17th Parliament · 3rd Session
The PRESIDENT (Senator the Hon. Gordon Brown) took the chair at 3 p.m., and read prayers.
– As a commission of harbour experts is to visit Western Australia in order to examine the congestion of shipping at Fremantle, will the Minister for Supply and Shipping direct the experts to examine also the ports of Geraldton, Bunbury, and Albany, with a view to making greater use of those outer harbours which have (Treat natural facilities ?
– I shall issue instructions for that to be done.
Production Cost - Rationing
– Will the Minister for Trade and Customs obtain from the Commonwealth Prices Commissioner a report on the cost of producing the poorer grade petrol now on sale, in comparison with the 80 octane petrol sold formerly, in order to ensure that all of the reduced cost of production is passed on to the public?
– The information asked for will be obtained as soon *u> possible, and supplied to the honorable senator.
– I ask the Minister for Supply and Shipping whether a statement attributed to him in the press this morning that he proposes to increase the petrol ration within the next few days is correct? Does that mean that the petrol ration is to be increased prior to the issue of tickets next Monday, in which case a delay of an additional month would bc obviated?
– Owing to the reasons which I have explained on previous occasions in the Senate, consideration is being given to an increase of the petrol ration. It is claimed that the petrol at present being sold to the public is of inferior quality having been reduced from an 80 octane rating to a 70 octane rating, and has resulted in a loss of mileage up to five miles a gallon. An examination is now being made to ascertain the loss to the public on a mileage basis, and consideration will be given to increasing the present ration to a corresponding degree. It is not expected that the examination will be concluded before the next issue of ration tickets is made, but I should say that the matter will be finalized before the following issue. With respect to the quantity and quality of petrol available for sale to the public, I again point out that this is not a matter for determination solely by my department. As the demands of the services must also be taken into consideration, the matter may have to be referred to War Cabinet.
Senator ALLAN MacDONALD Has the attention of the Minister for Trade and Customs been drawn to a report in to-day’s press that a protest meeting organized by the Returned Sailors, Soldiers and. Airmen’s Imperial League of Australia is to be held in the Sydney Town Hall to-night to give expression to the unpopularity of the Re-establishment and Employment legislation. If so, can he say whether tha Government proposes to have representatives at that meeting? If that has nol been decided on, will the Government take steps to send a representative to the meeting as there is still time to hear the discussion and advise those present as to the provisions of the legislation?
– I have not seen the press report referred to by the honorable senator. I remind him that during the passage of the bill through this chamber, as well as through the House of Representatives, assurances were given that the act would be brought into operation, and that if any anomalies were revealed in its administration amendments would be made. I presume that any decisions made at to-night’s meeting will be presented to the responsible Minister, in which event they will receive the early consideration of the Government.
Senator ALLAN MacDONALD.Can the Minister for Trade and Customs say whether steps have been taken by his department to ensure that an adequate supply of beer and tobacco will be made available to ‘ members of the British fighting forces now visiting Australia? Will he also indicate that in the allocation of quotas of beer and tobacco especially at the principal ports at which British ships will call, the supplies of beer and tobacco made available for British servicemen will not interfere with the local quotas for citizens?
– The Department of the Navy has been in communication with my department for some time relative to a supply of beer to units of the Royal Navy which will be based in Australia, and as a result 3,000,000 gallons of beer will be provided for that purpose for the remainder of this year. That quantity will be. provided from the ordinary beer production. The supply of tobacco to visiting -British troops has not been raised with me officially, but I can assure the honorable senator that arrangements for service requirements of tobacco have, at times, encroached on the supplies available to civilians. At the moment, the allowance of tobacco is 75 per cent, of the quantity consumed in the base year; the position has improved in some de gree. As I indicated recently in a statement which I made to the Senate, members of the services in operational zones get priority, both in quantity and quality, over others. That policy will be continued because the Government believes that British Navy personnel should be given the same consideration in these matters as was given to other Allied servicemen who have been in Australia during recent years.
– <Can the Minister for Trade and Customs say whether the Government is in possession of the text of the agreement which, according to newspaper reports, has been signed at San Francisco? If not, can he say how soon copies will be available to honorable senators ?
– I am unable to give a definite answer to the honorable senator’s question, but as the Deputy Prime Minister, the leader of the Australian delegation, is expected to arrive in Australia next Saturday morning, I assume that I shall have some information regarding the agreement to give to the Senate next week.
– Has any agreement been signed on behalf of the Commonwealth? If so, is the agreement subject to ratification by Parliament?
Parliamentary Debates. Senator ALLAN MacDONALD.- In view of the proposal to broadcast the debates in the National Parliament, and the increasing traffic on land lines between Canberra and Western Australia, will the Postmaster:General make early inquiries from his technical advisers as to the possibility of providing additional land lines between Port Augusta and Western Australia, and the cost of such installation ?
– In answer to the first part of the honorable senator’s question, inquiries arc now being made asto the technical possibilities of broadcasting debates in Parliament. I undertake to make inquiries with respect to land lines to which the honorable senator refers.
-On the 19th June, the Acting Leader of the Opposition mentioned that he had been informed that firms which someyears ago went out of the business of importing hog casings were able to sell their licences for the importation of hog casings at ahuge profit. He asked me whether there was any truth in the statement that these licences are being hawked about. I then informed the Acting Leader of the Opposition that I would examine the allegation. After examination, I find that the last allotment of hog casings was procured and imported from the United States of America by the Commonwealth Government. Previous allotments were procured under the lend-lease policy. In neither case, therefore, was the issue of import licences involved. It is evident that the Acting Leader of the Opposition has been inaccurately informed. At the same time,I should like honorable senators to know that, if there is evidence that abuses are occurring under the system of rationing or distributing imports, I would welcome information calculated, to be helpful in tracing those responsible for the abuses. I would then do my utmost to check them. If the Acting Leader of tie Opposition is able to supply me with any further information, I can assure him that I shall have the matter carefully investigated. I add, for his information, that a deputation representing a large section of sausage casing users claimed that owing to changes during the war in the structure of individual businesses, anomalies were present in the distribution of hog casings imported by theCommonwealth Government. Following an official conference, attended by representatives of the hogcasing distributors and representatives of the users, arrangements are in hand for straightening out difficulties to the maximum extent possible consistent with the limited supplies of imported casings available. Hog casings have been, and still are, in very short supply overseas.
– On the 13th June, Senator Amour asked me the fallowing questions, upon notice: -
The Acting Attorney-General has supplied the following answers: -
The Commonwealth Seamen’s Compensation Act 1911-1938 does not apply to masters of ships because the relevant Arbitration Court awards provide cover for death or injury through accident. The Workers’ Compensation Act 1926 of the State of New South Wales, with certain exceptions, applies to all classes of seamen, including ships’ captains.
I may add that Mrs. Rixon has been granted a pension under the Seamen’s War Pensions and Allowances Act 1940, as extended by the National Security (Additional Pensions and Allowances to Seamen) Regulations.
Statement on American Service Personnel.
– On the 22nd June, ‘Senator Grant asked the Minister representing the Minister for Information the following questions, upon notice : -
The Minister for Information has supplied the following answers: -
Use of Flags at Funeral Services.
asked the Acting Minister for the Army, upon notice -
Have representations been made, directly or indirectly, by any religious body suggesting that the use of the Union Jack or Australian flag at funeral services of ex-members of the fighting forces is objectionable to that body?
-The answer to the honorable senator’s question is as follows : -
Nothing is known of any representations by a religious body suggesting that the use of the Union Jack or Australian flag at. funeral services of ex-members of the fighting forces is objectionable to that body.
asked the Minister representing the Minister for Commerce and Agriculture, upon notice -
-The Minister for Commerce and Agriculture has supplied the- following answers : -
asked the Minister for Trade and Customs, upon notice -
SenatorKEANE. - The answers to the honorable senator’s questions are as follows : -
asked the Minister for Trade and Customs, upon notice -
– The answers to the honorable senator’s questions are as follows : -
A licensee of a residential hotel shall not. during trading hours, sell liquor in or upon any part of his licensed premises unlessliquor of the same class or kind is sold in the public bar.
A licensee of a residential hotel is authorized to sell, supply and dispose of liquor on his licensed premises -
to boarders between the hours of 12 noon and half-past two in the afternoon or 6 and 8 in the evening, as part of meals supplied to such boarders and their guests for consumption on the said premises.
asked the Minister representing the Acting Prime Minister, upon notice -
– The Acting Prime Minister has supplied the following answers : -
Debate resumed from the 20th June (vide page 3325) on motion by Senator Keane -
That the bill he now read a second time.
– We are approaching a time when probably some keen discussion on the financial policy of the Government is necessary. In making that statement, I do not imply that I intend to give a long dissertation on banking. That has been done in the House of Representatives. I propose to deal only with the salient points of the measure now before us. Possibly some of my remarks may be applicable also to the Banking Bill which is still under consideration in the House of Representatives because to some degree the proposals embodied in both measures- are inseparable.
– The honorable senator will not be in order in dealing with a measure under consideration in the House of Representatives.
– I shall deal generally with banking, because the proposals of the Government may be taken as a whole, at the same time deferring closer examination of the Government’s proposals with respect to private banks until the Banking Bill comes before us. The measure now before us is the beginning of a great gamble. The stakes at issue are the economic well-being and the standard of living of the people of Australia. The Government is cheerfully taking that gamble although, possibly, the odds are against it achieving that objective. Success for the Government, of course, will mean glorification of its policy of socialization of industry, and will assist it to attain its major objective; but failure to achieve that objective will mean that the people of Australia as a whole will have to tighten their belts. It will involve the loss of the people’s savings, and a hard time for everybody in this country. The prospect envisaged by the Government is a planner’s paradise. It is the popular supposition of planners that their schemes can be implemented simply by calling upon the resources of the country. By this legislation, free money is to be provided.
– There is no mention of that in the bill.
– The powers to which I am referring are in the bill. I shall deal with them later.
– -What does the bill say about free money?
– It provides that the Commonwealth Bank may print as many bank notes as it likes. The bank cannot refuse an instruction by the Government. The mirage of money is an obsession with honorable members opposite. It is the basis of most of the fallacies in which they believe. They regard? money as a great god. They worship the “golden calf” above everything else. Apparently they do not realize that money without tangible assets to back it, is worthless. When they regard money as the first essential in progress, they ignore the fact that the standard of living of any community depends upon what it produces.
– Where does this bill provide anything like that?
– I am saying that. The honorable senator will not deny that for many years he and his colleagues have proclaimed that the money available in the community has not been sufficient, and that the Government should have full power over money and credit. If more money is not to be put into circulation what is the object of this measure?
-LEM - Money will not be made available in excess of the requirements of the people.
– The term “requirements of the people “ is most elastic. How much money do the people require? The fundamental principle is that the value of money depends upon the assets that back it. It is only fooling the people to say that our financial problems can be solved by conferring upon the Government power to issue additional currency. If there is one thing that the people of Australia have learned in the hard way, it is that they can live only on what they produce. In his secondreading speech the Minister for Trade and Customs said -
A banking system must always be in process of evolution, continuously adapting itself to changing conditions.
