17th Parliament · 3rd Session
Mr. Speaker (Hon. J. S. Eosevear) took the chair at 10.30 a.m., and read prayers.
Motion (by Mr. Chifley ) agreed to -
That the House, at its rising, adjourn to to-morrow, at 10.30 a.m.
Views of Mr. E. Thornton.
– I ask the Acting Prime Minister to state whether or not, as the press reports, Mr. E. Thornton, a member of the Communist party who represented the Austraiian Labour movement at a recent world conference of trade union organizations, denounced the White Australia policy at a meeting of his union last Monday, and said -
We do not desire to see Australia flooded by a great immigration of Asiatic people, but only for the reason that we do not desire a flood ot Italians, or Swedes, or even Englishmen to enter this country in a haphazard way.
Is this to be taken as an expression of the policy of the Australian Labour party in regard to the White Australia principle? If so, has Mr. Thornton been authorized by the Government to announce that policy?
– Mr. Thornton is not a member of the Labour movement and is not, therefore, I presume, even attempting to speak on behalf of that movement. It is true that he represented Australian trade unions at a conference abroad.
– The Government paid his expenses.
– That has nothing to do with the question I have been asked, which is: bid Mr. Thornton express the views of the Labour movement? He does not express the views of the Labour movement, and I do not believe that he claims to be able to do so.
– The question is rather involved. If the honorable member will place it on the notice-paper, I shall have the matter examined and furnish a detailed answer. I am not surprised that an attack on the ground of bungling should have been made on the Government of Victoria by members of the Victorian Country party. But the members of that Government would appear to he “ escapologists “ who are adept at “ passing the buck “. The continuance of their existence as a government has been due to their adoption of that course.
– I ask the Minister for Commerce and Agriculture whether or not a wide publicity campaign for the cutting of grass hay in Tasmania was undertaken by the Commonwealth Government? If so, will he approach the Government of New South Wales with the object of having necessary machinery for the making of bush hay transferred from the southern portion of that State, which is badly affected by drought at the present time, to the northern portion, where a quantity of grass could be obtained in the near future for the making of bush hay?
– At the request of the honorable member for Denison (Dr. Gaha), I had an immediate investigation made of the position in Tasmania, and instructed the Director-General of Agriculture to send his officers to that State. Subsequent, to that visit, a. considerable quantity of hay was cut in Tasmania and transported to the mainland, most of it being distributed in Victoria, where it proved of great benefit. The Commonwealth Government appreciates the work which, at its request, the Government of Tasmania has done with a view to easing the fodder position on the mainland. I shall have an immediate investigation made of the possibility of transferring hay-making machinery from the southern to the northern portion of New South Wales. There has been a prolific growth of herbage in some parts of my electorate, and pro’bably that applies also to other districts. This might be used for the making of meadow or grass hay. The only difficulty that I foresee is that the winter months are not suitable for hay-making.
– Will the Minister for Commerce and Agriculture inform the House whether the Government has authorized the cutting of a quantity of rice-hay and rice-chaff in the New South Wales rice districts? Can he say what quantities of rice-hay or rice-chaff will be made available from this source? Is it a fact that the rice-hay or rice-chaff will be made available to the Riverina districts and Victoria? Has the Minister any idea of the quantities which will be supplied to the Riverina and Victoria? Is it a fact that substantial quantities of hay were sent by New South Wales to Victoria earlier this year ? Can the Minister state the actual quantity provided for Victoria by New South Wales growers ?
-Subject to the consent of the Treasurer, and on the recommendation of, the Director-General of Agriculture, my department has approved of the cutting of approximately 6,000 tons of rice-hay and also some rice-straw in the Wakool area. Some of the rice crops there are rather indifferent, but would make excellent hay, and as the supply of fodder is so short, we anticipate that about 6,000 tons could be obtained from that source. The distribution of the fodder will be in the hands of the Commonwealth, subject to an agreement with the Government of New South Wales. The Commonwealth has always received the utmost co-operation from New South Wales, and I do not anticipate any difficulty. I expect that the fodder will be divided between Victoria and the Riverina and distributed in areas which have been most affected by drought, and which are the most accessible from the point of view of transport. Considerably over 10,000 tons of fodder has already been made available by New South Wales to Victoria. I do not think that New South Wales has prevented any fodder from being taken across the border into Victoria, but has done all that it could to assist Victorian farmers in areas which have been badly affected by drought.
– Has the Acting Prime Minister read the press report of a meeting of an exports development group in Sydney, representative of primary and secondary industries, at which concern was expressed at the Commonwealth Government’s proposal for the formation of a Commonwealth Exports Corporation? Has the honorable gentleman noted that a resolution was carried, protesting emphatically against the proposed formation of a government or semigovernment organization to handle the export trade, and insisting that commercial interests be encouraged to exert every effort, and to apply their wider experience, in the direction of the rehabilitation, expansion and development of Australia’s export trade on a sound and economic basis, without government interference? Before further action is taken by the Government, will be ensure that representatives of the interests concerned shall be given an opportunity to submit their views to the Government?
– I have not seen the press report referred to.. I assure the right honorable gentleman that the Government statement in regard to the proposed corporation was designed to help, not to hinder in any way, Australia’s export trade, where it can be conducted without Government advice or assistance. On behalf of the Government, I undertake that discussions will be held with all those who are interested in our export trade. The proposals do not constitute an attempt to obtain a Government monopoly in the export, trade. Proposals have been submitted by manufacturers and other bodies, which rather welcome the idea that there should be export guarantees of some sort.
Visits by Next of Kin.
– Thousands of members of the Australian fighting forces who have made the supreme sacrifice in defence of the nation, are buried in war cemeteries in many parts of the world. Will the Acting Prime Minister give consideration to a scheme to provide for visits to be made by parents, wives, and other near relatives of deceased members, to the graves of these gallant men and women, the cost to be borne by the Commonwealth Government, and the scheme to come into operation uponthe cessation of hostilities?
– I shall be gladto ask Ministers in charge of service departments to examine the suggestion of the honorable member with a view to its consideration by the Government as a whole. The honorablemember has made personal representations on the subject, and other Ministers and I have received correspondence in regard to it. At the moment, I cannot give any undertaking as to what financial arrangements might bc made.
– The Acting Attorney-
General will recall that, some time ago, I raised with him the matter of Commonwealth. Public Service conditions, particularly those relating to hours of work. I have received from a constituent, a professional man who is temporarily in the employ of the Commonwealth, a letter in which he draws attention to what be describes as “ a flagrant injustice that is about to be instituted in the Commonwealth Public Service “. Ithas reference to the proposed new arrangements in regard to the hours which formerly were worked without additional pay. According to my correspondent, the effect of the arrangement is that unionists and ex-servicemen will be paid for any work which they do on Saturday morning, but that non-unionists will not. He complains that this is another instance of Government discrimination against nonunionist members of the Commonwealth Public Service. Will the Minister explain the circumstances?
– I should like the honorable member to produce to me evidence in support of the statement he has made.
– I shall let the Minister have the letter.
– If the honorable gentleman does so, I shall examine it.
– My correspondent says that he is a legal officer in a Commonwealth department.
– It would appear that the writer of the letter is not fully informed, because a decision in the matter has not yet been made, and, when made, will have to be laid on the table of this House and the Senate.
– He has enclosed a letter from the union concerned, which confirms his statement.
– I think that he has been wrongly informed.
– Has the Minister for Transport read the statement of the Queensland Minister for Transport, Mr. Walsh, that so far as Queensland is concerned there is no further need for the priority travel system to operate between Queensland and New South Wales, and that that State has been able to reduce the number of trains to the south by four a week, consequently the justification for interstate travel priorities no longer exists? In view of the judgment of the High Court, and this clear statement by a State Labour Minister, will the honorable gentleman abolish the system of interstate travel priorities?
– I have not seen the statement referred to. If the honorable gentleman will let me have it, I shall examine it. The statement that I made in this House yesterday indicated that the present interstate travel priority order, the validity of which was not challengedbefore the High Court, but which the Attorney-General’s Department believes might fail if it were challenged, is to be amended at an early date so as to bring it into line with the decision of the High Court. The Commonwealth Government does not admit that the need for an interstate travel priority system has ceased to exist. As soon as it believes that there is no longer need for the present restrictions, they will be removed.
– Has the Minister for Labour and National Service read a statement by leading officers of the New South Wales Education Department that public school children are suffering from the acute shortage of teachers? What is the present position with regard to the discharge of schoolteachers from the fighting services ? Will the Minister take steps to ensure that more teachers shallbe released for country districts?
– I have read the statement. Furthermore, I have had direct correspondence with the Premiers of the States and action has been taken, with the result that about 2,000 schoolteachers from all States, who are now in the services, have been nominated for release. I am sure that great relief will be afforded before long.
Publicity - Releases
– Has the Minister for Information read of the latest method of the United States authorities in publicizing the deeds of their fighting men in the Pacific war theatre? If not, will he consider the matter and confer with the Acting Minister for the Army, with a view to steps being taken to give similar prominence to the achievements of the Australian forces?
– I shall be happy to do as the honorable member suggests. I hope that at an early date I shall be in a position to advise him that his suggestion has been acted upon.
– I have recently had experience of the obstructive and autocratictactics of those in control of the services in connexion with the release of men, and of their disinclination to reduce or weaken their establishments. Will the Acting Prime Minister inform the House what powers will be conferred on the three committees which are to be appointed to enable them to arrange for the necessary number of discharges’ from the services before December next, particularly if service officers, claiming to be acting on instructions from higher up, insist that they cannot carry on witb fewer men, and persist in this attitude in opposition to government policy and the requirements of the existing civil emergency? Will the Government insist on the discharge of 50,000 men by December next no matter what attitude may be taken by the services or by the committees ?
– There are two different points to be considered. The committees to be appointed will act in connexion with operational establishments and general administrative matters associated with such establishments. Their reports will go to the Prime Minister who, in dealing with them, will be assisted by the Vice-President of the Executive Council (Mr. Beasley), who is Acting Minister for Defence. The general question of the overall reductions of service establishments is a matter for determination by Cabinet. Directions for such reductions will be given by Cabinet, and, of course, will have to be carried out by the service departments.
Mb. E. H. Scott - Bogus Shipping Agents
– Has the Acting Prime Minister read the report that Mr. E. H. Scott, the chief executive of an American firm which is engaged on war contracts for the United States Government, tried unsuccessfully for a period of four and a half months to obtain air or sea transport from Australia to America? Is the statement by Mr. Scott correct in quoting the Minister for Information as having said that the Prime Minister himself had issued a directive for an air passage across the Pacific for Mr. and Mrs. Scott? Is the statement correct in quoting the Minister for Air as having “ pursued every avenue likely to yield results “ and having “ met with negative results “? If so, does this mean that neither the Prime Minister nor the Minister for Air is able to secure transport in cases such as that of Mr. Scott? What are the names, occupations and addresses of all Australian citizens who have been permitted to go abroad during the last three months by air or sea? What were the reasons for their travel in each case, and who secured the passages by air or sea for those Australians who have gone abroad in that period?
– I read a statement in the Sydney Morning Herald yesterday giving extracts from a letter left by Mr. Scott. I presume that the newspaper had some knowledge of the difficulties associated with Mr. Scott’s attempt to secure n return passage to the United States of America for a period, I think, of a couple of months. The Minister for Air knows more about the details than I do, but I can say that every effort was made, in view of certain services which Mr. Scott had rendered, to obtain a passage for him from this country. At first he was to travel by air, but owing, I understand, to the state of his health, he could notuse that means of transport, and later a passage was obtained for him on a steamer. Without referring disparagingly to him, for he had done good work, there were times when his mental equilibrium did not seem to be perfect. He was inclined, probably owing to the state of his health, to make statements which could not well be justified. The Minister for Air, in view of the services rendered by Mr. Scott, particularly with regard to radar equipment, made every possible endeavour to obtain a passage for him, because word came from America that his services were needed there in connexion with the manufacture of certain war materials.
The honorable member also asked for certain information regarding passages by all Australian citizens who have been permitted to go abroad, by air or sea, during the last three months. A reply to that inquiry would involve a great deal of investigation, which I do not think would be justified in view of the present shortage of man-power; but I shall look into some of the points mentioned by the honorable member, and ascertain whether, by consultation with the Minister for Information, and particularly the Minister for Air, a fairly full reply could be readily made available to that portion of the question. I think, however, that some of Mr. Scott’s statements will not be borne out by the facts when they are presented to the House.
– Has the Acting Attorney-General seen a report in the press of the prosecution and conviction of a man who, posing as a shipping agent, undertook to secure “a passage to the United States of America for the wife of an American serviceman? Is the Minister aware that there are many socalled shipping agents in Sydney who obtain large sums of money from young married women onpromise of obtaining passages for them to America? One of my constituents recently paid £300 to such an agent for a passage, although it is wellknown that passages cannot be obtained in this way. Will the Minister have the matter looked into by the Commonwealth Investigation Branch with a view to checking the activities of such persons?
– I have read the report to which the honorable member referred. Only yesterday, the Minister for Supply and Shipping told me that his name had been improperly used in connexion with the matter, and he asked me to have it investigated, particularly as it affected him. I think it would be best to have the investigation conducted by the State police, who have a wider organization, and perhaps more experience in such matters, than has the Commonwealth Investigation Branch. I am willing to place at the disposal of the police any papers and information which might be of use to them, because I believe that this sort of thing should be stamped out without mercy.
– Will the Minister for Commerce and Agriculture inform the House whether the balance of the progress payments announced recently by him in respect of the No. 5 wheat pool have yet been made to wheatgrowers, and if not, when they will be made? Will he also restate the amounts to be paid? What is the position with regard to the overdraft, if any, of the Australian Wheat Board with the Commonwealth Bank, and have the amounts of adjustment money with regard to concession and stock-feed wheat yet been paid to the board’s account? Can the Minister inform me whether the 11/3d. a bushel which the Government agreed to pay in respect of a certain harvest wage award has been paid directly on behalf of the Government, or has it been met from the proceeds of the wheat pool itself?
– As I understand that approval was given a considerable time ago for advance payments in respect of the No. 5 wheat pool, I should be surprised if payment bad not already been made. The other matters referred to by the honorable member will be investigated and a reply will be furnished at the first opportunity.
Will the Minister representing the Minister for Trade and Customs inform the House whether, in all recent advertisements relating to the issue of food and clothing ration books, the public was informed that the completion and handing in of an occupation survey card would he essential before ration ‘books could be issued? Is it also a fact that officers in charge of the issuing stations were told that they were not to insist on the production of occupation survey cards from persons who were unwilling or unable to present them, but were to issue the ration books notwithstanding such inability or unreadiness?
– I am not sure whether it was stated that the production of the card was essential, but I know that reference was made to its presentation. After all, I am sure that honorable members will appreciate the necessity for a check to be made of the man-power position in this country, because circumstances have arisen during the last two or three months in which it is not possible to tabulate exactly where the manpower is and the amount of labour available.
– I agree with that ; but why was the instruction issued to officers that they were not to insist on the presentation of the occupation survey card?
– I am not certain on that point. There may be some doubt as to whether the matter could be pursued to the absolute limit, and therefore some discretion may have been necessary.
– Will the
Minister representing the Acting Minister for the Army have a look at the order issued by the Army authorities in the Northern Territory that all bullocks headed for Adelaide are to be dipped twice, and consider the effect that that order is having on certain droving operations in the Territory? In one instance, bullocks have to be driven to an Army dipping point 48 miles north of the station on which they have been raised before they can be sent 380 miles south to the railhead. A veterinary surgeon with whom I had a telephone conversation yesterday said that he has attended stock markets for 30 years, and has not yet seen. tick-infested cattle. It would be interesting to know whether the detection of tick synchronized with the arrival of the Army. In view of the serious shortage of beef, will the Minister have steps taken as soon as possible to enable fat stock to be removed to market?
– The answer is “ Yes “.
– I direct the atten tion of the Minister for Munitions to the fact that law-abiding citizens have recently lost their lives, and others have been assaulted., held up and robbed by gangsters and gunmen who have gained illegal possession of. lethal weapons. It has been reported in the press that many of these weapons are sub-machine guns of the Sten and Owen types. Allegations have been conveyed to me that some of these weapons have been supplied to members of the underworld by certain employees of the Small Arms Factory at Lithgow, who appropriate weapons or parts of such weapons which on test are found to be not up to Army standards. These employees then assemble the weapons, put them into a usable condition and dispose of them at high prices to members of the underworld. Will the Minister have this allegation investigated by having sub-machine guns which the police have seized inspected to determine whether they are normal army issue? Will he have the organization at Lithgow regarding the disposal of rejected parts so tightened up as to prevent their falling into unauthorized hands? Are appropriately heavy penalties prescribed for employees found guilty of the conduct complained of?
– I shall be very shocked if investigation shows that what the honorable member alleges is true. I can assure him that a careful check is made of all processes undertaken at the factory, and certainly all machine guns are accounted for.
– The fully assembled grins, no doubt.
– I shall have investigations made, and if there have been any irregularities I shall require an explanation from those in charge.
Absence of Members
– Have you noticed, Mr. Speaker, the empty benches on your left?I do not refer to those which were emptied by the votes of the electors at the last general elections, but to those left vacant by chronic absentees who, when they are present, busy themselves with castigating the workers for absenteeism. Have you received an apology from these honorable members for their absence, or a note from the National Service officer? If the absentees are members of the Liberal party, will you ask the Leader of the Opposition (Mr. Menzies) to inquire into the reason for their absence? Perhaps he will invoke the assistance of the Deputy Leader of the Opposition (Mr. Harrison), who is a stickler for discipline. Are members who absent themselves without excuse paid during the time of their absence, or do they have to go without pay as do the workers when they absent, themselves from their employment?
– I do not think that it comes within the province of the Chair to note who is absent from the House. The Chair is concerned only when some one draws attention to the lack of a quorum. Otherwise, I have quite enough to do to mind my own business.
– Can the Minister for
Commerce and Agriculture say whether it is a fact that, generally speaking, orchards throughout Australia have deteriorated considerably owing to the shortage of labour and fertilizers? Will he arrange that orchard-owners shall be given at least the same priority in regard to the supply of fertilizers as is enjoyed by the growers of bananas and pineapples?
– I know that orchards have deteriorated considerably, as have rural lands generally since the outbreak of war. This is largely due to the shortage of man-power arising out of the war, and it is something over which we have no control. I am very hopeful that when the releases are made from the Army within the next few months the position will be greatly improved. As for the priorities for fertilizers enjoyed by orchardists and banana-growers, I suggest that the honorable member discuss the matter with the honorable member for Richmond (Mr. Anthony).
– Will the Minister for Post-war Reconstruction, with a view to assisting the rehabilitation of Australian prisoners of war, of whom there are now large numbers in the United Kingdom, take steps to correct some of the inadequacies of the Commonwealth training scheme? Will he see that the meagre allowance of £5 10s. for expenditure on a course is increased? Will he arrange for prisoners of war to be given an opportunity to obtain their discharge in GreatBritain provided they return to Australia within a reasonable time, so that they may take an educational course or an industrial course which would assist their rehabilitation when they return to Australia?
-I have the utmost sympathy with prisoners of war, whether they are still in Great Britain, or have already returned to Australia, and anything which I or the Governmentcan do to assist in their rehabilitation will be done. I shall consider the point* raised by the honorable member in order to see what can be done in the directions suggested by him.
– Can the Minister for
Labour and National Service say whether, in the office of his department in Sydney, there is a list of between 80 and 100 key men for whom release from the services has been sought so that they may return to the coal-mining industry? The release of these men has been recommended by the Coal Commission, and 1 myself have also made representations regarding them. Is it a fact that a reply was sent from the office in Sydney that the quota of releases allotted to the mining industry had been exhausted? Does the Minister not think that such an attitude will have a very bad effect on the coal-mining industry, which is short of labour? On ray recommendation there was recently installed at Abermain No. 2 Colliery three scraper loaders which, when working, will increase the output of the mine by 200 tons a day, but so far it has been impossible to get men to operate them. Will the Minister make representations to Cabinet to obtain the release of the necessary men?
– It is true that replies of the kind mentioned by the honorable member have been sent to other industries when the quota of releases has been exhausted. I do not know whether such a reply was sent in connexion with the release of coalminers, but I shall find out. Within the next few days, the Government will consider every aspect of the man-power situation, as was promised by the Acting Prime Minister some time ago, with the idea of releasing more men. The quota of releases to the mining industry will then be considered.
– Has the
Minister representing the PostmasterGeneral noted the following published comment of the Postmaster-General on the acquisition of station 4AT, Atherton, by the Australian Broadcasting Commission : -
It won’t go back to private ownership if I can help it. We want all the stations we can get.
Is the Minister’s statement to be taken as an indication that at least a section of Cabinet flavours the socialization of commercial broadcasting stations, and when is it intended to give effect to that policy? If the Minister proposes to have broadcast the question of the honorable member for Reid (Mr. Morgan) regarding the absence of members of the Opposition from the House, will he also broadcast the fact that fifteen Government members are absent as compared1 with four members of the entire Opposition?
– It is true that station 4AT, Atherton, which previously belonged to Jehovah’s Witnesses, has been acquired by the Commonwealth, and will be used as a regional broadcasting station. There are about 26 national stations in the Australian Broadcasting Commission’s national network, and 100 commercial stations now operating in Australia. As for the future control of broadcasting, it is not usual to make announcements of government policy in answer to questions. In due course, and at the proper time, the PostmasterGeneral or the Prime Minister will announce the Government’s policy regarding commercial broadcasting.
– Has the Minister for Information seen in to-day’s press the report of a broadcast speech by Mr. Churchill in which he said that socialism was inseparable from totalitarianism and the abject worship of the state, and that a Socialist policy was abhorrent to all lovers of freedom. In view of these and other comments by Mr. Churchill in denunciation of socialism, will the Minister arrange for the full text of Mr. Churchill’s speech to be printed and circulated among members of the Labour party, to trade unionists, and to the Australian people generally.
– I have read Mr. Churchill’s statement, and there is nothing in it which is at variance with the views which he has expressed as a Conservative party politician in Great Britain during the whole of his political life. In my opinion, the people of Great Britain will notendorse such views at the next general elections, and it is my hope that there will then be in Great Britain a Labour government which will join with the Labour Governments of Australia and New Zealand in giving a fair deal to the workers of those three countries.
Debate resumed from the 5th June (vide page 2526), on motion by Mr. Chifley -
That the bill 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 -
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. (2). 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.”
– In dealing with bills to alter our banking system, it is appropriate that, we should express our good fortune in having established in the Commonwealth a system of banking which has won the esteem and confidence of the people of Australia, as well as of other countries. Theseinstitutions have played no small part in the development of Australia’s primary and secondary industries. Who would claim that, in proportion to its population, Australia has not, taken a full share of the war effort of the Allied Nations? On all sides it is admitted that Australia’s effort has been no mean achievement; and yet those who admit that fact also claim that the banks control industry. Australia’s industries, as well as its huge credit resources, have not failed the nation during the war. If there has been any evidence of industrial failure, it, has been due to restrictive government regulations, or to a determination to strike, or to attempts to evade taxation. There may be other causes; but no failure has ever been attributable to a lack of money to carry out, the nation’s obligations, or to an inadequate monetary return for labour. When the Commonwealth Bank was established over 30 years ago its founders insistedthat it should be free from political control. On that basis, the Com monwealth Bank hasdeveloped. Later, its functions were extended by legislative enactment to give to it the powers ofa central bank - powers which were not contemplated when the bank was estab lished in 1911. Other functions entrusted to the Commonwealth Bank were in the interests of primary producers. In 1920 when the control of the note issue was entrusted to the Commonwealth Bank,a board was appointed to assist the original Governor of the bank to carry out the function. When central banking functions were added in 1924, and the Commonwealth Bank was given control of the volume of credit, it was obvious that the sphere of the bank’s operation’ was too wide to be under the control of one man. Accordingly, a board of six members, representing varying interests, including those of primary production and the Treasury, were appointed to assist the Governor of the bank. Members of the board had a status similar to that of judges, and since then the bank has remained politically independent. The Commonwealth Bank has worked in close co-operation with the Treasury; indeed, the Secretary to the Treasury for the time being has always been amember of the Commonwealth Bank Board, and one can say that the Commonwealth Bank and the private banks have not. worked together in harmony. The Royal Commission on Monetary and Banking Systems supported the existing structure of the Commonwealth Bank, and recommended that it be given wider powersin a time of national crisis. To- that provision there was general agreement, even by the private banks, and so, when war broke out in 1939, a non-Labour government gave to the Commonwealth Bank all necessary war-time powers. The decision of the present Government to alter the constitution of the Commonwealth Bank, and to hamstring the peoplesprivate banks, is not the result of the advice of banking experts, or of primary producers, or of those who do business with banks ; if was the outcome of the latest conference of the Labour party, which instructed the Government to introduce legislation to make the Com m on wealth Bank subservient to the Government. That thatorder has been obeyed is clear from the two bills relating to banking which are now before the
Parliament. Permanent government control of thebanks means the permanent political control of the money placed in the bank’s by the people. Should this bill become law, the grave danger which will beset us after the war will be the wide use of power by future Labour governments, acting in accordance with directions by extremist bosses whom caucus must obey. With this law on the statute book, Australia will enter uncharted seas, depending on a skipper who takes his order from the crew who, in turn, will be influenced by the demands of persons not on board. I should have no fear of those aboard the ship. In order to hecome supreme in matters of finance, the Government decided to abolish the Commonwealth Bank Board, and to replace its members by bank and Treasury officials, who will constitute an AdvisoryCouncil to assist the Governor should he ask for assistance. The Governor, however, will not be bound to accept their advice, although the bill provides thathe must obey the Treasurer. It is in this power of government control, which, in practice, means caucus control, that grave danger lies, because it will enable the Commonwealth Bank to put the private banks out of existence. Under this legislation, the Government will also have power to utilize the credits of the people with all banks, including savings banks. I fear that the Government will exercise this power at the direction of outside extremists. When people entrust their savings to government or private banks, or when they borrow from such institutions in order to finance industry, is it constitutional for any outside body to have power to get such banks within their clutches? Will any honorable member say that Great Britain’s industrial development was the outcome of such a policy, or that the wealthy United States of America resorted to such a practice, and thereby became the greatest industrial nation in the world?
– Evidently the honorable member does not know anything o f the history of private banking in the United States of America. It is the “ crookest “ thing in the world.
– Many who hope for credit expansion will be disappointed with the provision which gives to the Government the right to continue the war-time controls which forced the private banks to deposit a proportion of their investible funds with the Common wealth Bank, as directed by the Treasurer, which, of course, means the caucus. Their disappointment will be greater when they realize that the Government claims that the Treasurer will be authorized to restrict credit in times of prosperity. Under war-time control, the private banks have had to hand over to the Commonwealth Bank £300,000,000, on which interest at 15s. per cent, is paid. The bill seeks to perpetuate that control, and provides that the maximum interest payable on the amounts handed over by the private banks shall be 17s.’ per cent. That power alone could cripple the private banks and cause their shareholders to lose the whole of their capital. As the bill sets out the procedure to be followed in the event of failure of a private bank, it is obvious that the Government is getting ready totake over the private banks. That power is advocated as a means of abolishing private banks without buying their assets.
– Hear, hear!
– Even now, the private banks cannot subscribe to government or semigovernmental loans. They are not allowed to receive the high rate of interest associated with such loans, although the Commonwealth Bank may do so. The bill provides that all information relating to profits and losses, and a statement in respect of their business, shall be supplied by the private banks to the Commonwealth Bank and to the Treasurer when demanded. That information would give to the Commonwealth Bank power to compete with the privately-owned banks by opening trading banks, or cheque paying banks, although the Minister for Works (Mr. Lazzarini), who assists the Treasurer, claims that, cheques are “bogus money “. Notwithstanding the claims made by the Minister in his booklet The “ How “ in Post-war Planning, he now proposes to extend this system by establishing a cheque paying Commonwealth Bank. I shall quote from the Minister’s booklet -
Themeans by which legal currency is falsified is by the operations of the cheque system-
– Continue with the extract from my booklet.
– I shall Jo so. The paragraph continues - because every time the banker makes an advance he creates (illegal) currency - cheque pounds.
Yet this legislation proposes to extend to a department of the Commonwealth Bank the power to operate a cheque system. The honorable gentleman’s ignorance is pathetic. Let him tell us how he thinks the private banks inflate the currency -
During 1038 the private banks never held more than £20,000,000 of legal currency. By legal currency is meant currency created by Government-operating currency laws providing paper money, silver and copper coins. The total amount of such currency in Australia during 1938 never exceeded £59,407,000. The amount not held by the banks was in the hands of the people - the nation’s till money. Upon this holding of £29,000,000 of legal currency the private banks carried out the following operations : -
They held deposits to the amount of £324,000,000, created advances to the extent nf £312,000,000, while they put through their clearing houses in the capital cities of Australia only cheque pounds, which effected economic exchanges nf all kinds to the extent f £2.007,000,000.
What befogs the Minister is that, although the private banks never held more than £29,000,000 of token moneypaper money, silver and copper coins - they were able to effect the exchange of £2,607,000,000 of credit by means of cheques; but he does not realize that this country, like all other countries, carries out its monetary policy by credit and that what he calls “ legal currency “ is only token money issued to enable the exchange of cash for commodities, as the housewife buys the provisions for the week. No company which wanted to buy 200,000 hoad of sheep would load a suitcase with notes and silver in order to complete the transaction and thereby expose itself to the risk of having the lot stolen by a footpad or some such rogue. Cheques are the means by which credit is transferred from one hank to another. Yet the Minister says that when a cheque is paid credit is destroyed, thereby showing his absolute ignorance of the position, for, when a cheque is met, a debit is entered in the account of the person who drew it and a credit in the account of the person in whose favour it is drawn. The honorable gentleman ought to learn the meaning of the credit system under which we live. The Minister says that because, in 1938, the private banks never held more than £29,000,000 worth of token money they, could not do all that they did do, in spite of the fact that it was done. It was done under the credit system. The honorable member is only deceiving the people when he says that we cannot have a currency more than that which is expressed in notes and coins, in other words, token money. Token money is used in the purchase of small commodities, but transfers of credit in bigger transactions are made under the cheque system, which is the only safe system.
– What is worrying the honorable member is that I say that the Commonwealth Bank should control finance, not the private banks.
– I am not worried, I am amused by the honorable gentleman’s theories. The private banks pay income tax, but its competitor the Commonwealth Bank does not. Is this not all evidence of the Government’s determination, under pressure, to nationalize industry? Do these bills not provide an easy means to that end? That is the end to which the Government is pledged by policy, the policy which the people rejected at the recent costly referendum. I believe .that competition in banking is healthy and of value to the people. If industry crashes when the dangers caused by these hills operate after the next, general elections., it will be the Government’s responsibility in that it will politically control the monetary policy and resources of this country on which . every section of the community, including industry, depends. It is in political control that I see danger. The Lang Government’s control of the Government Savings Bank of New South Wales brought about the crash of that bank. The honorable member was a supporter of Mr. Lang. He was one of those who allowed that bank to crash. He was one of those who deserted the right honorable member for Yarra (Mr. Scullin) in 1931 and helped to vote his Government, out of office.
– He is the man who wrote the book.
– Yes, the mau who says “ How “ in that book. Because he supported the man who wrecked the Government Savings Bank of New South Wales, he destroyed the Scullin Government, whose monetary policy differed from that of Mr. Lang. To their sorrow, the depositors lost their savings, because Mr. Lang, as Premier and Treasurer, seized the credit, not just the £1 notes, in that bank and used it for political purposes. I hold no brief for or interest in the private banks, but the facts clearly show that they are not the cormorants that honorable gentlemen opposite would have us believe they are. In fact, their dividends to shareholders are the lowest of all companies, having been only 3.6 per cent, in 1943 - after their managers had got al! they could out of their industry for their shareholders! What does the Government expect to get out of banking under political control when there is only 3.6 per cent, in it now? The Minister for Home Security (Mr. Lazzarini) will be going out to get notes whenever he wants them so long as the printing press operates and he does not run out of ink. Our confidence in the banking system has been developed by the experts in control of the banks - all the. banks, the private banks and the Commonwealth Bank. Those officers have been well and carefully selected and trained from the bottom of the ladder to Mie top. They are men whose advice is freely given in confidence. They mind savings’ or lend to those who seek assistance. Always the human element is carefully considered. Government, officials will eventually replace bank officials if the Labour party has its way and banking is nationalized. In government institutions politicians will have control, and that will end the efficiency and consideration that we have always had and learned to appreciate from our trading banks. The hitherto complete absence of red-tape, unnecessary delays and the filling in in triplicate of forms which are passed from one department to another, will be the order of the day if our trading banks become yet another government department. The Commonwealth Bank Board is sometimes charged with having refused in 1931 to accede to the demands of the Executive, but, whatever the merits of the differences on that occasion, it must be borne in mind that the reason why the Executive could not force the Commonwealth Bank’s hand was that it did not have the support of Parliament. That it did not have the support of the people either was shown at the subsequent general elections when the Labour government was defeated on its policy of seizing the banks.
