of the people will bc served. I am convinced that effective post-war reconstruction in Australia would be an utter impossibility without the banking reconstruction provided for , in these bills. When the people see the result of the changes, they will bless the day when a Labour government had the courage to do what this measure sets out to accomplish. Whenever changes which will benefit the people are proposed the “ calamity howlers “ in the community, some of whom sit on Opposition benches, raise a chorus of protest and predict the most awful consequences. When it was suggested in England in the last century that little children should not be allowed to work in mines and factories the “ calamity howlers “ of that day said that to withdraw them would be to destroy industries. The same thing happened when a Labour government in New South Wales placed on the statute-hook measures to provide workers’ compensation ; they said that such legislation would drive industry to the wall. Is there today any honorable member who would advocate the repeal of legislation providing for workers’ compensation, and those other humanitarian measures which have been placed on the statute-book by Labour governments? “Calamity howlers “ in Australia predicted catastrophe when it was first suggested that the Commonwealth should take control of the paper currency then being issued by private banking institutions. Now they are howling louder than ever because of the Government’s intention to make the Commonwealth Bank and the trading banks serve the interests of the nation instead of the interests of a comparatively few powerful financiers. When the British Government went off the gold standard in 1914 economic power went out of the hands of the greatest of all private financial interests in the world’s history, namely the Bank of England. The result was that purchasing power was made available to the masses to such a degree that, despite the war and the destruction that it caused, the British people enjoyed a prosperity that they had never known before. The private banking institutions quickly saw that this use of national credit meant loss of profits to them, and as soon as possible after that war they put such pressure on the weakened British Government of the day that Britain went back to the gold standard. The result was that economic power once more went to the Bank of England and the other private banks, and the value of money rose with the price of gold to greater heights than ever before. But the value of everything else fell. By 1931 British primary producers had been almost ruined, the export tradewas crippled, the nation’s productive capacity had been enormously reduced, 250,000 workers had been driven from theland, the number of unemployed had increased by 1,400,000, and the burden of national debt had doubled. Every honorable, member knows what happened! in Australia at that time. The Com monwealth Bank had been placed under a board by the Bruce-Page Government, and when the depression hit Australia, that board, under the influence of private financiers, was in strong control of the finances of Australia. The Scullin Labour Government realized that the only way to meet the crisis was to put national works in hand as soon as possible in order to offset the rapidly growing unemployment. It proposed a fiduciary note issue of £18,000,000. Honorable members know that Sir Robert Gibson, the then Chairman of the Commonwealth Bank Board, denounced the proposal, and described it as inflation. For his denunciation he received the hearty applause of the big financiers. But this war has shown what can be done with the judicious use of the nation’s credit. Up to the middle of last year, bank credit to the amount of £343,000,000 had been issued. Yet the Scullin Government was unable to obtain £18,000,000 in order to provide employment for poverty stricken workers ! Financiers have no conscience and no humanitarian instincts. It is claimed that the Government’s present proposals will place the Commonwealth Bank under political control. Even if it did that, I should prefer it to control by financiers, because politicians have some regard for humanity, and, moreover, they are answerable to the people. Financiers exploit the people and they are not answerable to anyone. “When the next election comes, I am prepared to allow the voters to decide whether or not these proposals should have been placed on the statute-book. One of the most unscrupulous acts of the Commonwealth Bank Board was its repudiation in 1930, of the Scullin Government’s guarantee of a minimum price of 4s. a bushel for wheat. Farmers were urged to grow more wheat for export so that our London funds could he increased. They responded to the appeal and grew more wheat, but when the ‘Government wanted to pay them 4s. a bushel for that wheat, the Commonwealth Bank said “No; it is uneconomic to pay 4s. a bushel when the world price of wheat is only1s. 6d. a bushel “. This powerful bank board defied the Government and the people and set itself up as a body of autocratic power, contemptuous of Parliament. Opposition members want to perpetuate the system that permits that. The private banks have taken a great toll in interest charges from governments, industry and citizens. In 1888, a loan of £16,000,000 was raised by New South Wales for railways. In 1924, when the loan became due, the State had paid over £25,000,000 in interest without having repaid any of the principal. The original interest rate was 3½ per cent., but, in 1924, when the loan was converted, it became 5 per cent. The loan is redeemable in 1955; by then New South Wales will have paid nearly £50,000,000 in interest without having reduced the principal. And what crushing interest burdens the farmers have had. to suffer! The wool committee appointed by the Lyons Government found that many small woolgrowers had interest burdens equal in pence per lb. of wool produced to whatever rate of interest they had to pay; that is, interest at6½ per cent. represented 6½d. in the cost of each lb. of wool grown. The Auditor-General of South Australia, in an official report, stated that an investigation of 43 farms in four wheat-growing areas in South Australia showed that interest amounted to half of the total cost of growing wheat. Abraham Lincoln said -
The privilege of creating and issuing money is not only the supreme prerogative of governments,but it is the Government’s greatest creative principle.