I agree entirely with that; hut it is the very point which the Minister himself ignores. Our hanking system has, for many years been undergoing a process of evolution. In most other countries banking systems have evolved in exactly the opposite direction to that envisaged by the Government in this legislation. For instance, the Bank of England started originally as a trading bank, but gradually it has been shorn of its trading powers, until now it is largely a bankers’ bank or a central bank. The Commonwealth Bank also set out originally to do trading bank business, but gradually evolved until it became, for the most part, a central bank, and carried out most of the functions which this measure now proposes that it should carry out. Therefore, looking at the matter impartially, there is no need for a measure of this kind, which gives dangerous powers to an institution which in the past has discharged its functions to the great benefit of the people of Australia. The technique of central hanking is not old. It has developed quickly, especially during the last few years. Honorable senators opposite have based many of their arguments upon the bank crashes that occurred in this country in 1893; but they have ignored altogether the development of the financial system of this country since then. The failure of the banks in 1893 was not due to insolvency, but to the fact that their assets were not sufficiently liquid to meet the demands made upon them. That is a condition .which will be accentuated by this legislation. The banking business of Australia will be centralized in the Commonwealth Bank, and whereas a central bank can afford to keep its assets in more or less liquid form, a trading bank cannot do that, because it has to invest money in commercial undertakings and in mortgages. Under this legislation the Commonwealth Bank will assume the role of a trading bank and, therefore, to some degree, its assets will be tied up in various commercial enterprises, and in mortgages. It is claimed that the Commonwealth Bank requires strengthening, and that the added strength required is provided by this measure. But what method is employed to achieve that objective? A proportion of the funds of the trading hanks is to be held by the Commonwealth Bank so that that money cannot be used for industrial purposes; however, it may be loaned to various sections of the Commonwealth Bank, such as the Rural Credits Department, which, of course, amounts to the same thing. To strengthen the Commonwealth Bank, the private banks are to be restricted to their pre-war business. Thi? legislation will ham-string the competitors of the Commonwealth Bank ; yet it if claimed that the Commonwealth Bank will enter into fair competition with trading banks ! In regard to the strengthening of the Commonwealth Bank, the Minister said - the central banking functions and powers of the Commonwealth Bank are strengthened so as to ensure that the broad lines of its monetary and financial policy will bc in harmony with the economic policy of the Government and in the interests of the people of Australia.
That, of course, is a quaint way of saying that the Commonwealth Bank must obey the orders of the Treasurer. Nobody will be hoodwinked by the words “ will be in harmony with the economic policy or the Government”.Everyoneknowsthatthe bank will be subject to political compulsion.
Over the years, the cry of honorable senators opposite has been decentralization, yet the tendency of this legislation is exactly the opposite of decentralization. It will centralize banking control and administration at the head-quarters of the Commonwealth Bank, in Sydney. There will be branches of the bank throughout the Commonwealth, but the entire economic policy of the bank will be directed from one centre. In the past, the risks taken by bank depositors have been distributed over various banking institutions, thus ensuring a certain degree of safety, but now banking is to be centralized, and assets will not be liquid. It has been said that the trading banks were making too much money, but I draw attention to the fact that in the last year for which figures are available, the profits of the private banks averaged only 3.6 per cent. of shareholders’ funds. It is safe to say thatduring the last fourteen years the average profit of the trading banks has not exceeded 5 per cent. Therefore, it cannot be said that these institutions have made exorbitant profits. The objects of the bill are specified in the Minister’s secondreading speech. The honorable gentleman summarized them as follows: - (a)To strengthen the centralbanking function of the Commonwealth Bank.
The first object is to strengthen the central bank by freezing the assets of the private banks thus hampering their operations and preventing them from competing with the Commonwealth Bank.
Their assets in the Commonwealth Bank amounting to approximately £230,000,000 will be frozen.
– Just as well !
– The honorable senator says,” Just as well “. Evidently he believes in confiscation.
– I did not say so.
– The honorable senator implied that if the assets of the private banks could not be taken out of the control of the Commonwealth Bank it would be a good thing. If he suggests that the Commonwealth Bank only should be allowed to use those assets and not the private banks, and that such a procedure would be good for the people of Australia, and fair to the shareholders of the private banks, then I have to learn something new about the ethics of fair play. The second object of the bill is to ensure that the financial policy of the Commonwealth Bank will be in harmony with the main objects of government policy. One of the main objects of government policy-
– Is full employment.
– The object of this bill is to provide more money than is at present circulating in the community. It will be issued by the central bank for the purpose of providing full employment; but full employment cannot be created unless there is industry to provide it. The Government proposes to provide the money to create full employment but that money will be issued without assets to back it.
– Who said that?
– That is the whole object of the bill. The Government will be acting under compulsion, and when it is asked to back some particular project and it is found that the money is not available, the Government will say to the Treasury, “Make the money available”. The fact that the result of such action would be the depression of currency does not concern the Government. I could not help noticing a statement made by a Minister of this Government to the effect that this country would not be able to pay interest on its loans and that the money to do so would have to be issued by the Commonwealth Bank.
– He had no right to say that.
– Perhaps so, but he is a member of the present Cabinet and that fact cannot be ignored. Upon examination, that statement means that the Government does not propose to pay interest on the national debt.
– That is only the honorable senator’s interpretation.
– That means either repudiation of interest on the national debt, which is nothing short of confiscation, or that public investors - the people who have lent money to the Government - are to be paid with the new money created by the bank. If that is done it will means that £2,500,000,000 of fresh money will be brought into circulation. One of two alternatives is, therefore, available- confiscation or depression of the currency. One can readily imagine the effect on the economy of Australia following the sudden release of £2,500,000,000 - prices would soar to unheard of levels ; no means of investment would be available ; and the only way in which people could get rid of their money would be by purchasing property or goods at fabulous prices. The currency of Australia would soon become worse than that of Germany after the last war when its value was so drastically depreciated.
– Would there be a uy difference between the Commonwealth Bank underwriting a loan and a private bank doing so?
– A private bank does not underwrite a loan. The term “ underwriting “ means that the borrower is guaranteed that the amount of the loan will be found and the underwriter undertakes that the amount required will be supplied.
– What would be the difference between the Commonwealth Bank and a private bank doing it?’
– Practically nothing. The only difference is that the private bank accepts the risk of guaranteeing the loan, but if the Commonwealth Bank underwrites its own loans it will be like stamping on its own foot for the pleasure of feeling the pain. The third object of the bill is to ensure the development and extension of the Commonwealth
Bank’s business by active competition with the trading banks. This proposal is a reversion to general banking principles operating about fifty years ago. The Government may think it knows more about banking than any other experts in the world, but I am doubtful. If one examines the progress of great banks in other countries, one finds that they have developed from trading banks to central banks. The Bank of England is an example, and great banks in the United States of America and Canada could also be mentioned. The Government, however, looks to examples of 50 years ago and takes no notice of the evolution of banking since that time. Among other things, the Government proposes to set up an Industrial Finance Department of the Commonwealth Bank. It also proposes to confine the lending of private banks to their 1939 level. That means that they will not be able to grow, and so they will eventually fail. The Commonwealth Bank will have a stranglehold on the private banks and when, in two or three years’ time, the failure of the Labour party’s banking policy becomes apparent and its cherished plans do not materialize, private enterprise will have to bear the responsibility of cleaning up the mess. The Government is setting out to strangle private enterprise so that it will have no hope of doing things which, in a year or so, the Government will blame it for not doing. A. further provision is that the Treasurer shall determine the policy to be followed in relation to advances. He will be able to order the banks to do certain things or he will refuse them permission to make advances.
– Why should he not do so?
– A private bank may consider that an industry is worth backing, and might desire to help establish it - being willing to take all the risks associated with such an undertaking - but the Commonwealth Bank can refuse it permission to advance money for the purpose. The Commonwealth Bank can also say, “ We will make the advance “. Private banks should not be deprived of the opportunity to help industry in that way.
– Irrespective of whether the industry will be detrimental to the community or not?
– Surely the honorable senator does not contend that it is against the interests of Australia for banks to advance money so that industries might be established, or to help people buy property or a home?
– It might be; it all depends on circumstances.
– The honorable senator says it might be wrong to establish an industry in Australia which would provide employment for workers.
– The advance would be all right provided that it was not for the establishment of a luxury industry.
– This provision is a weapon that could be -used to ruin any business. The Treasurer could suddenly instruct a .bank to cease giving financial backing to an industry. In any case where the Government was not pleased with the way a firm was treating its employees, it could say to a bank, “ You must not make advances to that firm. “We do not like it “. That is called “ controlled economy “. The Government, at the whim of the Treasurer of the day, could control advances to an industry, and therefore, it could prevent the making of advances. Is the Commonwealth Bank to lend money on easy terms, without the backing of security? That seems to me the way to disaster.
The bill is so designed as to give to the Government the control of the Commonwealth Bank. When the bank was instituted, it was placed under the control of an independent Governor. He was not subject to the will of the Treasurer of the day, but was appointed for a specified period of years and could not be removed from office during that period. The management of the bank was left entirely in his hands. In 1924, that arrangement was altered and the management of the bank was placed in the hands of the Commonwealth Bank Board, whose members represented financial, manufacturing, labour, pastoral and other interests. That system has worked well. An outstanding feature of the bank, as was stated by Mr. Fisher, the Prime Minister of the day, was that it was to be divorced from political influence, but in substitution for the Commonwealth Bank Board, the Government has introduced a departure which is ludicrous in the extreme. In addition to the Governor there is to be an Advisory Council consisting of the Secretary to the Treasury, the Deputy Governor of the hank, another Treasury official and two officers of the bank. That body will be solely advisory in character, and all of its members will be under the direct command of the Treasurer of the day. So, we have to make a decision between control by a board and control by the Treasurer of the day. The question arises whether the control of the bank is to be impartial or political. Honorable senators opposite favour political control with ali its dangers. That seems to reduce a noble institution to the status of a sub-branch of the Treasury. The Governor of the bank wil be appointed by the Treasurer, who will also appoint the Deputy Governor and the members of the Advisory Council. In fact, the Treasurer will “ run “ the bank.
Another object of the bill is to control the note issue. Everybody knows that at present there must be a backing to the note issue. Originally it was in gold, hut now it must be a backing of 25 per cent, of either gold or British currency. There is some difficulty, I understand, in using the term “ sterling “ nowadays, as it could be regarded as Australian sterling. As the note issue has had a backing, it has had the confidence of the people.
– When the late Mr. Lyons was Prime Minister, he wiped out the condition that notes were payable in gold at the seat of government. He won an election on that issue, and in the following month shipped the whole of the gold overseas.