In his second-reading speech the Minister for Post-war Reconstruction (Mr. Dedman) said -
I do not believe that the Commonwealth Bunk, being, as it is. the instrument of
Parliament, set up by Parliament on behalf of the people, should have greater powers than the Parliament itself; but the Opposition parties have said that the management of th« Common wealth Bank should be such that it t.-,i’ ki override, if it wished to do so, the desire? and objectives of the government of Hu- day.
The honorable gentleman there ignores the important, difference between the Parliament and the Government. It has become a habit amongst Labour members, steeped in the iron discipline of the caucus, to regard “ the Parliament “ and “ the Government “ as synonymous, and, conveniently, to disregard the fact that the Government, is only an instrument of Parliament. As a matter of fact, the Commonwealth Bank has not and never has had the power to contravene the wishes of Parliament. The Commonwealth Bank Board was set up by the Parliament, and the Parliament has the power to remove its members for any good reason. There is no good reason now. The board was set up as a body independent of the Executive quite deliberately, because the Parliament considered that the functions of central banking would be more wisely exercised by an independent board than by the Executive. In general, there has been little conflict between the Executive and the Commonwealth Bank Board on financial policy, as the fine record of wartime collaboration shows. The Minister also attacked the Commonwealth Bank Board for not having taken action early enough to alter the exchange rate in the depression of 1931, and described that as “ another example of the bad advice given by so-called financial experts “. What abOUt the advice given by his own Government? He said -
It has been referred to in the speech delivered by the Treasurer, and is found in the report of the Royal Commission on Monetary and Banking systems. Attention was drawn to the fact that the Commonwealth Bank ought to have “taken action earlier than it did to alter the exchange rate. Failure on the part of the then Commonwealth Bank Board to take that action cost the primary producers of this country many millions of pounds.
Apparently, the Minister was unaware of the contents of paragraph 551 of the commission’s report, which reads -
The movement in the exchange rate in January, 1031. was one of the major contributions of monetary policy to recovery in Australia. It increased the returns to exporters, in terms of Australian currency, which tended to increase the volume of export production and it tended to restrict imports. Had the movement come earlier, the fall in the national income would have been less, and the task of recovery easier.
And the Minister, apparently, has not read paragraph 554 of that report - in the belated movement of the official exchange rate to 130 in January, 1931, the initiative was taken by the Bank of New South Wales. By that time, the Commonwealth Bank should have realized the value of exchange depreciation, as a means of meeting an emergency, and have raised the rate 1.0 a. height which would have restricted imports and maintained exports.
The Minister conveniently overlooks the fact that the initiative in raising the exchange rate was taken not by an enlightened Treasury, although Labour was in office at. the time, but by one of the trading banks, the Bank of New South Wales. Australia may well be thankful that this legislation was not in force at that time, otherwise, the conservative influence of the Commonwealth Bank at that time might have prevented the movement of the exchange rate which proved so beneficial to Aus tralia as a whole, and to our primary producers in particular. As the result of the initiative of the Bank of New South Wales, the exchange rate was raised to £130, and all sections of political and banking thought realized the wisdom of such action. It was endorsed by the Commonwealth Bank Board and the Government of the day which pegged the rate at that figure. Later, due again to the initiative of the Bank of New South Wales, the rate was reduced to £120 at which it remains to-day. Then is a specific case of a private trading bank taking the initiative in an important matter in the interests of the11 a t 10 Il . I do not imply that danger? will arise from these measures immediately they became law, or while the people’s deposits with the hanks remain hi their present high level. Those deposits represent the thrift of our people as a whole. However, should the day come when conditions call for th* exercise of the utmost wisdom, the danger will arise and influences outside Parliament will he enabled under thos* measures to force the Government to take action which will plunge the country into chaos. Therein, lies the real danger of this legislation.
.- It is understandable that members of tinLiberal party should oppose this legislation, because in doing so they ar»= merely carrying out the behests of th* interests they represent; but when mem bora of the Australian Country party, who are supposed to represent the primary producers, oppose it, such action should leave no doubt in the minds of the farmers of Australia that the so-called Australian Country party in this chamber is but a mere appendage of the Liberal party. I support both of these measure* In doing so, I believe that 1 am expressing not only my own opinion, but also that of the great majority of the elector? I represent. Although these measures represent a great advance on previous legislation, they do not go far enough. Nothing short of complete nationalization of banking should be our aim. My attitude on this subject is well known to the electors of Swan, for I advocated hanking reform from every platform on which I have spoken during the general election campaign and the referendum campaign. I believe that my election to this House is due in no small measure to that fact. I also had the satisfaction of seeing a “ Yes “ vote recorded in the Swan Division, although the subject of banking reform, had no relation to the referendum issues. In a recent tour of a part of. my constituency, I addressed public meetings on eight consecutive nights on the subject of banking reform, and I estimated on a conservative basis that I had the support of at least 80 per cent, of the people whom I addressed. All of my meetings were held, in country centres. Whilst sound and efficient banking has never of itself created prosperity, an unsound banking system, or an unwise banking policy, can prevent our achieving the goals set by an enlightened public policy. Therefore, the issue now before the House is of utmost importance to the people as a whole. They will either go forward to full employment, increased living standards for the worker, farmer, small businessman and manufacturer, or surrender to the banker and wealthy financial interests and monopolists, and thus prevent tha development of Australia as an enlightened, nation. These measures are the keystone of Labour’s progressive legislative programme. Honorable members on this side represent the useful people of Australia, whilst honorable members opposite represent the opponents of the people’s interests, and for that reason are the enemies ofl Australian democracy. The Leader of the Opposition (Mr. Menzies), in his second-reading speech, was obviously speaking to a brief from the bankers, the major shareholders of th<3 six Australian and three British banks in this country. This small group, representing 3.71 per cent, of shareholders in Australian banks, hold 38 per cent, of the shares, whilst in the British group 3 per cent, ofl shareholders hold 29 per cent, of the shares in those banks. The Leader of the Opposition spoke on behalf of those two groups, and while he was speaking representatives of the bankers who had come here to hear their corporation lawyer hand.le his brief were arrayed in the galleries. I have no doubt that they were profoundly disappointed, not because of any lack of ability on the part of the Leader of the Opposition, but be- cause ofl the complete lack of any justification in the eyes of the Australian people for his opposition to the Government’s proposals. The right honorable gentleman said that political control of banking is undesirable, that politics should be kepi out of banking. These measures provide that bankers will be kept out of politics, and thus be deprived of their power to dictate to Parliament. The issue is whether or not Parliament shall have complete power to make laws for the good order andi government of the Australian people. The ministerial party has received an overwhelming mandate from the electors to carry the war to a .successful conclusion, and to prepare for reconstruction in the post-war years. The people rejected the parties led by the right honorable member for Kooyong and the right honorable member for Darling Downs (Mr. Eadden), because they had no confidence in their ability to prosecute the war, and even less confidence in their ability to win the peace. That the electors chose wisely is revealed by the opposition of those parties to this legislation, which is designed to provide full employment, to make it financially possible to rehabilitate and repatriate our fighting forces, to rescue the farmers from the clutches of the trading banks and financial institutions, to provide finance for the small industrialist who has a legitimate claim for the expansion of his enterprise, and, finally, to provide adequate housing for our people. The Leader of the Opposition opposes this programme. He is opposed to the provision of full employment and the rehabilitation of our fighting men, whilst he has always been indifferent to the claims of the farmers, and is not interested to the slightest degree in the welfare of the small industrialist. He is opposed to the proposal to establish an industrial finance department of the Commonwealth Bank. He poured all his scorn upon that proposal, and used every trick and subterfuge to misrepresent it. Why? Because those provisions represent the small . man’s charter. According to experts, Western Australia will, if fully developed, rank third among the Australian. States behind only Queensland and New South Wale*. Honorable members from Western Australia arn concerned with the financing of future industries in that State. This can be made possible through the proposed industrial finance department which will enable Western Australia’s tremendous industrial potential resources to be fully developed. But the Leader of the Opposition has always been an inveterate enemy of legitimate Western Australian aspirations. However, honorable members on this side of the House have the consolation of knowing that, so long as he remains the Leader of the Opposition, and so long as he opposes progressive legislation of this kind, Western Australia will remain 100 per cent. Labour.
It is claimed that the proposals embodied in these bills will place the banks under a political dictatorship. But are not the banks under a dictatorship now? I do not refer to wartime controls. Are they not under a minority dictatorship - the small minority of big shareholders who direct the policy of the hanks in their own interests, and not in the interests of the depositors or the nation ? The Government’s proposals mean that the banks will be placed under the control of the people; and when the majority dictates, it is not dictatorship, hut democracy. If the Government’s policy does not suit the people, then the Government can be removed at the following general elections. This democratic control does not suit honorable members opposite. They want dictatorship and direction by a group of wealthy individuals free from any control except that determined by their own bank balances.
The proposal to place the Commonwealth Bank under the management of u Governor, assisted by an advisory council, will ensure competent direction. This direction will be as competent at least as that given by the existing Commonwealth Bank Board, and, at the same time, will obviate the danger of the bank being a law unto itself. Moreover, the Royal Commission on Monetary and Banking Systems appointed by the Lyons Government in 1935 recommended that the Government should control the bank instead of the bank controlling the Government. Incidentally, the honorable member for New England (Mr. Abbott) concurred with that recommendation.
The Leader of the Opposition baa attempted to ridicule what he is pleased to term ‘’ one-man control “. But the Governor of the bank, when he is chosen, will have the help of many competent leaders trained in the service of the hank itself. General Eisenhower is the Commander-in-Chief of the allied armies of occupation in Europe, and General MacArthur holds a similar position in the South-West Pacific Area. Each is responsible generally for the campaign in his respective theatre of operations, but neither does all the work, nor does he give individual direction or detailed leadership. Further, the Commonwealth Bank will not be a one-man show like the Libera] party.
Do some of the present members of the Commonwealth Bank Board direct the bank in the nation’s interests? A glance at their private fortunes and the vast aggregations of capital which they control is sufficient to answer that question. It is obvious that if some of thos* members had to choose between their personal interests and the nation’s interests, they would choose for themselves. I admit, of course, that the Leader of the Opposition identifies the interests of the workers, farmers and small business men with those of the monopolists; but those sections have as much in common as the walrus and the carpenter with the innocent oysters. Honorable members opposite pose as “ liberal “, as champions of the middle class; but they are apologists and advocates for the very wealthy people in this community, and are the keen advocates for the social system which make great wealth and great poverty. The late and unlamented Hitler used such slogans as those now used by the Leader of the Opposition. Hitler rose to power to be the creature of the Krupps, I.G. Farben, Thyssen and other German monopolists. The Australian Krupps are the real force behind honorable members opposite. Let me revert to the directors of the Commonwealth Bank. Mr. H. G. Darling directs companies with a total capital of over £27,000.000. He was, according to the Vice-President of the Executive Council (Mr. Beasley) the biggest shareholder in the Broken Hill Proprietary Company Limited. Sir
Claude Reading is managing director of the British-Australasian Tobacco Company, a gigantic monopoly which is a disgrace to Australia. That monopoly robs the tobacco-grower by keeping down prices to the grower, w 11.11St at the same time employs cheap labour in its factories and charges exorbitant prices to the public. This monopoly has a capital of over £11,000,000. Can such men direct the affairs of the Commonwealth Bank in the interests of the people generally? What arc their politics? What about political control by such people? The Leader of the Opposition shed many crocodile tears for depositors with the trading banks. Yet this legislation specifically protects the depositors. With the adoption of these measures, they cannot lose in the future, nor can any government bank suffer the fate of the Government Savings Bank of New South Wales, which was deliberately wrecked in 1930 by the interests so stoutly defended by the Leader of the Opposition.
Generally, the legislation will stabilize the economy and banking system of Australia. One might be excused for thinking that every one would agree to this proposal. But, no! For their own selfish ends, big business interests would wreck Australia in order to seek a political advantage. They would deny to the people the fruits of the Allied victory.
Whilst this legislation will protect and strengthen the Australian currency, members of the Opposition are frantically proclaiming that the end of the world has come, and that the Australian £1 will be worth from only 5s.. to 7s., according to the will of an “ ignorant and irresponsible caucus “. It would be a sorry day for Australia if the members of the Labour party descended to such utter irresponsibility as that exhibited by the Leader of the Opposition, the Liberal party, and the anti-Australian organizations such as the Constitutional League, Political Research Society, and the Institute of Public Affairs. Those organizations are spending fortunes in inserting in the press lying advertisements about the banking legislation. As for the alleged ignorance of the Labour caucus, the remark by the Leader of the Opposition can be safely dismissed as the ravings of one who suffers from the complaint of Narcissus, ‘that figure of antique fable who perished because of unnecessarily attaching to himself an importance not conceded by others. But there is a side to this mischievous, irresponsible and disloyal propaganda against the bank bills which cannot be allowed to pass. At this time - of all times - this propaganda could cause a lack of confidence in the solvency and stability of the nation. It is treason, or perilously close to it. Certainly, people concerned with preserving democracy would not issue such propaganda.
Members of the Opposition gave many reasons for attacking the banking legislation, but none of them was valid. They said that the central bank must possess “great strength and authority” in order to carry out its functions. But the whole tone of their speeches was to deny to the Commonwealth Bank any strength and authority. Their opposition to the proposal that the Commonwealth Bank should engage in trading bank activities - a proposal which, when adopted, will strengthen central .banking functions - shows the hollowness of their claim that they are desirous of strengthening the central bank. Certainly, the scandalous and abandoned propaganda about the Australian £1 being only worth 5s. to 7s. in the future will not give to the central bank the great authority that it needs.- What honorable members opposite really desire is to convert the Commonwealth Bank into an appendage of the trading banks, use it for mobilizing the nation’s credit and then hand over the distribution of that credit to the trading banks, to their greater glory and profit. They object to the proposal that the bank’s surplus funds should be lodged with the Commonwealth Bank. This legislation does not propose that the £250,000,000 now held by the associated banks should be taken from them. It provides that the trading banks shall be able to use their funds, but in such a volume and in such a general direction as the Commonwealth Bank decides. With this proposal, only the most hardened and unrepentant advocate of economic laissez-faire will disagree. The trading banks will not lose anything.
They will receive interest on their deposits with the Commonwealth Bank. Lt is even proposed to increase the interest rates on their deposited funds.
The alternative to the adoption of the Government’s proposals in this direction is to return to the trading banks their £250,000,000. If they were content with the same cash ratio as in 1938, they could, if desired, expand their advances by an additional £750,000,000. Such an advance would mean the most catastrophic inflation; and inflation would destroy the savings of the workers and the middle class, and rob the service men and women of much of the value ot their deferred pay and gratuities. Controls, such as are proposed, are necessary to prevent such robbery. Sir Alfred Davidson, whom none will accuse of being a supporter of, this Government, contributed an article to the South Australian Banking Journal last September. He wrote, inter aiia, the following: -
While the closely controlled system has operated fairly satisfactorily during the war, there is no guarantee about the future, when the war-time accumulation of spending power can be expected to set up difficult inflationary pressures within the economy. Government controls will have to be exercised to prevent i sudden flood of spending power descending on n limited supply of goods and services, but on the other hand the community wishes to return as quickly as possible to a state when mi individual can exercise a free choice.
The honorable member for Barker pointed out that this year the Australian note issue has risen to £186,000,000 and treasury-bills to £417,000,000. He should have added that deposits in the Commonwealth Savings Bank and on current account in the private trading banks had reached a tremendous figure. If, after the war, all economic controls were removed, there would be, a.3 Sir Alfred Davidson predicted, difficult or even vital inflationary pressures within our national economy. To-day, inflationary pressuresare held in check by price-fixing, rationing and other controls. If they were abolished, the results would be most serious. For that reason, the Government was most anxious that the referendum should be carried last year in order that the Commonwealth should possess power, in the post-war period, to control price-fixing and the like. The honorable member for Barker opposed the referen dum. What he said yesterday was. .1 believe, right; but he should have gone farther than he did. He refused to apportion the blame. He should have added that, after all, the tremendous expansion of the note issue and treasuryhills was due to the war. The Government must finance the conduct of the war, and the gap between receipts from taxation and loans, and actual expenditure, must be bridged in some way. The honorable member for Barker actually made a case in support of the bill although that was not his intention. As I have shown, Sir Alfred Davidson does not agree with the people who wan’ economic anarchy.
The bills propose that the Commonwealth Bank shall control the volume of credits and direct the available credit to the proper channels, subject, of course, to holding a necessary reserve. This means that adequate money will be available to finance post-war reconstruction. It would be futile if the Labour party, while occupying the treasury bench, was not in a position to implement its programme. In future, the Commonwealth Government will be able to finance the construction of public works undertaken by itself, the States and semi-governmental instrumentalities. It will be able to direct the financing of those industries, the development, of which will contribute most to Australia’s post-war reconstruction, and leave the country free to collaborate with such other nations as is necessary and desirable. Adequate finance will be available to carry out all rehabilitation schemes for ex-service personnel, for the purposes of the Rural Credits Department and the Mortgage Bank Department. Those departments will offer the farmer new hope for planned production and guaranteed prices.
Overcoming the appalling housing shortage will demand thorough organization of supplies and man-power. To secure these supplies, every kind of building material must be utilized. The industries producing these materials must be modernized and expanded. Possibly, the Commonwealth and States will have to engage in the production of building materials. Their earlier ventures were outstanding successes. As the main reservoir of the nation’s credit, the Commonwealth Bank will have the task of making credit available probably to both private and governmental undertakings for the necessary expansion. The legislation provides for generous advances to private home builders and building societies. Can any one challenge the validity of the Government’s proposal? in this direction ? Is it not most desirable that every person should own his or her home? What has prevented great numbers of people from owning a home? Simply the inability to finance the construction, or meet commitments at high rates of interest. The interest rate on the generous advances that will be made under this bill must be as low .as possible; otherwise, the benefit of this legislation will be lost. The only people who could possibly object to the housing provisions are rack renters, or financial sharks, who, in the past, have provided finance at high interest rates for private building.
I desire now to deal with some of the provisions of these bills, and examine them briefly. First. it should be evident that the Commonwealth Bank belongs to the people as a whole, to members of the Opposition as well as to members of the Labour party, to the shareholders in the private trading banks :is well as those without shares. As a business institution, the bank has been amazingly successful, and that is not to be wondered at when we consider that it is a national institution. The bank has considerable reserves, from which it will finance its future activities. This annoys investors, who prefer to be in a position to lend money to the bank for its future activities. This provision explains to a degree the opposition of certain English banking concerns to the bill, because in Great Britain, banking capital is more parasitic than elsewhere in the world. We should bear in mind, too, that the profits of the central bank will not go into private pockets, as do the profits made by the private trading banks, but will benefit the nation as a whole. Twenty-five per cent, will bc placed in reserves, and an equal percentage will be allotted to the Mortgage Bank Department, which will benefit the primary producers. The remaining half of the profits will be credited to the National Debt Sinking Fund. This will assist the nation’s solvency, strengthen its currency, enable loans contracted outside the nation to be retired, and contribute materially to our political independence. Reduction of external loan indebtedness reduces any adverse balance of payments and enables the nation, if it is desirable, to increase imports. A favorable balance of payments, which is not to be confused with a favorable balance of trade, also determines the external value of our currency.
While I am dealing with this point, I should like to combat the misleading propaganda of the Leader of the Opposition concerning the value of our currency. He has read into the provisions of Part VII. of the bill an assumption that the currency will have less backing than that which exists at present. This assumption is based on the provision that the abolition of the 25 per cent, reserve of gold, or English sterling, devalues our currency. What the bill proposes to do is to implement the decision of the Royal Commission on Monetary and Banking Systems. But the provisions of the bill go farther than the commission’s recommendations. The Treasurer has explained that the note issue should be a reflection of our future credit policy. In other words, the volume of goods in circulation, their velocity of turnover, and their prices, will determine the extent of the note issue. Admittedly, the medium of circulation should have a value, and this is provided for in the bill. One would think, after having read the reports of propaganda speeches made by the Leader of the Opposition at alleged Liberal party rallies, that the Government proposed to have no backing whatsoever for Australian currency. Nowhere in the bill is this either stated or implied. Clause 44 makes specific provision for assets of the Note Issue Department. In this, as in other clauses, the bill allows for flexibility of operation, where flexibility is necessary. Associated with the provisions relating to the Note Issue Department are the proposals relating to the control over gold. Every government must have the right to place on gold the internal price that it considers expedient. Without this provision, the value of our currency could not be protected, and another blowcould be struck against our independence. Other provisions for control over gold can lead to the eventual ownership by Australia of our gold-mining industry. Foreign ownership has been a curse to Australia in general, and to “Western Australia in particular. The profits made from gold-mining have gone overseas, leaving in their train worked-out areas, old miners with their health permanently impaired, and without benefit to Australia.
I turn now to the clauses dealing with the Rural Credits Department and the Mortgage Bank Department,which will make it possible for the bank to extend real help to farmers in future. By making provision for credits to be advanced on a wide range of security, the bill will solve the farmers’ financial difficulties. Noteworthy is the provision for loans to co-operative bodies and marketing boards. This will prevent the farmers from being at the mercy of fin ancial institutions and tradingbanks. Also to be commended is the provision that the profits of the Rural Credits Deportment and Mortgage Bank Department shall be returned to the departments and allotted for the expansion of agriculture generally. Other clauses deal with the Industrial Finance Department to which I have already referred.What I urge here is the inclusion of a provision for making personal loans apart from those provided for in the clauses relating to the Mortgage Bank Department, and for housing. While we are cleaning up the big financial sharks and depriving them of their power, we should also remove the racketeers, who batten on adversity by making personal loans at exorbitant rates of interest. Small loans should be permissible to enable applicants to buy furniture and equipment for a home. We talk a lot about the necessity to increase the population. Here is an opportunity to do something practical. Many young couples would marry years before they do if they could get this form of assistance. Young people must either wait to accumulate sufficient cash to furnish a home, or go to a time-payment firm where they are exploited, first, by being overcharged for cheap furniture, and, secondly,by paying high interest rates on the balance owing.
The marriage loans advocated by the honorable member for Parkes (Mr. Haylen) would overcome the need for furniture loans, hut, until his suggestion is adopted, a Small Loans Department should be established to help many young people over the stile. Such a department would mean the end of the pernicious timepayment system, and spell finis to cash order firms - another type of business which battens on the misfortunes of the poor. The money advanced for such purposes should carry a very low rate of interest, and could be secured by a bill of sale on the article. Primary producers could benefit under such a provision by securing loans to buy machinery for cash.What happens now is that a farmer pays one-third down onh is machine - this amount incidentally, is generally recognized as paying the. actual cost of the machine - and on the remaining two-thirds he pays a flat ra te of 30 per cent. No wonder machine firms like the time-payment system. A real service would be done to the people if such practices were eliminated.
I should like to support the remarks of my friend and colleague the honorable member for Perth (Mr. Burke), who spoke of the necessity to attract staff to’ the Commonwealth Bank from the associated banks. If the Commonwealth Rank is to expand, and the people as a whole earnestly hope that it will, it must have a trained staff. Bank premises can be built or bought readily enough, but a trained staff cannot be conjured up overnight. Therefore I consider that some effort on the part of the Government to protect the interests of the staffs of private banks in the matter of superannuation funds and the like, and to the steps necessary to attract competent bank offices, will pay big dividends for the nation.
One hears much talk about the Labour party caucus as if it were a superior authority which dictates to the Government its legislative programme. Of course the Government consults caucus, and I presume that honorable members opposite, too, have party meetings, or do they believe in dictatorships? Are the Ministers of anti-Labour governments a law unto themselves, pursuing their own policy without consulting their respective parties? Caucus is a meeting of the Parliamentary Labour party and it is “ Tommy-rot “ to speak of caucus control. It is quite true that Labour members attend meetings of trade unions, primary producers, and other organizations in their electorates, and discuss withpeople matters which they require the Government to consider, but all this talk by honorable members opposite of caucus control is so much “ moonshine “, by means of which they hope to make the people of this country believe that caucus is a super-authority controlling the Government, whereas, in fact, caucus is the meeting of; the members of the Labour party. Policy is discussed by caucus in the same way as it is discussed at party meetings of the Liberal party and the Australian Country party. It is quite true that now and again Labour Ministers consult the Australasian Council of Trade Unions, but that is a far more democratic practice than that adopted by honorable members opposite of consulting with chambers of commerce, chambers of manufacturers, and so on.
The provisions of these bills when enacted and explained will be of such value to the people as a whole that I am satisfied that we shall defeat completely the opposition at the next elections. [Quorum formed.]
– It is doubtful whether I should have spoken at all on the secondreading of this legislation had it not been for certain statements made in three speeches delivered yesterday afternoon, in particular, the speech of the Minister for Information (Mr. Calwell). The Minister adopts a method of debate which has always interested me greatly. He employs what is known as the inductive method. He argues from the particular to the general, but in a manner which in general is not too particular. Quite frequently - I do not think that the Minister himself will disagree with this - the particular is a person, and he argues to a conclusion which is not always identifiable with a principle. Last night he referred to a matter which touches me very closely. He spoke of the economic depression, and I was associated very closely with political events which had an enormous influence upon what happened during that period. The Minister quoted from a newspaper the story of a woman and a child who had been ejected into the street in Melbourne at the beginning of winter. The woman was in poor health and her child was only a few months old. It was indeed a terrible story and a true story; and it was not an isolated instance. Here is another story of the same type -
Women of 72 and 52, Out of Home, Sleep in St. Kilda Lane.
Mrs. Edith Barden, 72, and her daughter, Mrs. Millie Mutton, 52, have been sleeping in a lane in Lyell-street, St. Kilda, among their belongings for the past four nights, because they have been unable to find a house or room.
Mrs. Burden is a widow, and lost her only son, Angus, in this war. She is receiving a military pension and the old-age pension.
And here is another story, this time from Sydney-
A digger, his wife and three children - two girls, eight and twelve, and boy, ten - live in two tents at Palm Beach. Wounded in Greece, the digger has to wear an iron on the right leg.With money saved by his wife and his deferred pay,he bought a launch and has been makinga good living fishing. Has now been given notice, with others unable to find a home, to quit the tents. Another son, twenty, who enlisted in the Australian Imperial Force at sixteen, is about due home from leave after fighting in New Guinea.
The Minister’s story belonged to 1934. but the two stories which I have related belong to 1945. The point that the Minister made concerning his story was that on the very night that that dreadful thing was happening, the then Prime Minister and the honorable member for Balaclava (Mr. White) were at a meeting in the St. Kilda Town Hall, convened by the Australian Women’s National League, and congratulatory speeches were being made about the Prime Minister because of the progress that had been made during the previous year or two in combating the depression. The Melbourne story which I have related refers to happenings of only a week ago, and the Sydney story was published on the very day on which the Minister for Information made his speech. These things have happened in many periods of history, and it is the constant concern of governments the world over to see that they shall not happen again. To argue that because the incident to which the Minister referred occurred in 1934, absolutely nothing was being done to deal with the depression is an entirely wrong use of language and argument.
– The circumstances to-day are entirely different.
– To-day we are in the midst of a world war, then, we were in the midst of a world depression.
– Houses are not available to-day, but hundreds were available during the depression.
– That is not correct. One can no more deal locally with a depression in its entirety than one can deal locally with a world war in its entirety. The whole argument is entirely false. Let me speak for a moment or two concerning events in 1934. [ know something of that depression. I went from one end of this country to the other doing what lay in my personal power to relieve conditions, and I supported what political ‘action seemed to be the best to relieve these conditions. [ met the honorable member for Hunter (Mr. .Tames) at that time, and he knows as I know, that I cannot be accused of having been careless of the sufferings of those about me, nor can such an accusation be levelled at members of the then Government. I must confess that in this chamber nothing has distressed me so much as the constant reference to the depression and things that happened at that time, as evidence of callousness on the part of the then government. That is distinctly unfair. In 1935, 1 went with my husband to England and returned through America. Everywhere in both America and Canada, and frequently in England, my husband was asked to describe the method used in Australia to combat the depression. The people in those countries believed that measures taken in Australia had been almost miraculous in their success. I have in my hand a book published by the Empire Club of Canada, containing the speeches delivered by all those who addressed members of that club during the year 1935-36. lt so happens that the first speech in this book is that delivered by the then Prime Minister of Australia, tie was introduced to the gathering by the Premier of Ontario, who said -
Australia is going through the same period of economic evolution, but I must say, in all humility, it appears to me Australia has made a little more progress toward rehabilitation than we have.
Whatever may have happened in Australia, honorable members may take my word as one who saw other parts of the world at that time, that worse things happened in other countries. To this day, Australia and Sweden are cited as the two countries which emerged first from the depression, and it is generally recognized that because of its own economy, Sweden was not affected in quite the same way by the depression as was this country.
The Minister for Information spoke with particular severity of the Commonwealth Bank Board, and I am not quite sure of the real reasons which actuated him in his complete opposition to that Board. I must confess that because of the debating method which he used, he rather left the impression in the minds of his hearers that his main objection to the board was that Sir Robert Gibson manufactured bedsteads. I do not suggest for a moment that that was the Minister’s real objection, but because of the method which he adopted in presenting his ease, that was the impression that was left in my mind. In my opinion the real reason is contained in the letter which the Minister read to this chamber. Owing to tb<propaganda which has been carried out constantly since the depression the majority of the people to-day are under the impression that it was the Commonwealth Bank Board which prevented the Government of the day from giving effect to a. policy which it believed to be the best one to remedy the depression. As a matter of fact, that is not true. That brings me to my main objection to this legislation, which is that the Commonwealth Bank Bill will take from Parliament the measure of control over financial policy which it now enjoys and will place it in the hands of the Treasurer. What happened at the time of the depression? In the opinion of the Commonwealth Bank Board, it was safe only to go part of the way along a certain financial road, and it stated its view in no uncertain terms. The Government, therefore, had to go to Parliament, as is right and proper in a democracy, but
Parliament rejected its recommendations and accepted the recommendation of the board. The Parliament was representative of the people, and within eighteen months of that time, at the elections, the people fully endorsed its action. The government which then came into office had a majority about equal to that which the Labour party has to-day. In view of these facts, I repeat that the great danger involved in this legislation is that it will take away the power which Parliament has always held and place it in the hands of the Treasurer.
– When the honorable member was in the Labour party, she subscribed to that policy.
– That is not so. I was a member of the Labour party, as everybody in Australia is aware, and certain ideals of the Labour party are still my ideals and the ideals of the people on this side of politics. [ have said over and over again, in this House and in many other places, that the vast majority of Australians a,re unanimous in their general aims. They want a fair deal for everybody; though people may differ over the methods of attaining that objective, they do not differ on the general principle. I say to the honorable member for Hunter that I fought the present objective of the Labour party fiercely when I was a member of that party. At a conference at which it was under discussion, I opposed it consistently. Therefore, I can say candidly that the specific objective of the Labour party is not, and never has been, my own. I believe in real democracy. In any collection of individuals I see much greater promise of wisdom and safety in the pursuance of any policy than I see in control by one man.
– That is why there are nineteen members of the Government.
– Exactly. Above all, I believe that the final control of financial policy, as distinct from administration and smaller problems of policy, should remain in the hands of Parliament, not in the hands of the Treasurer. Under the provisions of the Commonwealth Bank Bill, the Governor of the bank will be forced to do as the Treasurer says in the event of any con flict of opinion, and Parliament will not have the right to discuss the matter because no private member can introduce a financial proposal in the House. Therefore, the Government of the day will have imposed upon it a responsibility greater than it should be anxious to bear.
– Parliament can override the Government at any time and in any circumstances.
– That is not so. We know perfectly well that, in the present circumstances, the Government, having a large majority in both Houses, can do as it wishes. However, if the Government had to come to Parliament before initiating any great change of policy, it would be subjected then and there to the test of public opinion, and, after all, that is what really matters. We are at the beginning of a period in. which great changes are inevitable. There is a grave danger of serious mistakes being made within the next few years. That being so, L want to see concentrated in the hands of the people all the power that it is possible for them to retain. Serious results may arise from the Executive having powers which the people themselves cannot exercise. I refer now to a speech made by the honorable member for Martin (Mr. Daly). I congratulate him on the wellreasoned statement which he made. He spoke in moderate terms of the financial depression, and said that the action of governments, not the private banks, brought us out of. the depression. That is largely true. However, the honorable gentleman quoted a passage from the report of the Royal Commission ort Monetary and Banking Systems and, by emphasizing certain phrases, gave to it a meaning which to my mind is not confirmed by a perusal of the entire passage. This is the passage to which he referred -
Along with other parts of the system, thetrading banks must bear some responsibility for the extent of the depression. In the more prosperous times preceding the depression, they went with the tide and expanded credit. There was then no central bank to guide their policy,, but, even in its absence, the banks might have taken concerted action which would have helped, to check the boom, and thereby have lessened the extent of the depression. At the outset- of the depression, the trading banks, in theinterest of their depositors and of their ownsolvency, were forced by the general conditions, and by the reduction of their London funds,. duetothefallin export values and the cessationof overseas borrowing, to adopt the policy of contraction which intensified the depression.