I most heartily congratulate the Government on these two bills, which, as I said at the beginning, will be the salvation of Australia. Industry will be stimulated and primary producers and others relieved of great interest burdens. The Commonwealth Bank will be able to make advances at the minimum rate of interest, and this will benefit all sections of the nation. With the Commonwealth Bank released from imprisonment and with supervisory controls over the private trading banks, the Parliament of Australia can ensure the direction of our financial resources wholly towards national purposes.
Debate (on motion by Mr. Anthony) adjourned.
Motion (by Mr. Chifley) proposed -
That the House do now adjourn.
.- The failure of the Colonial Sugar Refining Company Limited to provide refined sugar to the people of Victoria, because of industrial disputes, has caused great inconvenience for about six months. Many cannot obtain white sugar at all. At the week-end, sugar ration coupons will expire. Time and time again we have been told that there is no shortage of sugar. The trouble is that it is not being refined and distributed because of stoppages of work which should have been settled long ago. I now appeal to the Minister for Labour and National Service (Mr. Holloway) to intervene in the hope of effecting a settlement. I have also been requested to ask that arrangements be made to enable those who have not been able to use their ration coupons, because of the sugar famine, to retain them for use when supplies become available. The more important matter, however, is that action be taken to settle the disputes and thereby end the stoppages of work. That is why I ask the Minister to endeavour to rectify the position.
Mr. FADDEN [Darling DownsLeader of the Australian Country party) [11.7]. -On Monday night, an anonymous Commonwealth Food Control spokesman stated in the press that -
It was hard to follow the reasoning of Mr. Fadden when he said that the drought had not affected food production this year.
The Minister for Commerce and Agriculture (Mr. Scully) said to-day in this House -
The statement attributed to the right honorable member for Darling Downs that the drought has had no effect upon food production is ridiculous.
I agree that the statement attributed to me is ridiculous, especially as it was made by an officer of his own department. What I said was -
Food control experts are blaming the drought for alarming shortages of various products. It is my belief that even if no drought had been experienced, there would still have been acute food shortages, due to lack of foresight and experience of our controllers.
It cannot conceivably be inferred from that statement, whichI have quoted exactly as it was written by me, that I had said that the drought had not affected food production. The honorable member for Wannon (Mr. McLeod) entered the controversy yesterday by misquoting me as follows : -
Had the Country party’s fodder conservation plan been adopted, the production of food would not have declined.
Compare that with my verbatim statement -
A complete scheme for national fodder storage, drawn up by leading Country party ministers, was in the hands of the present Government when it assumed office. They failed to implement it, and the serious results are now becoming evident.