– It seems strange that although Australia produces gold to the value of about £10,000,000 annually, legislation has been passed at the instance of the present Government providing that the sale of gold shall be entirely in the hands of the Government. It determines the rate of exchange and the price of gold, and nobody may buy or sell gold without the consent of the Government. Yet the Government does not use gold as a backing for the note issue in order to create confidence in the currency of the country. It says that the note issue does not require any hacking at all.
– That is what Mr. Lyons said.
– No. The only alteration for which he was responsible was that he substituted a backing of gold with one of British currency, and that system has operated ever since. Considering the vast amount, of paper money in circulation - the note issue has increased from £47,000,000 to £190,000,000 –one can realize what happened on the continent of Europe when the supply of notes was unlimited. The Government lias not even fixed a maximum amount of notes that may be issued. This mute should be decided from time to time by the Parliament, but under this measure, (he Government could introduce any w’ld scheme it chose for the printing of as many notes as it desired to have in circulation.
-. - The honorable senator knows quite well that the amount of notes that can be issued is determined by the productive capacity of Australia.
– The honorable senator is very confident in some of his statements, but he is also unwise. Everybody knows that the amount of notes issued is not determined in accordance with the productive capacity of the country. Many of the notes issued are not used for productive purposes, but are hidden away for various reasons.’ 1 am not so foolish as to believe that, the greatly increased number of notes now on issue is used by the people for pocket money and other purposes of that kind. Tinder this bill the note issue is not only to have no backing of gold, -but there is to he no limit to the amount of notes that may be issued.
The whole object of the provisions of the bill relating to the staff of the Commonwealth Bank is to convert the bank into another Government department. That is in harmony with the general tenor of the bill. The old rule about promotion by seniority which applied in many departments of the Commonwealth Public Service is to be observed. Promotions will not be made in accordance villi merit of the officers. Even in that comparatively small matter the Government is pursuing a wrong course. It should make provision so that bright and promising officers could receive quick promotion. Some men have an aptitude for finance, whilst others may lack it. An officer may have ample ability for any job in the Commonwealth Public Service, other than one dealing with finance, but he may fail completely in a position requiring a knowledge of finance. The bill practically prohibits the employment of any df the officers of the private banks. It contemplates the strangling and eventual abolition of tinother banks, although .those institutions have trained staffs, many members of which have spent almost a lifetime in the financial arena. What they will do if the private banks are forced out of business I do not know ; but the Government should at least make reasonable provision for any officers of the private banks who may be displaced. The bill is in accordance with the policy which the Labour party has advocated for many years. Since the beginning of the war representatives of the Labour party have had a good deal to say about the need for a “new order”, hut I am afraid that if the party proceeds along the lines indicated by this measure it will be said that it made a desert and. called it the “Nev/ order”. The first fallacy advocated by the Labour party is that money, not production, is of prime importance. If I were asked to define the difference between the policies of the Government and the Opposition, I would say that the Opposition believes that if people do not produce, they cannot live, and particularly that they cannot enjoy a high standard of living, whereas the supporters of the Government believe that so long as there is plenty of money available nothing more is needed.
– That is a stupid comparison.
– The honorable Senator is biased, and therefore he is incapable of judging fairly. He should not attempt to define stupidity, because he is> a living example of it. When the Re-establishment and Employment Bill was before this chamber, the Minister in charge of it either said that amendments proposed by the Opposition were not acceptable, or he left Ids place at the table to seek advice. I believe that his action in seeking advice was merely a courteous gesture on his part, and that he already had made up his mind what he intended to do. Had he sought the help of his advisers more frequently we might have been led to believe that he was considering our suggestions. I have no doubt that the bill before us will pass in the form which the Government desires. Time will tell what its effect will be. We are engaging in a great gamble in which the stake is the well-being and economic security of the people of Australia.
– If the bill be not. passed-, it will be a bigger, gamble.
– If we could ensure that, the Treasurer of the Commonwealth would always be a superman, actuated by the highest motives, we might believe that this legislation will not do much damage; but when we have regard to the human element, and recall the Treasurers that we have had in the past and are likely to have in the future, and reflect also that great pressure will bc brought to bear upon future Treasurers, I can see only disaster ahead, if the financial policy of Australia is to bc directed by the Treasurer of the day. [ visualize with horror members of Parliament in the future being inundated with complaints from constituents that they cannot get overdrafts from the Commonwealth Bank, and seeking aid in support of their applications, even dough they have no substantial security to offer. Members will be told that that is their job to get the advances and should they not be willing to support such applications, 3 visualize letters threatening them with loss of support. Only a Treasurer who is a superman will be able to resist the pressure that will be brought, to bear. The Governor of the Commonwealth Hank will be told, “You must obey the Government, and must lend money to this or that person, or for the establishment of this or that industry regardless of the security offered. If necessary, you must deprive this industry of financial support in order to assist that industry “.
Should that happen, the end will be worse than the beginning. I had hoped that the policy ‘of the Labour party, that money in plenty could be provided easily and that money, not production, can save mankind, would not be given legislative effect.
– The depression years convinced us of many things.
– If the bill passes its second reading. I hope that the Government will, at least, show common sense and will accept some amendments which Opposition senators will propose, f know that that is expecting too much. Nevertheless, we shall continue to hope that future Treasurers will measure up to the standard which I have mentioned, so that the danger which I foresee to the well-being of the people of Australia will not become real.
Senator NICHOLLS (South Australia) 1 4.23].- I support the bill to expand the functions and powers of the Commonwealth Bank to include the regulation of banking principles generally along the lines which war-time experience has shown to be desirable in the national interests. Banking control, as embodied in the War-time (Banking Control) Regulations, has not only operated satisfactorily, but also has provided a sound basis for the whole of our war effort. The experience gained since they have been in force has indicated clearly that they must be continued and expanded if the Government is to deal effectively with the many problems which will inevitably arise in the post-war period - problems which will demand our immediate and earnest attention, and which can only be solved if the Government of the day lias the powers necessary to implement its financial policy. Under the existing regulations, it is necessary for the private banking institutions to deposit with the Commonwealth “Bank all excess funds which they may possess at a rate of interest covering administrative costs only. From November, 1941, to July, 1944, the total amount deposited by the private banks with the Commonwealth Bank was approximately £185,000,000, on which the interest paid was at the rate of 15s. per cent. Had those controls not been in force, there would have been nothing to prevent the private trading banks from issuing credit to an amount many times their accumulated funds, and then investing the proceeds in war loans at high rates of interest. Those regulations have also prevented any increase of bank profits over and above the profits made in- prewar years, and have controlled interest rates to such a degree that, whereas 6 per cent, interest was paid, on war loans raised during the war of 1914-18, the rate to-day is 2-J per cent, for five years, or 3i per cent, for fifteen years. Moreover, interest rates on loans to the public have been reduced considerably. The expansion of credit which became necessary during war-time amounted to approximately £400,000,000 to September, 1944. That sum has been provided by the Common wealth Bank interest free, but had the controls which I have mentioned not been in operation, the great bulk of that money would have been advanced by private trading banks at high rates- of interest. The expansion of credit will’ not end with the conclusion of the war, because we hope in the postwar years to lay the foundations which will make Australia a great nation. Obviously, credit for that expanding economy must be provided by the nation itself in accordance with its needs, in the same way as during the war munitions were given priority over nonessential production. It will be the duty of whatever government is in power in the post-war period to ensure that in financial matters, as in other things, first things shall come first. For instance, the building of theatres and similar projects will have to wait until the needs of the people for homes have been fully satisfied.
In order to implement an economic policy along the lines indicated, it will be necessary for the Government to have power to ‘ensure that the real wealth of the Commonwealth will provide a maximum standard of living, consistent with the productive capacity of Australia, through the effective control of national credit resources and the establishment of an efficient medium of exchange between production and consumption. We would indeed have short memories if we could easily forget the depression with its disastrous effects upon our economy - the 10’ per cent, wage cuts; the scaling down of invalid and old-age pensions; the gap which existed between production and consumption; the thousands of people who were unemployed and compelled to exist on the dole because governments were unable to finance their policies. We also remember, .as the Minister for Trade and Customs (Senator Keane) has indicated, how the Commonwealth Bank, together with the private trading banks, refused to assist in the rehabilitation plans of the Commonwealth and State Governments designed for the express purpose of relieving unemployment and restoring industry. This Government is determined to ensure that in no circumstances shall a system of that description, a system embracing poverty, misery, degradation and even starvation, be allowed to operate. It certainly was degrading to those men- in the depression who, through no fault of their own, were compelled to stand idly by and witness their wives and loved ones apply to some “silvertailed “ charitable institution in our cities* and suburbs for some one else’s left-off clothing. That was a system of poverty in the midst of plenty, a system which compelled thousands of our people to exist on the dole, because government? were unable to finance their policies.
The insidious propaganda inspired by the private banks against this legislation is, to say the least, on a par with their usual form when their own personal interests are concerned, and is nothing les? than pure undiluted fiction. It bears a striking similarity to the many statements made by kindred interests when the hill to establish the Commonwealth Bank wai being considered by the Parliament in 1911. On that occasion the Melbourne Argus said that the whole scheme was conceived in idiocy, that it constituted a malicious use of public funds in order to compete with private activities which then enjoyed the full confidence of the public. That newspaper also said that there was nol the slightest justification for the scheme, that its failure from its inception was certain, and that it would be abandoned after a few weeks of glorious experiment. The success of the Commonwealth Bank is a complete answer to that statement. The present insidious, hysterical outpourings emanating from similar interests are just as false; and the same factor, time, will prove them to be so. Just imagine leaving the nation’s reconstruction programme in the hands of these people, the people who control the private banking institutions ! Immediately the war concluded we would be told that during the war Australia had indulged in a glorious financial spree. The argument of such people would then run : In the cold light of the morning after, with nerves on end and twitching fingers, the national financial drunkard must be made to realize that such conduct cannot be continued ; and he must be duly chastised for his own benefit. When peace returned, that would be the story splashed across the pages of every newspaper controlled by vested interests. It would not end there. Money would then reveal an unaccountable tightness. Disorganization of industry and mass unemployment would be stern realities, and the National Government struggling against those problems would find itself left high and dry on the foreshores of disappointment, and disillusionment; and, overnight, we would find that the sovereignty of powers vested in the Commonwealth Parliament would suddenly remove its residence from the legislative halls of Canberra to the board rooms of the associated banks. We remember only too well the deflationary credit policy instituted by the private trading banks during the last depression, which caused the effect of the depression on Australia to be doubly intensified by denuding our home market of purchasing power. As I have already said, we also remember how embarrassed were both the Commonwealth and State Governments, how such a policy jeopardized the very existence of many reputable firms and was directly responsible for many others becoming insolvent. Such a. policy was the greatest single contributing factor to the disastrous wave of unemployment which marked the progress of the depression which swept, like a bush-fire through Australia. In the light of these facts, is it reasonable, or sensible, to suggest that the power to* pursue anti-social policies should be left in the hands of those people, in the hands of private banking institutions, so that the post-war programme of the Government can be jeopardized? Would any government be prepared to take such a risk, having in mind the interests and welfare of the nation? Obviously, the answer is “No”. Therefore, it is essential that the full sovereignty of powers vested in the Commonwealth Parliament must be placed beyond the challenge of any financial group if Australia is to make the progress which all of us desire to witness in the post-war period. As a matter of fact, only a government so secured could ensure that its policy would be determinedly and expeditiously implemented. In addition, financial control would then remain where it rightly belongs in a democracy, namely, in the hands of the nation. Surely, this is in accord with the Constitution which gives full and complete power to this Parliament to make laws with regard to banking and monetary policy. Section 51 of the Constitution reads -
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: -
) Banking, other than State banking; also State banking extending beyond the limits of the State concerned, the incorporation of banks, and the issue of paper money:
That is a complete answer to the insidious propaganda being circulated to-day by certain interests which are endeavouring to create the impression . in the minds of the public that this Government is doing something detrimental to the interests of the nation, something which is not in accordance with the Constitution and which is contrary to the expressed desires of the people at the recent referendum. As indicated by the Minister for Trade and Customs, clause 8 of the bill is a most important provision. It sets out the guiding principles under which the Commonwealth Bank shall operate. Clause 8 reads -
Tt shall be the duty of the Commonwealth Bank, within the limits of its powers to pursue a monetary and banking policy directed to the greatest advantage of the people of Australia, and to exercise its powers under this Act and the Banking Act 1045 in such a manner as, in the opinion of the Bank, will best contribute to -
the stability of the currency of Australia;
the maintenance of full employment in Australia; and
the economic prosperity and welfare of the people of Australia.