According to the report, the banks were forced finally to adopt that policy, which intensified the depression, because of circumstances which were then beyond their control. I do not believe that the methods which were employed during the last depression would be appropriate to meet present requirements. A certain course of action may be right at one period, but not at another. Circumstances which existed at the time of the depression would have made policies which are now frequently adopted entirely wrong. Policies which would be suitable to-day would have been dangerous then and would have made Australia’s credit abroad absolutely valueless. During the depression the value of Australian stocks in London was as low as 58 per cent. and inNew York 35 per cent. At that time any action which would have appeared to be deliberately inflationary would have utterly destroyed our credit overseas. We have learned a great deal since those days, not only in Australia but also in other parts of the world. Depressions are world-wide and only world-wide concerted action can combat such eventualities in the future. That is the reason for a policy being pursued in certain quarters at San Francisco. The world is a single economic unit, and we must co-operate with other nations if we are to avoid another depression such as that which struck us early in the last decade. When the Minister for Post-war Reconstruction (Mr. Dedman) was speaking on these measures he made this statement -
Trading banks had always discriminated against customers and had withheld finance from certain industries e.g. a textile manufacturing firm in Geelong had been refused finance to make blankets, while the banks had found finance to import them.
Statements like that could probably be multiplied many times. But the fact that a bank refused to lend money to a firm for the purpose of makingblankets does not mean that thebank was opposed to the manufacture of blankets in Australia. The Minister did not say that, but that inference was drawn from his remarks by many people. He insinuated that such was the case by stating that the same bank lent money freely for the importation of blankets from his homeland. The obvious answer to his insinuation is that the hank concerned did not believe that the firm was capable of making blankets at a price which would enable it to carry on. Here, of course, the profit motive must be taken into consideration. However, the cold fact is that unless the firm could make enough profitfrom its blankets to enable it to continue paying graziers for their wool, employees for their work and those who bad put money into the venture for their financial backing, the undertaking would fail and there would be a net loss to the community. If it can be said that banks cause depressions, as members and supporters of the Government insist, they must do so by lending money to firms which ultimately fail, because depressions are caused by a large number of such business failures. What happened in Wall-street just prior to the last depression? A wave of financial gambling arose in America which shook the whole structure of society and upset the ramifications of business throughout the nation.
Sitting suspended from12. 45 to 2.15 p.m.
– A bank has to protect its depositors. In doing so, it lends to individuals and firms which it believes can make a success of their businesses. If the banks did not act in that way they would not only lose the money which their depositors had entrusted to them, but would also contribute to the instability in economic conditions which causes unemployment and, we all agree, ought to be avoided at any cost. The Minister did not say what ultimately had happened to the blanket manufacturers in Geelong. That town has seven branches of banks, including a branch of the Commonwealth Bank. If none of them would lend to the firm, its chances of success must have been extremely slender. One of the advantages of having competition among banks is that it is possible forafirmto place a proposition before a number of institutions, all of whom are anxious to have business which is reasonably sound. One of the grave disadvantages of this legislation is that, under it, there will be finally one judge only of the kind of business to which banks can lend money. If the Government should decide that too many blankets were being made in Australia - as it recently decided that too much wheat was being grown - no financial institution would provide accommodation for the manufacture of that article.
I have no dislike for the Commonwealth Bank. It is the only bank in which I am a shareholder, and I want it to succeed and to give the best service it oan to the community. I believe that, purely as a trading hank, it, will play a very important part in the prevention of circumstances such as I have recently described, which 1 :ad to local financial crises. The Commonwealth Bank has proved itself to be thoroughly conservative in the matter of taking risks. It would he a very steadying influence in the banking structure if it were in straightout competition with the other banks. lt should have the same obligations as the private banks have to the central bank, And be open to the same kind of assista nce from that institution.
To sum up : I should like the central bank to be strengthened, and to be divorced entirely from the trading activities of the Commonwealth Bank. L” wish the Bank Board to be retained, because I regard it as a sounder method of directing policy than that of accepting advice from one man, or a group of men, all of whom have had the same “kind of training. Above all, there should remain in the possession of the Commonwealth Parliament the power which it has at the present time. I said earlier that the effect of this legislation will be to take from the Parliament that final power to direct financial policy which it now has, and to entrust it to one man - the Treasurer, who, of course, is the mouthpiece of the Government. Finally, r again warn that many honorable members opposite are labouring under a great delusion if they consider that, in this legislation alone, there resides the power ro deal with and prevent world depressions. That is something which cannot !>e done locally in any country, because any action that can be taken must extend far afield. I hope that, whatever else may be done at the conference in San Francisco, at, least steps will be taken to ensure that the nations of the world will be brought together in some kind of organization which will make it possible for representatives of all the nations to meet regularly for tie discussion of all kinds of economic and financial problems, so that, in the future, the risks of a depression such as that through which we passed in the early ‘30’s will grow less and less and may finally be entirely controlled.
.- I am honoured in being a member of this Parliament when measures of such importance as those embodying the banking proposals of the Government are being considered. The people of Australia have been waiting anxiously and with justifiable pride for their introduction. They have every reason for believing that the interests of the nation as a whole have been safeguarded during the regime of th>Curtin Administration, and on the appropriate occasion they will express their confidence in the Government by again returning it to office. I well remember the period during which I was a bank officer. 1 gave honorable service to the banking institution by which I was employed. In the last six months of my service, as the accountant of a senior branch, I saw pass through that institution £2,596,963. As a bank teller, J have handled in two hours the sum of £S8,000. At that period of my life, I was a married man with a wife and child. For the “ magnificent “ salary of £3 17s. a. week, I had to maintain a personal appearance in keeping with the social standing of a bank officer, and contribute to the bank officers’ fidelity fund. The bank saw fit to grant to me a teller’s risk allowance of £10 per annum - 16s. 8d.. a month, or 4s. 2d. a week. The education which I received in the bank has not since been a handicap to me, but 1 have no desire to revert to that status.
I listened with rapt attention to the second-reading speech of the Treasurer (Mr. Chifley) on this all-important legislation. I am sure that the high degree of satisfaction which I gained from his exposition of its provisions was experienced also by other Government supporters. One did not need to be a very keen student of. psychology to observe the expression of dismay on the faces of members of the Opposition. No doubt, this was due to the fact that they were overwhelmed by the thought, care and thoroughness which were evident in the different provisions. They realized that the immediate reaction throughout the length and breadth of Australia would be favorable to the Government. I hold this belief, and it has been amply fortified by the numerous letters of appreciation that I have received from all sections of the community.
I paid very close attention to the speech of the Leader of the Opposition (Mr. Menzies). The right honorable gentleman referred to his “ amateurish knowledge “. The use of that expression by a gentleman who had had the benefit nf schooling by the highest banking authorities in the Commonwealth in all the arguments that couldbe used against this legislation, was a display of vanity, but it had a purpose - to suggest that banking is a mysterious science and beyond the comprehension of a layman. With his high educational attainments, the right honorable gentleman is well able ro appraise the benefits which the people will derive, and the important part which the legislation will play in post-war reconstruction. We all remember the failure of the associated banks after the termination of the first world war. It will be the duty of the Government to ensure that such inglorious errors shall not be repeated.
Ialso listened with great interest to the Leader of the Australian Country party (Mr. Fadden). It was easily discernible that that right honorable gentleman could see many good points in the legislation. That, from a gentleman of his business standing, was a tribute. Unfortunately, some Opposition members have belittled the ability of Government members to grasp the intricacies of financial matters. I claim unhesitatingly that some honorable members on this side of the House have been just as successful as honorable members opposite in the commercial sphere, and that their knowledge of finance and of commerce generally is equally as keen. No other country has had its finances so carefully handled, and inflation so well curbed, as has Australia during the war. The people of this couutry are probably more prosperous than are the people of any other country. Credit for that cannot be withheld from the Curtin Administration. I have before me a letter posted from Greece on the3rd March, 1940. The postage on it was 37 drachmas, equivalent, at that time, to ls. 9d. Australian. Also before me is another letter, sent by the same person to the same addressee on the 11th November, 1944. The postage on it was 200,000 drachmas, normally equivalent to approximately £473 Australian. That illustrates the financial control which has been exercised in thiscountry compared with some overseascountries. When our delegates return from San Francisco, not only the Government members, but also thosewho represent the Opposition, will be able to relate what they have learned in regard to the cost of inflation overseas. As a former bank officer, I well remember the treatment meted ont to primary producers in certain parts of South Australia. I remember interest being charged at rates as high as 8 per cent. That crushing burden made it impossible for those unfortunate farmers to carry on. their operations. That condition of affairs is not experienced now under the Curtin Government.
– Under war-time conditions.
Mr.RUSSELL.- That is so. I have received from a farmer in South Australia a letter in these terms - 24th December, 1944.
Dear Sir. -I wish to bring before your notice certain facts which are against the success ot your Government.I have been asked bythe agent of my stock firm for ls. for a telegram to send you a protest against any change in the banking system. I have also been asked to sign a petition to you re the above. I havelooked down the names on the list, all of whom I know, and I do not think one of them would have wired you or written unless they were pushed into it by an agent, some of whom have oily tongues, and put out vicious statements re the banking. Aninvestigation would show what damage is beingdone by these fellows, who, I suggest, must have been asked to do the job for the monarchs of finance. When I spoke to one agent he admitted he knew nothing much about the monetary system, yet he is one of the hardest workers for telegrams and signatures against the change which I hope your Government, will he able to bring about. My opinion is that the financial interests will stoop as low and lower than they have ever done to retain their power. Some of the agents ave chaps always very anxious to make big profits out of their fellow man and that is about the height of their knowledge. I know quite a lot of my thinking farmer friends think we have the best Government wo have ever had. Therefore, I offer just in my own simple way the success of your Government in the coming year.
Another farmer has written to me as follows : -
Dear Sir. - The other day I received a circular from the- Bank telling me they did not consider it wise to let the Federal Government take over control of the bunks. I was in the bank at- a few days later and the manager of the bank asked mc would I sign a form objecting to the Government interfering, which 1 did. .1 might state, I work on an overdraft at the bank, and have no crop this year, and 1 may possibly want :i bigger overdraft before the end of next year, and it means if I refused to sign it they could make things awkward for me. so I did not object to signing it. So I thought I would write and let you know where I stood. Personally, I will be glad to see the Federal Government take over control. We have had to pay high interest long enough. Dmi ug the depression I bad to pay the bank 74 per cent. Even when everybody else had to come back to 5 per cent, interest the banks came back on a gradual scale over a two year period, and then only left it on the 5 per cent, for about six months and then put it up to 5i per cent, and left it there until the .Government forced them back to 5 per cent. Since the war started, a lot of farmers arc crying out about the government control. It has been bred in them to object to anything where Labour has control; but t am pleased to say that every year more farmers are changing over to Labour. When the depression was on the other crowd had us selling our wheat. Well, I sold mine as low as ls. 1.0d. and 2s. a bushel for three or four years, and had to pay 7i per cent, interest during those years. As you know hundreds of farmers were forced off their land because they could not pay their interest, and most of those that were left on the land, had a hard struggle to keep going. Until this last three years we have had a lot better sailing since the Government has taken control of our products. As you know this year is a real failure. Most of us have even got to buy seed wheat, but we are living in hopes of getting early rains next year so as to give our stock early feed. Hoping you will not take any notice of these objections that are sent in by the banks, as hundreds of farmers are in the same position as I am, and are frightened to object to it, hoping the banks will be forced under government control.
Since I have been a member of this House, I have approached the associated hanks in Adelaide, requesting that they agree that on Eyre Peninsula, South
Australia, the residents should be charged the same rate of exchange as that paid by residents on the mainland, namely, ls. on £100. The rate on Eyre Peninsula is i per cent., which is 2s. 6d. on £100. Rates of exchange are based on the time which it takes to effect the clearance. There may have been some justification for this charge 50 years ago, but to-day, with our quick means of transport, our daily plane service, our fast steamer service from the mainland of South Australia to Port Lincoln, and the fact that mails are delivered from place to place by speedy motor transport, it is a most iniquitous charge to impose on settlers who have gone to “the backblocks. opened up and developed the country, and sacrificed all the amenities and pleasures of city life. In answer to my pleas on behalf of these people, I have been informed by Mr. O. L. Isaachsen, general manager of the Bank of Adelaide and chairman of .the Associated Banks in Adelaide, that it would cost the banks £300 per annum to send the mail matter by air. “What is £300 per annum when compared with the enormous amount which the banks receive in exchange? I trust that when the functions of the Commonwealth Bank are extended, so that it is brought into competition with the Associated Banks, these most unfair charges will be altered. 1 trust that the day is not far distant when all cheque payments made to various government departments in the country, such as those in respect of income tax. land tax, water rates, and all government registration charges, will also be free of exchange. During the course of my professional duties as an accountant and local government auditor, I have found that farmers and business people and all other sections of the community have every reason -to be profoundly thankful for the administration of, and the legislation sponsored by, the Curtin Government during the last four years. I can assure honorable members that this is not denied by the various sections which it is my privilege and pleasure to contact.
The trading banks, ‘by means of propaganda, and also honorable members opposite have pleaded for the shareholders of the Associated Banks, who will be affected by these proposals. There are about 100,000 shareholders of the private banks, and if they were all resident in Australia that would be only about 1-J per cent, of the population. Surely it would be truly democratic for the whole of the people to be shareholders in a purely national institution rather than that only 1-J per cent, of them should own the banking system. “Well do I remember when the officers of the banks awoke to the necessity for forming themselves into an association, and what was the cry then by the representatives of the banks. It was that the banks would not be able to pay the wages of their staffs. However, the courts decreed otherwise and to-day the officers of the banks are receiving a living wage. The position was entirely different when I was an officer of a bank. Now the propaganda put forward by the banks is that the men who are away fighting will be deprived of their positions. This is entirely untrue, because thousands of girls who have been employed temporarily will have to make way for ex-servicemen who are desirous of returning to the banking profession, in accordance with the promise made to them by the directorates of the banks. A large number of men will have to be employed by the Commonwealth Bank in its new branches, and therefore the propaganda which is being circulated is not only misleading but entirely untrue. All of the trained personnel will be required and will not, 1” am confident, lose any status.
Australia, under its present banking system, has drifted badly. A mere handful of people occupies only a portion of this country near its shores. The population should be spread out, making the best use of our land, which the pioneers worked and struggled to develop; but the soil is drifting towards the eastern fringe of this continent. The land is drifting and the people are drifting. They drift from the farms to the over-congested cities. The statistics tell the grim story of centralization. Tour and a half million of Australia’s 7,000,000 people are crowded into a few big cities, and we have a steadily declining birth-rate. Around these coastal regions so pitifully vulnerable to attack stand the buildings of our great industries, our munitions l”.S91 works, our petrol supplies, our sources of electricity, all the pulses of the national body. One aircraft carrier could have destroyed the whole lot. Therefore, for the benefit of Australia, this drift of people from the country must be stopped.
Plans must be made for irrigation, exploration, decentralization of industry and the full use of the continent’s natural resources. These plans are halted at present, but the whole world has tightened up as distances have shrunk under the new mastery of the air. Australia is no longer isolated, but what of to-morrow? Our fate stares us in the face, unless we check the drift to the cities, turn back to develop our land and breed a virile population. Tasmania, the smallest corner of our nation, has shown us by its area schools what can be done in training children to be happy, healthy and prosperous farm-workers. Such schools do not train the children only; they train the people of each district surrounding the school. They engender the pioneer spirit, and aided by modern scientific methods, tackle problems which the pioneers of old faced bare-handed.
In order to return to that state of development and progress, we must have a Commonwealth Bank with an entirely national outlook. I do not propose to detain the House by citing facts which should be well known to all honorable members. In the limited- time at my disposal I desire to state reasons why I support the placing of full power in the hands of the principal Parliament of Australia, in order that the financial policy may accord with the needs of the people. Banks wield a tremendous influence through their power to create and cancel credit. That they do create credit is no longer denied in circles having any knowledge of the subject. Mr. Reginald McKenna, ex-Chancellor of the Exchequer, and chairman of the Midland Bank, says, at page 76 of his book, Postwar Banking -
The. amount of money in existence varies only with the action of the banks in increasing or decreasing deposits. We know how this is effected, livery bank loan and every bank purchase of securities creates a deposit and every payment of a bank loan and every sale destroys one.
When addressing the shareholders of the Midland Bank in 1924, Mr. McKenna said - 1 am. afraid the ordinary citizen will not like to be told’ that banks can and do create and destroy money. in the course of the same address he fur then stated -
And they who control the credit of a nation direct the policy of governments and hold in the hollow of their hands the destiny of the people. [f this be true - and the authority of Mr. McKenna to say so is undisputed - banks hold and wield a- power which should never be in private hands. From Mr. Winston Churchill we have a telling description of this power. In his book, Aftermath, written after the last war, he says, at page 32 -
On the afternoon of 11th November i assembled the Munitions Council and directed their attention to the immediate demobilization of British industry.
Referring to the Munitions Council’, lie states, at page 33 -
There was little in the production sphere they could not at this time actually do. A requisition, for instance, for 500,000 houses would not have seemed more difficult to comply with than those we were already in process of executing, for 100,000 aeroplanes, or 20,000 guns, or the medium artillery of the American Army, or for 2,000,000 tons of projectiles. But a new set of conditions began to rule from eleven o’clock onwards. The money cost, which had never been considered by us to be a factor capable of limiting the supply of armies, asserted a claim to priority from the moment the fighting stopped.
One object of the present banking proposals is to prevent thi3 priority from’ operating in Australia when the fighting stops. Apart from the existing war-time regulations controlling the policy of the banks, this Parliament does not control the finances of the nation. It should, and will. Money is not wealth ; it is purchasing power. It is a title to the produced wealth of the nation. The nation does not exist merely to- ship its wealth and fertility out of the country. Our job is to build up the home market to the limit, and to exchange our surplus for the surplus of other people.
The present financial position of the people is not favorable to the banks. Their main purpose is to lend money for profit; not their deposits, but new money iii the form of credit advances based on a multiple of their liquid assets. When there is a lot of money in the hands of the people there is a slack demand on the banks for advances. Let us compare the circumstances of the banks in 1944 with their position in 1940. The deposits and other liabilities of the trading banks and the savings banks, exclusive of the Commonwealth Bank, in 1940, totalled £594,874,000. In 1944, the total was £1,083,528,000. There is another outstanding feature. The savings hanks, both Commonwealth and State, in 1940, had aggregate deposits totalling £376,932,000. By December, 1944, the total had reached £847,956,000, an increase for the four years* from 1940 toJ 944 of £471,024,000. During the same period the nine trading banks showed the following increase of their total deposits: - In 1940; the figure was £357,883,000, and in 1944, the total had risen to £566,843,000’ - an increase’ of £208,960,000. It will be seen that the deposits in the savings- banks grew to more than twice those in the trading banks, thanks to the Government’s control. The ordinary small savings bank depositor has benefited from the war expenditure. The same thing happened in 1914-18. Deposits- in savings banks, exclusive of: the- Commonwealth Bank, increased! from £83^559,000 in 1914 to £116,339,000 in 1918. In 1940, 22 years after, deposits in the same banks: had only just doubled, whereas they have more’ than doubled again in the last four years. This position causes great concern to the hanks. It would suit them for this money to be cancelled out of existence so as to create a demand for loans. Savings bank deposits between 1930 and 1940 increased by only £109,373,000. These were the depression years, and the depression, was necessary to the banks so- that the savings of the people might be used up. The- figures are worth repeating. The savings bank deposits of the people increased by only £109,373,000 during the ten years from 1930 to 1940, but they increased by £471,024,000 during the four war years from 1940 to 1944. Even with this vast expansion, the savings bank deposits average only £160 for each depositor. Can, any one say that our present standard of living is in excess of what is necessary to uphold human dignity?
The cost of the war to September, 1944, was £2,160,000,000, of which £826,500,000 has been raised by loan, £933,500,000 by taxation, and approximately £400,000,000 by Commonwealth Bank credit. Of this total, £1,226,000,000 is debt. The total public debt of Australia, Commonwealth and State, at the 30th June, 1944, was £2,366,850,000. It is approximately £2,600,000,000 to-day, and will probably reach £3,000,000,000 before the end of the war.
Let us now consider another aspect of the money situation as it affects the banks. In December last, the note issue totalled £202,493,000. Of this amount £187,188,000 was held, by the public, and only £15,305,000 by ‘ the banks to meet deposit liabilities of £1,083,000,000. No bank to-day could meet more than a fraction of its deposit liabilities. Banks are the only institutions which are permitted to maintain this position. I do not desire to be misunderstood. There is nothing wrong with this so far as the assets of the banks are concerned, but the fact remains that every bank would, to-day, have to close its doors if the people made a united demand for their deposits in cash.
The enormous superstructure of book assets and liabilities has, generally, a relation of ten to one against the liquid assets of any trading bank. Geoffrey Crowther, editor of the London Economist, in his book An Outline of Money, says that the power of the banks is “an enormous one”. It is a power that should never be in private hands. An equally important point is that it has never worked satisfactorily. When the supply of money is dependent upon the liquid assets of the banking system, even on terms ofl ten to one, there can never be sufficient money to distribute the requirements of the people in consumer goods. Industry languishes because it is not producing its potential output. Another limiting factor is the price received for our exports. It has been stated that in one year the value of wheat and wool dropped by £75,000,000, and this fact has been cited by the banks as a reason, for the stagnation of the depression period.
We have been led to believe that, by producing goods, we in some way automatically produce the money necessary to bring about the consumption of the goods. Primary producers can produce tons of potatoes, bushels of wheat, large quantities of wool, mutton, beef, &c, but no matter how much they produce it depends entirely on the action of the banks whether money will be made available to put those foodstuffs into circulation. As was indicated by Mr. Reginald McKenna, the banks do not take into consideration the needs of the people, a statement which is borne out by the depression years following 1930 when we had stores and granaries full of the necessaries of life, while people went hungry and ill-clad. Money in the depression years was not equated to production. It is a weakness, and a vital one, that lowexport prices should have an adverse effect on Australia’s economy; but, as I have already stated, the fact that we had plenty of consumer goods and no money is clear evidence that production does not auto1 matically bring into existence the money to purchase the goods produced. It would seem that the only successful means of distributing purchasing power is war. What a reflection on the nation’s economy! There are millions of people in Australia to-day who have experienced two periods of financial prosperity in their lifetime - the two war periods. I have shown how the people have accumulated during the war a pent-up purchasing power in the form of savings banks deposits. Owing to the prior needs of war, they cannot spend this money. War brings about a vast expenditure on capital goods, munitions factories, aircraft, guns, shells and all the needs of war. With the men and women in the forces, and the labour demand in the factories, the nation is fully employed in time of war, or during preparations for war. This is the only time when the whole nation is fully employed, but the banks do not find the money for war - it is found from the savings of the people, from hightaxation, and central bank credit. Except during the early days of the war, the banks have been excluded from participating in war loans and, under regulation, have been required to deposit their surplus funds with the Commonwealth
Bank. This requirement will he continued by legislation. In June, 1940, the Government and municipal securities, including treasury-bills held by the chequepaying banks, not including the Commonwealth Bank, were valued at £85,647,000. In December, 1944, the figure had risen te £175,891,000. This increase i3 entirely due to the war economy, and yet no bank ever made a gun or shell, or grew a bushel of wheat, or mined a ton of iron ore. The war expenditure of the nation has increased their assets, notwithstanding that they have not been allowed to subscribe to loans.
Are these banks to be allowed, in the words of Mr. Churchill, to assert their claim to priority the moment the fighting stops? The purpose of this legislation is to prevent them from again assuming command of the country when the battle flags are furled. The supreme Government of the country, elected by the people, which has been responsible for the nation’s war economy, and has found employment for every man and woman in the country, shall be responsible for the individual security of the people in time of peace. The private banks are responsible only to their shareholders. The Government is responsible to the people, and must render an account of its stewardship every three years. Past insecurity and tribulation nave engendered in our people a fear for the future. The present propaganda of the banks plays on this primitive emotion, but this legislation will become operative and the benefits accruing will he apparent when our men return.
There is a notable similarity between statements which are being -made to-day and those made when the bill providing for the foundation of the Commonwealth Bank was before Parliament in 1911. The Melbourne Argus, in 19-11, discussing the proposal to establish the bank, said -
The whole scheme is conceived in idiocy. It constitutes a malicious use of public funds to compete with private activities, activities that enjoy the full confidence of the public. There is not the slightest justification foi- it, and its failure from its inception is such a matter of certainty that the whole proposition will be abandoned after a few months of inglorious experiment. “We know how false was that prophecy. The present hysterical outpourings are just as false, and the same factor, time, will prove them to be so. Could the banks possibly cope with the work of post-war reconstruction ? What is involved in reconstruction? Housing, to cost £300,000,000, is one item; land settlement and the prevention of soil erosion are others. The Commonwealth will have to find the money for the full programme. Are we going to permit private groups of individuals to benefit from the expenditure of so much public money? In the past, control of our economy by financial institutions outside of Parliament brought our people to the abyss of misery. Even accepting the banks’ statement that they were powerless to avert the depression, we know that the Commonwealth Bank can avert a future disaster because- it can make money available to governments and others for useful production.
I desire to bring to the notice of honorable members the following figures showing the numbers of bankruptcies in South Australia, New South Wales, Victoria, south Queensland and Western Australia during the seven years from 1932-33 to 1938-39 :-
These figures disclose that during that period of seven years bankruptcies in South Australia were 55.1 per cent, of the Australian total. I have not the figures for all other States since 1939, but I shall give the statistics relating to bankruptcies, including compositions and schemes of agreement, for South Australia. They are-
ls it due to the kindly assistance of the Curtin Government that the primary producers have enjoyed such prosperity, or is it because the banks have awakened to the fact that, it is necessary for them to treat the producers somewhat better, and so have refrained from forcing them into insolvency? It is partly the latter, perhaps, but I believe that the main reason lies in the progressive and helpful policy of the Curtin Government.
When these poor farmers in South Australia were going to the wall, the primary producing districts were represented by the United Australia party and the United Country party. To-day, the shipbuilding yards at Whyalla are practically manned by ex-farmers. A few years ago, I used to meet them on the road. They were engaged on the hardest job that any honest man can undertake, namely, looking for employment. To-day, those farmers in the shipbuilding industry are performing an important national work.
The honorable member for Barker (Mr. Archie Cameron) referred last night to the great work done and the assistance rendered to primary producers in South Australia by the Bank of Adelaide. I have received from the manager of a big and active branch of a bank in South Australia a letter, in which he says -
The lying propaganda being circulated emanates from one source only, and, no doubt, many will be “taken in” by same; due mainly to the inability of the Government to find a press avenue to refute the inaccuracies of the statements being circulated. However, history reveals that such has been the case whenever any reform for the benefit of the masses has been proposed. Similar outbursts were made against the formation of the
Commonwealth Bank, but the success of same, although its activities have been limited, has proved a God-send to our nation.
The capitalistic system signed its own deathknell just prior to the last depression, and from the present outburst it would appear that, as far as Australia is concerned, it is in its last throes.
The plea that the private banks have played a major part in the development of tho country docs not show up in a very favorable light when compared with the (lumber ot bankruptcies in the farming community or the number of farmers who were forced from their holdings. The advent of private banks to country areas was not made in any spirit of pioneering or patriotism, hut solely for profit. True, the banks provided large amounts by way of credits in country areas, but can. institutions whose sole aims are profit-making be credited with having played a major part in the development of the country? i truly believe that, under the circumstances, not only the major portion but the whole of the credit should go to the farmers and the workers, whose sweat was the foundation for the future development of the country.
No doubt you have been inundated with letters supposedly from your constituents relating to the proposed legislation, and in, this connexion you will, no doubt, be interested to learn what was told to me by one of our customers the other day. This customer happened to go into another bank to cash a cheque, and as he walked in the accountant handed a customer at the counter a sheet of paper and said, “ Copy that out in your own handwriting and send it on “. Whilst there is no actual proof that it will be one of the letters you will receive or had any relation to the proposed legislation, the coincidence is rather remarkable in view of the stereotyped letters you have been receiving.
To our glorious servicemen of all arms I pay my respects. Let us not forget that to our sailors, soldiers and airmen we owe our all; to them shall be for ever in debt. They must be restored to civilian life with security of employment. That, in this huge continent of opportunity, in my opinion, presents no difficulty, but we must face our obligations to them, with no uncertainty. It is the duty of this Parliament to ensure that they shall not be left to want, and I say with all sincerity that I am confident the Government will not let them and their dependants down. I consider that the greatest tribute ever paid to the Curtin Government in that respect came from Sir Gilbert Dyett, who was recently elected for the 26th consecutive term as federal president of the Returned Sailors, Soldiers and Airmen’s Imperial League of Australia, when he said at its conference in Adelaide -
I do not think that we have ever had a government more sympathetically disposed to the interests of ex-servicemen than the present Government.
Our servicewomen must be cared for. They must be given employment, and I know that the Government will watch their interests to the utmost. I fervently pray that peace for all time will follow the signing of the treaty to end the present hostilities. I have confidence that the great leaders of the United Nations will do their utmost to ensure that posterity shall be spared the horror and anguish of war. My faith in the statesmanship of our leader, the right honorable member for Fremantle (Mr. Curtin), is so great that I am positive he will ensure that we shall not falter in the progress towards a better world.
– I propose to address myself to the Commonwealth Bank Bill. It is a political bill. Its main purpose is to create political control of the banking system of this country, and the speeches in this debate have .been of a highly political character. As a matter of fact, they have revealed, in diversity and range of antagonism, some of the perils ahead of this country if political control of banking becomes an accepted fact. It is also a highly technical bill, and 1 very much regret that the tenor of the debate has been
Such that it is necessary to concentrate on its political implications rather than on some of the highly involved technical problems. I hope t(hat the Government will not make any attempt to restrict a full discussion in committee of the technical aspects of . the bill. I think most speaker s have accepted the fact that this bill, in its ramifications, is the most sweeping of its kind ever placed before the Australian Parliament. It was described by the financial editor of the London Observer as representing - the most far-reaching banking legislation enacted by any country in the world, not excluding Germany before the war.
It was described by the Banker, the official monthly journal of the Financial News, Economist and Investors Chronicle group in Great Britain, as “Nationaliza tion on the cheap “, and the Banker went on to observe -
The proposals will give the Commonwealth Government more complete control over the central bank than was embodied in the German banking legislation of 1937.
I make those two quotations as indicating the sweeping character of the legislation that the House is called upon to pass. Seeing that the measure is political in its essence, I find it necessary to devote a few minutes to the political background of the measure, and I go back to the Federal Labour conference of 1908, which included in the “fighting platform “ of the party a plank aiming at the establishment of a Commonwealth bank. The scheme adopted at that time included in the first clauses provision that the bank should be absolutely free from political control, and action along those lines came three years later. It is interesting to recall the comments of two stalwarts of the Labour movement of those days, Mr. King O’Malley and Mr. Andrew Fisher - men who could claim justifiably and with pride that they had a great deal to do with the establishment of the Commonwealth Bank. I was interested to read this attributed to Mr. O’Malley in a left-wing publication quite recently -
I am a believer in private enterprise and only desire to utilize the powers of the State in order to help. I would put our bank beyond the control of the politicians.
Mr. Fisher, who, of course, played a most prominent part in the foundation of the bank and who is spoken of with almost awe and reverence by Labour members to-day, said -
This institution is now established as a going concern. It will stand upon its merits and must not be subjected to political influence, either in support or” derogation of it. It is now quite outside the political arena. Banking is not a political matter.
I pass from those comments when the bank was first introduced, and take a big jump forward to the Australian Labour party conference in 1921. That was the famous occasion when the party adopted a complete socialization platform, and nationalization of banking as the principal means to that end. Not a great deal could be done about it in the intervening years, because Labour was rarely in office, but we recall the many .political campaigns in which attacks on the banks featured so prominently, but so disastrously as far as the political fortunes of the Labour party were concerned. I come now to the Australian Labour party conference of February, 1943, four months after the last general elections, during which the Prime Minister (Mr. Curtin) gave a pledge .against socialization during the war. That conference instructed the Government to proceed as follows : -
The legislation was to secure -
Those were the terms of the instruction. So this legislation is coloured by the known political programme of those who sponsor it, and it is backed by the written pledge given by every member of the Parliamentary Labour party when seeking nomination that he will support a socialist policy. iSo I tell the House that this position is very much the same as the position with which we were confronted when the referendum proposals were considered. There were points of merit to be found in the referendum proposals when considered individually. There are also points of merit to be found in this legislation, hut I say to those prepared to support individual provisions of this legislation that they must remember at all times that this legislation is one of the instruments by which the Labour party hopes to place its pledged policy into effect. In considering this legislation, we must make the same choice as was before us at the last referendum. Either we believe in individual initiative or in a controlled economy.