My statement made only three assertions : (1) A fodder conservation plan was available to this Government; (2) it failed to implement the plan; and (3) the present results of that failure are serious. Nowhere did I state that if the scheme had been adopted, food production would not have declined. The Minister for Commerce and Agriculture stated to-day that “ it is well known throughout the Commonwealth that the States are responsible for primary production “. Does this mean that the vast army of expensive Commonwealth food controllers wash their hands of responsibility, for feeding this nation at war? Does it mean that the Minister himself accepts no responsibility whatsoever for the extent of primary production in this country? Does he infer by his statement that if State governments adopted “ go slow “ policies, there would be - no responsibility upon him to take urgent action to see that the troops and the nation were fed? If a good fodder conservation scheme was in existence, and its implementation was necessary for the defence of Australia, does the Minister, like Pontius Pilate, wash his hands of the responsibility merely by stating that the States turned the plan down? Was there not one man in his department capable of advising the Minister that the Commonwealth should step in and not “ pass the buck “.
I am well aware of seasonal conditions in my electorate. The fact that the harvest of grain sorghum from the Darling Downs will fall short of the estimate leads me rather to question the experts who made the estimate. Naturally, by manipulating the estimate either way. production would either be stepped down or up according to the experts’ desires. If the Minister would give us the production of wheat on the Darling Downs for last season and for the previous seasons, he would find that last season’s production was the best since 1939-40. Here are the figures: -
Despite voluminous and inaccurate comments on other parts of my statement, nobody has yet replied to the last portion, which I quote:-
Farmers are unable to obtain electric motors for irrigation purposes. The amount of material and man-power involved in the manufacture of one of these motors is infinitesimal compared with the potential foodproducing capacity of the land now idle.
Queensland farmers cannot obtain seed oats, because other States have imposed a ban on their export beyond State boundaries. Here again luck of planning is all too evident. A few bags of seed oats distributed in Queens land, where drought conditions are not in evidence, would produce much more than under the present patchwork plan of distribution only in drought-stricken States.
An inquiry into these matters, and an insistence that the necessary action be taken to rectify them would ultimately be of more benefit to Australia than will the wasting of time on verbal quibbles.
.- As the honorable member for Bourke (Mr. Bryson) has raised the matter of the present distribution of sugar in Victoria, I shall explain to honorable members the position so far as the Rationing Commission is concerned. The refining of sugar in Victoria is carried out by the Colonial Sugar Refining Company Limited at Yarraville; the refinery has an output of approximately 3,000 tons a week. On a yearly average, that balances with the consumption of the State. There is no constant surplus at any time in Victoria which would permit of the building up of stocks. Usually, the greatest consumption of sugar takes place in the jam-making season, and some stocks are accumulated for this purpose. Towards the end of the year the company has stocks of from 10,000 to 12,000 tons, and that is practically used by the end of March or April. This year there was a strike for a fortnight at the end of February which dissipated the stocks on hand at the end of the year, and left the company short. There have been some strikes at the works since, and at the beginning of last week production was four weeks in arrears. There was no hope whatever of making up that reduction of refined sugar in this rationing year. On the 15th May, in company with the Director of Rationing, I interviewed Mr. Champion, the manager of the Sugar Refining Company in Melbourne, and asked him whether there was any chance of making up any of the leeway in the production of refined sugar. He replied that there was no hope of doing so this year. “We then asked him whether he would agree to deliver raw sugar in Victoria to an amount sufficient to enable consumers to cash their coupons. He agreed to do that, and the Rationing Commission put out a notice -that raw sugar could be obtained up to the end of June to enable consumers to redeem coupons outstanding at the end of the rationing year. It was pointed out that raw sugar would not be as acceptable as refined sugar, and that people would not use as much raw sugar as they would refined sugar. The refining company also agreed that should stocks of raw sugar be left on grocers’ hands it would take that raw sugar back in order to avoid loss to grocers. This arrangement would enable us to give to consumers in Victoria sufficient to meet, coupons outstanding, and, at the same time, enable the company to accumulate stocks of refined sugar for the coming year. Unfortunately, up to last Monday the company had got out only 500 tons of sugar. It made the excuse that the men were on strike, and therefore could not get the sugar unloaded. I wish to make it clear that the arrangement which the Rationing Commission entered into with the company, and sent to the company in writing, was that the sugar should be delivered from stocks on the wharfs, and that arrangement should not he affected in any way whatsoever by the strike complained of. The Transport Union is not out on strike, and had an application been made to the Department of- Labour for wharf labour help could have been provided to unload the sugar. The company claimed that because of the strike it was unable to getthat sugar out. I again saw Mr. Champion last Monday, and the company has now agreed to make sugar available to grocers to meet coupons outstanding. It has also agreed to bring from Sydney 25 tons of refined sugar which the Rationing Commission will control and issue to chemists and hospitals for the manufacture of essential medicines. I have not been advised with respect io the distribution this week, hut 1 hope that the people of Victoria will be able to obtain raw sugar to meet the outstanding coupons which have not been cashed by the end of June. That can only he done if the company shows a great deal of initiative, and gets the sugar to the consumers.