Surely no logical argument can be advanced in opposition to the principles outlined in that clause. It is essential that the Government stabilize the currency if inflation, or deflation, is to be avoided. The whole of our reconstruction programme depends upon the degree to which the Government is able to stabilize the currency; but if inflation, or deflation, occurs, it will not be possible for the Government to implementits policy of full employment, with the result that the economic prosperity and welfare of the people of Australia must suffer accordingly. The bill also provides for the restoration of the original charter of the Commonwealth Bank. The bank is to be controlled by a Governor, and the present bank board is to be superseded by an Advisory Council consisting of the Secretary to the Treasury, the Deputy Governor, an additional representative of the Treasury who shall be an officer of the Commonwealth Public Service, and shall be appointed by the GovernorGeneral, and two officers of the bank to be appointed by the Treasurer on the recommendation of the Governor. The Advisory Council will advise the Government on matters appertaining to monetary and banking policy and such other matters which may be referred to it from time to time, but it will not deal with ordinary matters of administration. Those provisions will, indeed, restore the original charter of the bank, and place the bank where it was from the time it was first created in 1911 until 1924, when it was taken out of the hands of the Governor by the government of the day and placed in the bands of the Commonwealth Bank Board, which then consisted of the following gentlemen : - Mr. J. J. Garvan, managing director of the Mutual Life and Citizens Assurance Company Limited; Sir Robert Gibson, K.B.E., vice-president of the Associated Chambers of Manufactures, Victorian representative on the Aus tralian Coal Board, and a director of the Austral Manufacturing Company, the Lux Foundry, the National Mutual Life and Citizens Assurance Company Limited, the Union Trustee Company, Robert Harper and Company, and the Chamber of Manufactures Insurance Company;Sir Samuel Hordern, a director of Anthony Hordern and Sons Limited, the Australian Mutual Provident Society and the Royal Insurance Company; Mr. R. B. W. McComas, president of various wool buyers’ associations and proprietor of William Haughton and Company ; Mr. Richard S. Drurnmond, who appears to have been the only member of the board who was not connected with outside interests; and last, but not least, Mr. J. MacKenzieLees, former chairman of Associated Banks in Queensland and general manager of the Bank of Queensland and the North Queensland Bank.
From an analysis of the Commonwealth Bank Board as constituted by the BrucePage Government in 1924, it is obvious that although the bank was conceived originally as a people’s bank, it was taken out of their hands and made subject not only to private interests, but also to interests which were in competition with each other, as is evidenced by the number of insurance companies and other like organizations represented. Under the new set-up, the bank will be controlled by a Governor who will be advised by the disinterested experts who will constitute the Advisory Council.
Considerable support for this legislation has been forthcoming from many bodies other than labour organizations. Sir Louis Bussau, a former Victorian Agent-General in London, is reported to have said at the recent conference of the Australian Country party held in Melbourne, that the people of this country should not be hamstrung by the finances of the nation being in the hands of private individuals, and that if the Commonwealth Bank did not have power over all finances within the Commonwealth, the Government could not fulfil its promises in regard to guaranteed prices, and the re-establishment and rehabilitation of ex-servicemen. He also said that the greater the power that the Commonwealth Bank possessed, the greater would be the benefits accruing to primary producers. Speaking at the same conference, the honorable member for” Wimmera (Mr. Wilson) said that the Parliament was not dealing with the nationalization of banking, but was considering the restoration of the original charter of the Commonwealth Bank, and the inclusion in the Commonwealth Bank Act of certain principles for which there was full and complete power in the Constitution. He also said that if Australia were to continue to develop, without any financial impediment being placed in the way of the men who had saved this country, and with a continuance of guaranteed prices and industrial stabilization, the present legislation was absolutely essential. The conference carried a resolution to the effect that the Commonwealth Bank should not have power over the lending activities of the private trading banks, but should have power to operate as a central bank, control the note issue, and compete as a trading bank with private banking institutions, and to establish a Rural Credits Department. The annual conference of the Australian Wheat Growers Federation held in Adelaide at almost the same time, also carried a resolution urging the abolition of the Commonwealth Bank Board and the establishment of an Advisory Council on which all rural interests would be represented. It is obvious from the resolutions adopted at those conferences, that those organizations are determined that in no circumstances should the people whom they represent be left in the air at the end of the war. They realize that under its original charter the Commonwealth Bank was the financial backbone of the nation and they remember the achievements of the bank during the last war when it floated loans amounting to £350,000,000, saving the Commonwealth approximately £8,000,000 in bank charges, financed various primary producing pools to the sum of £436,000,000, made available £4,000,000 for housing, and loaned £9,360,000 to local governing bodies for public works. These organizations realized that what was done on that occasion could be done again if necessary. They know that the credit necessary in the post-war period will be lucked by the tremendous assets of primary and secondary industries, and public works.
I have waited twenty years for this legislation and I am very proud to be in this chamber to-day, representing the whole of South Australia, and to be able to cast my vote with the votes of my colleagues in favour of this legislation which is part and parcel of the general pattern of legislation which will enable the Government to implement its policy of full employment. If we, as the custodians of the people’s interests, cannot provide economic security for the people in the future, the sooner we walk out of this country and leave it to the aborigines, from whom it was confiscated, and to whom it rightly belongs, the better it will be for all concerned. I have much pleasure in supporting the bill.
Senator COOPER (Queensland) [4.52 J. - This bill is one of outstanding importance as it embodies vital changes in the financial structure of this country. It is evident from the general trend of the speeches in the House of Representatives that this measure, and the one which is associated with it, are designed to implement one of the most cherished planks of the Labour party’s platform, namely, the nationalization of the banking system.
The Labour party did not receive a mandate from the people of this country at the last elections to introduce legislation of this character. In fact, a promise was given by the Prime Minister (Mr. Curtin) that no legislation dealing with the nationalization or socialization of industry would be introduced during the war. At the recent referendum the peope of this country confirmed that view by voting overwhelmingly against the conferring of new powers upon the Commonwealth. The Government was returned to office pledged to maintain a maximum war effort. The war is still in progress, and still demands the full support of the people of Australia. Controversial legislation does not help to achieve that unity which is so necessary to bring the war to a successful conclusion. From statements made by senior Ministers in the House of Representatives, it would appear that the Government is not prepared to accept any amendments of this bill. The Government has a majority in both Houses. and can secure the passage of any legislation it introduces; but as these measures will have such far-reaching effects upon the industrial and economic life of the people of this country, the Government would have been well advised to have consulted all parties in Parliament before introducing them. This measure and the Banking Bill represent only the views of the Labour party. All that we on this side of the chamber can do is draw the attention of the people of this country to the dangers inherent in this legislation. That I intend to do.
Legislation establishing the Commonwealth Bank was passed in 1911 and the bank opened for business as a savings bank in July, 1912 - next month it will have completed 33 years of service to this country. In 1913, the bank commenced trading bank activities, and in 1920 it assumed control of the note issue. In 1924, the Commonwealth Bank Act was amended to permit the bank to undertake central banking activities and in 1925 a Rural Credits Department was added. Therefore, to-day the Commonwealth Bank is engaged in savings bank business, general trading bank business, the issue of rural credits, and central banking business. In addition, it controls the note issue. The achievements of this institution over the past 33 years should be a source of pride to all Australian citizens. The bank to-day is a monument to its founder, Mr. Andrew Fisher, and to Sir Denison Miller, its first Governor, who was responsible for much of the early planning and management of the bank; yet, despite the progress of the bank over the years, there are people in the community to-day who would like to see it returned to where it started in 1911. If that were done, this country would lose all that has been gained by the development of the bank over the years, and the bank itself would become merely a savings bank similar to many other such institutions in this country. Since the bank first opened its doors, its business has grown enormously, and of course, its responsibilities also have increased. By 1924), its activities had become too great for one man to control, and a Commonwealth Bank Board was set up consisting of six members, representing various interests. That board was constituted by clause 17 of theCommonwealth Bank Act 1911-1943, which states- (1.) TheBankshallbemanagingbyaBoard of Directorscomposed of the Governor and seven other Directors. (2.) Subject to this Act, the seven other Directors shall consist of -
It will be seen that the act provided that these members were to be men of widely differing experience in various branches of commerce and industry. They were thus able to give advice to the Commonwealth Bank Board based on their own personal experience of matters with which the Governor was not sufficiently familiar to make a final decision. The Secretary to the Treasury is a member of the board, and for many years that body worked in close co-operation with the private banks and the Treasury. Throughout its 33 years the bank remained entirely politically independent; that is an important contrast, particularly in view of the bill now before the chamber. TheRoyal Commission on Monetary and Banking Systems upheld the structure of the bank and the Commonwealth Bank Board, and in paragraph 575 of its report stated -
The present method of government of the Commonwealth Bank is by a Board, appointed by the Commonwealth Government and consisting of a Governor, the Secretary to the Treasury and six Directors who hold office for a term of years and retire in rotation. The Board elects its own chairman. We are of opinion that this method of government is generally satisfactory.
– Was that a unanimous decision?
– Paragraph 576 of the report states -
We recommend -
1 ) The Governor should be Chairman of the Board by virtue of his office and should possess qualifications and receive a salary commensurate with the importance of the office. The appointment of the Governor should not be made on the basis of seniority, nor is it even essential that he should already be in the service of the Bank.