From the result of the referendum, we may fairly claim that Australians have rejected regimentation as a way of life in this country. That is borne out by the fact that the most decisive “ No “ votes were given in those States where regimentation had been most heavily felt. Queensland and, to a slightly less degree, New South Wales, are the outstanding instances. We have the evidence of the attempt made at the referendum to back up the policy, and subsequent attempts to introduce by a side door, the means towards giving effect to the programme. While the House is debating this legislation, the Attorney-General (Dr. Evatt) is making a very strenuous effort at the San Francisco conference to secure the inclusion in the charter of a provision for full employment, which, he believes, will enable him to sidestep the referendum result and implement his policy by using the external affairs power. Members of the Opposition are not blind to the manuoevrings that have been conducted by the Attorney-General at San Francisco, and to the significance of his fight for the inclusion of the word “separate” in a resolution recently adopted at the conference. That was claimed as a great tactical triumph for Australia. The Attorney-General pressed so strenuously for it because he believes - he has expressed’ this opinion outside this chamber - that by means of that external affairs power, he will be able to implement a policy which will, in effect, sidestep the result of referendum. So I ask again : Do we advance after this war as a democratic community along the broad highway of liberty, or do we slither down the slippery track towards the totalitarian state?
At this point, I desire to make it clear that I believe in central bank control. In my opinion, it is essential, in a modern state, that we should have a strong central bank, able to determine the quantum of credit to be available in the community at any given time. Nothing that I shall say in the course of my remarks on this bill will weaken my attitude on that, or deflect from it. Believing in a strong central bank, I consider that the Commonwealth Bank should be built up in such a way as to possess the necessary control over the volume of credit in this country. But the achievement of that objective can be sought by methods other than those embodied in this legislation. I propose to examine the machinery of control. First, and most important, the bill will abolish the Commonwealth Bank Board. Now, the hoard consisted of a Governor, the Secretary to the Treasury, and six directors nominated by the Government, who were, or had been, actively engaged in agriculture, commerce, finance or industry. That was the type of hoard which had been functioning, and I do not quarrel with the proposition that the members should be nominated by the government of the day. When a hoard is nominated^ and the members are drawn from different groups in the community and appointed for a term of seven years, one retiring each year as the practice has been, that machinery provides a degree of stability and a check on extremism. There was no opportunity for a sudden change of policy, which might upset the delicate mechanism of our economic structure. But one of the cardinal provisions of this measure is to abolish the Bank Board, which has rendered such valuable service to Australia in the past.
I pause at that point to deal with the recommendations of the Royal Commission on Monetary and Banking Systems. When speaking on this legislation, some honorable members opposite have pointed out that the bill embodies many of .the recommendations of that commission. 1 remind them that the royal commission advocated the maintenance of the Commonwealth Bank Board. It was obviously the central feature of the whole machinery of banking, as the royal commission understood it. If control by the ‘board be abolished, the Government will vitiate every other recommendation that the royal commission made. It is futile to claim that the Government has adopted a number of recommendations of the royal commission when the central pillar of the edifice is removed, because the whole structure is weakened thereby. Consequently, I do not accept the argument by honorable members opposite that the proposals contained in this legislation are based on a series of recommendations by the royal commission. The Government proposes to appoint in place of the Bank Board a governor with supreme administrative authority, subject to the controls which I shall mention in a moment. The Governor will have some sort of shadowy advisory body, which is apparently to be drawn from within either the banking service itself or the Commonwealth Public Service. But it will have no real authority whatever.
Let us examine the duties of the Governor. The hill sets out a list of his principal functions. He is to look after the Commonwealth Bank, and that, in itself, is a big job. In addition, he is to look after the Central Bank’s operations and determine the extent of the note issue, at a time when any fixed maximum upon the note issue will have been removed by this legislation. He is also to determine the proportion of gold and sterling reserve that he will hold against the note issue when the minimum has been removed by this bill. He is to administer the Rural Credits Department, the Mortgage Bank Department and the Industrial Finance Department, and deal with the problem of housing loans, as they come within the scope of the bank’s activities. Finally, he will be responsible for the Commonwealth Savings Bank.
In carrying out those duties, the Governor will not have the assistance of any board, but will be subject, as I shall shortly demonstrate, to direct ministerial control. Either the Governor will become a new version of the mythical Atlas, and attempt to balance the banking world on his shoulders while standing on the shifting foundation of Treasury policy - a role which would give him some stature at any rate, although on a very unsteady base - or else he will become a principal character in a sort of Punch.andJudy show, with the bank: itself playing Judy to the Governor’s Punch, and the Treasurer manipulating” the strings behind the scenes. The Governor will come under the control of the Treasurer, and I do not have to go into great detail in this House, particularly at this stage of the debate, to tell honorable members all that that can imply.
– The Treasurer is responsible to the Parliament.
– I shall come to the role of Parliament in this matter. A Treasurer is either a very strongminded gentleman, who is really responsible to no one but himself - I have always beard it urged that a good Treasurer will not. let any one but himself know what is happening with the country’s finances - or else he is a gentleman who is directly responsive to the influences that the caucus can impose upon him.
Whether he is strong enough to ignore caucus or is sensitively responsive to its pressure, influences will be operating on Treasury policy which will not make for economic stability in this country.
– Why does the honorable member always go to extremes?
– I hope that the proposed banking arrangements will not go to extremes; otherwise, the condition of confusion will be worse confounded than I have already indicated. The provision that the Governor shall be subject to the control of the Treasurer makes for direct and untrammelled political control of the Australian banking system. That fact is accepted. Indeed, honorable members opposite claim that the bill will achieve precisely that end. They see great virtue in the fact that the bill does give political control of the banking system. They glory in that fact. But the extraordinary paradox about the whole business is that, whilst the provision gives political control of the banking system, it does not provide for parliamentary control of the banking system.
– That objection has been raised before.
– That is so. The point was made very ably by the honorable member for Darwin (Dame Enid Lyons), and I hope to develop it. Whilst this provision establishes political control, it takes away from the Parliament the control of finance. The Parliament consists of a number of representatives - some who comprise the minority Opposition, others who prefer to style themselves independents and act accordingly, and members of a caucus which is subject to so much pressure and influence by outside bodies, who have no responsibility to the Australian electorate, but apparently have a great deal of authority over the present Administration. I desire to show how parliamentary control will be utterly destroyed when political control of banking is established. I shall cite three specific instances to support my contention.
I remind honorable members of the traditional role and historic origins of the parliamentary system. The Parliament was created in the first instance so that there should be some direct supervision and proper examination of the demands by the Crown for finance for the purposes of government, because tha people had to find the money for it. Therefore, the people demanded the right to elect their representatives to see how much they were paying, what value they were getting for the money, and whether they were called upon to pay too much. From this supervision of expenditure by the people, our parliamentary system developed. Let us see what has happened. By the established forms of this House measures requiring finance are subject to a special ritual. I agree that it is a ritual, but it is a reminder to us of Parliament’3 historic origin and the proper tradition that we should preserve here. That is our responsibility. In peace time, the normal practice was that when the Government required to extract money from the taxpayer, whether by direct tax, excise or loan, the proposal was submitted to this Parliament which then had an opportunity to express its view regarding it.
What can happen under the system now proposed for our acceptance ? During the war our currency has been steadily devalued as the result of central bank policy. I am not challenging this at the moment, but the effect of it has been to impose a direct levy upon the people of the Commonwealth. The purchasing power of the £1 has been substantially devalued by central banking policy throughout the war period, and our people have thus made an additional contribution to the financing of the war. Normally we would expect, in peace-time, a return to some sort of supervision of such levies, whether made by direct taxes or by banking policy which had the effect of lowering the purchasing power of the people. We had hoped that, after the war, we would return to a system of parliamentary control under which we would know what was going on, how much money was in circulation through the note issue, treasury-bills or other forma of credit expansion, and what effect it all was having upon the purchasing power of the £1. We .should also expect to know how much we would have to raise as the result of loan operations, taxation and other measures; but with a Treasurer in direct control of the banking system, and directly subject to caucus instruction, we shall not know the true situation.
My second illustration relates to the note issue. Under the existing law, a maximum amount is fixed beyond which the note issue shall not go. We have been told that this legal maximum, which could not be altered without an enactment of the Parliament, has proved inconvenient during the war years. Therefore, it is proposed now to remove the legal maximum. What difficulty would there Have been in the Treasurer coming to the Parliament at any time - for the Parliament is sitting long enough and often enough to enable this to be done - and saying to it : “ The present maximum of the note issue is too low. I ask that it be raised by so much, and that the Parliament authorize this to be done. Here are my reasons why this proposal should be approved “. The Parliament could then have a full explanation of the existing situation, and the representatives of the people in the legislature would be able to offer any criticism which they thought should be voiced. Under the measures now before us, however, all parliamentary control of the note issue is to be abolished, and our financial structure is also to be otherwise further weakened. The existing legislation contains a provision that the note issue shall have a sterling or gold backing of 25 per cent. This is to be abolished. If there are good reasons why the backing should not be 25 per cent., but some smaller percentage, the Treasurer should be prepared, openly and honestly, to submit the facts to the Parliament. He could say: “ The required backing of 25 per cent, of sterling or gold is too high. I ask that a lower percentagebe fixed “. But under this legislation all need for a backing is to be abolished, and the Parliament will thus lose this measure of control of the financial structure. In short, the political control of our banking system which the Government is now proposing will take away from the Parliament all the restraints which it has been able hitherto to exercise over finance. I therefore strongly support the proposal of the Leader of the Opposition that, at the committee stage, the bill shall be amended in such a way as to ensure a continuation of parliamentary supervision of financial policy.
I do not desire to spend a great deal of time in discussing the controls to be imposed upon the banking system itself. I am not here to defend the private banking companies of Australia. I have no doubt that, as with all other companies and, for that matter, individuals, a good deal may be said for and against them. I am concerned, however, about the effect of this legislation on the free citizens of the Australian Commonwealth. I, therefore, consider it proper to mention briefly some of the effects of political control of the banking systenuthat, ultimately, may have a most adverse effect upon individual citizens. I refer first to unfair competition. Under this legislation the Commonwealth Bank, which is not liable to taxation, will be enabled, to compel government and semi-government authorities to bank with it. It will also be able to use the funds deposited byprivate citizens with the trading banks, the savings banks, and other institutions, which have become frozen with the Commonwealth Bank. I intend to enlarge on this subject at the committee stage of the bill. The proposed control will result also in a serious degree of instability which must inevitably arise from violent changes of policy due to party differences. I refer not merely to the internal differences of parties, but also to the switching over from one party to another at election time. Of course, honorable members on this side of the chamber do not see eye to eye with government supporters in regard to the economic policy that should be followed in Australia during the next few years. It is true, as the honorable member for Darwin (Dame Enid Lyons) has said, that our objectives are largely similar insofar as they are intended to promote the welfare of the people, but the methods that the Opposition parties would employ differ widely from those which honorable gentlemen opposite would employ. All these considerations must have their repercussions on banking policy if they result in changes in central banking and financial procedure every time a change of government occurs, and they must have an unsteadying influence on all sections of the community. The peril of such instability in our banking system is, in my opinion, very grave. It must inevitably result in a loss of confidence, within the country and abroad, in our whole banking structure. Honorable members can readily imagine the serious results that such a state of instability must have on enterprise and industry and on our capacity to export and import goods.
Then the sensitiveness to pressure influences will be manifest in such a banking system. I believe that the whole set-up envisaged in this legislation, under which the Treasurer will be in direct control of the banking system, and will himself be subject to caucus instructions, will result in pressure influences of a most undesirable kind. Such influences may play a most important part in moulding banking procedure in this country. I shall mention one or two instances of the kind of thing that is- likely to happen. Honorable gentlemen opposite greeted with great gusto, a few weeks ago, the announcement of the resolution of the Victorian Wheat and Wool Growers Association supporting the Labour party on its banking legislation. I gathered later that this was not really the intention of the association’s resolution. It desired rather to express its satisfaction that the original charter of the Commonwealth Bank was to be adhered to, but, as honorable members know, these proposals depart in a most important way” from the original charter of the bank. However, the fact that the association’s resolution was acclaimed by honorable members opposite as a tactical triumph indicates one danger that I see in these proposals. I can well understand why some growers of wheat and wool would be ready to support this legislation. Obviously these measures will place our banking policy under political control and, therefore, under caucus control. It has been suggested, with some force, that 26 of the 74 seats in this Parliament can be won or lost by the wheat policy of a particular party. We all are well aware that the representatives of wheatgrowers have never been reluctant, in this Parliament, to express the views of the people they claim to represent. I can imagine, therefore, that a certain amount of enthusiasm would be displayed by the Victorian Wheat and Wool Growers Association about any banking policy under which advances could be influenced by caucus decisions. On this subject our experiences are somewhat limited. Political control of the Commonwealth Bank has not been a noticeable feature of the operations of the institution hitherto, and such a development, if it comes about, will be comparatively new to us. But I bring to the notice of honorable members the experience of one Australian bank which has been under political control to a considerable degree. I refer to the Agricultural Bank of Western Australia and I shall quote extracts from the reports of two royal commissions which have investigated the conduct of that institution. The first quotation is from the progress report of the Royal Commission on Agricultural Industries in Western Australia, which was made in 1917, and appears in the Votes and Proceedings of the Western Australian Parliament, at page 25. It reads -
Although settlers universally give the Agricultural Bank all praise for its assistance there is an unmistakable tendency to regard further State advances, not as a privilege but as a right, and we fear that the best results will never be obtained while our settlers rest content with the idea that it iB the State and not the individual, who must be relied on to promote progress. From the bank’s point of view, political management - with its fatal accompaniments, lack of discrimination, the changes of policy - is frankly intolerable and impossible. Under the present system the bank cannot control its own business and the effect of the system is to weaken the self-reliant fibre of an artificially fostered rural community.
The report proceeds to contrast the experience of Western Australian banks with those of the State Bank of South Australia, which was established about the same time, and it states in this connexion -
After being in business for over a quarter of a century tho bank has no foreclosed properties on its hands, the total arrears of principal and interest are less than fi, 000 while it has accumulated a reserve fund of nearly £100.000 and has also purchased the freehold of its fine banking premises in Adelaide. Advances are only made in strict mortgage lines and the bank is controlled by a representative board of five members, appointed for life entirely free of political control, the members being selected representatives of suitable rural and city experience.
The commission’s recommendation that the Agricultural Bank of Western Australia should be removed from political control does not appear to have had much effect, for the activities of the bank were investigated again in 1934. I make the following extracts from the second report, taken from the Votes and Proceedings of the Parliament of Western Australia for 1934 following the second investigation -
The financial position of the bank is alarming. For the last twenty years in order to meet the commitments of the bank the trustees have been drawing on capital and/or loan moneys to make up deficiencies.
The accrued, actual and estimated contingent loss on account of the Agricultural Bank and its allied institutions is £12,304,600.
The trustees, by their conduct, become heads of a department for carrying into effect a policy of land settlement dictated to them from time to time by Ministers in control of the Department of Lands and/or allegedly in control of the Agricultural Bank.
If the allegation of the trustees that they were purely instruments for carrying out ministerial policy is correct, then political interference in the development policy and internal administration of the bank has had a disastrous effect on its control by the trustees.
The commission on that occasion made the following recommendation : -
All political interference in the management of the bank and the control of ite policy must be abolished.
The second recommendation seems to have received very little more attention than the first, for I noticed a statement in the press recently that -
Western Australia’s Agricultural Bank, a government concern, incurred losses last year of fi 15,000, and that, since 1!)35, the institution had had to write off £7,438,8S2; on 30th June, 1!)44, it held 2021 “reverted properties” and 1429 abandoned wheat farms. Such losses have to be met by the taxpayer.
It must be obvious to all honorable members that such losses ultimately must fall upon the general taxpayer. That is one illustration of what the political control of banking may mean. In the first place, there must be a restricted service, because, with only the one bank making advances, denial of an advance by it will be final. I do not think that the Minister for Works (Mr. Lazzarini) will challenge the statement that the advances are to be limited to the amounts now held by the private banks. The additional amounts which the private banks have lodged with the Commonwealth Bank have been frozen. Because banks must keep going their present clients, new clients must be driven to the Commonwealth Bank, whether they like it or not. Returning servicemen who want to establish themselves in industry, will be driven to the Commonwealth Bank for advances, whether they like it or not, because the capacity of the private trading banks to make advances will be limited.
Had I the time, I should develop my argument in relation to the provisions for the direction of credit, quite apart from the quantum of credit. I expressed earlier, belief in control by a central bank over the quantum or volume of credit available in the community. But I am entirely opposed to that hank using its powers to attempt to canalize credit, or to define by direction where it shall be used. I regard that as an intolerable interference with the liberties of tha subject.
Part X. of the bill purports to establish an Industrial Finance Department. That is a recognition of the point made in the royal commission’s report, that very limited facilities were available to small secondary industries to obtain finance. The report stated that, without special provision, such industries would have great difficulty in expanding with the means at present available for providing finance for them, and could merely plough profits back into the business, in the hope that these could be used for purposes of expansion. It was pointed out in 1937” that such means would be inadequate. I now make the point that, if the ploughing back of profits by very small secondary industries was inadequate in 1937, considering the rates of tax then applicable, how much more dangerous is the position of those small industries and firms to-day, with virtually no profit left to them at the existing very high rates of tax? So there is essentially a need for some provision, either through the private banks or a government institution, for assistance along those line?. However, I am afraid that, as the honorable member for Denison (Dr. Gaha) pointed out, the Commonwealth Bank necessarily will have to adopt a very conservative policy in regard to such assistance; because, as a central bank, it mast preserve its own credit, otherwise the credit of the whole nation will be liable to suffer. Therefore, those operators who, by common opinion, are regarded as not credit-worthy, or whom the banks are not prepared to accept as a reasonable risk, are to come under the Industrial Finance Department within the Commonwealth Bank. Inevitably, that will mean the application to them of a conservative policy. The Government should take the Industrial Finance Department out of the control of the Commonwealth Bank, and place it - as has been done in America - under a reconstruction finance corporation, which, by its very title and activities, will be known to be dealing with the development and expansion of small industries which otherwise would not be able to obtain financial accommodation. There would then be no risk of the credit of the Commonwealth Bank suffering as the result of the operation of the Industrial Finance Department, because some concerns were not able to measure up to the risks that had been taken on their behalf.
In conclusion, I return to my opening theme. My prime objection to this legislation is that, considering the political background and the provisions which it embodies, it is an interference with essential liberties of the private citizen. Winston Churchill has been very vocal on that subject within the last 48 hours. Already, there are persons who are prepared to dismiss his forecast as to the implications of a socialist state, as some were prepared to dismiss his forecast of the real significance of the German armaments programme. No one is in a better position than that man, who has been at the centre of wartime controls in Great Britain, to know the significance in the lives of the people of the continuation of war-time controls into the period of peace. 1 adopt his statement that “ the socialist policy is abhorrent to British ideas of freedom “. He added -
Socialism is in essence an attack, not only upon private enterprise, but upon the right of the ordinary man and woman to breathe freely, without having a harsh, clumsy, tryrannical hand clapped across bis mouth and nostrils.
I make no apology for adopting that language, or for the term “ private enterprise “ which he used.
– The honorable member’s time ha3 expired.
.- The honorable member for Fawkner (Mr. Holt) followed the lines of preceding Opposition speeches. In his concluding remarks, he said that he was concerned about the liberties of private citizens, and quoted certain remarks by the Prime Minister of Great Britain. He and his colleagues represent the Australian branches of the powerful banking combines and monopolies, which have international ramifications. I am amazed that they have not been able to adduce some new argument. More than 30 years ago, their forebears had a great deal to say about the calamities that would ensue if the Commonwealth Bank were established. Experience has not enlightened them, and they are still trying to frighten the people. Not one sound argument has been advanced against this legislation. All that the critics have been able to do has been to raise ghosts of the past. They have not given one logical reason to support their assertion that this legislation will be detrimental to the nation. I admit that it will be most detrimental to the interests which they represent; but it certainly will be of great benefit to the people. The object of it is to avoid in the future the bitter experiences of depressions, unemployment, the dole, poverty, and the foreclosures imposed on business men and farmers. I understand that the honorable member for Wentworth (Mr. Harrison) is an agent of powerful interests.
– The honorable gentleman is a representative of the Communists.
– That is a deliberate lie. I represent the poor people, whilst the honorable gentleman represents and is a paid agent of powerful financial interests. I fear that the Australian Country party is in the same category, and is trying to mislead the farmers whom it is supposed to represent. Why have the members of that party not had the courage to relate what has happened in the past? Our destinies are controlled by a financial fascism which has more power than this Parliament, and so long as I am a member of this House I shall strenuously oppose it. We know what unnecessary suffering has been endured by this young nation, which, whilst having practically unlimited real wealth, has at times been denied finance. In 1924, the predecessors of honorable members opposite realized that the Commonwealth Bank was likely to be a powerful competitor of the interests which they represented ; consequently, they amended the act to provide that it should not compete openly with the private trading banks. Do those who prate to-day about the curtailment of individual liberty know that a private individual is deprived by the legislation introduced in 1924 from obtaining financial relief from the Commonwealth Bank?
– That is plain nonsense.
– It is not. I could relate many instances. An acquaintance of mine in a good position informed me that he very nearly went under during the depression, and now wants to have financial dealings with the Commonwealth Bank, realizing that the private banks would treat him in the future as they did in the past. Despite his sound position, the Commonwealth Bank has refused him accommodation, although the private banks are prepared to make it available to him. Under this legislation, the Commonwealth Bank will be able to accept any business that is offered to it, and, naturally, the private trading hanks do not want it to be placed in that position. A great responsibility will face the Government in the near future. There has been much talk of a new order, and I am one of the few persons who believe that it is possible of accomplishment. What could we not do with our great heritage of national resources? But, unless the nation has control of the monetary system, there will he another depression after a boom period. . The powerful financial groups have no concern for the people. What concern did they show for them in 1930? The people were led into a position in which their ruin was certain, and this happened to men who held the freehold of their land and had been in a sound financial position. In some instances, such men did not want monland. They were quite happy as they were, but the banks had money to lend, and so, working through land salesmen and auctioneers, they persuaded thi farmers to buy more land. In this respect, the banks and the auctioneering firms remind me of two sheep-worrying dogs - one rounds up the sheep while the other kills them. The technique is something like this: The land agent goes to Mr. Brown and says, “You have a nice farm here. Your neighbour, Mr. Jones, is getting old, and wants to retire. If you buy his place it will just round off your own farm and add to the value of the property”. Mr. Brown protests that he doesn’t want any more land and. anyway, he has not enough money to buy Jones’s place. The agent tells him that he can get financial accommodation foi him, and eventually talks him into purchasing. A hank lends the money for the transaction, hut it does not do so on the persona] security of Mr. Brown. No. Mr. Brown must mortgage his freehold property as security. Later on, the banks manipulate’ prices of primary productsin such a way as to cause a financial depression. Perhaps if prices had noi fallen, Mr. Brown would have been able to meet his commitments, but he has no chance once they fall. He becomes insolvent, and the bank takes possession of his property. A thimble and pea trickster is given six months in jail, but the people who work this financial swindle are given titles.
– It is a crime to steal a loaf of bread, but it is all right to steal the bakehouse.
– Exactly. It took a war to get the people into employment. The Government has said that there will be full employment after the war, and that servicemen will be rehabilitated. So long as the private financial institution? control the economy of the country, the Government has not power to ensure full employment for the people, and I should be a hypocrite were I to tell them otherwise. This fight over the banking legislation is a fight for control between the Government and the banking companies and financial groups. The great pastoral companies are, in effect, banks ; they lend money on wool ‘dips and finance graziers. The battle is fierce. The financial institutions have unlimited supplies of money to spend on propaganda for the purpose of misleading the people. They know that unless they can defeat the “Labour Government their activities will bo -seriously curtailed, and their profits and privileges limited. No longer will they be allowed to control the destinies of the people. Therefore,’ they are trying to shake the confidence of the people in a Government that is game enough to figh’t them. Their methods are interesting. I have received letters and telegrams despatched from the banks and paid for by them, in which it is stated that the banks are anxious to conserve the interests of the little man. All the time, of course, -they are thinking of the (great harvest they will reap when the war is over. The Government is thinking of !the future of the servicemen, and of the (progress of the nation, but the bankers tare thinking only of their own interests. We have defeated fascism as a .political >power, and are we ito allow this ‘economic 4 fascism to ‘continue unchecked-?
-It is not the Baine.
– It is ‘the same. I cannot understand why the honorable member for Gippsland (Mr. Bowden) should be opposing this legislation. He iis a farmer, and he must remember the low prices which he received for his produce before the war. He must remember now food was destroyed during the last depression because there was no sale for it, although thousands of men and women were ‘‘hungry. Are we to confess that Irian has hot the wit :tb -prevent such things ‘from happening ‘again? When I Caine 1>u4 of ‘the army after the last war, T started growing wool. I got one suit o-f clothes when I was discharged, and another in 1929. That was all I -could afford, because interest is more sacred -‘than even human life. It is because interest comes first, that families were evicted from their holdings. I myself saw jobless, homeless men walking -the roads, and yet honorable members opposite tell us that we must raise the birth-rate. .Something must be done to *break the control by the private financial institutions of the world’s economy. Of -,the trading banks operating in Aus tralia, half are controlled from overseas, and half have their capital owned in Australia, but, whether they are controlled from outside Australia or within it, their primary concern is their own Welfare. In the past, we had the spectacle of those in control of the banks telling a ‘Prime Minister of thi3 country what he had to do - that he must reduce the standard of living by reducing wages. This was their remedy for the economic depression. Why, it was li’ke trying to extinguish a (fire by throwing petrol on it! The motto of the banks was, “ starve yourselves into prosperity “. When the financial manipulators felt that their hides were in danger a few years ago we heard >f’rom them much talk of a new order. Never again, they said, would the people have to go through another depression. Now they feel safer, and we are -again hearing the old talk. We are told that, -after the war, we shall have to economize in .order to pay for the war No doubt, they are already planning te get the ‘soldiers’ wet ‘gratuities as they got them after the last war. Property values were inflated at that time, and the returned soldiers put their money into ‘houses and businesses. Then came the depression. Prices fell, unemployment ensued, and the returned soldiers lost their ‘house’s, whilst those who were in business became insolvent. After thi’ last war, Great Britain reverted to thu gold standard. The effect of this waa that -a man who had owed £100 became liable for £20.0 after the reversion. The price of woo’l had been high, and land was bought -at prices based ‘Upon the price of wool. When the gold ‘standard was restored - one ‘of the greatest mistake0 fever Wade, as Churchill has since admitted - the price of a bale of wool fell from £20 to £10, but the farmer’s interest bill remained the same. And wool was the real wealth, not money. Let us never fall into the error of confusing money with wealth. Those who manipulate money and credit do so in such a way a? to keep the producers perpetually in debt With ‘all the strength I possess I shall oppose their power as long as I live. i believe that the people have learned a bitter lesson. Never again will they fall for batch-cries and specious arguments advanced by those who allegedly represent the victims of the system. As a Scotsman, I ask why are the banks spending so much money in fighting this legislation? Are they doing it in my interest, or the interest of the common man, or are they serving their own interest? They pretend that they are seeking to protect the interests of the people, but that is sheer hypocrisy. I know that some people, acting on the instructions of their local bank managers, tried to use their influence in opposition to the Government’s banking proposals. One municipal councillor travelled several miles to interview me. I wondered why he had come until he told me that he had come to talk about the hanking legislation. His bank manager had called him in. and told him that dreadful things would happen if the Government’s proposals were put into effect - among other things, that he would lose his bank deposit. I know men who really did lose their deposits to the very interests which are now issuing this propaganda against banking reform. There is no proper ground for objection to this legislation. The Leader of the Opposition (Mr. Menzies) said by interjection that he represented more workers than I do. Well, he is certainly misrepresenting them on this issue. I think that he must also be the director of some big companies; only that could explain his opposition to the bill.
The restrictions placed upon the activities of the Commonwealth Bank in 1924 were fatal to the farmers. We have to consider the financing of the wheat crop and wool clip. Are we to leave this responsibility to the tender mercies of the private banks? It has often happened that, although a farmer was quite solvent, the banks refused him accommodation. I could give at length proofs from the history of the last 30 years that it does not matter who makes the laws, because those in control of the finance hold the destiny of the country in their hands; but that is a truism.
– That is why the Government must dictate financial policy.
– Exactly. The claims that the banks have helped struggling men remind me of the remark of a friend of mine, “ Yes, they lend you an umbrella when the sun is shining, and take it back when rain falls”. It is fundamental that the control ‘ of finance must be reposed in the representatives of the people. Every three years the people will say whether they approve of the way in which that control has been exercised, but the directors of the private banks never have to render to the people an account of their service. They can do what they like regardless of what the people think. The fears expressed by honorable gentlemen about what will happen in the Labour caucus when these measures become law make me smile, because I recall how in 1924 the Tory Government was taken behind closed doors by the financiers of this country and told what it had to do, with the result that, although I and other sheep farmers were waiting to sell our clips in order that we might continue the struggle on our holdings, the wool sales were postponed, and were not held until the next September. That was ia “ hold up “ of the whole nation. Such things would happen now but for the war-time controls. The private financiers want freedom to do as they like after the war when, but for the placing of these measures ou the statutebook, those controls would automatically lapse. Hence the bitter opposition to this legislation. What do the financiers care about the rights of our soldiers who have beaten the enemy and saved the money and skins of the wealthy? It is imperative, if the rights of the members of the forces are to he adequately respected, that this Parliament shall have control of the financial system.
.- If I chose, I could quote extensively from the Douglas Social Credit pamphlets.
– The honorable member used to do so.
– Yes, I know them well. But if I adduced such arguments now, I would be honest enough to cite also the safeguards provided in the Douglas Credit scheme. No other honorable member who has quoted from those pamphlets has been honest enough to mention those safeguards.
– No one on this side expounds Douglas Credit.
– I have heard them do so ; the honorable member for Wannon (Mr. McLeod), for instance.
– The honorable member is a poor judge if he thinks the honorable member for Wannon is an exponent of Douglas Credit.
– Honorable members opposite have made statements which they have learned by heart in their reading of Douglas Credit pamphlets. I suspect that the Minister got most of his knowledge from the same source.
– I expressed my views on finance long before Douglas credit was ever heard of. Those views are on record.
– I have risen to define my attitude. That is the duty of every one, aud I am pleased to see that all previous speakers have declared themselves, and have not attempted to sit on the fence, or have ten “ bob “ each way. It is paradoxical that this legislation is a deliberate interference with the administration of an institution which the Minister for Post-war Reconstruction described as having been so successful that it was a monument to the perspicacity of a former Labour administration. Honorable gentlemen opposite have tried to bask in the reflected glory of that administration, for which I had great admiration, but the facts, as Hansard shows, are that the Commonwealth Bank would never have seen the the light of day had its birth been left to the Labour party.
– That is a new one.
– The institution of the Commonwealth Bank was due entirely to the continuous fight waged by Mr. King O’Malley in the Labour caucus to get agreement to legislation setting up the bank. The creation of the bank was due therefore to the pertinacity of one nian. I concede that, immediately the caucus agreed, there was no delay in placing the legislation on the statutebook. The then Prime Minister, Mr. Andrew Fisher, tackled the job courageously and determinedly, but the legislation was the conception of one member of the Labour party, whose fight against his colleagues’ obstinacy is history. I have no intention to detract from the merit of the party’s work, but I resent honorable gentlemen opposite trying to give the whole credit for the establishment of the bank to a former
Labour government, when it should be given to one member of the party.
– Without support, he could not have established the bank.