. At question time to-day I drew the attention of the Minister representing the Minister for External Affairs to certain representations which, apparently, are to be made to him and to the Government by the International Youth Committee for visas for two individuals - and there may be more - who allegedly represent the youth of Australia, to attend a youth world conference in London. At this juncture, I merely want to make available to the House and to the Minister certain information which has been given to me respecting the bona fides of the organization which purports to send delegates to represent the youth of Australia abroad. The information that I have is that the committee which selected these delegates consists of thirteen members, eight of whom are foreigners - French, Chinese, Jewish, Austrian, . Indian, Yugoslav and Greek. Three are recognized as members of the Communist party. In fact, the whole organization seems to he strongly permeated by Communist influences. The general impression that has been conveyed to me is that this is an effort by the Communists to secure credentials for their representatives so that they may speak on behalf of Australian youth at a world conference in London. For example, one of the delegates is Mr. H. C. Williams, senior vicepresident of the Eureka Youth League, which is known to be a Communistcontrolled organization. I am informed that in the selection of delegates to represent Australian youth, no consideration was given to the Catholic youth organizations which are very extensive throughout this country, the Boy Scout movement, or the National Youth Organization of Australia, which I understand has positively dissociated itself from this venture. I regard this incident as another audacious attempt by the Communists to achieve further authority and prestige. I trust that the Government, before granting permits to these delegates to travel and providing them with accreditation, will look into the whole matter very thoroughly, especially in view of the fact that neither of the delegates selected - I notice in a circular that one is 24 years of age - has seen any war service. Surely the youth of this country could be better represented by young men who have fought in this war.
– I draw the attention of the Government to some serious inequities in regard to the distribution of drought relief to wheat-growers. Many farmers who have been suffering drought condi- tions for upwards of two years have been placed in an anomalous position. Climatic conditions were so adverse last year that they were not able to proceed with their planting in the usual way. They kept their seed wheat and fertilizer, and, acting on the advice of soil erosion experts, refrained from working the land. They are now informed by the authorities distributing drought relief money that they are not eligible to participate in these payments. Some of these farmers are having a desperate struggle to carry on. Conditions are still dry and they have not an income from any other source whatever. Their stock is either dead, or has been transported to other parts of the State where conditions are better. On the other hand, growers who committed their seed to the ground last year and’ lost their crops owing to the drought, are being reimbursed or compensated substantially from the Drought Relief Fund. Incidentally, I may say that the distribution has been most generous and most helpful to those who have participated, in it. The growers who did not plant their seed in view of the advice of State authorities, are being denied any financial assistance whatever. I hope that some relief will be given to them. Surely, they are entitled to some portion of the distribution. They are smarting under a sense of injustice. They do not know whether to blame the Commonwealth Government or the State Government for the present state of affairs. I understand that an agreement was reached between representatives of the States and the Commonwealth upon the basis of distribution of the funds allocated for drought relief. That basis, in my opinion has tunned out to be quite inequitable, but the State governments are holding fast to the arrangement. I do not know exactly what it is, but my correspondence with the Minister for Commerce and Agriculture (Mr. Scully) indicates that he is in sympathy with the growers, and is surprised that farmers who did not plant last year are completely excluded from drought relief.