The Chairman of the commission and Mr. Nixon dissented concerning the
Governor being chairman of the board by virtue of his office. Sub-paragraph 3 of paragraph 576 states -
The limitation on the field of choice of Directors in section 11 (2.) (6) of the Act should be removed. The members of the Board should bc selected for capacity and diversity of experience and contact, and not as representatives of special interests.
The commission was unanimous on that point with the exception of Mr. Abbott. Subsequent to its appointment, the Commonwealth Bank Board was given wider powers in a time of national emergency; thus, in 1939 the then government clothed it with wartime powers. In comparing the set-up of the Commonwealth Bank Board which has been in operation since 1924, with that proposed in the bill one finds that the board, is to be abolished and an Advisory Council substituted. Sub-clause 2 of clause 28 provides -
The Advisory Council shall consist of -
The Secretary to the Department of the Treasury;
The Deputy Governor; te ) An additional representative of the Department of the Treasury who shall be an officer of the Public Service of the Commonwealth and shall be appointed by the GovernorGeneral; and (<J) Two officers of the Bank, who shall V>e appointed by the Treasurer on the recommendation of the Governor.
– The Advisory Council will have no functions at all.
– They are all experts in finance, not in special types of vested interests.
– The members of the Advisory Council will have a sound knowledge of banking and Treasury matters, but when it is realized that the .Commonwealth Bank is to become a trading bank dealing with all kinds of business, although the members of that council may be experts in their particular sphere they will not have the necessary knowledge of the varying needs of business, such as is possessed by members of the present board. The members of the board were selected from many representatives of business interests and industry. The council may be called upon to assist the Governor if asked to do so. There is no need, however, for him to accept its advice. It will not hold regular meetings to deal with the general business of the bank. In clause 9 provision is made that if disagreement arises between the Governor of the bank and the government of the day concerning the bank’s policy, the Treasurer is empowered to direct the Governor of the bank to carry out the ‘policy of the Government. That brings the bank, through the direct intervention of the Treasurer, under political control. None of us know what kind of government may be in office in ten years, or even five years’ time. This provision takes away from the Parliament - consisting of the direct representatives of the people - the power to do anything concerning the banking policy of the Government or Treasurer.
– That is not provided in clause 9.
– -But it is implied. No act can be passed and no discussion will take place in Parliament concerning such a matter. The Treasurer has the power, in a final discussion with the Governor of the Commonwealth Bank, to decide on any policy.
– That is on any policy of the Government.
– That is so. Senator Collings. - How could it be a private conversation between the Treasurer and the Governor when the Treasurer has to subscribe to the policy of the Government?
– The Minister does not follow me. Parliament is not the Government; it is a body of representatives elected by the people, but the Government represents only a certain portion of the people.
– The Government is the Executive.
– That is so, but it is not the Parliament. The Parliament consists of the Government and the Opposition. Any measures taken which would interfere with the financial or economic policy of this country should be discussed in the Parliament and not in some secret place such as a caucus meeting, where the elected representatives of the people have no chance of considering the matter. This proposal is a revolutionary change in the me’.hod of management and brings the bank under complete political control. It is a reversal of the methods that were responsible for the remarkable progress of the Commonwealth Bank during the 33 years it has operated. I hold no brief for private banks. They are in a sufficiently strong position to defend themselves. Some of them have been functioning in Australia for 125 years and have kept abreast with the progress of this country. The private banking system practised in Australia is of Scottish origin and consists of the branch banking method. It is most suited to this country, with its vast distances and sparsely populated areas. It is so flexible that it can readily adjust itself to the changing conditions of a country such as ours, and the resources of the banks are made available to other than restricted areas. In the early days, the private banks guided this country through many progressive and successful periods and also lent their aid in times of depression. The private banks have established branches or agencies in the outback areas, and when mining towns were first set up, consisting mainly of the tents of the miners, a branch would be opened ready to transact business and assist, in the development of the field.’. In rural areas the banks have worked hand in hand with those engaged in the wool and cattle industries. They stood by the early pioneers, shared their hardships, and helped them to overcome their difficulties. They played an important part in building up the wool industry which is so valuable to Australia to-day. From my personal contacts and experience of the assistance given to settlers in the far north-western parts of Queensland, I am able to refute what Government supporters have said about the private banks. From my own experience of the drought in north-western Queensland from 1925 to 1935, I can say that the private banks financed their customers for five or six years free of interest, restocked their holdings and wrote down their overdrafts.
– The worst period was from 1929 to 1931.
– But the private hanking system has a record of progress extending over 125 years, and it should not be judged on what occurred in the last depression. Whilst the conditions which prevailed at that time are most regrettable, it should be remembered that the depression experienced in Australia from 1929 to 1931 was world wide. Australia was the last country to feel that depression, and it was the first to recover from it. The resourcefulness of one of the Australian trading banks in fixing the exchange rate at 25 per cent., at a time when the rate was detrimental to Australia’s export trade, had the effect of increasing the spending-power of money received from exports by one-fourth. The value of wool at that time was about £10 a bale, and the fact that the spending power resulting from the sale of each, bale was increased by about £2 10s., considerably assisted in Australia’s recovery from the depression. That shows the great flexibility of the private banking system. As a rule, the trading banks deal more with individuals than with the actual assets of a business, and they will back an individual to a larger degree than a business undertaking; but a governmentcontrolled bank acts in accordance with regulations.
– How many governmentcontrolled banks have we?
– In the various States there are agricultural banks and government savings banks, and their policy is more or less dictated by regulations which are not flexible. The privatebanks, however, determine their policy io accordance with the ability and integrity of their individual customers. In some instances ‘ they may increase overdrafts beyond the danger point, but in a government-controlled bank, when the limit allowed by regulations is reached, it is rarely exceeded. Senator Sheehan. - Does the honorable senator suggest that the private banks take undue risks?
– Yes, in certain circumstances, they may, but they closely watch the activities of the residents in the areas where they do business, and they are closely in touch with the individuals engaged in industry.
Progress in industry, with which social security is closely interwoven, is largely due to confidence in the stability of the banking system. Public confidence in the present system has been built up by the progress which Australia has made under that system. Since the outbreak of’ war the deposits with the private banks have increased by £276,000,000. Advances have certainly decreased, but that is due to war-time control. It is generally agreed *hat in time of war there is need for such control. The private banks have played an important part in the provision of war-time finance, especially through their war-time deposits with the Commonwealth Bank. They have deposited a total of £230,000,000 at an interest rate of 15s. per cent, per annum, thus saving the people of Australia some tens of thousands of pounds yearly in interest.
– That has all been done under compulsion.
– Quite so. We are all under compulsion in war-time. In various ways the private banks have supplied the Government with war-time finance to the amount of approximately £368,000,000. To have done that the private banks must have been in a stable condition and must have enjoyed the confidence of the public.
– Deposits with the Commonwealth Bank have also increased.
– Yes, but the fact that the private banks have increased their deposits since the outbreak of war by £276,000,000 shows that the public has confidence in the present banking system.
I now turn to that portion of the bill in which it is proposed to abolish the reserve requirements in respect of the note issue. The Minister in charge of the bill pointed out that the Royal Commission on Monetary and Banking ‘Systems reported on that matter, and that in view of its recommendations the Government had decided to do away with the reserve. Paragraphs 579 and 5S0 of the commission’s report state, inter aiia -
It is desirable Unit some limit should ihe placed on the note issue, hut the issue should be capable of some expansion where necessary. We recommend -
The statutory provisions which require the Commonwealth Bank to hold gold or sterling in proportion to the amount of Australian notes on issue should be repealed.
That recommendation was dissented from by Mr. Pitt, and the chairman of the commission consented subject to reservation. The commission made the following further recommendation: -
The note issue should be limited by law to a fixed maximum (for example £00,000,000), subject to the right of the Bank to exceed the maximum by a stated amount (for example £9,000,000), with the consent of the Treasurer.
The commission recommended that there should be some control of the note issue, but under this bill the Treasurer or the Government of the day alone will have a voice in the matter, should the Government desire to increase the note issue beyond a certain limit. I object to the power to do that being taken out of the hands of the Parliament. There should be free and open discussion of such a proposal in the Parliament. The royal commission saw the fault of allowing the power to be taken from the Parliament, and it recommended that legislation should bc passed providing that a certain limit should not be exceeded.
– The commission was appointed by an anti-labour administration.
– But the Government has not acted in accordance with its recommendations. It has dispensed entirely with the backing of the note issue. The commission recommended a change, and since its report has been published there has been an alteration of the reserve held against the note issue. Previous to the issue of the commission’s report the reserve was fixed by act of Parlia.ment at 25 per cent, of the note issue. A later amendment fixed the amount of the reserve, to be held either in gold or partly in gold and partly in English sterling, at not less than 15 per cent, of the note issue. That action was taken on the recommendation of the Royal Commission on Monetary and Banking Systems. The present Government has decided to abolish the reserve altogether, and I fear that that will result in a lack of public confidence in the stability of the currency. Authorities in the rr i ted States of America are perturbed a: the great increase of that nation’s currency during the war, despite the enormous gold reserves which are held. The June issue of the Western Australian Mining and Commercial Review, in an article headed “ Price of gold “. in which reference is made to -a suggestion that the price of gold should he raised from 35 dollars to 5G dollars an ounce, states -
The inflationary policies followed in financing the war have so increased bank deposits mid money in the hands of the public that we have just a.bout reached the limit under present legal requirements. V/e are faced with the necessity, therefore, of cither overhauling our war finance programme, with a view of putting it on a non-inflationary basis, or changing the law so the banks can continue to expand credit. The Administration, of course, prefers the former course, and that almost certainly will be done.
The United States of America has 20,000,000,000 gold dollars, and the amount of the reserve against the currency is fixed by act of Parliament at 40 per cent. That wealthy country is holding a 40 per cent, gold reserve against its currency, yet the Commonwealth Government has decided to abolish the reserve, and to leave the government of the day power to decide what currency shall be issued.
T come now to the Industrial Finance Department of the Commonwealth Bank. Much could be said on this subject, but I shall draw attention to only one or two matters. Loans are to be made to assist industrial ventures, and that leaves the w.ay open for considerable pressure to be exercised in favour of particular industries. We shall probably find that members of Parliament will submit requests for loans to industries, some of which may not be sound undertakings. A central bank should always have its assets in liquid form, whereas a loan to assist an industrial venture- is generally regarded as a long- terra investment.
– That is why private banks will not touch them.
– The private banks have advanced money to assist many industrial ventures.
– They have been mostly big concerns, not small industries.
– I should say that a private banking institution would support any venture the success of which it believed to be assured. This bill will tie up the capital of the central bank for long periods, because no industrial venture is likely to become highly profitable for a number of years. In view of thi’ pressure which is likely to be brought to bear on members of Parliament, and the long terms under which industrial loans will be issued, the functions of the central bank are likely to be weakened.