– No, but he had to force his party into agreement with him. I do not intend to debate the technicalities of banking, because I am sufficiently honest to admit my limitations in a discussion of banking science. As other honorable members have done, I shall talk on the principles rather than the technicalities of this legislation. I know that all the cases cited by the honorable member for Wannon are true, but whether his statement of their origin is correct we shall find in due course. All honorable members should approach these measures with a due sense of responsibility. Divested of all pretence and camouflage, these measures make national finance and public well-being the playthings of party politics. There is no escape from that conclusion. Under this power, which will be recognized as a radical departure from the original charter of the Commonwealth Bank, there can be no guarantee of continuity of policies which may be considered necessary to develop this country, because, in the final analysis, the Treasurer of the day will be the arbiter of national destiny and public welfare. I digress in order to reply to the honorable member for Hume (Mr. Fuller) and the honorable member for Bass (Mr. Barnard), who tried to bolster an obviously weak case by stating that a certain primary producing organization in Victoria, at a conference, had voted .in favour of the Government’s banking proposals. Nothing could be farther from the truth, and the Age report, from which they quoted, did not support the allegation. The conference voted in favour of the Commonwealth Bank reverting to its former charter, and, immediately those who attended it saw what use was being made of their decision in the National Parliament, almost every one of them declared through the Australian Country party press that they had been misinterpreted, and that what they meant was that the Commonwealth Bank should revert to the original set-up, under which it was controlled, by a governor, at that time Sir Denison Miller, without a bank board, but not that there should be political control. The honorable member for Bass was highly indignant that the press of the world had not swept everything else aside in order to headline the decision of that conference. He declared that the press had purposely overlooked it, because it favoured the Government’s banking policy. He was not so anxious that the denial of the inference drawn by honorable gentlemen opposite should be equally publicized.
– That is different.
– Quite different. Any case which depends on presentation of half the story must be very weak. I put it to the honorable member for Hume, who, in all sincerity, read the article-
– I read the report in the Age and quoted the utterances of various speakers at the conference. I believe that what appeared in the Age is true.
– Exactly, but the honorable member prefaced his remarks by saying that the conference supported the Government’s banking proposals.
– That is what I read.
– But the honorable member did not read the disclaimer. Under these proposals, one Treasurer with inflationary tendencies may be displaced by a Treasurer with deflationary tendencies, and any rapid change in either direction imposedon an economy struggling for equation could have only disastrous results for the whole community. I am in favour of banking reform. I believe that bank policy should at all times conform to national requirements.
– Who will decide that?
– It will not be decided in accordance with the booklet written by the Minister. Co-operation between the Parliament and the bank, similar to that which exists between the House of Commons and the Bank of England, is needed. The Treasurer made a clever speech, for which I give him full credit, and in which he voiced some worthy sentiments. He instanced the fact that the House of Commons and the Bank of England were cooperating. They co-operate because there is mutual confidence. It is what is described as tacit acceptance of and agreement with government policy; but there is no political coercion andno treasury control of the Bank of England by means of a statute. No one in Australia would object to the English policy being adopted in this country.
– The Bank of England is a private institution.
– I know. I am saying what the Treasurer has said. Whilst agreeing to the principle of evolutionary reform, one need not he in agreement with any particular methods, andI record my objection to the method proposed in the Commonwealth Bank Bill and my suspicion of the motive. I digress again to deal with one of the gentlemen mentioned by the honorable member for Hume, Mr. Everett. Mr. Everett is an ardent “ social creditor “. How little reliance can be placed on what he said is shown by the fact that months before the Labour party had even determined its policy he urged, through the press, the people to support the Government’s proposals. He did not even know what they were. Can we place any reliance on the statements of a man of that description? He was prepared to support anything in the nature of an attack on his bete noire, the private trading banks. Yet his utterances have been quoted as those of an authority on banking!
– A very enlightened Australian.
– He must be fairly enlightened, because he knew what would happen before the Government did. He endeavoured to induce the people to follow the lead of the Government, even before theGovernment knew what its lead would be. He was so enlightened that he could forecast what that lead would be. But I believe that the people are too enlightened to heed him.
Having heard the speeches of certain honorable members opposite, I cannot believe that this bill is an objective in itself. It is merely a link in a chain. The completion of that chain will mean the fulfilment of the objectives of the first plank of the platform of the Australian Labour party, namely, socialization of the means of production, distribution and exchange. I am encouraged in that belief by speeches which I have heard delivered by honorable members opposite, including the honorable member for Swan (Mr. Mountjoy), who disagreed with this bill because its provisions did not provide for complete nationalization. I am encouraged further in my belief by statements attributed to the Minister for Information (Mr. Calwell). Speaking at a conference of the Australian Labour party in Melbourne last March - that noteworthy conference to which the Minister for Post-war Reconstruction (Mr. Dedman) made remarkable contributions - the Minister said -
The Bank Bill will go through in spite of everything that oau be ‘brought to bear against it.
He added this gem, which can he taken by all honorable members to mean that he is not sure of the reception that this legislation will receive at the hands of the electors -
We have eighteen months left in which to get our policy on to the statute-book. .
That was his opinion. During the disastrous world-wide depression-
– For which the banks were responsible.
– ‘Government spokesmen have advanced the depression as the sole reason for altering the control of the Commonwealth Bank. During the depression, we were accustomed to hear certain slogans, one of which was the “ dead hand of finance “.
– Did the honorable member use that slogan
– Why did the honorable member somersault?”
– It can still be the “ dead hand of finance “ without my somersaulting. Since coming into this chamber, I have learned of a greater menace, and that is the dead hand of an overwhelming political majority, particularly when that majority considers that its sole responsibility on a measure of this kind is to do exactly as it is told. It is axiomatic that huge majorities make bad governments. That statement could not he better exemplified than by the short speech which the Prime Minister (Mr. Curtin) made on this bill. Feeling perfectly secure in his majority, he said-*-
The Government will not accept amendments.
He could have added “regardless of their merit “. The right honorable gentleman could have said that th, Government, having given such thought to this1 hill that it believed th, measure foolproof, was not inclined to accept amendments, but each amendment would be considered on itf merits. Had he done so, the 46 per cent, of the people represented by members of the Opposition, and the tens of thousands of people who voted for the Labour party for reasons far removed from banking control, would still think that they had some voice in the management of their own country, and that there was a bare chance of the survival of democracy. I am old-fashioned enough to believe that any major change of policy should be submitted to the people at a general election before, not after the event. It is quite true that power to deal with certain features of banking is now granted to the Commonwealth Parliament under section 51 othe Constitution. It is equally true thai the nationalization of hanking is pari and parcel of the policy of the Australian Labour party. But it is not true thai because the nationalization of banking ia plank of the platform of the Labour party, the people at the last election vote( in favour of it.
– What is the Australia, Country party’s platform on banking?
– Order! The honorable member for Wannon has already told the House about that.
– And we were just as wise after his speech as we were before it. The honorable member for Batman (Mr. Brennan) and others stated thai because the nationalization of banking is a plank of the Labour platform, the electors voted for it at the last election, and knew all about it. I believe that not one man in a hundred knows the planks of the platform of any political party. The people are concerned only with the policies of the moment, which change from election to election. They elected this Government on a policy far removed from the control of banking, because at that time this Government wa already controlling banks. All honorable members advocate certain banking reforms.
Clause 29 gives to the Treasurer power to prevent both imports and exports. It enables the Treasurer to seize any overseas funds belonging to any person or group of persons, and in this way he can effectively destroy any project which an importer or exporter may have in hand. The Treasurer is also empowered to deny finance to any or every industry which government, bureaucrats consider to be unnecessary or uneconomic. Most people will agree that this power is too great to entrust to political parties, many of which would not scruple to use it at elections. I believe that the honorable member for Swan would be one of those who would use it.
– The honorable member would leave that power in the hands of the private banks.
– If the honorable member for Wannon will possess his soul in patience, he may learn something. At elections, all sorts of extravagant promises can be made, in order that cupidity and not intelligence shall determine what party shall govern the country. It is quite easy to imagine Labour party candidates, at the next elections, warning the people that the anti-Labour parties, if returned, would repeal certain provisions of the banking legislation.
– The Leader of the Opposition made that statement.
– That is correct. The Labour party candidates would add that if they were returned, the people could be assured of the continuance of many things that they enjoyed under war-time controls. But the candidates would conveniently omit to mention that the people would also have to put up with most, if not all, the things that they did not enjoy under war-time controls. Banking reform will become a stalking horse at every election. Extravagant promises can be made, and fulfilled. That is probably a greater danger than any other. Honorable members opposite appear to believe that because they are in office now, they will be in office for ever, and that no harm, could ensue from the administration of the present conservative Treasurer. The honorable gentleman knows something about banking.
The financial institutions agree that he does. But the principle of one-man control, or political control, of banking is bad. Treasurers come and go, and government opinion is not necessarily parliamentary opinion ; it may be merely the decision of the majority of caucus, and that majority may be merely a small minority in this House.
The power which is given under this bill, vitally affects the primary producer. In dealing with this matter, I shall go outside the four fences of my property.
– But the honorable member must not go outside the Standing Orders.
– The primary producer does not come within the Labour party’s definition of “ worker “.
– He does.
– The primary producer probably does more work in three days than many persons officially recognized as workers do in a week. If the Labour party classifies the primary producer as a worker, the decision is of recent origin. Primary producers suffered equally with other sections of the community during the depression, but they recognized that a world-wide depression could not be cured by any single nation, particularly if that nation depended on other nations for markets for its produce. Honorable members opposite have spoken as if the Commonwealth Bank was to blame entirely for the depression, and that, with one stroke of the pen, they can remove the danger of a recurrence. As the honorable member for Darwin pointed out so ably, the depression was world-wide. She stated that Australia felt the effects of the depression later than any other country, and emerged from it earlier than any other country. Honorable members opposite must recognize that fact when they speak of the ability of the Commonwealth Bank, properly controlled, to prevent another depression. I admit, as most honorable members will do, that the use of the national credit could mitigate the effects of an economic depression, but nobody can contend that it would cure a depression. The primary producer has every reason to fear monopolistic control of banking by an institution which is rigidly bound by regulations and is, in consequence, more conservative in its approach to advances than are the private trading banks. I shall refer now to a matter which will take the smile off the face of the honorable member for Wimmera (Mr. Wilson), because he played a prominent part in the establishment of the Mortgage Bank Department. The operations of this department, which was to be the panacea for all known ills, had, an unexpected result recently, as honorable members will see from the following letter: -
So far as I understand the Mortgage Bank legislation already in existence, its purpose was to provide finance for farmers whose security was not quite good enough in the usual channels of finance, i.e. State savings banks, trading banks and private mortgagees.
It appears that the Mortgage Bank Department of the Commonwealth Bank is not carrying out this purpose. The act enables the Commonwealth Bank to lend up to 85 per cent, of an approved valuation. Its present policy appears to be not to exceed 70 per cent. Then, by adopting a conservative valuation, the amount that may be obtained from the Commonwealth Bank is no greater than that which is available from other sources. it cannot, therefore, be said that the Commonwealth Bank, through its Mortgage Bank Department, offers money on more liberal terms than can bc obtained elsewhere.
Recently, acting for a discharged serviceman, the firm with which I am associated made an application for £1,150 to the Commonwealth Bank. The security offered was a first mortgage over land valued at about £1,700. After charging the applicant about £3 3a. for cost of valuation, the bank wrote to hi,n stating that it could not advance the amount that was required. An application was then made to the manager of the local branch of a trading bank, and a few days later £1,200 was advanced on the same security a.« that refused by the Commonwealth Bank for £1.150.
– That is the bank’s policy under the present control.
– Honorable gentlemen opposite may laugh, and I have been able to enjoy some of their jokes, but this is no laughing matter. The letter proceeds as follows : -
That, of course, is a reversal of what was intended, namely, that the Commonwealth Bank should provide money on more liberal terms than those afforded by the trading banks.
From that it follows that should the Commonwealth Bank get that power of control over trading banks which the Labour sponsors of the bill now before Parliament desire, it would be within the power of the Commonwealth Bank to prohibit the trading bank from making an advance such as is referred to above. While ministerial supporters may argue that that is improbable, it nevertheless seems possible that if the Commonwealth Bank, under ministerial direction, proposed to engage in a conservative policy of lending, or saw that its competitor was likely to “ steal a mardi “ it would prohibit such a transaction.
I have already pointed out that under this legislation the Commonwealth Bank would have power to prohibit such a transaction.
– From whom did the honorable member receive that letter?
– I received it from one of my constituents. It continues as follows : -
Having regard to some experience in the matter of arranging farm finance, and the present policy of the Commonwealth Bank that it offers nothing that a farmer cannot get from the trading banks, no advantage to the nation can accrue by giving the Commonwealth Bank power of control over trading banks. For that reason, country people can only regard with misgiving the powers which the Labour party now desires to confer on the Commonwealth Bank. It would be otherwise if the Commonwealth Bank were to “ set a pace “ for the trading banks.
– How and on what security did the other hank make the advance of £1,200?
– The advance must have been made by overdraft or on mortgage. The plain fact is that whereas the Mortgage Bank Department of the Commonwealth Bank refused to make an advance of £1,150 on security worth £1,700, the private bank made an advance of £1,200 upon it. That is not an isolated case of the conservative attitude of a regulation-controlled financial institution. The danger of that kind of thing may not become apparent immediately, but with the increase of the general banking business of the Commonwealth Bank which the Government hopes will follow the enactment of this legislation, the day may come when the private banking companies will be completely ousted. There will then be only one institution to which primary producers may go for financial assistance. We all know that regulationcontrolled institutions have no sentiment; they deal with cases and not with men of flesh and blood. If such an institution were the only one from which financial assistance were available and it refused to make advances on the ground that the security was not satisfactory, the unfortunate primary producer who desired the accommodation would be thrown out on the road. I should be sorry if that day ever arrived in our history.
The honorable member for Wannon (Mr. Mcleod) was not the only one who had a bitter experience during the depression. I had considerable dealings with the trading banks at that time. Some were happy, and some were most unhappy; but at least the managers of the trading banks dealt with me as an individual. A Commonwealth Bank controlled by regulations would not be able to do so. The honorable member for Wannon referred to the prices that prevailed in 1919, 1922 and 1923 for certain primary products, his object being, apparently, to indicate the more satisfactory experience that producers had when the Commonwealth Bank was under the control of Sir Denison Miller as Governor. I point out to the honorable gentleman that in 1919 the price of butter was 3s. per lb., whereas within a year it had fallen to ls. 6d. per lb. Cows were realizing up to £30 in 1919, and in the following two or three years they could be bought for £3. It must be obvious therefore, that one-man control of the Commonwealth Bank is not the answer to the needs of the people. The Commonwealth Bank could not prevent the depression of 1922 and honorable gentlemen opposite should not ignore that fact.
I am participating in this debate in order to make my position quite clear. I am not opposed to banking reform, but I am not in favour of one particular method to suit, certain interests in preference to some other methods which may suit the whole community. I shall not be a party to political control of banking in this country. When a real reform in banking can be achieved I shall support it. I emphatically decline to support these measures which will place in the hands of the Treasurer - whoever he may be - the sole control of financial policy mid of the people’s destiny.
.- 1 support the measures before the House because I believe that they provide for a measure of monetary and banking reform which is long overdue, and because they represent the first step towards the implementation of the Government’s policy of employment for all after the conclusion of hostilities. The two bills before us provide, respectively, for variations of the control of the Commonwealth Bank and for the imposition of certain controls on the private banks. It is obvious to me that the Government has learned a great deal about financial procedure during the last few years. We all, of course, have learned much about monetary and banking policy since the conclusion of the first world war. It is clear also that the lessons of the dreadful depression of 1929-32 have not been forgotten by the Government. We are living in a revolutionary era. We realize that our economic system must be dynamic and cannot remain static. We cannot permit a return to the .economic conditions that prevailed prior to the outbreak of this war. In the last few years the Government has had to face unprecedented conditions, and it is obvious to all of us that it will also have to face unprecedented conditions after this war. In these circumstances adequate steps must be taken now to meet the situation that must arise in the not distant future.
We cannot countenance a return to the conditions which prevailed during the last depression, when the Commonwealth Bank Board dictated financial policy to the National Government and the National Parliament. That was the time of the Gibson-Theodore incident, which was referred to in the letter read to the House last night by the Minister for Information (Mr. Calwell). The time has come for action to be taken to ensure that the National Government shall be able to influence financial policy through the Commonwealth Bank. As I have listened to this debate it has become clear to me that the bitter opposition to these measures is similar to the bitter opposition displayed to the original Commonwealth Bank Bill when it was introduced in 1911 by the Fisher Labour Government. The opposition at that time came from honorable gentlemen who were known as Conservatives. The same honorable gentlemen to-day call themselves Liberals, although until lately they were members of the United Australia party, but they aTe the descendants of the Conservatives who so bitterly opposed the inauguration of the” Commonwealth Bank in 1911. In those days, as in these, a great deal of attention was given to what was called “ political control of hanking “. In the circumstances I consider it desirable to review briefly the history of the Commonwealth Bank, for it makes an interesting study. When the Commonwealth Bank was established in 1911, the Fisher Government appointed Mr. Denison Miller, then an inspector of the Bank of New South Wales, as the first Governor of the new institution. We all know that the bank was successful from the day it opened its doors, although it had some difficult periods up to the outbreak of the war in 1914. Overnight, however, it assumed a position of vital importance to the whole Australian community, and, in particular, in the banking structure. . The bank passed through a severe testing during the regime of the Cook Government, but in 1914 a double dissolution of the Parliament occurred and a Labour administration was returned to office. At that time, when the people suffered from a fear complex due to the war, and when there were many doubts about the stability of the trading banks and their capacity to withstand the strain imposed by the war, the Commonwealth Bank became a bulwark of public confidence. Its- prestige increased day by day, and it was able to render outstanding service to the community. It is a matter of, history that in the raising of war loans, whereas the trading banks charged up to £3 per cent., the Commonwealth Bank charged 5s. 7d. per cent. That was only one phase of the Commonwealth Bank’s activities during the period of that war. At the conclusion of hostilities, it had prospered and expanded its operations. Then in 1924, the act was amended by the Bruce-Page Government. The honorable member for Wannon (Mr. McLeod) stated that tha Commonwealth Bank is not permitted to accept an account against the objection of a private trading bank, because of the policy laid down by the Commonwealth Bank Board. The Deputy Leader of the Opposition (Mr. Harrison) challenged that statement. I quote an extract from a statement by Mr. E. C. Riddle, manager of the Commonwealth Bank in London, published in the Sydney Sun of the 22nd November, 1932-
Addressing a meeting of the Fellows of the Royal Empire Society at a luncheon, in October, 1932, dealing with the policy of the Commonwealth Bank, Mr. Riddle stated that, although the Commonwealth Bank continued to conduct general business that side of its activities was not pushed. The trading banks had been advised that if they lodged their reserves with the Commonwealth Bank they would not be used in competition with the private banks for ordinary business, and that promise, said ‘Mr. Riddle, had been faithfully observed. Moreover, the Commonwealth Bank’s policy was not to take advance business from private banks, even with its own money.
When a customer of a private bank asked the Commonwealth Bank for accommodation, the Commonwealth Bank undertook to investigate his position, and if satisfied that he was entitled to the accommodation, private banks were notified and informed by the Commonwealth Bank that if they were prepared to do business they, the Commonwealth Bank would withdraw from the negotiations. If not, the Commonwealth Bank would make the advances. In nearly every case, said Mr. Riddle, the private banks made the advances.
From that quotation it will be seen that the Commonwealth Bank Board laid down a policy which prevented the Commonwealth Bank from taking business from the privately owned institutions ; yet it expended public money in. investigating the financial stability of persons by whom it had been approached; and if they were a good risk, the reports were handed to private trading banks, with the intimation, “ If you are not prepared to finance these cases, we shall do so “. Thus, public money was squandered in the interests of the trading section of our hanking system. Is there any wonder that the Government has decided to abolish the Commonwealth Bank Board? Nearly every honorable member on this side of the House has criticized the composition of that board.
Mr. Kell,” who was Deputy Governor of the Commonwealth Bank during the Governorship of Sir Denison Miller, and became Governor on the death of that gentleman, warned the Government and the people of Australia of the dangers of the inflation that was practised by the trading hanks after the last war. During the course of that war, Great Britain was forced by its war commitments to practise inflation. By doing so, it, unfortunately, played into the hands of the private trading banks. There was not then in existence, National Security Regulations such as we have to-day, compelling company banks to place their surplus investable funds in a frozen account with the central bank. That money was left in the accounts of the trading hanks. The London banks were choked with what they described as “ funds “, and they encouraged dominion governments to raise loans on the London market. If the record of the BrucePage Government is examined, it will be found that loan after loan was raised at the instigation of London financial interests. That loan money was deposited in the London branches of Australian banks. The proceeds of loans so deposited and the money expended in Australia for war purposes, were used for the expansion ofl credit in this country. Because of this inflationary trend, quite a number of persons in addition to Mr. Kell, warned the Government of the dire calamity which this nation might have to face. The private banks and those associated with them at the time, also warned the people and the Government, as they are doing to-day, of the catastrophe that might be round the corner. At the same time, they were busily expanding credit, in order to make tremendous profits for themselves. Mr. Kell might have had a lot of faults, but, in addition to warning Australian Governments, he did everything possible in the Common-wealth Bank to check inflation. Because of the restriction of advances, the business of that bank was lost to the private trading banks. The controls embodied in this legislation will enable that bank to avoid occupying a similar position in the future, and will prevent a. depression more vicious and terrible than that of 1929. This nationally owned institution was “ cut to ribbons “ to make a Roman holiday for private institutions, and subsequently the nation was encompassed by a depression. The trading banks must have realized what would be the result of their activities. Notwith- standing the contention of the honorable member for Gippsland (Mr. Bowden), they were directly responsible for the last terrible depression. Most of the apologists for the banks say that that disaster was world-wide. Of course it was. But the inflationary stream was - ‘being “ fed “ from London, and the whole world was engulfed as the result of the evil policy which the financial institutions pursued. In Britain and the United States of America to-day, the private banking institutions are appropriating the central bank credit which is being created for war purposes. Later, they will seek fields for the investment of those funds, just as the London banks did after the last war. The inflation in Britain in this war as the result of necessary war expenditure, is colossal compared with that which occurred during the last war, and unless restrictive action be taken we shall experience the greatest depression that this nation has ever had to face. Consider, first, the Australian trading bank deposits, amounting to £200,000,000, that are in the frozen account, the total investments in war loans, and the savings bank deposits. There are controls which can be exercised under National Security Regulations during the war, and the controls provided in this legislation will prevent the private banks from using those funds to expand credit in the post-war period. Thus we shall be able to avoid an economic and financial, collapse.
How has the Commonwealth Bank assisted secondary industry in this country?’ A good deal has been said about the part which has been played by the trading banks in industrial development. It is true that they have made advances to primary industries and have thus assisted in some degree the development of this country. For this service their rewards have been great. But in connexion with secondary industries, the banks’ policy has been “ a horse of another colour”. The financiers on the other side of the world have always wanted Australia to provide merely raw materials and food, and never to become a manufacturing country. Sir Denison Miller, like Mr. Kell, had a lot of faults, but he demonstrated great breadth of vision in relation to the establishment of the .Broken Hill Proprietary Company Limited. For many years, the Government of New South “Wales had considered the commencement of steel works. Investigations were made, but nothing was accomplished; The negotiations in regard to the matter have been well set out by the Minister for External Affairs in his work, Life of Holman. The Broken Hill Proprietary Company Limited also had been making thorough investigations as to the practicability of changing over to an industrial organization. The mine at the Barrier was nearing the end of its tether “. The very able general manager of the company, Mr. Delpratt. urged the directors to convert it into an industrial organization. The company had the necessary capital, the iron ore deposits, trained technicians, professional staff, and so on. ‘Collins House directorates, rising Australian capitalists, being shrewd ‘business “ heads “, realized that, if this country was to be developed 100 per cent., the establishment of the basic steel industry was essential, and if it were to be established they wanted to be connected with it. They approached various financial institutions on the other side of the world in their search for capital amounting, I understand, to £600,000, but they met with a very chilly reception. ‘ They even explored the possibility of themselves floating a loan on the overseas market, but in this they were unsuccessful. Then they returned to Australia, and subsequently, Sir Denison Miller, who was then Governor of the Commonwealth Bank, agreed to underwrite an issue of debentures to the value of £600,000, bearing interest at the rate of 6 per cent. The Commonwealth Bank took up practically half the amount of the debentures, and the public rushed the remainder. On the 2nd June, 30 years ago, the steel works at Newcastle were opened. That was an example of the failure of great financial institutions to assist in the establishment of an industry which was vital to the welfare of Australia. Thanks to the Fisher Government, and to the Commonwealth Bank under the control of Sir Denison Miller, when the Japanese struck there was in Australia a steel industry which has contributed very materially to the supply of arma ments and munitions with which to repel the enemy.
Three of the private banks, in particular, have been bitterly hostile to this legislation from the outset. They have hurled abuse at the Government, and have sought by widely diffused propaganda to pose as “ lilywhites “ themselves, adopting throughout an air of injured innocence. They object strenuously to the Government’s proposal to regulate their affairs. They are opposed to political interference. In one typical piece of propaganda they say “ Clearly, this legislation will give vast powers over industry and substantial control over the individual to the ‘Commonwealth Bank.”. It seems to me that those responsible for such propaganda are only amateurs at the game. Their own arguments can be turned against them. Their assertion that it is proposed to give to the Commonwealth Bank vast powers over industry, and even over the individual, is a tacit ‘admission that they themselves are now exercising those very powers. [Quorum formed.”] They resent legislation, the purpose of which is to bestow upon a democratic institution power which they themselves now possess. In effect, they unashamedly admit that they have a stranglehold on the economic life of the nation, and they challenge the Government to break it. In olden times, when the lending of money was the function of usurers, it was only a matter of time for the lenders to obtain control of the economy of the nation. Then there was an explosion of popular feeling, such as the pogrom in Continental Europe, and the usurers were cast out. In modern society, the banks have taken the place of the old usurers, and the time has come for them to be dealt with. Instead, however, of their being thrown out neck and crop, it is proposed to take constitutional action through Parliament to control them.
I am surprised that the Royal Commission on Monetary and Banking Systems did not more closely investigate the banking crisis of 1S93. The statement of the managers of the various banks which defaulted at that time hardly touched on the issue, and the report of the commission itself mentioned the crisis only in passing. No close inquiry was made into it, despite the fact that it brought misery and degradation upon many thousands of people, and forced some of them into suicide. In paragraph 216 of the report of the royal commission, the following passage occurs : -
The aggregate deposits of the banks which suspended payment at the dates of suspension ii mounted to £08,500,000. The depositors of those banks were requested, and, by force of circumstances, compelled, to agree to an extension of time for the repayment of the amounts owing to them. There was much similarity between the proposals made by the banks, though naturally they varied in detail. In some instances, depositors were given an option to convert part of their deposits into preference shares, und, in others, were compelled to do so. Deposit receipts were issued for the balance. These were payable by annual or half-yearly instalments, the first in most instances about five years after the dale of reconstruction or re-arrangement
MacKay, whose work on banking and credit is accepted as a standard textbook, says at page 14S -
Even among those hanks which were successful in winning terms from their creditors, there were some which did not meet their obligations till 19J7 or 1918.
Or. Jauncey refers to the banking crisis in these terms -
During the crisis (1S03), twelve banks, having 905 branches throughout Australia, with aggregate liabilities of over £100,000,000, suspended payment. Twenty-three failed between July, 1891, and May, 1893.
I quote these authorities in order to show how necessary it is,, that legislation should be passed to protect bank depositors. Those hanks which, in 1S93, forced their depositors to accept a reconstruction scheme were guilty of plain repudiation of the worst kind. We know that bank advances are repayable on demand. Those who borrowed money in this way used it to buy houses or farms. In 1893, t;he banks called in all mortgages and overdrafts. When the borrowers were unable to pay, the banks took possession of their securities, generally in the form of real estate. The Commercial Bank nf Australia Limited, which is now so loudly abusing the Government, formed an Assets Trust, a “phoney” company, to take over the properties of defaulting borrowers, and hold them until prices rose. The original owner had no chance of selling in order to clear his indebtedness, because at that time there were no buyers. In 1893, when the Commercial; Bank of Australia failed, it held” deposits from the public amounting to approximately £10,000,000. It suspended: payment in April and remained closed for more than a month. Before it reopened a reconstruction scheme was placed before its customers. Mackay refers in his book to a comment made by the Insurance and Banking Record at that time -
The decision of the Commercial Bank of Australia Limited to apply to the court, under provisions of un act passed by the Parliament of Victoria as late us 1st December, 1892 (an act which, in its variation from the English Act of 1870, opens the way for grave abuses of the law of debtor and creditor as understood throughout the greater part of the world) to compel depositors to capitalize £3,000,000 of their money, came as a clap of thunder, terrifying depositors in other institutions.
An institution, which is now complaining about political interference with and control of its business, had to ask the Government of Victoria for an act of Parliament to assist it back on to its feet. So, it is sickening to hear its protests now. Its propaganda keeps dark the facts of 1S93 when it pillaged the moneys of its depositors and then repudiated liability.
The English, Scottish and Australian Bank was referred to last night by the Minister for Information (Mr. Calwell). I think I know why the honorable member for Wentworth (Mr. Harrison) laughs, because, on the 10th February, 1927, Mr. J. Ryan, M.L.’C, a member of the Stevens Government, moved the adjournment of the committee to discuss the actions of that bank, which also is vociferous in its attacks upon this legislation. It also sought political assistance. In 1893, it also suspended payment and was able to re-open only with the assistance of an act of the Victorian Parliament. When it failed it held public deposits of £4,630,000, and it arbitrarily proposed a most outrageous reconstruction, scheme. The story of the policy of repudiation practised by the bank following the 1893 crisis was ventilated in the Legislative Council by Mr. Ryan, who, amongst other things, explained that, during the crisis, the Dibbs Government passed the Bank
Issue Act whereby the Governorin.Council could declare hank notes as legal tender for a period of twelve months. He said that the Government also passed the Current Account Depositors Act authorizing the Treasurer to advance government notes to half the amount of current accounts then locked up in the banks. These are the people who harp about political interference and say, “leave us alone”. But they ran for political cover in 1S93. Mr. Ryan went on to say -
These acts were passed with the good aim of allaying the panic which existed at that time.
He indicated that, when the English, Scottish and Australian Bank closed its doors, it held in current deposits and current accounts about £4,600,000, all of which was impounded, and that the bank, under the scheme of reconstruction, gave a promise to repay only a certain proportion of the deposits. It had converted the remainder into perpetual stock. Details of the arrangement were as follows: - £1,000,000 to be repaid over a period of years, plus 4$ per cent, interest. £1,000,000 converted into Perpetual Debentures at 4. per cent, interest. £2,000,000 converted into Inscribed Perpetual Stock at 4i per cent, interest.
En 1896, however, the English, Scottish and Australian Bank made use of its London influence to have an act passed by the Parliament of Great Britain reducing the interest from 4i) per cent, to 3 per cent. Mr. Ryan continued -
Yet this bank, for many years, has paid to its London shareholders dividends from 10 per cent, to 12-J per cent, while still retaining nearly £2,000,000 of the 1803 deposits of its customers on which it was paying only an average of 3$ per cent.
They had the “ hide “ to squeal about political interference. Most of the money held by the bank when it closed its doors and on which it was paying interest was owned by Australian depositors. A committee was formed, and a Melbourne solicitor, Mr. B. J. Parkinson, visited London to interview the directors of. the bank, but without any benefit. The financial affairs of the bank improved to such a degree over the years that after the 1914-18 war it was in a position to take over the London Bank of Australia in 1921, the Commercial Bank of Tasmania in 1921, and the Royal Bank of Australia in 1927.
I understand that Mr. McConnan is connected with the National Bank of Australia Limited. “When that bank suspended payment in 1893 and re-opened later on a reconstruction scheme, £306,000 of depositors’ money was converted into preference shares, and practically the whole of the £7,365,000 of depositors’ funds was impounded. Mackay in his work says -
Of the banks which closed their do.ors, three did not re-open for business. Those that did open again suffered a varying fortune. Some of them were able to pay off depositors within two years, others were not so fortunate as this and did not shake off the burden for some years. The National Bank of Australia Limited managed to be free by 1900.
So, it was seven years before the depositors could regain their money. The smash of 1893 retarded Australia’s development for many years, because it was not until 1914 that some of the defaulting banks made restitution ofl some of their clients’ money. It is to avoid a recurrence of the 1893 debacle that the controls contained in these measures are necessary. This legislation will be acclaimed as epoch-making. Depositors in trading banks henceforth will, like depositors in the government bank, have nothing to fear because the proposed controls will ensure full protection of their money and rights.
.- Only the Re-establishment and Employment Bill is of as great importance as the Commonwealth Bank Bill and the Banking Bill, which, for good or ill, will affect the future of this country for many years. It is, therefore, right that they should be given the attention that honorable members on both sides have given them. Honorable members opposite have talked about many different matters, but they have not yet told us why this legislation is introduced now.
– The honorable member should have a good idea.
– No, I am still waiting to he told why these bills have been introduced in contravention of the Prime Minister’s pledge during the 1943 general election campaign.
– What, again! We have already heard that many times.