Farmers of another class are excluded also. I refer to men who this year do not propose personally to go ahead with planting. They are to be excluded from this benefit despite the fact that they may have leased their properties, or handed them over to sons or neighbours who are financially and physically more able to do the job. I understand that it has been laid down that the fund is to assist farmers to sow their crops in the present season, and they must give an understanding that they will sow, otherwise they do not participate; but I draw the attention of the Minister to the fact that the farmers to whom I have referred have suffered losses just as serious as those suffered by others who are carrying on with their work. They also have obligations to meet, and possibly in some cases those obligations are greater than those of some beneficiaries under the drought relief scheme. A definite anomaly exists. I hope that the Government will take the initiative by placing the matter again before the States, and having the whole position reviewed so that these worthy farmers who have been excluded from the distribution of relief payments will be enabled as quickly as possible to obtain funds which they urgently need to help them to meet past and present obligations, maintain themselves and their families, and carry on whatever farming they have planned to undertake now and in the future.
– It is noticeable that the two honorable members of the Opposition who detained the House have not awaited replies to their representations. I shall bring to the notice of the Minister for Commerce and Agriculture (Mr. Scully) to-morrow the statements that have been made by the right honorable member for Darling Downs (Mr. Fadden) and the honorable member for Wimmera (Mr. Wilson). I am sure that he will give consideration to them. I shall refer to the Acting. Minister for External Affairs (Mr. Makin) the statement repeated to-night by the honorable member for Richmond (Mr. Anthony).
It is true that at present there is a ‘ grave shortage of sugar in Victoria. That is not duc to lack of supplies, although the policy of the Colonial Sugar Refining Company for many yea rs has been to keep supplies as close as possible to the requirements of the people, with the result that the slightest hitch in transport arrangements or the operation of any other adverse factor, causes a shortage in Victoria. It is not true that many industrial disputes have occurred in the sugar refining industry in that State. There has been one dispute. As the honorable member for Henty (Mr. Coles) said, it commenced last February. Although it was purely a State matter, I approached the Melbourne manager of the company, Mr. Champion, representatives of the Disputes Committee in that State, and representatives of the Sugar Workers Union. A conference was held at which I urged the men to return to work. They did so, and left to me the arrangement of a conference with the Registrar of the Arbitration Court, Mr. Murray Stewart., He investigated the matter fully and asked Chief Judge Piper for permission to make a decision on the merits of the case. The Chief Judge consented and subsequently approved of the decision at which Mr. Stewart had arrived. The men continued work until the company, which had agreed to abide by the decision, appealed to the full bench of the Arbitration Court and had it upset. Because of that interference by the company, the men have ceased work again. Only the small number of men who handle the sugar as it leaves the ships which berth alongside the works at Yarraville are involved. For years they have claimed that they should receive therate paid to waterside workers while doing the same class of work. The appeal by the company was on the technical ground that the matter should have been dealt with by a State jurisdiction instead of by the Commonwealth Arbitration Court. The manager of the company in Victoria always agrees to my suggestion for a conference, but his decision is always overruled by the manager of the. head office in Sydney, and this prevents our reaching a conclusion in any dispute. I have no wish to be unfair. For many years, the company has had rather a dubious reputation. It is regarded as a very close monopoly which is careless of public interests. Without ceasing work, the employees have tried repeatedly to obtain more consideration. Because of the company’s harsh treatment of employees and its reckless disregard of the interests of the public, the belief has grown that this is one of the first industries which should be nationalized for the benefit of the community. Should it continue to harass the people, withhold consideration for its employees, and refuse to abide by decisions of the Arbitration Court or its officers, it would be worth while to see whether greater control of the industry would not be to the advantage of the people generally, as well as its employees.
Question resolved in the affirmative.
The following papers were pre sented : -
Arbitration (Public Service) Act - Determinations by the Arbitrator, &c. - 1945 -
No. 28 - Commonwealth Public Service Clerical Association.
No. 29 - Professional Officers’ Association, Commonwealth Public Service.
No. 30 - Commonwealth Legal Professional Officers’ Association.