We are at the beginning of a period in which great changes are almost inevitable. The banking system is the pivot upon which the happiness, prosperity and wellbeing of the community largely depends. Alterations of the system may be necessary to meet changing conditions, and I believe that this can best be achieved by full and frank co-operation and discussion between the Commonwealth Bank and the private banks. The Government is rejecting such an arrangement, and instead is launching out in this role on an uncharted financial sea without making any attempt to safeguard the savings of the people from being wrecked on the rocks which lie ahead.
Sitting suspended from 5.40 to S p.m.
– This is one of the most important bills that have ever come before Parliament, and it is a great privilege to me to be given the opportunity to speak in support of it. Some 34 years ago, when the late Mr. Andrew Fisher, who had as his Attorney-General the right honorable member for North Sydney (Mr. Hughes), introduced the original Commonwealth Bank Bill to which there was great opposition and all kinds of forebodings and prophecies as to what was likely to happen. Since then the world has rolled on apace, until we now find ourselves confronted with a situation the like of which has not been seen before. That being so, banking legislation paused in 1911 is obviously unsuited to deal with banking to-day. Looking over some of the speeches made at that time, I discovered that it was predicted that the country would go “ broke “, that there would be a run on the banks, that no one would take Fisher’s “ flimsies “, that the bad money would push out the good, and the country would not be worth living in. None of those things has happened, and to-day two measures dealing with banking have been introduced by the Government. These measures are closely related. One deals with the extension of the Commonwealth Bank and the other restricts the powers of the private banks. I do not hesitate to state my position in the matter. 1 question the right of private individuals, ethically, morally, economically or in any other way, to control the purchasing power of the community in this or any other country. The Acting Leader of the Opposition (Senator Leckie) dealt with the hill in detail, and, in the main, what he said was correct, but he said that supporters of the Government looked on money as something entirely unrelated to goods, and implied that we did not understand the law of economics. I realize that the bill is not a cure-all. I know from the worker’s point of view, that so long as the wage system lasts the worker’s position can be only temporarily improved. I know that a reduction of interest means a reduction of prices which is eventually followed by a reduction of wages; but, at the same time, despite the platitudinous verbiage of some erstwhile Socialists, who pervert and invert Marxian economics, the bill does not provide money for nothing, as the Acting Leader of the Opposition suggests.
The honorable member for Balaclava (Mr. White) said that the measure represents Douglas Credit. I know something about Douglas Credit, and the law of values. The bill, and what it stands for, are the exact antithesis of what the Douglas Credit propagandists advocate. They presuppose that by issuing currency either by national dividends or otherwise, and pegging prices, it will be possible to make consumption equal production. For instance, if production was valued at £1,000,000 and the purchasing power amounted to only £500,000, they say that merely by giving the people national dividends, or in some other way increasing the purchasing power by another £500,000, consumption would equal production. Anybody who knows anything about economics knows that that is piffle. There is no connexion between Douglas Credit and what is proposed under this measure. Is it suggested, for instance, that by giving £1,000,000 to people to build homes the Government would be giving those people something for nothing? One of the most appalling things in this country, despite our talk about how far we are advanced, is our backwardness economically. We are like the cyclist who is a length behind his competitors but thinks he is ahead of all of them. The town of Inverell, in New South Wales, like many other towns in Australia, has a population of from 4,000 to 5,000 who have more money than they know what to do with; but that town has a sewerage system which would be a disgrace in the Middle Ages. Surely, it is not suggested that the provision of a sewerage scheme in such a town would mean giving those people money for nothing. Of course not. The workers employed by the Civil Constructional Corps have done a magnificent job in our present emergency. Incidentally, I have the greatest admiration for Mr. Theodore, who is its administrative head. He and his colleagues have done a marvellous job; but, surely, had credit been made available to build roads throughout Australia during the depression, that work would have helped to relieve unemployment and distress. All that is proposed under the measure is that credit which the bankers have used for their own individual benefit should be socialized in the interests of the nation. What is wrong with that? The Acting Lender of the Opposition went back a few years. Let us go back to the origin of banking. In his book, Everybody’s Political What’s What, George Bernard Shaw has a very interesting chapter on the subject. He tells how Lombard Street, in London, was named after Lombardy, in Italy, where the brass workers and jewellers had their principal centre. Because they had safes, other people deposited their precious metals with them, and actually paid a fee for the safe-keeping of their precious metals. But the people who held the precious wares discovered that few of the owners ever came back to reclaim them. So they asked themselves, “What is wrong with lending out these precious metals? “ Occasionally a depositor would come back and claim his metals, just as, occasionally, a person after having deposited £5 in a bank comes back many years afterwards to claim it. But these people discovered, further, that as they got receipts for these things, they could use the receipts as we use currency to-day, and thus these precious metals were lent out at four or five times their value, and these people levied interest on what previously was deposited with them for safekeeping. Banking evolved from that system. The Acting Leader of the Opposition has described the measure as giving something for nothing. He said that banking is evolving, but the Government wants to freeze the assets of the trading hanks- The Government is charged with the rehabilitation of our people after the waa-. It is determined that the state of affairs which- arose after the war of 19 14-3 S shall not be repeated after this war. It is determined to use the banking system as far as possible for the purpose of putting people to work; and as the workers will create a value over and above what previously existed, this will solve the unemployment problem. What is wrong with freezing the assets of the trading banks? The Acting Leader of the Opposition went on to talk about inflation. This measure will obviate inflation.
– And deflation.
– I shall deal with that when I come to the political aspect of the subject. Senator Cooper agreed that if the reserve of £20,000,000 were allowed to be used for buying nonessential articles, inflation would result :in.d: would seriously interfere with our war effort. Why has the Government 1’iiacted regulations under national security legislation to control banks during the war? Why is it that in every country when there is a crisis, banks cannot carry on but must either be nationalized or controlled by act of Parliament? Because, after all, it is the wealth of a country that counts. The banks have found it impossible to carry on in every crisis. When the last war broke out the Bank of England had only £9.000,000 in gold. The people got “ windy “, and, as they believed that the war would last a considerable time, a rush on the banks resulted. Mr. Lloyd George told the banks to close their doors for three days. Then he told the Bank of England to issue currency; that the Government would permit it to issue currency to whatever limit it wished.
Subsequently, the people realized that they would eventually get their money back, and, therefore, did not apply for it for the time being. But the sum-total of that arrangement was that before the war was over the same bank was investing the same money which they got for nothing, and was charging the people interest on that money at the rate of 6 per cent.. Yet we are told that the banks have done something of great benefit to the people. The banks have never lent anything belonging to them. According to the Acting Leader of the Opposition there is not very much profit in banking. Every honorable senator on this side of the chamber has been sickened by the number of pamphlets he has received, mostly typed oil the same machine, telling him about the terrible catastrophe which would take place as the result of the passage of this legislation. If the banks do not make much profit, how are they .able to erect the best buildings in our cities and towns? By capitalizing credit they obtain control over industries controlled by monopolies. And at this juncture I might say that our next step in our rehabilitation scheme is to obtain control of monopolies. Otherwise, the Government’s banking legislation will not be the success that wedesire.
– What is a mono-, poly ?
– The Broken Hill Proprietary Company Limited is a monopoly, and the Liberal party is controlled!, by monopolies.
– When is the Government going to take over the Broken Hill Proprietary Company Limited ?
– I did not say that the Government wa3 going to take over that company; but I point out that had it not been for the tariff protection which a Labour government gave to that company,, it would not be in the position it is in to-day. That is how the Broken Hill Proprietary Company Limited developed. The Acting Leader of the Opposition asked why the Government should determine where money should be invested. Why should it not do so?’ If I wish to build a block of flats and. want, say, £100,000 for that purpose,. surely a government desirous of providing full employment and stabilizing prices for the farmers - and that can only be doneby government monopoly control of banking - has a right to say that the banks must not lend money for the building of flats at the same time when the community requires better schools, and better roads, and the people need to be better fed and better clothed. Surely it is the duty of theGovernment which has been elected to office to do these things to say that the banks shall do as they are directed. Thousands of pounds have been spent by the banks on propaganda against this legislation. Every leaflet which they issue says, “ Keep banking out of politics “, or “ Keep politics out of banking “. Have honorable senators ever heard anything so asinine? I have even heard ex-Cabinet Ministers use these phrases over and over again. What is politics? It is the administration of the State. Surely it cannot be denied that banking has something to do with the rehabilitation and re-establishment of ex-servicemen, and with almost every other administrative function of government. It even has to do with war; yet honorable senators opposite say, “ Keep banking out of politics “. If banking were out of politics at present, it would be the business of this Government to bring it within the realm of politics. Would any honorable senator suggest that the late Sir Robert Gibson was not a party politician?
– He was not.
– He was a hard-headed Scot.
– And probably would have been deported with the rest of us if a certain honorable member had his way. However, I am not concerned with his nationality. I agree with Isaac Watts -
WereI so tall to reach the pole,
Or grasp the ocean with my span,
I must be measured by my soul :
The mind’s the standard of the man.
It does not matter whether a man was born in Scotland or Timbuctoo.
– “ A man’s a man for a’ that.”’
The rank is but the guinea’s stamp,
The man’s the gowd for a’ that.
Every one knows that consumption can never equal production. Senator Cooper said this afternoon what great people the bankers are.
– He made a good speech.
– Yes. I may even see one or two honorable senators opposite on this side of the chamber when the vote on this bill is taken. Lord Keynes, the noted British economist said -
There can be no doubt that all deposits are created by the banks.
That means, that banks do not lend their depositors’ money, as we are so often informed by bankers, but rather that bank loans create deposits. When private banking institutions buy government and other securities, they do not part with cash or hand over real wealth. They simply create new money.The book-keeping entries that take place are as follows:An asset account - government and municipal securities - is debited with, say, £1,000, and a liability account - government deposit or current account -is credited with £1,000. The late Right Honorable Reginald McKenna ofthe Midland Bank said -
When a bank makes a loan to a customeror buys war loans or makes any other investment, the purchase money goes to the credit of somebody’s account and increases the total deposits.
The famous British Macmillan commission of 1929 substantiated these opinions when it stated -
Let us suppose that a customer has paid into the bank £1,000 in cash, and that it is judged from experience that only the equivalent of 10 per cent. of the bank depositneed be held actually in cash to meet the demand of customers, then the £1,000 cash received will obviously support deposits amounting to £10,000. The bank can carry on the process of lending, or purchasing investments, until such time as the credits created, or investments purchased represent nine times the amount of the original deposit of £1,000 in cash.
The question arises : Why should a private banking monopoly be allowed such power over governments, industry and people? Marriner Eccles, chairman of the Board of Governors of the Federal Reserve Bank, of the United States of America, in a speech to the Ohio Bankers Association in 1935, said -
There is no political or economic power more charged with the general or social interest than the power to increase or decrease the supply of money.
If the Sovereign Authority delegates this power to a particular group or class in the community, as it has done in large part in this country, it divests itself of a part of its sovereignty.