– The honorable member shall hear it again. In any case, the country should be told why legislation of this importance should be introduced when not one word was said about it by the Prime Minister during that campaign. The Curtin Administration was returned on the policy of an unrelaxed war effort. Not only did he offer no criticism of the banks, but, on the contrary, he referred to the Commonwealth Bank as being the great bulwark of the Australian financial world. He said that it had provided £250,000,000 with success unequalled. So I still f<ail to understand why these bills have been introduced as a matter of urgency while the war is still raging. Like all other honorable members, I favour reform of the banking system.
– “What, kind of reform?
– I favour the implementation of the recommendations of the Royal Commission on Monetary and Banking Systems. It reported that our banking system was not perfect. It never has been, and is never likely to be. But the Government proposes to go far beyond that commission’s recommendations. Why? To find the answer one does not need to go beyond the basic policy of the Australian Labour party - “ Nationalization of the means of production, distribution, and exchange”. As one honorable member opposite said earlier, this legislation does not meet the heart’s desire in that respect of some members of the Opposition. It represents a compromise between the moderates and the leftists on the Government side, with all the honours to the leftists, because, although socialization or nationalization will not be achieved in form in these measures, it will be achieved in substance. In the first place, the .Commonwealth Bank is to be given practically unlimited powers. Secondly, the Commonwealth Bank, with these powers over the national economy and the trading banks, will be placed completely under the thumb of the Commonwealth Treasurer. The trading banks will be put in a straitjacket, and will not be able to expand. No one can deny that. When the straitjacket has enclosed them, a noose will be placed around their neck, and the rope may be tightened at will by the Treasurer, the Government, or caucus. Although this measure does not achieve socialization outwardly and openly, the Government will gain it in fact, and at no cost to the Treasury. Even the Minister assisting the Treasurer (Mr. Lazzarini) will not deny that under the powers that will be vested in the Treasurer, he may squeeze the trading banks so tightly as to kill them. The manner of their death will be slow or quick, according to the whim of the Treasurer. What is more, the Government will achieve its objective of socialization without paying for the assets of the trading banks. I congratulate the author of this grand scheme; but I am sure that it will not appeal to the big majority of Australians.
This legislation has not been supported by honorable gentlemen opposite with any technical or material arguments. The only contentions that have been propounded have been sentimental, sloppy stuff which, no doubt, will touch the hearts of certain people, but certainly will not appeal to the heads of honorable members on either side of the chamber. Supporters of the Government ha.ve adduced two main arguments in support of this bill. The first is that our banking system at present operates detrimentally to the economy of the country, and honorable members opposite assert that from time to time, the policy of the trading banks has imposed considerable hardships upon individuals and seriously affected the interests of the country as a whole. The honorable member for Kennedy (Mr. Riordan) and others stated ad nauseam-
– Members of the Opposition have repeated their objections to the bill ad nauseam.
– That is not correct. It is nauseating, though at the same time interesting, to note that supporters of the Government, being unable to find any ground for dissatisfaction in the action.0 of the trading banks in recent years, have been compelled to revert to 1893 in an effort to bolster up their case. In that year, a number of banks failed. If honorable members opposite require a more recent example of a bank failing I remind them of the Government Savings Bank of New South Wales and the Agricultural Bank of Western Australia.
– I inform the honorable member that the Agricultural Bank of Western Australia did not fail. The honorable member may have in mind the Primary Producers Bank Limited.
– Dealing with the general principles underlying this legislation, the Minister for Post-War Reconstruction (Mr. Dedman) said -
If one casts one’s mind back over the events of the last 150 years, one will find that always, in any given 50-year period, ideas which were regarded as revolutionary, destructive and dangerous have at the end of that period beenacceptedas evolutionary, completely orthodox, constructive and safe.
That is true in a very limited and special sense. As individuals and as a community, we are progressing. Rigid ideas that used to be held regardinga number of economic principles, have become more flexible. During the last twenty years, the views of financial authorities have certainly changed. It is true also that the ideas which are expounded to-day as being new and progressive are only “ re-heated “ after having been forgotten for hundreds of years. When revived by some “ crank “, they are put forward as being completely original. If the Minister for Post-War Reconstruction means that our present financial system is not perfect, I agree with him. Obviously, it is capable of improvement.
– When this legislation is passed it will be nearly perfect.
– Our financial system may be improved by appropriate methods. But if the Minister means that the principles upon which our present economic system is founded are false, I strongly disagree with him. The system has been evolved over a number of centuries. In stating that the principles on which modern finance is based arc out of date, the Minister was wrong. Never let it be said in this chamber, in reference to Australia or other British dominions, that during the last fifteen years, our banking system has not yielded extremely good results. Honorable members opposite have defended the bill in various ways, and raised matters which, they believe show the disadvantages and faults of the present system. Referring to interest rates, the Minister for Post-war Reconstruction said -
The rate of interest is one of the strategic points of economic activity. A low interest rate is conducive to the maintenance of high industrial activity, and it is therefore imperative, if employment and income arc to be adequately sustained, that the rate of interest should be supervised and kept at a level which accords with the requirements of economic policy. Control over interest rates is all the more important, because experience shows that increases in interest rates have always been associated with increases in unemployment.
That statement is completely untrue, as any one who knows the facts can tell the honorable gentleman. The implication of his statement is that when interest rates are high, unemployment is high and, therefore, there is a causal connexion between the two. In other words, high interest rates mean high unemployment. The facts disprove that view. In the majority of economic depressions, when unemployment has been high, interest rates have been low. For that, an excellent reason exists. As employment improves during a period of growing prosperity, increasing turnovers and rising prices, interest rates tend to rise because production and individual incomes are expanding. During such times, interest rates increase because the mounting prosperity of the country makes the profits inviting, so businesses are extended and new enterprises are launched. This requires more financial accommodation and consequently, interest rates rise. This fact is proved by figures showing interest rates and the percentage of unemployment in Great Britain over many years, as follows: -
Those figures prove that the statement of the Minister for Post-war Reconstruction was wrong. In recent years, particularly since the depression, every one who has any knowledge of the subject believes that interest rates should be kept low, mainly in accordance with the theories of Lord Keynes, the eminent economist, who expounded with great force some time ago the view that low interest rates were essential to prosperous trade. Everybody will agree with that opinion. More recently, much greater emphasis has been placed on the idea that a central bank should devote its attention to regulating the total volume of credit and currency in the community rather than relying on interest rates to achieve that objective. In our war-time economy, the central bank expands credit so much that interest rates lose, to an appreciable degree, their influence, particularly on commerce and secondary industries. The whole matter depends, not so much on exerting a definite positive pressure, as by interest rates, but on influencing it by appropriate credit expansion or contraction. Lord Keynes, who is perfectly aware that interest rates do not primarily determine the level of employment, stated -
It is the return of confidence, to speak in ordinary language, which is so insusceptible to control in an economy of individualistic capitalism. This is the aspect of the slump which bankers and businessmen have been right in emphasizing, and which the economists who have put their faith in a “ purely monetary “ remedy have underestimated.
When introducing this legislation, the Government overlooked the point that finance is not a matter of adding up figures in a book, but is, above all, a matter of confidence.
Sitting suspended from 6 to 8 p.m.
– Prior to the suspension of the sitting I had referred to the suggestions of honorable members opposite that unemployment was invariably related to high interest rates. I have compiled a fairly complete statistical table dealing with this point, and it shows that the reverse is the case. With the consent of honorable members I shall incorporate the table in Hansard -_
Honorable gentlemen opposite have also stated that the present banking system was largely responsible for the unemployment and depression that prevailed in this country and elsewhere prior to the war. Their contention that unemployment and depression were inevitably linked with the banking system is, in my opinion, quite incapable of substantiation. The banking systems were not responsible for the depression in either this country or countries abroad.
– Quite a lot of bankers have said otherwise.
– Then they were bad bankers. The honorable member for Kennedy, in a most pessimistic way, outlined the kind of depression that he considered was likely in this country and overseas in the post-war years. He went so far as to say that the new depression might completely overshadow the depression of 1929-31. He said that the only thing that could prevent the coming of such a depression was strong control of banking; if banking lacked such control, nothing could stop the depression from overtaking us. That view has been expressed by several honorable gentlemen opposite. I do not propose to examine the subject in any detail, because of a limitation of my time, but I point out that Government control of finance has been tried in some other countries and has not achieved the results honorable members opposite claim for it. Certainly the history of Government control of finance could not support their contention that such control in 1929-33 would have prevented the depression. Those who make such statements can have given very little attention to the economic factors which caused the last depression. We all know that after the last war almost every country adopted a policy of economic selfsufficiency, and endeavours were made in all countries, by means of internal development, to do without goods and services from other countries. The result was a period of exceptionally high tariffs, that effectively stopped the free flow of international trade, and were largely responsible for the depression. Even those countries which adopted governmental control of finance failed to avoid depression. I have in mind particularly Germany and Italy, in which the depression was probably more severe than in any other countries,. Government-controlled finance notwithstanding.
It is therefore quite evident that if we adopt new measures on false premises we shall invite trouble. It is quite wrong to say that internal measures for the control of finance can stop depressions. Even i f this Government took the most extreme steps to control finance, and even if it had a measure of control over other countries, which of course it cannot have, it could not prevent depressions from occurring.
It is curious that every person who has a couple of shillings in his pocket thinks that he knows all about finance. For this reason all sorts of weird and wonderful ideas have been propounded about how our financial affairs should be arranged. The Minister for Home Security, for example, has given us some strange ideas on the subject.
– Which are supported by quite a number of people. The honorable member would be surprised if he knew how many.
– I know that a surprising number of people support strange financial theories. The fact is, of course, that, the best brains of many countries, including men who are not only practical bankers, but also financial economists, have been struggling to find the answer vo this problem of great complexity. Many attempts have been made to put weird and wild theories .into practice. But up to now no real success has been achieved. The best results in finance have been achieved by the people of our own British race in the various countries of the British Empire. The reason for this is, broadly, that finance - and I am using the word in its wider significance - is not an exact science. It is not a matter of adding up figures in the books of a bank, or of a nation, because it is also a matter of psychology, which involves confidence. It is here where the theories of so many people fail. Even to-day, with all the financial knowledge we have accumulated in the experiences of the last two decades - and we have made great advances in financial knowledge in that period - it is impossible to find a common view among people who have given their lives to the study of the subject. It is not difficult, therefore, to understand that the experts having failed to reach a common view, common men, among whom we must number ourselves, have also failed to find the answer to the problem. The ordinary man is completely mystified when he finds himself among the true and the false prophets, Keynes, Marshall, Hawtrey, Douglas, and Lazzarini. In all the welter of ideas, however, there is one rock to which we can cling with some assurance of safety, and that is the experience of the past. This will serve us far better than the will o’ the wisp ideas of people who have little reliable background on which to base ideas.
I come now to a consideration of this legislation, and I shall deal chiefly with three points. The first is the proposed political control of the Commonwealth Bank. In this legislation the Government is seeking complete power over the whole financial system of the Commonwealth. It desires power to divert money into any channel, or to prevent it from flowing through any channel, or to particular individuals. Under this legislation there is nothing of a financial nature that the Government is not empowered to do. It could, if it so desired, inflate the currency to any degree, and no authority could prevent it from doing so. This power over the currency was exercised by the Executive in the early history of our race. It is a power against which the people, through their Parliaments, fought vigorously, and eventually overcame. Yet we are now asked to place this power, once again, beyond the control of the Parliament, lt is true that circumstances have changed, and that the governments to-day are subject to the control of Parliaments; but, nonetheless, governments in other countries have destroyed currencies in recent times, not by the old methods hut by new methods which have been equally effective. We all realize that behind the members of this Government there is the caucus, and behind the caucus there are trade unions, many of which are Communistcontrolled. But, leaving out of account, for the moment, those indirect and hidden controls, I direct attention to dangers that are inherent in even treasury control. In this connexion I invite the attention of honorable members to the following extract from a book by Dodlock entitled Treasuries and Central Banks : -
Something more elastic and quick-moving than a Treasury, and more closely in touch with active business, trade and industry, is needed to carry out credit policy from clay to day. If a firm and continuous policy is to be enforced, the institution charged with this duty should also be free from the pressure of political interests in particular matters. It may be assumed, therefore, that a central bank is the proper and indispensable instrument of credit control in the general interest.
– The same thing was said years ago about wages. Only the boss must control wages. Parliament must have nothing to do with it!
– There is no connexion whatever between that subject and these bills. It is obvious, of course, that the central bank must have a fair degree of independence, but, at the same time, the central bank must also be subject to some influence. There must be a happy balance between the authority of the Government and that of the central bank. I suggest that we should be wise to follow the example of Great Britain, where the central bank, which is the Bank of England, is completely independent of government control, but is obliged to maintain certain contacts with the Treasury. I make bold to say that the system of expansion and subtraction of credit in Great Britain has been admirable and in the best interests of the whole community. We should develop the same system and should not embark upon the objectionable system of political control.
My next point relates to the proposal to abolish the Commonwealth Bank Board. In this connexion I direct attention to the following remarks of the Treasurer -
Thu selection of persons who have the qualifications and experience to manage a central bank but at the game time no other business interests in the community, is obviously a difficult if not an impossible task. Most persons with suitable qualifications have other interests which might at times conflict with their duties as members of the board.
He went on to say that the management of the institution should he divorced from people with outside interests. Obviously, everybody who has had any experience in life must have outside interests. Hardly one honorable member of this House lacks outside interests of some sort. How can it be said that this House suffers because of that fact? On the contrary, it gains, because we are able to bring to the consideration of all legislation the experience we have gained in a wide range of subjects. The same principle should apply to the management of finance, which is just as far-reaching in effect, and equally important. Banking and treasury experts will be entirely inappropriate for the proper management of the affairs of the Commonwealth Bank. The Minister for Post-war Reconstruction (Mr. Dedman) pointed out that all the appointees will be officials of either the treasury or the bank itself; therefore, they will be purely technical financial officials. I submit that men of that type are not peculiarly qualified to deal with finance in its wider branches, embracing the whole of the country. I shall give an example, taken from personal experience, which definitely impressed me at the time. While occupying a responsible position in Germany, I received a visit from the chairman of “the big five” - London banks - who made to me an offer to become a banker. He said that my duties would consist of managing a series of foreign branches of those banks on the continent of Europe. The salary offered was far higher than I had ever received previously, or have received since. Naturally, I was not only flattered, but also somewhat intrigued as to the reason why I, who had no knowledge of banking in the technical sense, had been chosen for the position. Eventually, I said to him : “ Why do you make this offer to me, a man who knows very little about the business of banking ?” He replied : “ We have experienced in the higher administration of banking the utmost difficulty in making appointments from the personnel of the banks. They have been brought up on figures, and live a secluded life inside the bank, seeing nothing of the outside world. The wider aspects and implications of banking are completely foreign to them. So, when we want men for the outside function of running the business of the bank in a big way wre select generally men who are outside the ranks of the banks’ officers “. That practice has been followed in the selection of the board of the .Bank of England. Yet we propose to move in the opposite direction, by bringing in officials who, in fact, need not be appointed by statute. If the Treasurer or the Governor of the bank needs advice, he may merely call into consultation one or other of the officials mentioned in the legislation. Why bother to mention them, when all that is needed is advice? These officials will be very careful in the advice that they give, because they will know that they are talking to their masters, not to their equals. A bank board consisting of independent persons who have interests in the community will have the necessary knowledge of the various aspects of business, primary production, commerce and industry. The proposal of the Government will do a very great disservice to this country, as well as to the financial interests in it, and that portion of the bill ought to be altered.
My last point is that this legislation does away with the whole of the backing for the currency. That brings me back to a consideration of confidence. Let us take the analogy of the Constitution. That instrument mentions the actual functions of the Commonwealth Government and lays down lines beyond which the Government must not go and thus encroach on the rights of the States. Why should not lines be laid down beyond which the Government may not encroach on the value of the Australian pound? In order to achieve that end, a limit must be imposed which must not be exceeded except in accordance with a decision of this Parliament. The currency plays a very important part in the whole life of our country, and its value depends on the confidence which the people have in it. I have seen currencies topple at an enormous rate, not because of the volume of credit issued or the value .of notes printed, but because the people had no confidence in the Government and considered that values were being squandered.
I sum up by saying that political control of the banking system is wrong in principle, in theory and in practice; that expert advice in relation to currency and the expansion of credit should be given by persons with a knowledge of the subject and not by Treasury or bank officials; and that if we are to maintain the value of our currency it must have a backing established by law and the ratio so prescribed must not be exceeded except by resolution of this Parliament.
.- In measures of such importance as these banking bills, in which the Government is seeking the Parliament’s approval of the alteration of existing legislation, the House should satisfy itself that not only are the alterations necessary for putting into operation a government policy or programme, but also that the interests of the community are adequately safeguarded. We should assure ourselves that if ‘the safeguards written into legislation by former Parliaments are being removed, either they are unnecessary or the need for their removal far outweighs the risks which might arise from such action. The first and most important point is the intentions of the Government in bringing down the legislation. On that point, we must accept the explanation given by the Treasurer (Mr. Chifley) in his second-reading speech and the language of the bills themselves. Apart from the value of the lessons that may be learned from the mistakes of the past, I am not very greatly interested in the rehash of a lot of the history of banking in Australia. That has often been used in this debate, as well as outside this House, in arguments designed to justify and to condemn the introduction of these measures. We have a lot for which we should be thankful. One cause for thankfulness is our present hanking structure. In the past, we have weathered some ‘ stormy periods and should rejoice in the fact that we have profited by the mistakes that were then made. We should remember that for the last 50 years we have enjoyed the service of a banking system that has been free from failure, and that during the last 30 years both the Commonwealth Bank and the private banks have played a part in that service. The banking service did not grow up overnight, but has been evolved gradually to meet the needs of a growing nation. It has weathered every emergency that has arisen in either peace or war-time. Whatever criticisms may be levelled at the present banking structure, the fact that stands out in bold relief is the stability of the existing system, which has been evolved from the reconstruction that took place after the bank failures of 1893. Many attacks have been made on the Commonwealth Bank Board and the private banks in connexion with the part that they played in the depression years. There must be some justification for those attacks. But there are also some credits in the ledger, which have not been very much stressed. The main complaint is that the Bank Board and the private bankers refused credit to the government of the day, and on that account were responsible for the distress and unemployment that occurred. Historically, that is true. But it is not the whole story, and we must go a little deeper for the cause. The refusal of the Bank Board was not the prime cause and to a degree it was only an effect. The real responsibility for any failure to provide sufficient public finance to carry out the policy of the Government at that time, can be laid at the door of this Parliament, because it had deprived itself of the power to direct the Commonwealth Bank, and when the emergency arose it took refuge behind the excuse that it lacked the power it needed. Ever since that time, the Commonwealth Bank Board has been made a scapegoat by every one who wished to excuse that failure of the Parliament. It was clearly the duty of the Bank Board and the private banks to protect the solidity and the solvency of their institutions and thus prevent a very much wider failure, with consequential distress, wholesale insolvency and the collapse of business in this country.
The depression was not peculiar to Australia, but was world-wide. Reports had appeared in overseas newspapers of banking and business failures. The responsibility for being powerless to raise credit at that time to promote industry and provide work, lies with this Parliament. I do not suggest that the government of the day - the Scullin Administration - was responsible; it was not. I must pay ‘tribute to the right honorable member for Yarra (Mr. Scullin), because he gave soundly considered advice to the Bank Board, after consulting all the
States, and his advice was not accepted. He did not have a majority in both Houses of the Parliament, his advice was overruled, and his legislation was rejected by the Senate. But I do blame former governments which deliberately hamstrung this Parliament by transferring power and responsibility which rightly belonged to it, to the board. Inasmuch as this measure restores that power to where it rightly belongs, I heartily endorse it. When introducing the measure, the Treasurer (Mr. Chifley) said -
The Government must accept responsibility for the economic condition of the nation . . In the opinion of the Government the Commonwealth Bank and the banking system should have done more to mitigate the distress in the depression years … In 1931, in the depths of the depression the Commonwealth Bank and the private banks refused to assist the rehabilitation plan of the Commonwealth and State Governments - designed to relieve acute unemployment and restore industry . . . The present Government is determined to ensure - so far as it is in its power that this will not be repeated . . . Immediately after the war, Australia will be faced with unprecedented economic problems. Banking controls to safeguard the nation from the perils of inflation will be urgently needed. The Government is determined to grapple with this danger and, in doing so, it will take full advantage of the experience that has been gained in operating war-time controls.
Clause S of the bill states that the duty of the bank is to exercise its powers in such a manner as will best contribute to the stability of the currency of the country, to the maintenance of full employment in Australia, and the economic prosperity and welfare of the people. That, in a nutshell, is the policy of the Government. This legislation is designed to prevent inflation, and to relieve or mitigate distress from unemployment.
With the cessation of war in Europe, and with the war against Japan proceeding so successfully, the rehabilitation plans of the Government are becoming daily more urgent. Australia, as much as any other country in the world, has transformed its economy for war purposes. Since 1942, when Japan entered the war. the Commonwealth Government, by the exercise of its powers under the NationalSecurity Act, has directed men, women and resources into war activities. The people are entitled to expect that the Government will accept some responsibility for their protection and welfare during the process of converting our economy back to peace. Because of high Government expenditure for war purposes, there are enormous liquid funds in the hands of the people. For some time after the war, we can expect a shortage of goods and materials, so that there will be present all the elements which make for a rapid rise of prices such as occurred after the last war. This will result in an unfair distribution of goods. Those with money will be able to get what they want. The man who knows a builder will get his house built, while others go without. Unless some control be exercised by the Government, its housing plan, for instance, cannot be put into effect. This legislation will not enable the Government to proceed directly to its goal, but it will enable the central bank, by the expansion and contraction of credit, to assist the Government in using the resources and labour of the country to the best advantage. Even so, the Government will exercise only a remote control over economic activities, and direct measures can be taken only through, and in cooperation with, the State governments. After the war, the Government will face the task of rehabilitating servicemen, many of whom were unskilled boys when they entered the services. If the Government did not bring down legislation such as this it would be false to its trust and to its elections pledges. The Government must do even more than this - it must adopt every constitutional measure possible to solve the problem of rehabilitating servicemen. The first and most important preparatory step is to ensure that its programme will not be hampered by lack of funds, as was the programme of the Scullin Government in 1931. Every State Government could have done something at that time to set industry in motion and to relieve distress, had funds been available. I can never forget that the period of greatest distress coincided with a time when God had been good to us and the seasons were bountiful.
To a great extent it is proposed in these bills to re-enact the provisions of the old. Commonwealth Bank Act. For 30 years, the Commonwealth Bank has operated as a trading bank, and for a part of that time it has functioned as a central bank. It has, in fact, evolved in order to meet the requirements of the nation. The most contentious provisions o£ the bill are the few in which the Government has accepted in an altered form the recommendations of the Royal Commission on Monetary and Banking Systems. Some of the findings of the commission may have appeared revolutionary to those holding orthodox financial views, but they were widely accepted by commercial men. The commission recommended that the will of the Treasurer should prevail over that of the Bank Board if there were - a clash of opinions. The bill establishes this authority of the bank, but it also abolishes the hoard. The commission recommended the abolition of the reserve fund as a basis for the note issue, together with a statutory limitation on the amount of the issue. The Government has accepted the recommendation to abolish the reserve, but it does not propose to fix any limit. The Government’s proposal to retain the special wartime deposits, and to take power to call up all surplus assets of the hank over and above the 1939 figure, is a rather more positive and effective one than that recommended by the commission, namely, that the trading banks should keep with the Commonwealth Bank deposits amounting to a certain percentage of their liabilities for a period not exceeding two years. I believe that Parliament should retain control of the currency so as to be in a position to meet any emergency that may arise. I cannot see any particular merit in the proposal to abolish the Commonwealth Bank Board. It appears to me to be somewhat vindictive and without justification. The reason appears to be that the board was originally appointed by a government supported by the parties now in Opposition. It is true that, in 1931, the board clashed with the government of the day, and, as its opinion was upheld by the Senate, the board prevailed. Not many people doubt that the members of the board acted in accordance with their views as responsible men, yet, it is now proposed that the board shall be abolished. This ignominious dismissal - for that is what it amounts to - of a body of men who acted to the best of their ability, and, as they believed, in the best interests of the bank, cannot be justified. As a matter of fact, the board has a very fine record. The proposal of the Government sets a “new low “ in the treatment of those who have rendered service to the public. The actual membership of the board does not matter. Men are appointed for a period of seven years, and then replaced by others. Men with some experience in trade and commerce are appointed to represent the people in the control of the people’s bank. It has never been claimed that members of the Commonwealth Bank Board are appointed because of their expert knowledge of banking. They are appointed because of their knowledge and experience of various forms of industry, to assist in the management of the bank. They are like windows in a building. They let in light and fresh air from outside.
– The members of the board to-day are different from the members in 1931.
– Yes. The board as such is being abolished. Its members have done a job for the country according to their lights. What they have done may not have suited the Ministry or me, but, on the grounds of common decency, the abolition of the board should be brought about in a better atmosphere. Considering, too, that clause 9 of the Commonwealth Bank Bill provides that where the policy of the bank differs from that of the Treasurer the Treasurer’s policy shall prevail, it should be worth while to retain the board with what virtue or strength its retention may give to the bank. The bill, however, provides that it is to be replaced by a completely unresponsible advisory council composed of officers of the bank and of the Treasury. I can find no added strength or wisdom in that change, or in the provisions relating to the meetings of that body.
– Its members will have no private business interests.
– Yes, but I do not think that the honorable gentleman can say that the Treasury officials, who will draw a salary elsewhere, will have no private interests. They will draw two salaries. I did not intend to raise that, because it does not concern me and, no doubt, they will be worth what they receive. Anyway, if the bank board must be abolished, it could be done more graciously The special accounts provided for in division 3 of the Banking Bill are essentially a precaution against inflation and, as such, may be a valuable adjunct to the powers of the Commonwealth Bank. This power has been used successfully during the period of high war-time governmental expenditure, and, at least, theoretically, it shouldbean effective curb on high governmental expenditure in peacetime. In my opinion, this power will not be required, except as a brake to prevent an orgy of expenditure which could possibly occur with the immediate release of the funds of the trading banks held on deposit by the Commonwealth Bank. Such a situation would be most unlikely to be sponsored by the experienced trading banks, even if there were no such control. But, if the Government accepts responsibility for the stability of the currency, it is wise for it to have the power. There is nothing in the bill to warrant the suggestion that those deposits are to be permanently frozen. The discretion as to withdrawal rests with the Commonwealth Bank, and that discretion may well be the real corner-stone of the central bank. The test whether this power, like many other powers proposed in this legislation, will operate for good or evil will be the test of time. If the result of the administration is evil the Government will he removed.
There are other clauses to which I do not desire to devote much time. Provision is made for housing loans of 80 per cent, of the value of the asset up to a limit of £1,250. A rural credits department is to he created. The Industrial Finance Department is to assist in the establishment of small businesses, and may have some relation to the policy of decentralization of industry. All those provisions may be helpful, but they offer no services which are not already available to the people, and make no addition to the prosperity of the nation. National prosperity depends on the initiative and enterprise of the people, whose production represents the security for the accommodation grantedby the banks. Easy loans cannot be expected from a government bank any more than from a private bank. Easy loans are not a panacea for commercial ills, but may turn out to be poison. Sending good money after bad is not likely to make an unsound enterprise sound; rather will if, make the enterprise even more unsound. The real assistance that a strong government bank can give is in keeping interest rates low and maintaining the stability of primary industries by the wise use of subsidies to temper the cold winds of world parity from which this country has suffered on previous occasions. I am disturbed by a small provision in Part 3 of the Banking Bill, wherein it is provided that the GovernorGeneral may make regulations in relation to the prohibition of the importation or exportation of goods. I should have no objection if it stopped there, but it goes on to say - unless a licence under the regulations to import or export the goods is in force.
This implies the retention of the export and import licensing system. If we are to develop our export trade, as we must, we should aim at removing, as far as possible, all irksome controls. We must make it easy for buyers to buy and take delivery. It may be necessary for a licence to be given in respect of some goods, but there is certainly no need to provide in this bill for that to be done. Export licences are time-wasting, annoying extra processes, which, in a world of keen competition, may turn the scale against Australia getting the order. 1 hope that the Treasurer will amend the clause in order to retain the power, but not stipulate the method.
I, generally, support the principle behind these bills, and I think that the amendment proposed by the Leader of the Australian Country party (Mr. Fadden) would make the legislation more closely follow the recommendations of the Royal Commission on Monetary and Banking Systems, which would leave all the powers desired in the hands of the Government, but retain safeguards which would improve the bill.
– Although I can hardly hope, at this late stage of the debate, to say very much that is new on this most important measure, I can at least approach it from a new angle, for T was senior Minister of the Government, that in 1911 introduced and put on the statute-book the act establishing the Commonwealth Bank, and so can fairly claim to speak with authority as to the aims and purpose of the Government in creating the institution. These were set out by the then Prime Minister and Treasurer, Mr. Andrew Fisher, in his second-reading speech, and, although many references have been made to them during this debate, I hey will bear repeating for they have a very direct bearing on the bill before us. Mr. Fisher said -
The hunk was established to curry on the business of banking; it was not to displace private hunks but to compete with them, to receive money on deposit, to advance moneys on sound security, to buy and sell exchange, to aft as the Government’s bankers, to handle its securities, to float its loans.
The Savings Bank Department was -
To receive the savings of the people, pay the highest rate of interest for the use of their money and to lend it on sound security at tha lowest rate compatible with sound business methods.
Mr. Fisher said ;
There must foe absolute security for all investment, and we propose to meet public requirements at the lowest rates of interest. Our chief aim is not to make profits but to ensure safety and security to depositors, and as the Commonwealth will honour all the obligations of the bank, .it must therefore be as safe as any bank can be. The whole resources of the Commonwealth were behind the bank, both in its trading and in its savings bank activities, but it was to make its own headway.
Mr. Fisher went on to say ;
If this bank is a success - as I venture to say all honorable members hope it will be - the profits in time to come, although small compared with those of the present banks, will be enormous so far as reserve and redemption purposes are concerned.
It is not without interest to note that Mr. Fisher’s references to profits were ridiculed. Even members of the Labour party called him an optimist, but he was not disturbed. He believed in the bank and in its future success, and to the gibes of his critics he replied -
If there was no advantage, depositors would not trouble the Commonwealth Bank, and the troubles of the bank would soon be over. We shall just add this one bank to the others, and see how it is accepted by depositors.
But he was determined that the bank should not fail. He had very definite ideas of what was necessary to ensure success. Although the bank was not to displace private trading banks, it was to compete with them, and this meant that it could not do so with any hope of success unless it were run on sound business lines. Accordingly, the control of the bank was vested in one man, the Governor, a trained banker with wide experience, who was to be absolutely free from political interference. He was to run the bank on business lines. Mr. Fisher wa3 firmly persuaded that this was essential to the bank’s success. He said -
A national bank is a necessity. It will do the Government’s business here and in London better than any other bank could do it. Time and experience will show how its functions for usefulness may bc extended. We can rest assured that if this proposal, which is new in many important features, is a success, all parties will ultimately lay claim to a share of the honour of having brought it into existence.
Suggestions have been made during this debate that the real purpose of the Government was to establish a central bank, or, as Mr. Fisher put it, a bankers’ bank. But, while Mr. Fisher “ expressed the hope that the bank would ultimately become a bankers’ bank “, that was not the immediate, and certainly not the sole purpose which the Government had in view when establishing the bank. It was to be “ a people’s bank - a trading bank competing with private banks for ordinary banking business on business lines “. This Commonwealth Bank, this great national institution, which was sponsored by the Labour party and established by a Labour government, was to’ be run on business lines, that is to say, on the same lines as private banks and other capitalist enterprises. This is surely something over which political parties may usefully ponder at their leisure. There is a lesson in it, from which they may benefit.
The bank commenced operations in 1912. It began in a very small way, for at the end of the first year its total resources of trading and savings banks deposits were only £5,000,000. In its second year, World War I. broke out, and the bank was called upon to show its mettle. The part that it played in this mighty conflict is surely known to the people of the country. The bank not only justified its existence, but its achievements far outran the expectations and hopes of the Government that established it. It raised loans totalling £250,000,000, and financed war-time pools amounting in the aggregate to £437,000,000. It saved the Government millions of pounds in raising its loans and financing its pools. It was a tower of strength to the Government, and a focal point around which all government and voluntary efforts turned. That it won the confidence of the people may be gathered from the figures showing its resources when, after more than four years of war, peace came again to the world. When war broke out in 1914, its total resources were under £10,000,000. When peace was declared in 1919, these had increased to £65,000,000 !