National Security Act - National Security ( Rationing ) Regulations - Orders - Nos. 82, 83.
House adjourned at 11.36 p.m.
The following answers to questions were circulated: -
asked the Minister for Commerce and Agriculture, upon notice -
– The answers to the right honorable member’s questions are as follows : - 1 to 4. Three hundred and fifty tons of meadow hay has been imported this year from New Zealand and efforts are being made to secure any further quantities of hay that are available there. Twenty-five thousand tons of outs for human consumption is being obtained from Canada. Negotiations arc proceeding for the early delivery of 2,000,000 bushels of grain sorghum from the United States of America for stock feed and a further 4,000,000 bushels will be obtained if possible. Some barley may also be obtained from America. The negotiations have covered various types of fodder from overseas but grave difficulties have been experienced.
y. - On the 22nd May the right honorable member for Darling Downs (Mr. Fadden) asked me a question in respect of transport of grain, hay and chaff south of Warwick.
Inow advise the right honorable member that power to control the distribution of grain, hay and chaff in Queensland was delegated to the Queensland Minister for Agriculture and Stock some time ago. A similar delegation has been made to the Minister for Agriculture in each of the other States which are affected by the shortage of stock-feeds. In endeavouring to prevent the transport of grain fodder from Queensland to other States, the Minister for Agriculture and Stock enlisted the assistance of Commonwealth authorities in preventing these commodities from crossing the border. Any order relating to Warwick and any hold-up of stock-foods at Toowoomba would be matters entirely under the jurisdiction of the State Minister, and I shall take the matter up with him in an endeavour to obtain further information.
Warramunga Gold Leases.
Mr.Chifley. - On the 23rd March the honorable member for Barker (Mr. Archie Cameron) asked a number of questions relating to the Warramunga gold-field. The following statement, containing replies on the particular matters raised by the honorable member, has been prepared by the Minister for the Interior following an investigation of the position: -
The honorable memberstated that “ the Government ordered the miners to leave that field, and confiscated their tools”. This was definitely not the case. During 1940 and 1941 and the earlier part of 1942, lease-holders and their employees were leaving the field in considerable numbers to join the services or to engage in some essential war service.
During June, 1942, on the invitation of the Lease-holders Association, the Director of Mines of the territory, Mr. W. A. Hughes, addressed a meeting at Tennant Creek and informed them that war conditions would preclude operation of the Government batteries at Tennant Creek which would close when the stocks of diesel fuel on hand were consumed.
Following the closing of the batteries miners thenat Tennant Creek who did not desire to leave the territory and who were otherwise directed by man-power authorities migrated to other fields to mine minerals of strategic value.
A quantity of plant and tools was impressed under the National Security (Minerals) Regulations. This property was not confiscated as stated by the honorable member. All tools were acquired at fair prices mutually agreed upon.
The honorable member went on to say that in one case a man was served with a notice that he would have to pay all back rent on a lease which the Government would not allow him to work and that as the letter containing the notice could not be delivered owing to the man’s absence from Tennant Creek the department intimated that it would re-allot the lease.
The honorable member was advised by the Minister for the Interior that the Mining Ordinance of the territory was amended in 1942 to provide that the Administrator may grant an exemption from the labour covenants of a mining lease or for application for a lease or claim, such exemption to be granted for the duration of the war andsix months thereafter. Ho -was informed that the amendment also provided that any rent payable in respect of a lease or for application for a lease or claim, shall continue to be payable, but that, if the applicant satisfies the Director of Mines that he is unable by reason of his financial circumstances to pay the rent, action for forfeiture for non-payment of rent shall not be taken against him during the period of the exemption. No lessee has taken advantage of this provision.
Further leases are not allotted. When voluntarily surrendered or forfeited all areas become Crown lands and are available to members of the public,’ who -under the provisions of the legislation arc eligible to become lessees.
Cite as: Australia, House of Representatives, Debates, 30 May 1945, viewed 22 October 2017, <http://historichansard.net/hofreps/1945/19450530_reps_17_182/>.