That is what we are doing in Australia. I could read such quotations endlessly if it were necessary for me to do so. The idea that hanking is a mystery is fostered by the bankers themselves to fool the people. Some of the most stupid people I have ever met were bankers. Some years ago when I started cn a trip to China I discussed with two bankers - one American and one Australian - the desirability of buying Japanese yen. They said not to buy on any account; but I had some knowledge of economics and of what the Japanese were trying to do at that time, so 1 bought and sold Japanese yen over and over again. I took advantage of the laws relating to banking.
– For private profit?
– Yes, and I hope my speech to-night will also be of some profit. I am not attacking individuals, but the capitalist system. George Bernard Shaw, who is a’ millionaire over and over again, has been a socialist for nearly 70 years. However, to return to the trip of which I was speaking: As [ have said, I bought and sold Japanese yen over and over again, and managed to get through and still show a profit. I ask any member of this chamber to tell me by what ethical or moral right any individual, group of individuals, or group of groups of individuals, controls the purchasing power of any country. The only reason why that has been done in the past is that until now, the people have been too stupid. After all, what is the security of this country? If nobody went to work tomorrow, the bankers would not be worth a penny. They would all be “ broke “.
– Of course.
– The Acting Loader of the Opposition admits that. If security .means putting men to profitable work, then what is wrong with a policy of full employment?
– If what the honorable senator says he true, how can it be argued that bankers create depressions’?
– I do not believe nor have I ever said that bankers are wholly responsible for depressions. Depressions are inherent in a capitalist system ; but by controlling the currency of a country in times of adverse economic conditions, a government can alleviate unemployment enormously until such time as the next step in economic recovery can be taken. Anybody who argues that bankers are wholly and solely responsible for depressions does not understand economics. However, I return now to the cry of the bankers that politics should be dissociated from banking.
– It is not so much politics as politicians that should be dissociated from banking.
– If politicians, who are the elected representatives of the people, should not control banking, whom does the honorable senator suggest should exercise that control?
– The people themselves.
– How can all the people of any country have a voice in the control of banking? How could the 7,000,000 people of Australia run a bank? Bankers can force countries into war. Not long before this war, the Governor of the Bank of England, Mr. Montagu Norman, loaned £7,000,000 to Hitler, and he is reported to have said, “ If I never get it back, it is worth giving it away so long as I can stop the Bolsheviks “. Lord Baldwin, who had control of Great Britain’s heavy industries, also helped to finance Hitler. When the Social Democrats were in office in Germany they could not get any support from England or France. M. Poincare of France just laughed at them, because investment in Germany when they were in office was not profitable. Anybody who has read the history of the fast war knows that there was a province in northern France in which the international iron and steel trusts, controlled jointly by Germany and France, had huge interests. When Germany occupied this province, the French did not bomb it, and when the
French occupied it, the Germans did not bomb it. There was a gentleman’s agreement to that effect. In fact, several generals were cashiered for failing to observe this agreement. The industries of that province were owned by international bankers, and it did not matter to them whether Germans or Frenchmen were killed so long as they were able to draw their profits. The great, Baron Rothschild once said -
Let me control thu money of a country and I do not care who makes its laws.
He knew what he was talking about. Prior to the last war, antagonism was created between the people of France and Germany by the press of those countries, which was under the control of the international armaments ring. First the German press would publish propaganda against France, and then the French press would retaliate, and so on. until the people of those countries were psychologically ready to go to war. Forty-eight hours prior to the outbreak of this war, Great Britain was deprived of supplies of certain most important metals.
Some years ago a British Labour man, who was one of Mr. Churchill’s righthand assistants, visited this country, and gave me some interesting sidelights on happenings- in Europe. He told me that his offices were next to those of the McGowan Chemical Trust, and that he used to meet Lord McGowan every day. One day he asked Lord McGowan how things were in Europe, and Lord McGowan said, “ No good. The French do not know how to organize things. Take Czechoslovakia for instance: What they want there is German organization and British capital “. These are the people to whom Senator Cooper referred this morning as the saviours of humanity. When the German forces entered the Sudetenland, £6,000,000 in gold was held by the Czechoslovakian Government in London. What happened to it? It was handed over to the Germans by the Bank pf ‘England. When ‘the matter was raised in the House of Commons Sir Kingsley Wood said, “I do not know anything about it, and if I did I could not do anything because the Bank of England is not subject to political control “. The Bank of England gave £6,000.000 of Czechoslovakian money to
Hitler, and our boys have paid for it since, many with their lives; yet Senator Cooper says what wonderful people the bankers are, and that if control of the credit were taken from them the world will be a terrible place. I say that if we do not take control of the credit from these international burglars, we shall be unable to stop wars in the future as we have been in the past. They have no country and no soul. They are concerned only with profits. Honorable senators would be interested to read of the ramifications of the Chemical Trust in America, and the action of that organization in withholding German inventions from the Allies when war broke out. Of interest also are events in Switzerland, where the banks have .been financing Hitler throughout the war. This legislation is aimed merely at bringing the currency and the credit of the country under the control of the Government so that they may be used in the interests of the people as a whole. I do not see anything wrong with that. In the House of Representatives several nights ago I hoard the honorable member for Balaclava (Mr. White) say that inflation which had brought Hitler to the forefront, would create chaos in this country. Inflation may have assisted Hitler’s rise to power, but what was the cause of inflation? It was caused by bankers - the “ saviours of humanity”. I have here an interesting booklet entitled Time Buns Out, by an American, Henry Taylor. The book deals with a well-known gentleman called Stinnes. It states -
Stinnes, called “ The Assyrian” by enemies and “ Der Principal “ by sycophant associates, had capitalized inflation. Acting with ruthless energy, he had, in four years, hammered out a glittering fortune of $100,000,000. He sat on the board, of 60 corporations at the timo I saw him in 1923, and employed 700,000 labourers in his scattered companies. Stinnes was then 53 years old.
The managers of only a few’ of these knew De Principal by sight. But all Europe knew that Stinnes’ power extended through every facet of Germany’s banking system, shaped the German Government’s policy in the four corners of the world through control of the Foreign Office, influenced the home front through his mighty newspaper Deutsche Allgemeine Zeitung . . .
The big trick in Stinnes’ bag was that heknew the mark must fall. The “ Inflation King” inherited a moderate-sized coal and steel interest from his father. He sold marks abroad, converted them into gold, left this gold outside German)7. Stretching his firm’s credit as far as he could, he made commitments in marks, contracting debts all over Germany. This was an over-simplification, of course, but it was Stinnes’ basic formula.
Stinnes met these obligations, when duc, by reconverting trinkets of his foreign gold into the tobogganing mark. He and his associates got the properties. Their -workmen got worthless marks.
These are the people whom Senator Cooper describes as humanitarian and without whose beneficent patronage we will cease to exist.
– The statement that not one rich man in Germany suffered, is incorrect. They .all suffered.
– The nien who had real assets represented in gold and property did not suffer. It was the worker who suffered. The bankers and the property holders did not lose because of inflation; the people who lost were the workers because the value of their wages decreased and that were worse off than any other class. If the author of this book is correct in saying that Hitler was brought to power as a result of inflation, it was the banking classes that were responsible for that inflation because they financed Hitler. It has been said that the war is being fought against Fascism. The Leader of the Opposition in the House of Representatives (Mr. Menzies) stated recently that the Labour party seemed to think it could do in peace what it could do in war, but there is a big difference in the economic state of a country in war-time compared with peace-time. In war-time an enormous national debt is incurred and most of the things produced are blown up in the air and their value is lost. It is not suggested in the bill that useless commodities should be manufactured. In war-time three-quarters of the population i3 employed in industries producing either munitions for the purpose of destroying life, or food- and clothing for servicemen. What a terrible indictment it is on the capitalist system that either peace and starvation go hand in hand oi’ war and work! The Labour party contends that if, in times of war, production is carried on for the purpose of destroying life, in peace-time, it should bo possible to produce commodities for the needs of the people. That can be done by controlling credit and using it for the benefit of the people instead of the benefit of the bankers and shareholders of hanks.
All over i the world the Labour movement is fighting the banking ring. Tb, Labour party in England declares that it will nationalize the Bank of England, also the coal mines, transport and other social services. General de Gaulle knows that to have a satisfactory financial system in France, government control of finance is necessary - not the revival of the Bank of France and the two hundred families who are shareholders in it. Although de Gaulle is a conservative he knows that nationalization of social services such as transport, coal supplies, electricity, gas and other amenities is necessary. Because this Government proposes to provide these benefits for the people, members of the Opposition hold up their Hands in horror and exclaim that the country will be ruined. Five or six years ago I was in New Zealand at the time when the Labour Government there introduced a bill to secure control of the Bank of New Zealand. There was a great outcry that the country would be ruined, .and bankers in Australia and England tried to sabotage the measure. The New Zealand Government was not then aiming at nationalization of banking and its bill was not as far-reaching as this measure. No member of the Labour party had ever been in a Cabinet previously and the Government was walking warily. After the bill “was passed, however, the Government proceeded with social service plans and built bouses for the workers that are the finest in the world, with the exception of those in Sweden. The New Zealand Government is now considering another banking bill which goes further than the measure now before this chamber. Last week members of the Opposition asked why the Government had not introduced a post-war rehabilitation scheme similar to that of New Zealand, but I have not heard those honorable senators refer to New Zealand when debating this measure. The Acting Leader of the Opposition would perhaps describe the New Zealand banking bill now under consideration as “ drastic “ but, in my opinion, it is more advanced than this measure. Two or three years ago a great deal was said about the “ new order “, but nowadays every one is in favour of the “ new order “ so long as it does not interfere with the “ old order “.
– What is the “new order “ ?
– Senator Gibson would not know if I told him. Asinine interjections such as those of the honorable senator do not mean anything. However, for the honorable senator’s benefit, I will explain that the “ new order” is something different from the present order.
– Now I understand.
– I am glad Senator Gibson understands something at last. Any one who looks out upon the world can realize that fascism is not overthrown. Although Lord “Haw Haw “ is being tried for treason, the Fascist salute is again being given in England. A few weeks ago a deputation of 5,000 munitions workers waited on Mr. Brendon Bracken, a member of the British Cabinet. They had been discharged from their war-time occupation and asked him, “We have been working night and day for the last five years, but we are now out of work; what do you propose to do for us ? “ Mr. Brendon Bracken’s reply was, “ What are you growling about? You have had a good job for the last five or six years”. He would not have given that answer a few years ago, when the German’s were at Great Britain’s door. The Labour movement is determined not to allow the capitalist classes to treat the workers and the soldiers as they did after the last war. Fascism is rearing its head in every country in the world and communism is also rife. The only way to defeat those systems is to show that the democratic system can give more of the amenities of life to the people as a whole. It has to .be translated from political democracy to economic democracy otherwise it will mean nothing. It is useless to deport Communists because Australian Communists will take their places. The person who has been deported simply spreads his propaganda in the place where he has been sent.
The Labour party has introduced this bill so that it might demonstrate the benefits of true economic democracy. The Government is determined that there will not be a depression such as followed the last war. If the democratic system fails the two alternative systems that will claim the allegiance of the people are fascism and communism. Democracy, therefore, has to show that it can do better than is being done in Russia; that it can provide work for the people.