For twelve years, the management of the bank remained under the sole control of one man, the Governor. The first Governor, Sir Denison Miller, was a trained banker, and possessed outstanding qualities. A man of vision, he had a wide knowledge, great courage, initiative, and ripe judgment. His successors, all able men with a long apprenticeship in banking institutions, have continued to manage the bank on the lines laid down by its first Governor. In 1924, the Bruce-Page Government amended the Commonwealth Bank Act to provide, inter alia, for a board of directors, over which the Governor should preside and have a deliberative vote as well as a casting vote. For twenty years the bank has functioned with this board. Its record, since it was established in 1912, speaks for itself. After making all allowances for the transfer of the note issue department, the amalgamation of the Queensland and the New South Wales Savings Banks, and the deposits lodged by the private banks with the Commonwealth Bank, it is a story of amazing progress. The bank has been established for 33 years. At the end of the first year’s business its total resources were £5,000,000. Last year they were £900,000,000! The confidence of the people in this great institution is shown by its savings bank deposits of £300,000,000 ! Whether the growth during the last twenty years under the board would have been as great, or greater than, under one man, is a matter for speculation. But one fact stands out.
This bank, about whose future so many gloomy forebodings were expressed, has mere than justified the wisdom and foresight of those who established it.
The bank flourished without a board, it flourished also with a board. But one factor has remained constant throughout its history. With or without ii board, the bank has been absolutely free from political control. To this we may fairly attribute its success. The bank has been conducted by trained bankers on business lines, free from political control. The bank has become the great national institution that it is to-day because, and only because, it has been controlled and managed- by highly trained banking specialists, free from political control.
The bill proposes to make radical changes. It widens the scope of the bank, creates new departments, abolishes the board of directors and appoints an advisory council, on which the Governor is to be chairman, but in the moulding of decisions, he has no vote. When the bank was established, the Governor was given supreme authority. He decided its policy, and he gave effect to it. He was free from all outside interference, political or otherwise. Under the bill, he will take the chair at meetings of the advisory council, but will have no vote. The other in embers of the council will decide the policy that he is to implement. Even if lie does not agree with it, he must still curry it out.
The bill authorizes a central bank. Now the principal function of a central bank is to stabilize the monetary system and maintain that equilibrium essential to the smooth and efficient working of the complex processes of the national economy. The Central Bank, clothed with the powers necessary to exercise this1 vitally important function, should be directed and managed by an authority entirely removed from, and independent of, political control or influence. Under this hill the Central Bank, the Commonwealth Bank, and all departments of the hank will be for all practical purposes sub-departments of the Treasury. The Governor will remain the titular head of the bank, but on matters of broad policy he will have to carry out the instructions of the Treasurer, whether he agrees with them or not, just as any other officer of the Treasury must do. It is true that, if he takes exception to the policy of the Treasurer, as expressed by the Advisory Council, provision is made for what lawyers would term a “ stay of proceedings to enable the Treasurer to give a life-like imitation of a man reconsidering his policy. But that is all stageplay and when the Treasurer intimates to the Governor that he stands firm on his policy, “ for which the Government accepts full responsibility “, the Governor has no alternative but to carry it out.
This hill places the bank, with its immense resources and its dominance over the credit structure of the Commonwealth, completely in the hands of the Government. This is not compatible with the well-being and progress of the community; on the contrary, it threatens to undermine the foundations upon which the stability of our financial and economic systems rest.
I must make my own position quite clear. I believe in a Commonwealth Bank - a bank owned and controlled by the people. Finance should be the handmaiden of industry, not its master. National credit should be made available for national purposes. It should, be used to develop our resources and to ensure the maximum output of industry and maximum employment. National credit should be made available for the purposes of post-war reconstruction, housing, irrigation and water conservation, standardization of railway gauges, land settlement, &c. But I am opposed to handing over the resources of this great treasurehouse of the Commonwealth Bank to the Government, leaving it free to scatter largesse among its supporters, to make millions available for any scheme, good or bad, backed by influential supporters, and to nationalize any industry that caucus or the executive of the party may deem expedient.
This Commonwealth Bank, great and powerful as it is, this bank whose stability has withstood the shocks andstrains of war and of economic depression, would collapse like a house of cards if it lost the confidence of the people. Confidence is the rock upon which its towering structure rests. Shatter that confidence and all its millions are in danger. of becoming as valueless as shrivelled leaves. Freedom from political control is vital to the very existence of the bank and of the financial and monetary structures that it sustains. Mr. Fisher made it quite clear that the Commonwealth Bank was “ not an. ‘’ idealistic ‘ bank, but a business concern “, and, speaking in the same debate, I said -
There is no “ wild oat “ element in this bill. We set down in black and white what the bank’s functions are. The scope of the Governor’s powers are precisely delimited; he is placed above the power of any party influence; put in a position to exercise authority . . . that being so, the Governor is asked to make the best he can of the business. He will have behind him the credit of the Commonwealth, of which nothing can rob him.
But under this bill, the Governor, who, in 1911, was given supreme control of the bank and securely protected against political interference or influence, becomes a mere subordinate, compelled to give effect to a policy formulated by the Government.
I was opposed to direct political control of this great national bank in 1911; I am opposed to it to-day. But I am not less opposed to the control of credit and finance being monopolized by great private institutions. That was why the Government of which I was a member established the Commonwealth Bank. But this bank, established to protect the people against, powerful financial interests, is now to serve party and sectional interests, over which the people can exercise no effective control ! This bank, which has served the people so well, should be free from political control.
.- It was strange to hear the right honorable member for North Sydney (Mr. Hughes), who was associated with the establishment of the Commonwealth Bank in 1911, and who know<s so much about its origins, declare that he is opposed to the Government having control over the institution. In 19.11, the right honorable gentleman was a member of the Labour party. In fact, he was a Minister of the Fisher Government, which established the Commonwealth Bank. It is necessary for us to call this fact to mind in order to put the true value on his remarks to-night. Unfortunately, as time has passed, the right honorable gentleman has “ doubled “ the roles of Dr. Jekyll and Mr. Hyde on many occasions. Even to-night he made some eulogistic remarks concerning the place that the bank took in its early history. He had to admit that the bank did a great deal during the last war to assist the Treasurer of the day to finance the war operations. We have been reminded frequently in this debate of the wisdom of the Fisher Government in appointing Sir Denison Miller to the office of Governor of the bank. The bank remained under a governor until it was betrayed by the BrucePage Government in 1924. It was at that time that political influences were imparted to the bank’s operations. The Bruce-Page Government did not even appoint to the bank board persons of adequate banking experience. Some of the appointees, as a matter of fact, had had no banking experience whatsoever. I recollect that one man who was appointed to the board, Mr. Ashton, of New South Wales, said - “ I do not know the first thing about banking, but I am a pretty good polo player “. It was at that period that the bank became, to a considerable degree, the instrument of the private banks and of vested interests. Early in 1923 the Bruce-Page Government, on ascertaining that Sir Denison Miller was opposed to the appointment of a bank board, did a little political kite-flying in different parts of the Commonwealth in order to attempt to gauge the public mind on the subject. However, it was not prepared to enter upon a contest with Sir Denison Miller. Mr. Bruce, who was then Prime Minister, went so far in a statement that he made on the 8th March. 1923, as to deny that there was any truth whatever in rumours that the Government proposed to place the bank under a board of directors. He said that the reports were quite without foundation. Unfortunately for Australia Sir Denison Miller died on the 6th June, 1923, and shortly afterwards Mr. Bruce visited Great Britain as the representative of the Australian Government at an imperial conference. While he was there he took the opportunity to consult with the Bank of England and other financial interests concerning alterations in the control of the Commonwealth Bank.
On his return to Australia he introduced a bill which provided for the discontinuance of the control of the hank by a governor, and the substitution of control by a board of directors. This is the first opportunity that the Labour party has had to correct that serious departure from the original charter of the bank. I am sure that the people of Australia will be glad that at last this great institution, which has served Australia so well, will he restored to its original management.
Last night the honorable member for Barker (Mr. Archie Cameron) discussed at some length the alterations that have
These figures indicate clearly that, comparatively, our position is sound, especially in relation to public debt and note issue. In regard to the note issue I point out that during the last few years we have had in Australia many thousands of American troops who, as is generally known, arrived here with their pockets filled with rolls of American bank notes. The use of this money has had a great influence upon our own note issue. The position of Australia in relation to shortterm treasury-bills is different from that of the United Kingdom and the United States of America, and that must be taken into account in considering the figures.
The honorable member for Henty (Mr. Coles) revealed, in his speech this evening, that he was worried about the intention of the Government to discharge the Commonwealth Bank Board. He said that the board had done a very good job for Australia during the war. I agree occurred, during the last five years, in Australia’s financial structure. Everybody except the honorable member id fully aware that throughout that period the country has been at war, and that war conditions have greatly affected the financial position of not only Australia but also many other countries. In view of the remarks made by the honorable member on this subject, I asked the Treasury officials to provide me with certain figures relating to our financial position compared with that of other countries. I have pleasure in conveying to the House the following revealing particulars which were made available to me: - with the honorable member, but I remind him that the members of the board have been well paid for what they have done. We must bear in mind also, that our service personnel, who also have done a magnificent job for Australia during the war, will be discharged on the cessation of hostilities. Many other workers who have been engaged in war activities of one kind and another, will likewise be discharged. They too, no doubt, have done an excellent job for their country. I cannot see any reason, therefore, why the honorable gentleman should be perturbed because the bank board will be discharged. The board is to be replaced by an advisory body of experts. I am quite sure that the honorable member for Henty would never dream of employing any one in a position of responsibility in his business who was not well informed on salesmanship and stock requirements in the various departments. As he employs only experts in positions of responsibility, I cannot see that he has any. ground for complaint because the Government is proposing to adopt the same practice in connexion with the Commonwealth Bank. It can be taken for granted that i»sitions on the advisory board will be given to persons with experience of banking and not to social butterflies. Social position will not count. Who should be in a better position to advise the Treasurer on the operations of the bank than persons who, by years of study and practical experience, are well informed on the banking business?
I intend to make a few remarks about the attitude of the Australian Country party towards this legislation, and therefore, regret that neither the Leader of that party (Mr. Fadden) nor even one of his followers is at present in the chamber. The right honorable member referred, in his speech, to the closing of the Government Savings Bank of New South Wales, and remarked that it was significant that the only financial institution that had to close its doors at that period was a Labour-controlled institution. We all know, of course, that that bank was closed for purely political reasons.
– The Royal Commission on Monetary and Banking Systems reported to that effect.
– That is true. The statement of the right honorable member that no other financial institution had closed its doors was incorrect. He forgot to mention two Queensland institutions, the Federal Deposit Bank and the Primary Producers Bank of Australia Limited. The right honorable gentleman did not refer to them; he referred only to the institution which was closed for admittedly political considerations.
I cannot understand why members of the Opposition should be so greatly incensed that this Government is taking steps to give effect to the financial policy of the Labour party. We have very vivid recollections of what took place while the Scullin Government was in power in this House, but regrettably was in a minority in the Senate. Unfortunately for this country, there was external borrowing during the last war,, and subsequently during the regime of the Bruce-Page Government, which did not want to increase the structure of the Commonwealth Bank.
Because of the interest that had to be paid on huge overseas debts, Australia was caught firmly in the grip of international financiers, who attempted to dictate the policy of the Government. We have heard a great deal about the nonpolitical character of the bank board. The Scullin Government appealed to that board for assistance to enable this country to weather the depression., and this House passed legislation for the provision of a fiduciary note issue of £18,000,000, the intention being to devote £6,000,000 to the assistance of the primary producers who were becoming destitute and £12,000,000 for the relief of unemployment. When the measure was before the Senate, the Chairman of the Commonwealth. Bank Board, Sir Robert Gibson, was called to the bar of that chamber. He was asked by Sir George Pearce whether there had been consultations with the Bank of England in connexion with financial policy in this country, and his reply was that the Commonwealth Bank was in continuous communication with the Bank of England on all matters affecting the credit of Australia overseas. This reveals the reason for the visits by overseas financiers to this country, and their attempts to dictate the policy of the Government. One of the sound achievements of the present administration during, this war has been the raising of all loans internally instead of externally. All the interest on that borrowed money will be distributed among the people of Australia, instead of being sent overseas. Is it not time that we rid ourselves of the dictation of international financiers? If we can expend as much as £500,000,000 a year for destructive purposes, surely we can afford a substantial expenditure on constructive purposes in peace-time! What will be our fate otherwise? When the War against Germany and Japan was at its height two years ago, we heard many references to a new order for the world. Now that the war in Europe has terminated, and the struggle in the Pacific is reaching its climax, those who had so much to say about a new order are proving by their actions that their desire is to maintain the old order, under which the rich become richer and the poor poorer. The Government hopes that this legislation will prevent such an occurrence. The Minister for Post-war Reconstruction (Mr. Dedman) quoted on one occasion an interesting paragraph from a report from a bank manager in Australia to his general manager overseas, which revealed that private banking interests in this country were appealing to their principals in Great Britain to provide from £20,000 to £30,000 a year for propaganda in the fight against the Government. Perhaps I had better place on record further statements from the report, so that they may be referred to in the future, particularly for the benefit of the honorable member for Barker (Mr. Archie Cameron). They are these -
The fact that we now have a Federal Government which is avowedly not favorably disposed toward the trading banks, and an Opposition which is uncertain and disunited, is a matter for grave concern. But the further fact that the financial issues on which Labour based its attack on the late Government were not submitted to the determination of an election may be a matter for graver concern from the banks’ long-range point of view. Complacency about what the Government can or cannot do because leaders are strategically cautious is to misread the situation. . . .
He was very well inf ormed.
For the present, though it will implement every fraction of the agreement made between the Fadden Government and the banks, Labour proposes to choose its own time and ground for any further radical move, lt knows exactly the nature and extent of the differences of opinion which exist among members of the Opposition as to what “ appropriate amount “ of central bank credit means. T.t will test these differences and exploit them. Labour will also not gamble on the Senate. Its intention is to build up confidence in itself by a moderate policy and a vigorous war effort. As this succeeds it will promise popular social reforms. . . .
If the trend of events can be directed as the leaders propose, the Government will endeavour to avoid making financial policy a major issue at the next election, lt will prefer to depend upon a process of attrition probably administered under National Security or War Precautions Regulations. . . .
This has proved successful during the war. Why should it not prove equally successful in peace-time? That is all that the banking legislation proposes to effect.
Owing to its importance it is worth while to consider what it is in the mind of Labour that determines its attitude toward the trading banks. I speak from four and a half years’ experience consistently addressing meetings on principles and methods of finance. A large proportion of the 700-800 meetings addressed were preponderantly Labour.
The great mass of organized Labour, apart from the union leaders, is undoubtedly, inarticulate and uninformed. To charge Labour, as such, with being subversive in its attitude is a mistake which makes understanding impossible. Primarily the great mass of Labour has two immediate objectives - to improve its own lot by securing the highest wages possible and to prevent unemployment. In the masses those two objects almost amount to instincts. They form the background of every political Labour appeal. To achieve these primary objectives Labour has been taught to believe that it must do two things - secure the power of government-
It has done that - and completely control the financial system.
That is what the Government proposes to do by this legislation -
It has an almost devotional faith in .the Commonwealth Bank as the nation’s bank, though it believes that a Bank Board appointed by its opponents has robbed the Commonwealth Bank of most of its power.
That is what we all believe -
Against this it has been taught that the trading banks have too much power, that they can create or destroy credit at will. By this they understand that the trading hanks exercise almost omniscient control in the contraction or expansion of production and distribution. Second only to this is the belief that the banks are chiefly concerned with the interests of big business and the maintenance of that form of government opposed to the worker’s welfare. . . .
To organized Labour must be added a very large body of unorganized supporters such as clerks, typists, shop assistants, semiprofessional employees, teachers, &c. And it is proverbial that the great majority of civil servants support Labour’s policy. We may also note here that a number of the new departments created . since the war began have, in spite of some of the large salaries paid and their professional character, strong Labour leanings. . . .
Everybody can see the trend of his thoughts -
It is not my desire to exaggerate the gravity of the situation by adding more to the list, but I cannot omit mention of the growing diversity of opinion as to methods of financing the war among a great portion of the middle-class people whose incomes are nowbeing severely tapped, and who, in the past, have been mainly conservative in their views. It is not an uncommon thing to find within the ranks of business men, perhaps, mostly retailers or wholesale merchants, advocates of what cannot be described as other than direct and uncontrolled inflation.
Despite the outbursts of the Opposition, the Government has controlled inflation admirably, and it intends to prevent deflation after the war -
When we come nearer to that side of the politics which in the past has given its support to governments committed to the preservation of the present system we find that here too there is considerable diversion. This is probably not quite so evident in Victoria, but in New South Wales not one but a number of parties, magnetized by expansionist ideas, seem to exist, all claiming to belong to the same side.
The next paragraph reveals the reason for the formation, of, the new Liberal party ; it if co counteract radical views and conserve the future welfare of the private hanks and other big vested interests. The letter proceeds -
A new party is in course of creation in New South Wales which proposes to incorporate expansionists of varying degrees. From the reports which I have received, its leaders will comprise some of the members of the United Australia party in that State who favour very liberal measures of inflation. Some of the leaders are influential in business and other places and are using that influence to. build up a trend toward radical policy. They have small sympathy with the trading banks. Indeed, a number do not burke at straightout nationalization. The majority would not associate themselves with that word, but the ultimate result of their proposals would amount to little less. This party is as yet in the embryonic stage but it is definitely taking shape and promises to play a big part in the future political situation in New South Wales.
Summarizing the present situation, the following points can be enumerated: - 1: We have a Labour Government in power, behind which there are strongly organized powerful forces itching for the opportunity to make effective policies of financial reform which they have nursed for many years. The fact that the great mass of Labour electors are inarticulate and uninformed is of little account when they are thoroughly organized in their various unions and thereby capable of wielding a vast united electoral influence.
The leading members of the Labour Government are strategically more cautious and experienced than when last in office. Moreover, they are quite equal to if not more intelligently alert than the average of the members of the late Government.
The Government may follow a moderate policy through taking advantage of the agreement between the late Government and the banks to implement its policy to the fullest extent possible. When the opportunity occurs, and the war situation is sufficiently propitious, the Government will seek to get a double dissolution on a domestic issue.
Tho attitude of Labour toward the trading banks is determined by its belief that the trading banks are the citadels of “all power” to secure which would transfer to Labour the power to determine its own destiny and enable it to satisfy the primal instincts for better conditions and full employment.
In its attack upon the banks, Labour is very strongly supported by a large unorganized portion of the community comprised of what may be termed the “ white collar brigade “ and also, for their own purpose, by social creditors to whom social credit has become a religion.
Certain sections of the primary producing interests, more particularly the wheat industry, show definite signs of an inclination to support monetary reform measures.
Quite a, large number of middle-class and business people exhibit opinions highly critical of the financial system in the belief that changes are necessary.
Within the United Australia organization in the different States there is a considerable diversity of opinion as to the appropriate application of financial methods both in war and in peace, and which in themselves have a tendency to follow very radical lines.
In New South Wales, political parties, apart from Labour, are developing symptoms highly dangerous to the financial system.
In support of the foregoing outline of the present situation, one has only to refer to the running fire of criticism aimed at the banking system in the press, in Parliament, in a variety of associations representing different grades of society, a-nd in the disposition of religions organizations, in their urge to solve social problems, to pertinently question the construction of the present financial system as if it were the chief cause of poverty. These are evidences of a ferment of suspicion working underneath.
This ferment of suspicion cannot be ignored. It must be tackled boldly and positively if it is to be prevented from permeating the whole of the community. To merely defend the system as in the past will, in the writer’s opinion, not meet the problem. A positive form of direction is needed. This direction might have been given by the late Government right from the commencement of the war. Suspicion could have been greatly allayed by an authoritative statement or, if necessary by progressive statements of an educative character by the Government itself. Considering the urgent nature of the Government’s war programme and the need that the Government should take the people into its confidence as to why it was necessary to do certain things by means of authoritative publicity, one is surprised at the meagre amount of real educative work the Government did during its term of office. One can only apply the word “appalling” to its lack of publicity sense in its own interest in this regard. Even in Parliament itself during the debate on the Fadden budget it did not give an effective reply, though one was certainly available, to the charge that the agreement between the Government, the Commonwealth Bank and the trading banks presented to the trading banks an opportunity to make big profits out of the financial exigencies imposed upon the country as a result of war. The inference drawn by Mr. Curtin, that the Commonwealth Bank Board had failed in its duty by presenting to the trading banks such an opportunity to profit through credit inflation provided by the central bank, was sufficiently ingenious to create the impression of a sinister alliance. This was fully exploited by Mr. Curtin’* supporters and has left a bad impression on the mind of that section of the community which follows these things in the newspapers rather closely.
As to the problem now facing the banks, it is the writer’s suggestion that a broad publicity scheme, designed to reach and influence every section of the community should be determined. It should aim to cultivate friendliness and goodwill, correct false impressions, combat criticism, explain banking and its services, and by skilfully prepared material help the public to a more considered opinion on methods of finance as they affect the welfare of the community. Though privately owned, the banks could in this way assume the mantle of a public utility in their attitude toward the community. ‘J he scope for such a form of publicity is nation-wide. The banks must become institutionally minded in their attitude towards this.
The mediums available are also nation-wide. The radio, the press, literature, pictures, monthly journals, all could be used to carry the simple story attractively and interestingly told. Every branch could carry the story of goodwill, confidence and justification for existence.
The organization necessary to carry out the scheme would need to be carefully designed. Directional publicity officers, journalists, lecturers, radio experts, and accomplished exponents of banking, all would find their place, in part or wholly, in such a scheme.
The cost would be virtually the price of advertising, justified, not only in the interest of the community, but also in preserving and increasing the business of the banks.
Above all, such a scheme skilfully carried out would build up a solid spirit of public relationship few governments would venture to destroy.
The private banks sent out to their clients a sample letter which they asked should be copied in the handwriting of the recipients and addressed to their federal members. I received only S6 of the 70,000 copies of the letter circulated in my electorate, but I also received a large correspondence in support of the Government’s proposals. It will thus be seen that this propaganda did not have much effect on the people generally. It is evident that the writer of that letter was a well-informed person who realized that the people were demanding bank reform. I have here the latest Stock Exchange list which quotes bank shares at the highest price permissible under the law, indicating that the Government’s banking proposals have not adversely affected these stocks. The Government is doing the right thing in bringing down this legislation. It is a first step towards full control of the banks of this country. I hope that the Labour party will be returned to power in Great Britain at the forthcoming elections, because it proposes to take control of the banks in that country also. The men who return from the war will demand in the future something better than this country was able to offer them in the past. The new order must come, and economic security must be guaranteed to all those who, during the depression, were denied the right to work.
– Practically everything that can be said either for or against this measure has already been said. ‘Several honorable members opposite have declared that if these bills are accepted Parliament will lose control over banking policy. I take the opposite view. I believe that Parliament, through the Government, will have a greater measure of control over banking policy than ever before. The power ofl the Commonwealth Parliament to make laws in respect of hanking are clearly set out in section 51 of the Constitution as follows: -
The Parliament shall, subject to this Constitution, have power to -make laws for the peace, order, and good government of the Commonwealth with respect to -
Currency, coinage and legal tender.
Banking, other than State Banking; also State Banking beyond the limits of the State concerned, the incorporation of banks, and the issue of paper money.
I have quoted, those provisions because 1 desire to refute a lot of lying propaganda designed to make the people believe that the rejection of the recent referendum proposals denied the Government power to legislate in respect of banking. The Commonwealth Parliament has always had that power, but has exercised it only to a minor degree. I can remember former Treasurers and governments going cap in hand in all humility to the private bankers and pleading for loans with which to finance various undertaking’s, and thus give effect to the mandate which they have received from the people. They were often rebuffed by the money masters, and left to make the best excuses they could to their disappointed and thwarted electors. Is that democracy? I say emphatically that it is not. It is the antithesis of democracy, and that is why the present measure has been demanded by the people for years past. The intelligent majority has been looking for something like this legislation for a long time, something which will remove those obstacles that have impeded the progress of the country and the improvement of our living standards. The experience of governments in the past is almost exactly paralleled by the experience of thousands of humbled but equally credit-worthy individuals who have been brushed off by the lending institutions in a similar way. I am reminded of the words of the Scottish poet, Burns, who wrote -
I’ve noticed on our Laird’s court day
And mony a time my heart’s been wae,
Puir tenant bodys’ scant of cash
How they maun stan the factor’s snash
He’ll apprehend them, poind their gear,
Stamp and threaten, curse and swear,
While they maun stand wi’ aspect humble
An’ hear it a’ and fear and tremble.
The dominance of money and finance has held sway over the lives of men and women for centuries. Through ignorance we have allowed it to do so. Through ignorance carefullyfostered and halftruths, aye, and full-blooded lies, cunningly disseminated, we could still go on suffering under this refined economic slavery, hut I trust andbelieve that at least the majority of the people of this good land are now prepared to back the progressive element in this Parliament in a step, and it is a moderate step, too, to throw off the bondage of ignorance insofar as national finance is concerned, and to make money the servant and not the master of the people and their Governments. It is far too late now to regard the Commonwealth Bank, nationally owned and controlled, as an experiment. It is a monument to its founders. I pay tribute rto that great spirit, Mr. King O’Malley, a former Minister of the Commonwealth, for his vision and untiring labours which brought it into existence against the fiercest opposition from the vested interests of this country. The Australian people owe him a great debt of gratitude, his name will go down in history and he will long be remembered for the service he rendered to this country.
– Mr. O’Malley is a great believer in private enterprise.
-So am I, but I do not believe in private enterprise controlling the legal tender of this country in its own interests and not in the interests of the nation. There is much ill-informed criticism and opposition to the present proposals. Some of this is based on political grounds. Because the amending legislation is brought inby a Labour Government, it is regarded as suspect and therefore is opposed. There has been a certain amount of soft-pedalling by members of the Opposition. They had praise for some aspects of this legislation, but there was “ a nigger in the wood pile” because there had tobe one. Indeed, I fear that its chief fault in the eyes of the leaders of the party of which I am a member is that it is introduced by a Labour Government. This is exemplified by the fact that at Country party conferences for years past we have carried resolutions asking precisely for what this legislation confers. Yet at Country party conferences this year, party leaders have been instrumental in persuading delegates, if not to reverse their previous policy, at least to modify it to meet political expediency. For example, at the New South Wales Farmers and Settlers Conference in 1944, the following resolution was carried by a large majority : -
That conference supports strict control of banking to ensure that banking policy will best serve the interests of the people.
The correctness of that resolution is vouched for by Mr.R. A. O’Neil, an executive councillor of the Farmers and Settlers Association of New South Wales, in a letter published in the Melbourne Age of the 27th April, 1945. I do not know whether the association has rescinded that policy or not, but I rather suspect that it may have modified it in some degree. The Country party organization in Victoria at the 1944 (conference carried the following resolution, also by a large majority: -
In view of the overburden of taxation that lis ‘being imposed on the community by reason of wai- obligations this conference believes that it is imperative that the Commonwealth Bunk be restored to its former charter to relieve this burden of taxation and for the rehabilitation in the post-war period..
In the two resolutions I have just quoted you have expressed the real desires of the rank and file of the Australian Country party in both New .South Wales and Victoria) and> despite any modification of that policy which may have been induced subsequently, I am satisfied that ;the great majority of. Australian Country party supporters are solidly behind the present legislation. I do not need to state that the Labour movement as a whole is behind banking reform and has been in the forefront of the fight for it. Further, amongst the elements that usually support the present Opposition party in this and other Parliaments are large numbers of thoughtful men and women who also support banking reform. They realize the dangers of the uncontrolled private ban’king system as we have known it in the past. All these things being true, I ask myself, “ Who are the people opposing banking reform ? “ and answer by saying, “ A noisy but powerful minority plus a number of tory die-hards who oppose every reform movement “. The demand for banking reform is worldwide to-day. The Government of New Zealand, I understand, has found it necessary to make a further step forward with proposals to take over the complete control and ownership of the Bank of New Zealand, in which it already holds a major interest. In ‘Canada there is a rapidly growing body of public opinion demanding drastic changes in that dominion’s banking system. It will be interesting to note how the reform groups in that country progress at the forthcoming Canadian elections. Already in Canada important progressive changes are taking place in banking practice, despite the fact that all the trading banks there are owned by private companies. For example, I refer to the recent provision of large export credits to facilitate and encourage that country’s export trade an all sorts of goods, both primary and secondary. I have advocated for years this policy of export credits for Australia. It is, in fact, a variation of the principle of lease-lend, and,) if wisely and scientifically applied, it can, I believe, he as helpful to progress and economic safety in peace-time as the lease-lend scheme has been in war-time. In Great Britain and in Europe the trend is either towards strict government control or straight-out government monopoly of banking. In my view, banking practice should never be allowed to remain static : it should be flexible, and readily adjustable to the ever-changing conditions which occur in all countries of the world. That does not mean that the quality of stability of currencies would be threatened with recurring fluctuations of value, but, on the contrary, that such- adjustments would actually ensure the highest degree of financial stability by means of scientific control and adjustment as and when it became necessary. All the dire croak.ings of those who are opposed to this legislation are mainly based on what might happen or what could happen if an abuse of power were to occur. I dismiss these arguments because I believe that ample safeguards are provided in the Constitution and in the Parliament itself to cover any such contingency. Parliament and the people must be given the opportunity to rise superior to the power of. money owned, controlled or cornered in the interests of private profits alone. Human and national considerations must become paramount if Australia is to advance, and the fruits of victory and the sacrifices of the war are to be secured to the people.
A good deal of word, play has bee* made with the term “ nationalization of banking” in connexion with these bills. As the Prime Minister has truly said, the question of1 nationalization of banking does not arise in this legislation. Whilst the Commonwealth Bank is to extend its. activities to most of those phases of banking now carried out by the trading banks and in competition with them, everybody will have the free choice of doing their banking business with whatever bank he chooses, and it will, 1 think, be found that no really perceptible change in existing banking facilities will actually be apparent to the average citizen. There will, however, I hope, be important changes from the national point of view. Never again should we see important national development impeded or held up through lack of money. Never again should we see the tragedy of hundreds of thousands of worthy citizens unemployed and degraded by idleness in a land like Australia so blessed with everything necessary or essential for human happiness and a reasonable standard of comfort. This legislation points the way to wider horizons for the Australian people. It can also open the door to better and saner relationships with kindred peoples of other lands. It is, in fact, necessary if we are to give effect to the ideal of the four freedoms to which we have pledged ourselves. To rebut the charge that this legislation involves nationalization of hanking, I quote from the London Times of the 13th March last in which is published a report ofl a meeting of the hoard of the Bank of Australasia. The chairman, Mr. D. F. Anderson, said -
The Commonwealth Government has recently announced its intention of acquiring full control of the Commonwealth Bank, using it as an active competitor for the business hitherto carried on by the trading hanks and by giving permanence to the war-time controls over these latter. The Government does not intend to nationalize the trading banks.
There are many other aspects of uncontrolled private banking to which this House might well give its attention, and again I quote from a comment in the London Times made earlier in the war under the caption “ Modern Finance “ -
Our financial and economic authorities have been staggered by the “ miraculous feat “ of Nazi finance. The achievement has been so surprising that, for a long time, outside critics were inclined to regard it as an optical illusion. So far, Germany seems to have had no serious difficulty in financing the war. Nothing is ever heard of the necessity for increasing taxation, compulsory savings or the issue of enormous war loans. Quite the contrary. Recently, one important tax was abolished. Hitler seems to have discovered the secret of making something out of nothing, and to have evolved a system based on perpetual motion. These changes may well call for drastic readjustment in our established conventions. A hidebound persistence in methods and doctrines which were sound 50 years ago may easily prove as costly in the financial and economic field as in the field of actual war. It might not lose the war; it would almost certainly lose the peace.
The last words are ominous. They point to the most vital consideration of all. I realize that this new financial power discovered by Hitler was put to the most diabolical uses, but it could equally have been used by him for the noblest and most worthy humanitarian purposes. Therefore, I hope and believe that whatever powers this, legislation may confer will he used in that way. When we think of what American and British industry and their associated private banking firms did in the pre-war years to finance and supply Germany with money or credits and military equipment, can any honorable member honestly justify a policy other than one of definite control by the Parliament of such an important function as banking and the disposal of credit internationally ?
– ‘Control will be political, and will not be exercised by the Parliament.
– I disagree with the honorable gentleman. I believe that the Parliament will exercise the control, and time will prove that I ann correct. The private manufacture and export of arms and military equipment of any kind should be banned by every peace-loving nation. To date, I have seen no proposals emanating from the assembly of nations at San Francisco to this effect, and I regard this omission as being of great significance.
I have heard of great emphasis being placed on the principle of full employment, upon which, I understand, agreement has been reached at San Francisco. This is good as far as employment is necessary ; but employment is not an end in itself to be striven for regardless of other related considerations. Yet I shall never forget the miseries and human suffering which I witnessed in this country through unemployment during the years to which we now refer as the period of the depression. Added to this was the vast economic waste of those hundreds of thousands of idle men and women for whom this or the State parliaments apparently could do nothing except provide a pittance known as the “ dole I remember an occasion in this chamber when the then Leader of the Opposition, Mr. Curtin, sought to persuade the Treasurer of the day to provide £200,000 of , £300,000 in order to create jobs for the unemployed at Christmas. I still become angry when I recall his reply that the money couldnot be found.
The situation at that time was aptly summed up by an Irish writer named Eimar O’Duffy, in these words -
The Banker in his counting house, counting out his money.
The land was overflowing, with bread and milk and honey.
The shops were full of good things, the factories likewise.
The Banker shut his books and said, we must economise.
Sing a song of plenty, a planet full of fools. Everybody starving, by sound financial rules.
If in those days the Government had had sufficient economic knowledge and sufficient moral courage to challenge the existing order, there need have been no extended business depression, no thousands of impoverished and bankrupt farmers, no real unemployed and, may I add, no housing shortage in Australia to-day. A few years ago, I noticed an advertisement by the Australian Mutual Provident Society, and it cause me to reflect on the tragedy of the statements that it contained. I shall read it to the House -
Only Five will Prosper - Will You?
Mere are some figures to make men “furiously to think”. Judging by past experience, we infer that the following will be true 40 years hence: Of every 100 healthy men now 25 years of age -
One only will be wealthy;
Four will be well-to-do:
Five will still be working for a living;
Thirty -six will be dead;
Fifty-four will be dependent on relatives or charity.
What a terrible admission to make in an advertisement for life assurance. It is a dreadful condemnation of the system which allows such a condition of affairs to exist in a country like Australia. I look to this legislation to correct that position, so that never in the future, when a similar statistical review is made, shall we have to admit the existence of such a dreadful position.
I now desire to refer to the Mortgage Bank Department of the Commonwealth Bank, which is re-enacted in this bill. The Treasurer should be told that the department has not functioned in the way in which many people hoped that it would. The department has not met the real needs of the majority of primary producers because of the very rigid and conservative security policy adopted by the bank, and this part of the bill should be amended accordingly. The rate of interest also is too high for this class of loan and might well be reduced to 2 per cent., on a basis of 80 per cent, of the valuation. At the time the original Mortgage Bank Bill was introduced in the House, the Treasurer admitted that to be of effective use to farmer borrowers who were desirous of refinancing, a complementary scheme of farm debt adjustment and reconstruction would be necessary. To indicate the impact of interest rates on debt finance, I quote the following figures : -
At 2 per cent, capital doubles in 35 years.
At 3 per cent, capital doubles in 24 years.
At31/2 per cent, capital doubles in 21 years.
At 4 per cent,capital doubles in 18 years.
At 5 per cent, capital doubles in 14 years.
At6 per cent, capital doubles in 12 years.
At 7 per cent, capital doubles in 10 years.
At 8 per cent, capital doubles in 9 years.
At 9 per cent, capital doubles in 8 years.
At 10 per cent, capital doubles in 7 years.
Housing loans are an important feature of this bill and a welcome innovation for the Commonwealth Bank to engage in, but again I direct attention to interest charges. If the rate on housing loans is to be based on present levels, then the purchasers will pay in all over the extended period of the loans a total amount which will be in the aggregate about double the original purchase price, or even more. I commend to the consideration of the Government a plan which has been sponsored by a Melbourne co-operative group for the allocation of a substantial lump sum of money, to be used in perpetuity for a housebuilding scheme for certain classes. We could build a stated number of homes with that sum of money, and, as repayments of the principal were made, we should have further finance with which to carry on building with interest-free money in the future. For the lowest wage-earners of Australia, assistance of this nature would be most beneficial. I commend the subject to the Government for consideration.
The time at my disposal does not permit me to refer to many aspects of this bill in the detail which is warranted, so I must reserve my further comments for a later stage. However, one thing emerges clear in my mind. The bill gives considerable powers to the Commonwealth Bank, and in an important degree to the Government. Such powers can be used or left dormant. The usefulness of the measure will depend on how its provisions are applied. If used wisely, the bill can be the modus vivendi to usher in a new era of progress and development in Australia that could he an object lesson to the rest of the world. The important point is whether the Government, having taken this power, will use it. Some reserve of power has existed under the Constitution for years, but no government has been prepared to utilize it. I hope that when this measure is passed, as it no doubt will be, it will not be allowed to remain dormant, but that all of the benefits that can accrue under it will he given effect as quickly as possible. A former president of the United States of America, in one of the noblest and truest statements ever made, said -
Money is the creature of law, and the creation of the original issue of money should be maintained as an exclusive monopoly of national government.
Government possessing the power to create and issue currency and credit as money and enjoying the right to withdraw both currency and credit from circulation by taxation and otherwise, need not and should not borrow capital at interest as the means of financing governmental work and public enterprise. The Government should create, issue and circulate all the currency and credit needed to satisfy the spending power of the government and the buying power of consumers. The privilege of creating and issuing money is not only the supreme prerogative ‘ of government but it is the government’s greatest opportunity. By the adoption of those principles, the long-felt want for a uniform medium will be satisfied. The taxpayers will be saved immense sums in interest, discounts and exchanges. The financing of all public enterprise, the maintenance of stable government and ordered progress, and the conduct of the Treasury will become, matters of practical administration. The people can and will be furnished with a currency as safe as their own government. Money will cease to master and become the servant of humanity. Democracy will rise superior to the money power.
Those are the words of Abraham Lincoln. I also remind honorable members that the late President Roosevelt, perhaps the greatest President the United States .of America has ever had, when sponsoring the lease-lend legislation in that country, remarked : “ Cut out the dollar sign and financial nonsense “. I hope that the Government will go forth courageously in giving effect to this measure, and usher in a new era of prosperity and progress for Australia.
. - in reply - Some of the arguments advanced in opposition to this bill should be answered. The measure has received very careful consideration by the Government. I, myself, was a member of the Royal Commission on Monetary and Banking Systems which was appointed by the Lyons Government ‘ of which the Leader of the Opposition (Mr. Menzies) was then a member. That commission, of which the honorable member for New England (Mr. Abbott) was also a member, examined the problem of banking reform in an impartial atmosphere and from many angles. I put a simple question to members of the Opposition: if they thought that no reform of the banking system was necessary, why did they, when in power, appoint a royal commission to inquire into banking matters?
– As a member of the government of the day, I should say that it was done to give everybody an opportunity to put his views forward.
– What the honorable member for Balaclava (Mr. White) is saying, in effect, is that the Government with which he was associated was not sincere in putting the country to the expense of a royal commission.
– I did not say that.
– I am putting my own interpretation upon the honorable member’s interjection.
– It appointed the honorable gentleman to the commission, and it thought that he was sincere.
– Some of my colleagues on the Government side would say that I was appointed because the Government of the day thought that I would take the most moderate Labour view. The great surprise which the members of the Lyons Government received was that the report was quite contrary to what they anticipated.
– The honorable gentleman was out of step with all of the other members of the royal commission.
– I may remind the Opposition that I was not out of step with them, not even with the honorable member for New England. That is a matter on which there has been some comment. ‘
– The trouble is that the Labour caucus has told the Government what to do.
– I am proud to be the mouthpiece of the caucus of the Labour Government of this country. I have no objection to offer if my colleagues differ from me regarding some aspects of Government policy; we have a way of finally resolving our difficulties. The proposals I submit to the House have been submitted with complete sincerity and confidence in the united opinion of the party.
I have referred to the fact that the Royal Commission on Monetary and Banking Systems was appointed by a previous government. If that government was honest it must have believed that the banking system of the Commonwealth required examination. It selected a number of men who, with the exception of myself, could not by the wildest stretch of the imagination, be regarded as having radical views. I say that with due deference to the honorable member for New England, who has proved lately that his views are not very radical. Regarding a couple of important aspects of this bill, particularly the control of the monetary policy, the report of the banking commission is clear and definite. That is the particular aspect of this legislation which the Opposition has attacked most strongly. There must be banking reform in this and every other country, if the financial system is to be used for the benefit of the great mass of the people, and not in the interests of a limited section of the people. If the financial system is to operate as it did in 1930, and we are not to have banking evolution, we shall have national revolution from starving hundreds of thousands of people.
I derived great pleasure from the concluding portion of the speech of the Leader of the Opposition, because I hope that at the next elections his closing remarks will appear on every election placard put out by the Labour movement. The right honorable gentleman stated -
On behalf of my colleagues and myself 1 desire to make it quite clear to the House and people that if we. on this side of the chamber, are returned to office in future, we will take prompt steps to restore board control of the Commonwealth Bank, with political independence of the Commonwealth Bank function* and a complete restoration of the parliamentary authority on this matter.
– ‘Could wre share the cost of the hoardings, because we shall both be advertising that?
– As a matter of fact the last portion of the statement completely contradicts the first because th right honorable gentleman says that, whilst there is to be parliamentary authority on the matter of banking, then is to be complete independence of th< Commonwealth Bank Board. We could not have both. Let us take our mind, back to 1930. A dictatorship was set up in this country, and it was responsible to nobody. I refer to the appointment of the Commonwealth Bank Board. It was not responsible to this Parliament or to the government of the day in any way at all. What were the results of its financial policy?
– This Parliament could have legislated with regard to banking at that time.
– Does the honorable member suggest that in 1930 the government of the day had control over both branches of the legislature, and could have had its legislative proposals passed ? Is it not true that at that time, although the Government had a majority in this House, it did not have control over the Parliament, because it lacked a majority in the Senate? That meant that a government which had been ‘ returned by an overwhelming majority of the people was completely impotent, as far as control of the Commonwealth Bank Board was concerned. Therefore, that board was able to dictate the financial policy of this country.
– A Labour government appointed Sir Robert Gibson to the position of chairman of the board.
– I need not go into the details.
– The honorable gentleman sidesteps awkward questions.
– I shall not sidestep this matter. I take it that the declaration by the Leader of the Opposition was that, if elected to office, the Opposition will appoint, to control the financial policy of this country, a board of the same type’ as was appointed in 1930.
– They never made a declaration more pleasant to the party on this side of the House than that of the Leader of the Opposition, and I hope that it will be repeated everywhere they go-
– It will.
– Honorable members opposite talk about the need for experienced banking control, hut let us have a look at the names of the directors of the Commonwealth Bank Board appointed by non-Labour governments. They were ordinary citizens doing a good job in their own spheres one day, and they became the financial dictators of this country on the following day. One man appointed to the board was known to the people only as a champion polo player. I say nothing against him personally. I understand that he is a decent citizen and that he has done good work, but although on one day he was known to the people only as a polo player, the next day he became one of the greatest financial authorities controlling the financial destinies of Australia. Honorable members opposite talk about experts ; they say that there is something revolutionary about control by the Government, through the Treasurer, of the Commonwealth Bank. “What did the Chancellor of the Exchequer say regarding the relations between the Government of Great Britain and the Bank of England ? On the 2nd March last he stated -
No doubt iii regard to issues of the very highest importance, as a last resort the will of the Government of the day, with the sanction of Parliament, must be made to prevail.
That very conservative newspaper, the Sunday Times, said on the 18th March-
To g:ve the Commonwealth Treasurer power to override the Governor is a frank recognition nf the actualities of modern government.
The London Stock Exchange Gazette surely is respectable enough for honorable members opposite ! It has said this -
In fact, for the best part of a decade in this country the Bank of England has carried out the requirements of the Government in power.
The Bank of England has not dared, during the last ten years, to deny to the Government of Great Britain the exercise of its will in financial affairs.
– Has the Commonwealth Bank dared to defy the Government ?
– I do not know what it did during the life of other governments, hut I can say that in 1930 it absolutely refused to carry out the will of the Administration of that day.
Listening to the honorable member for Barker (Mr. Archie Cameron) speaking last night about the gold standard and the great danger of not having a note issue reserve, I thought that I had been transported back to the days of Queen Victoria. Other members also have referred to the note issue reserve. I say, quite frankly, that the note issue reserve is purely a fetish. I recall that in 1931, when the Scullin Government proposed to export a certain amount of gold, the Opposition said that the currency would be ruined by such action. It recognized, finally, that something had to be done if we were not to be in defaultin London, and agreed to an amendment permitting the shipment of the gold from Australia but on the understanding that it would be restored within a limited period. The Scullin Government was defeated at the polls, and after assuming office the Lyons Government shipped the whole of the gold from Australia. The right honorable member for Cowper (Sir Earle Page) made very strong remarks as to Australia being divorced from the gold standard, and said that this was either the act of a madman or the last throw of a political gambler. “What view does he hold of the Government which exported all the gold from Australia, and permitted the reserve to be held in sterling? I was a member of the Parliament when these matters were debated. I have never heard such complete political hypocrisy as has been indulged in concerning them.
In effect, the Leader of the Opposition has pledged himself to place the management of the Commonwealth Bank outside the control of this Parliament unless special legislation is passed. There can be no other interpretation of what he said. According to him, the board of his constitution would have complete independence to control the financial and monetary policy of this country, and if its decision at any time did not suit the government of the day the only remedy would be to pass legislation through this Parliament. Such legislation might give rise to financial arguments or fears in this country. The Government is not waiting for a situation of that sort to arise, but is placing on the statute-book legislation which will give to the Commonwealth for all time the power to control monetary policy.
Honorable members opposite apprehend all sorts of dangers from the establishment of the Industrial Finance Department. Does the honorable member for Balaclava (Mr. White) suggest that the Royal Commission on Monetary and Banking Systems did not recommend unanimously something of that kind?
– It did not recommend what is now proposed.
– It unanimously recommended that some such provision should be made in the banking system of this country. It has been suggested that this proposal is designed to enable the Government to purchase shares in companies, and thus obtain control of industry. Should the Government decide to engage in industry in a large way, it will be by means of an industrial corporation quite apart from the Commonwealth Bank, not under the operation of a simple provision of this sort. The intention is that which I have stated, and is in conformity with the unanimous recommendation of the royal commission, namely, to encourage and assist small industries financially when they have not real security which a trading bank would accept, or when they need technical or costing advice. I wish to allay the fears of honorable members in that connexion. I am not saying that what they predict will not be done; but it will not be done through the Industrial Finance Department, of the Commonwealth Bank.
Listening to honorable members oppo site, one would assume that there had been no bank failures for a long time. As a matter of fact, two banks failed in 1931. No longer can any government in the world which claims to guide the destinies of a country and to have as its main objective the welfare of the people, permit any other authority to control the most powerful economic weapon in existence. The private banks engaged paid organizers to get the people to sign telegrams - .which the organizers paid for - to send to me and other honorable members.
– Does the Minister say that the public is not alarmed?
– I shall give a simple instance: 64 telegrams were lodged at one post office by one individual at one time. That is what we have been told is a spontaneous demonstration by the public against this banking legislation. If the Australian Country party telle the primary producers that it is not prepared to agree to any banking reform, but wishes to return to the system which existed in 1930, 1 do not think that many members of that party will be in this Parliament after the next elections.
– The Australian Country party stands firm on the report of the royal commission.
– I am glad to hear that. I take it that the honorable member for New England (Mr. Abbott) means that the Australian Country party agrees to the commission’s report in which it was stated that the final authority in monetary policy in this country must be the Executive of this Parliament.
– The Australian Country party agrees to a board being in control of the bank.
– The royal commission reported that, in the final analysis, decisions as to monetary policy must rest with the Executive. I remind the honorable member for” New England that the Treasurer is only an instrument of the Executive.
– The Minister has gone farther than the’ royal commission went on that point.
– I do not suppose that I should ask the Australian Country party to do .much, explaining here, as its members will have such a busy time explaining their attitude to the electors.
I wish now to say a few words about, those “ irresponsible “ Treasurers who, it is assumed, have occupied, and will occupy, the position which I occupy today. I look around this chamber in which there are . four or five exTreasurers. Does any one suggest that the Treasurer or the Prime Minister of this country at any time has been an irresponsible person? It will be admitted that a Treasurer is influenced a good deal by the Prime Minister under whom he serves. Is it assumed that the men who have held those positions have been so entirely irresponsible as not to have beer alive to the danger of inflation?
– Some Treasurers are caucus-ridden.
– The reason why we on this side are opposed to inflation is that we know that the greatest sufferers from inflation are the workers whom we represent. It is utter nonsense to say that the Prime Minister, or the Treasurer, of this country at any .time has been an irresponsible person. I say that notwithstanding that I have disagreed politically with most of them. Surely honorable members do not propose to say such tilings to the public of Australia? No one recognizes more than I do - and I know that a similar view is held by my colleagues - that all the ills of a country cannot be cured by monetary policy. It is completely true that no matter what is done with monetary policy in one’s own country, there are factors in other countries which would not enable that monetary policy to do all that one desires.
– Or even in one’s own country.
– That is so. I have never fooled myself about these things. But representatives of the private banks have gone through this country saying that because control is to be given to the Commonwealth Bank under this legislation, that institution will control the industrial life of this country.
– It could do so.
– If it is true that the giving of that power, to the Commonwealth Bank would mean that it would control the industrial life of this country, it must be equally true that the trading banks have had that power all along.
– They are competitive.
– -Let us keep to the issue. If in the circular which they have issued the private banks say that control of finance by the Commonwealth Bank means complete control of the industrial life of this country, they must also admit that they have possessed that power all along. Those banks and the Commonwealth Bank have been controlled by men who recognize no responsibility to any one. It is preposterous that men should be appointed to the Bank Board, controlling the most powerful economic factor in the community, who recognize no responsibility to any citizen or to any government. The idea is so absurd that I donot believe that any sane person, if he divorced himself from party politics, would attempt to defend it. We cannot, by monetary policy, rectify all the evils in the community. Nevertheless, monetary policy is the most powerful instrument in the community for rectifying economic ills. The Royal Commission on Monetary and Banking Systems said, in effect,, that a different financial policy could not have abolished all the ills of the depression ; but it went on to say that a proper financial policy at that time could have mitigated those ills considerably. That plain fact is admitted by the very people who drew up the Premiers’ Plan and also by the advocates of that plan; they admit now that the policy then adopted was a shocking economic blunder.
– The same people who advocated that plan are the Government’s advisers to-day.
– I shall not go into details at this stage, but every man who has given any thought to this subject knows that had the banking system of this country made. use of bank credit at an earlier stage of the depression than it was used, a great number of the evils of that time could have been avoided.
– Every political party in this country tried to maintain the exchange rate to the detriment of the primary producers of Australia.
– The policy of the bank owned by the people of this country was dictated by the private banks. On the commission the honorable member for New England and I were associated with men holding various opinions on economic subjects. When the right honorable member for Cowper (Sir Earle Page) saw the report of the commission he got a terrible shock. I do not say that the various members of the commission were biased, but some of them, by virtue of their training, tended at first to favour the continuation of the established order of things rather than accept such drastic reforms as were suggested in the report. They were induced to go as far as they did only by a realization that banking reform was absolutely necessary. Any government, no matter what its political complexion, which refused to accept responsibility for financial reform would be recreant to the trust placed in it by the people. I ask leave to continue my remarks in order to give some other honorable members who did not anticipate that the debate would finish to-night, an opportunity to vote on the amendment and the second reading.
Leave granted; debate adjourned.
Public Service: Preference to Union ists - Service Personnel: Discharge Overseas.
Motion (by Mr. Chifley) proposed -
That the House do now adjourn.
.- I have no apology to offer, even at this time of night, for raising a matter which I think should engage the attention of the House. I refer to a state of affairs which constitutes a scandalous misuse of governmental power, a flagrant abuse of authority, and an unjustifiable discrimination by the Government against certain persons employed in the Commonwealth Public Service. I refer to the policy of the Government by which public servants who are members of unions receive preferential treatment as compared with others doing exactly the same work who are not members of unions. Many persons in the Public Service, for reasons which to them seem proper, do not want to join a union, and I sympathize with them. I wish to make my position clear by saying that I believe in unionism. I believe that a man per manently employed in a particular capacity should contribute to the funds of an organization established to protect his interests. At the same time, I regard it as an abstraction from the rights of a free citizen if he is compelled by governmental interference to join a union. It is monstrous that different rates of pay and different conditions should apply in the Public Service to unionists as compared with non-unionists. When we sought information on this subject some time ago, we found that public servants of a particular grade receive £282 a year if they are unionists, but only £258 a year if they are not, and the discrimination extends beyond salaries. For instance, the unionist receives 2s. 6d. tea money, whereas a non-unionist receives only 2s. Unionists have their overtime calculated on a Weekly basis, whereas the nonunionist’s overtime is calculated on a fortnightly basis, so that the unionist enjoys an advantage in that respect. I direct the attention of honorable members to the fact that the full benefits of the determinations of the Public Service Arbitrator are extended to returned soldiers, even if they are not members of unions, because the Government feared that it might otherwisebe swamped by a wave of public indignation. On the 16th May, 1943, the Prime Minister (Mr. Curtin) sent the following memorandum - it was really a direction - to the chairman of the Public Service Board: -
The Government desires, as a matter of policy, that the provision of any determination already made by the Public Service Arbitrator, but which is not yet in force, or of any determination that may be made subsequent to the 19th May, 1942, shall be applied only to returned soldiers and members of an organization within the meaning of the Commonwealth Conciliation and Arbitration Act.
There can be no misunderstanding of the clear language used by the Prime Minister’ in that memorandum. He had definitely in his mind, and he was speaking, no doubt, as the spokesman of the Government, that any additional benefits which might be paid to persons working within the Public Service should extend only to those who belonged to unions and to returned soldiers. I doubt whether one could parallel that particular instruction in any other part of the
English-speaking world. If ever one were justified in applying the term fascist to an instruction that is such an instruction. There is no ambiguity about t lie language, or the instruction. Certainly, there can be no uncertainty about the effect which has followed from it. In point of fact,, persons attached to Opposition parties may be either compelled to join the appropriate union or suffer some disability in respect of pay and conditions. For example, the differential rate in respect of travelling allowance amounts to 2s. 6d. per day. Recently I have had occasion to bring to the attention of the Minister representing the Prime Minister in this matter the general conditions under which so many members of the Public Service have been working during the war years; and I, personally, would bc glad to contribute my share to the tribute which all honorable members would pay to the members of the Public Service for voluntarily doing work during the war in addition to that prescribed in awards and determinations, and without additional remuneration. [Quorum formed?] I now bring to the notice of the Government an even more serious breach in respect of this matter. A correspondent who is employed in the. Public Service has brought to my notice certain facts, and, as he is a legal officer, he would have expert knowledge of the subject with which he deals, and which he regards as a flagrant injustice which is about to be instituted in the Public Service. He requests my assistance in having the matter rectified. Before the war Commonwealth offices were closed on Saturday mornings. Shortly after the commencement of hostilities it was decided that work should be performed on Saturday mornings in view of the shortage of man-power and the urgency of business. The award was not altered, and the ‘Saturday morning work was regarded technically as a free contribution of the Public Service to the war effort. In spite of this, any one who did not work on Saturday mornings had the appropriate amount deducted from his regular pay. For some time the clerks’ union has been pressing for the abolition of Saturday morning work in view of the easing of the war situation. This abolition has not been granted, but instead, the
Government has granted a reduction of the working hours from 41^ hours a week to 40$ hours a week, and has undertaken to pay members of the union, and returned soldiers, at ordinary rates for all time worked in excess of 73 hours per fortnight up to 81 hours. This means that an ordinary public servant who does not work overtime will receive extra payment for working on Saturday mornings provided’ he is a member of a union or a returned soldier, but that non-unionists who are not returned soldiers will not receive this extra pay. No provision for any alternative benefit for such persons, such as extra recreation leave in lieu of pay, has been made. My correspondent then points out that he is the legal officer of the Allied Works Council, and is a member of the Law Institute. As such, he feels that he is precluded from joining any other organization such as the clerks union, and says that there must be many other members of the Law Institute and the British Medical Association who are in the same position. Some of them, however, he says, may not be affected, as the extra rates will probably apply only up to a certain salary range, above -which he himself is probably placed. This matter is, however, of vital importance to a number of persons on low wages who have resisted the usual persuasion-pressure to become members of a union, and are now about to suffer by .being paid less than members of a union who perform exactly the same duties. To junior typists whose wage is approximately £2 per week the extra few shillings make a tremendous difference, and there have already been brought to the notice of my correspondent a number of cases in which such typists, although having no desire to do so, have now joined the clerks union purely because the extra Saturday morning pay will mean so much to them.
– Order ! The honorable member’s time has expired.
.- I bring to the notice of the Minister for War Organization of Industry (Mr. Dedman), who also represents the Acting Minister for the Army in this chamber, a matter concerning which I asked a question this morning. As I was not able to give the details at that juncture, I propose to do so now. I refer to the rehabilitation of prisoners of war now in England. The Acting Minister for the Army announced to-day the name of an officer who will be in charge of the education facilities to be given to prisoners of war in Great Britain. That is very good so far as it goes. We know that education officers are now performing their duties in Great Britain, and that Brigadier Gorman has returned from Great Britain, where he was sent to take charge of the reception of Australian prisoners of war on their- arrival in that country. Those men have been housed at Eastbourne, where they have been well treated. But some prisoners of war with whom I am in touch complain that they are being hustled out of England to Australia. I have not raised this point before. I ask the Government to cable instructions to Great Britain that those prisoners of war who wish to derive some benefit while in Britain in respect of their rehabilitation should be afforded that opportunity. After the last war- and circumstances have not altered in this respect so far as prisoners of war are concerned’ - all men in Great Britain who so desired were given three months’ non-military employment. The set-up to-day is this : If service personnel wish to take up non-service employment in Great Britain, they may do so up to the normal time of embarkation, but they must have previously entered upon a course. That is unfair. They may just start on a course and be called immediately to their ship to be brought home to Australia. They must have started on a course in Germany, or -wherever they were held prisoner, to be allowed to continue it in Britain. That is all right for those who were in camps where treatment was of the kind that allowed study to be undertaken, but not for those who worked in salt mines and the like and had no opportunity to take tip courses. A lot of nonsense is talked about released prisoners of war being neurotic and needing special treatment. They need nothing of the kind. As one man broadcastlast week, the ex-prisoner of war is really a better man when he is released than before he was captured, because most of them do not waste their time, for, otherwise, they would deteriorate. Where they have the facilities, they employ their time in study. Their only concern is to return to a normal life, to make up the leeway, and to get a job and a home. That can be very much facilitated if the Government gives orders for assistance to be given in Britain. It has been given, but only in part. There is no provision under the Commonwealth training scheme for men to undergo industrial courses. Many men would like to study die textile trade in Manchester or Bradford, the steel industry in Sheffield or commercial work in London. But all those opportunities will be missed and we will have the men awaiting discharge in camps in Australia quicker than we can deal with them, whereas a month or two in England would assist in their rehabilitation to the benefit of themselves and Australia. This is important. It can be done in this way: Ask what men desire their release in Britain. Men repatriated to Australia are offered their release. I have already mentioned the case of an Englishman discharged in Australia, who has been waiting about a year to get a passage back to Britain. If we offer them their discharge in Britain they can-
– That case has been looked into.
– Yes. The Government ment is giving them six months’ leave without -pay and1, if they take an educational course, they ‘are allowed £4 a week and only £5 10s. to cover all the equipment they want. That is a miserable allowance to men who for up to four years have led .a hard existence and have been underfed and to whom a few pounds in their pockets is a great luxury. I ask the Minister to consider the financial aspect, too, and to offer opportunity for discharge in Britain and repatriation, say, within twelve months. They will not want after a few months. They should be allowed to remain to undergo industrial courses. Such courses should be open to every one, not only to those whom the Germans allowed to study while they were prisoners of war.
– I will examine the Hansard report of the speech of the honorable member for Fawkner (Mr. Holt) to learn exactly what he has in mind. If his reference is to a recent decision in regard to hours-
– Did I not make myself clear? There was some interruption.
– I am not sure. The honorable member covered a lot of ground - the non-payment of award rates to nonunionists, a memorandum issued by the Prime Minister (Mr. Curtin) and other mutters. Frankly, I have always held the view that if I want to enjoy the conditions of the industry in which I am employed, I should support the organization that can obtain those conditions.
-I believe that, too, but I also support the point of view of people who think otherwise.
– If they think otherwise, they should be prepared to accept lower rates. The arbitration system has been built up by organized employees on the one hand and organized employers on the other.
– I have no respect for an employer who pays less than the award rates.
– The arbitration system is a part of our national life. I t costs a lot of money, effort and organization. Cases arc argued and awards are made and policed, and I honestly believe that those who share the benefits shouldshare the cost of obtaining them. The Minister for Labour and National Service (Mr. Holloway) and I handled this matter of payment for extra hours. Our decision was that the Government did not want any one to work for nothing and that if employees were called upon to work additional hours, they were to be paid. I told the honorable member when he raised this matter this morning that I thought he was on the wrong track and that his correspondent had brought the matter to him prematurely. The decision was to operate from the second pay-day in May, but I do not think that any payment has yet been made. The law provides that this decision shall lie on the table for 30 days before becoming operative, but I propose to make payment without awaiting the expiration of that time, hoping that the Parliament will concur, because it is a just proposition. If the honorable member’s case rests on the decision that we recently made in connexion
– If I may make myself clear - and I appreciate the honorable gentleman’s attitude - my correspondent said that the principle applied to wages and conditions was being applied to payment for overtime.
– I think the honorable member’s correspondent is misinformed, because no payments have yet been made, and, therefore, he is unable to establish a case. If payments had been made and he had not received payment, he would be able to do so. When payments are made there shall be no. differentiation. All work shall be paid for.
– At the same rate?
– Yes, the Government does not believe in asking people to work without payment.
Question resolved in the affirmative.
House adjourned at 11.32 p.m.
The following answers to questions were circulated : -
n asked the Minister representing the Minister for Trade and Customs, upon notice -
– The Minister for Trade and Customs has supplied the following information : -
n asked the Acting Attor ney-General, upon notice -
If so, (a) from what States have they been received, (b) how many officers are concerned, (c) when were the complaints received,
y. - The answers to the honorable member’s questions are as follows : - 1 and 2. The numbers of legally qualified males temporarily employed in the Deputy Crown Solicitors’ Offices in the various States, and their salary ranges, are as follows: -
3 and 4. It is quite impossible to give the detailed particulars asked for by the honorable member in reply to a question. I can say. however, that many applications for increased pay have been received from temporary legal officers in the various States, particularly those stationed in Perth and Brisbane. These applications have been referred, as required by law, to the Public Service Board for consideration. The Public Service Board is precluded by the “ pegging “ regulations from giving favorable consideration to such applications, unless it can be shown that an anomaly exists.In cases where the board has been satisfied that the duties of an office entitled the holder thereof to a higher salary, the classification of the office has been raised and quite a number of cases have been adjusted within the last few weeks.
y asked the Acting Attorney-General, upon notice -
– The answers to the honorable member’s questions are as follows : -
t asked the Minister for Commerce and Agriculture, upon notice -
– The answers to the honorable member’s questions are as follows : -
Meat Industry: Household
Mr.Francis asked the Acting Prime Minister, upon notice -
Has he seen press reports that any move for early resumption of meat deliveries to the public will be resisted by master butchers?
If so, will he order a comprehensive investigation into the man-power position, particularly in relation to retail butchers, the lack of vehicles, repair facilities, harness and petrol with a view to having a complete plan ready prior to the removal of restrictions upon meat deliveries?
y. - The answers to the honorable member’s questions are as follows : -
Broadcasting: Listeners’ Licences.
y. - On the 1st June the honorable member for Moreton (Mr. Francis) drew my attention to the difference betweenthe amount of the fee payable for a broadcast listener’s licence by an old-age or invalid pensioner as compared with the fee charged to a person in receipt of a service pension under the Australian Soldiers’ Repatriation Act.
I am now in a position to inform the honorable member that the question of amending the Australian Broadcasting Act 1942 with the object of rectifying the anomaly referred to is receiving consideration.
Rehabilitation of Civilians Interned by Japanese.
– On the 1st June, the honorable member for Adelaide (Mr. Chambers) asked the following questions, upon, notice: -
External Territories, the Minister for Repatriation, or the Minister for Social Services; (c) provision for medical attention, pensions, rehabilitation, training or grants to internees who return under either temporary or permanent disability; (d) provision for the dependants of any internee who has died while in Japanese hands; (e) whether civilians who were not members of, but of necessity worked with, and were captured with, the New Guinea Volunteer Rifles will be treated for rehabilitation purposes as if they were soldiers, and, therefore, members of the Australian Imperial Force; (f) whether, where an allotment has been paid to the nominee of an administration internee, and it appears that such internee has died during his internment by the Japanese, the Government will continue his allotment; if so, to what extent, and for what period;
The answers to the honorable member’s questions are as follows : -
Cite as: Australia, House of Representatives, Debates, 6 June 1945, viewed 22 October 2017, <http://historichansard.net/hofreps/1945/19450606_reps_17_182/>.