Hitler made the people work as slaves but it must be remembered that before he came into power, 6,000,000 Germans were unemployed. We have to see that that sort of thing does not happen in Australia. The Opposition has protested because it says that the Government’s policy is directed against individual liberty. Much has been said about individual liberty over the last 100 years. Engels wrote a fine treatise, entitled, Conditions of the Working Classes in England in 1837, in which he revealed the conditions in factories conducted by people who were champions of individual liberty. Periodically, orphan children were sold to the proprietors of those factories to work as slaves and three imbeciles were included among them. Unfortunately, there are not many really good histories of Australia written to tell us what happened in the early days of settlement in this country, but we can rest assured that people such as Kidman and other capitalists exploited the doctrine of individual liberty to their own advantage. When I hear the Acting Leader of the Opposition referring to individual control I am reminded that such a policy is all right for people who exercise the control but it is no good for those who do not. While there may not have been individual control exercised by act of Parliament, there has been a measure of economic control exercised by non-Labour governments. During the depression there were no ration cards, and although the stores were full of the necessaries of life the goods could not be purchased.
– Any one could buy goods if he had the money.
– That is so. As I remarked ironically, some time ago, ft worker could huy a mink coat in the morning for his wife and a Russian sable in the afternoon. He could take his wife and friends to Romano’s, or King’s Cross for afternoon tea, go to a dance or theatre in the evening and return home by taxi. He could also proceed to work the following morning by taxi, and all this was possible provided he could pay for it out of 5s. lid. a week. There was no control then, and the Government is determined that such conditions will not recur.
– Why bring Romano’s and King’s Cross into the discussion?
– I am not saying anything against Romano’s or King’s Cross. In my opinion, King’s Cross is the most Bohemian centre in Australia. E am quite happy to meet anybody there and discuss Chopin or Beethoven, Karl Marx or Darwin or any great figure in history.
– Or Churchill? The honorable senator mentioned the names of other great men; why not mention Winston Churchill also?
– I shall be pleased to mention Winston Churchill. In 1924 Churchill met Signor Benito Mussolini after he had butchered the socialists, including Mattiotti, who was stabbed to death with 75 wounds. He congratulated Mussolini on having brought the Renaissance back to Italy, and said that if he ever required assistance he was prepared to do what he could to assist Italy against the bestial Bolsheviks! As a war leader, Churchill is one person, but as a leader of the Tory party in Great Britain he is another proposition altogether. I am interested in people either as Labour men or as Conservatives. One of the parties represented by the Opposition in this chamber has changed its name often.
– The honorable senator has changed his place many times.
– I have never changed my views on the subject of the government control of banking.
– The Australasian Council of Trade Unions is a monopoly.
– I am not opposed to monopolies, but I want them to be owned by the people in the interests of the people, instead of being owned by individuals for the benefit of the few. Surely, the honorable senator does not suggest that we should smash up the big machines and go back to the little ones! Monopolies show us how things should be done; but, whilst I am in favour of this bill, I do not contend that it is a “ be all “ and “ end all “. It is only a first step.
In the House of Representatives the honorable member for Barker (Mr. Archie Cameron) made an observation to the effect that he was in favour of individual freedom.
– Does the honorable senator believe in the right to strike ?
– It depends on what I am striking. When I hear inane interjections, my answer to the question of the honorable senator would be “ Yes “. The honorable member for Barker, in saying that he favoured individual liberty, reminded me that some years ago, when I was listening to station 2KY. Sydney, it was cut off the air by thaihonorable member. who w-as then PostmasterGeneral. He did not give me a great deal of individual liberty on that occasion. He believes in individual freedom, for the hankers and others who have too much of it already. That is what brings about fascism.
I have shown the necessity for thu bill, and Senator Nicholls has explained its principle provisions. The object of the measure is to secure government, control of the things which are necessary so that, as far as possible, depressions may be prevented in future. Anything that prevents the achievement of that objective must go. As the AttorneyGeneral (Dr. Evatt) stated recently in the United States of America, we have a second opportunity to put the world right. When we consider the conditions prevailing throughout the world at present, we realize that the task of putting it right is an enormous one. It is all very well to say that it can be put right by having another Gestapo over the Fascist Gestapo, but the world cannot be put right until the people own the means whereby they live. As Shakespeare said, “ He who owns the means whereby I live owns- my life”. Whether the people have industrial arbitration laws or not, labour being a commodity which is bought and sold in the market, they must have sufficient wages to buy food and clothing, live comfortably and reproduce their species. If we cannot dispose of our surplus products by peaceful means, there will be war. After war, there comes a spell between depressions and then there is another war. Full employment cannot be provided unless every nation takes its part in translating that ideal into a reality. The first step towards that desirable result is to take the control of the currency of the country out of the hands of the private bankers and place it in the hands of the representatives of the people. Theref ore, I have great pleasure in supporting the bill with all the power at my command.
– During the time allotted to Me I shall endeavour to discuss this most important bill. After the historical references to which Senator Grant has treated the Senate, it is appropriate to deal with some aspects of Australia’s economy, and not to worry overmuch about Germans, Italians and Red Indians and all that we have heard from this oracle within an empty cask. The subject of banking control has exercised the minds of the ‘people of Australia since long before the consummation of federation. In 1891 a number of people actively electioneered on behalf of a State bank at least nine years before the Commonwealth was established. Down through the years, until 1911, after much agitation by various sections of the people, the first* Commonwealth Bank Bill was introduced by the late Mr. Andrew Fisher, then Prime Minister and Treasurer of Australia. I am reminded of some of the observations by Lord Forrest, the then honorable member for Swan, and a former Treasurer of the Commonwealth. His remarks are as fresh and appropriate as if they had been uttered only last week. He warned the people of Australia of the danger to this country and to the people generally of autocratic control of the Commonwealth Bank by one man as was proposed in the Fisher Government’s bill. In effect, that is the crux of the measure before us, with some alleged improvements added to the banking structure suggested ‘by the present Government. This hill is a creature of the depression years. The people of Australia received a salutary lesson during those difficult years, and the bill could well be described as a child of the depression. It has many facets, but the main feature is the proposed substitution for the present Commonwealth Bank Board of control, by a governor, who shall be appointed by the Government, and shall hold office by virtue of having been so appointed. In these difficult times such a change is one which we should examine very carefully. I do not know what the present board has done to incur the wrath of the Government. The majority of the members of the board were appointed by the present Government. Only two members - Sir Claude Reading and Mr. Ashton - were appointed by previous administrations. Mr. M. B. Duffy, Dr. H. C. Coombs, Mr. W. C. Taylor, the Secretary to the Treasury, and the Governor of the Bank are appointees of the present Government.
– We could not do otherwise.
– When Sir Olive McPherson’s term of office expired in October, 1944, no fresh appointment was made, so the .present board, with the possible exception of two members, can be said to have been appointed by the present Government, or are appointees closely allied to the political party with which the Government is associated. Why these gentlemen should suddenly find disfavour with the Treasurer, and be sacrified on the altar of the Government’s socialist idea, I do not know. It seems a retrograde step to replace them by one nominee who shall be the creature of the government in power. It is of no use to mince words. The bank, in effect, will become a politically controlled institution. That is a pointer to the Government’s intentions. Running parallel to this proposal of the Government is the question of the future financial policy of the country. In my opinion, this bill gives an indication of another trend in the Government’s policy in regard to the Commonwealth Bank. Government supporters seem intent on taxing the “ tall poppies “ and making some gesture of a relief from taxation to salary and wage earners in the lower income grades. On analysis, however, it is found that the bulk of the taxes extracted from the people does not come from the “ tall poppies “ or even from the wealthy companies. Individual taxpayers with incomes exceeding £1,000 per annum represent only 3 per cent, of the total taxpayers, whilst wealthy companies pay only 38 per cent, of the total taxes, including the supertax and the tax on undistributed war-time profits. The bulk of the revenue derived from taxes is paid by men and women with incomes between £5 and £10 a week. That being so, how can the Government reduce the taxes on those incomes and at the same time maintain the high rate of expenditure that, seems inevitable? Obviously, in order to fulfil its promise to reduce taxes on the smaller incomes, the Government must indulge in further inflation. That is the reason for this and related measures. This bill is a step towards the removal of any obstacles likely to hinder a Treasurer from carrying out the demand for socialist expenditure - or expenditure without tears. Much has been said about this bill having been introduced as the result of a report by the Royal Commission on Monetary and Banking Systems in 1937. It is well that we should refresh our memories concerning that report, because the royal commission made some very interesting observations about the future of the Commonwealth Bank. I propose to quote from a minority report by Mr. H. A. Pitt, who, according to the introduction to the report, was Director of Finance, Victorian State Treasury. In other words, Mr. Pitt was at the time UnderTreasurer for the State of Victoria. Up to the time of his retirement from that office he had spent many years in the Public Service of Victoria, and was regarded as one of the most successful Under-Treasurers that that State has ever had. Moreover, no finger of scorn has ever been pointed at him: he is not a capitalist; he does not represent so called vested interests. In his report, Mr. Pitt gave his independent judgment after many years of experience in the Victorian Treasury. As we are regarding this bill as a creature of the depression, it is proper that we should have regard to what Mr. Pitt said in his minority report, on page 269 of the commission’s report -
I dissociate myself from criticisms of the conduct -of the Commonwealth Bank during the period of acute depression. My personal view is that the terms of the Commission do not require expression of opinion of such a nature, and that there is little value in making thum. Apart horn this, it must be borne in mind that the Commonwealth Bank Board had to face a time of unexampled difficulty. It is quite possible that the Board did not at all times act with perfect wisdom, but on the other hand it is. doubtful if any other body of men placed in such a position would have done more effective work for Australia. In particular, I dissent from the suggestion that the Board acted unwisely in reducing the exchange rate from 130 to 125. T do not consider that the consequences of this reduction were detrimental.
In another paragraph, Mr. Pitt said -
I do not agree that when differences of opinion arc irreconcilable the Commonwealth Bank Board should subordinate its judgment to that of the Government of the day. It is important that the public should not only have faith in the judgment of the Board, but should be satisfied that it will be prepared to preserve its spirit of independence. Sacrifice of independence will involve loss of prestige. Confidence in .the administration of a central bank is essential, and this may be disturbed if it is thought that the administration is in the hands of a gelatinous Board which may set aside its judgment on pressure from the Government. The Board should not lightly disregard the views of the Government and should do all it reasonably can to avoid conflict, but occasions may arise when it considers it essential in the public interest not to sacrifice its judgment. The Bank h the creation of Parliament and not of the Government of the day. Parliament can be asked to give effect to the Government’s wishes if a conflict arises.
That is a wise and pregnant expression coming from a recognized authority on public finance after about 40 years’ experience in the Public Service of Victoria. Mr. Pitt’s summing up of the problem is given on page 268 of the royal commission’s report. Dealing with the depression and the disorganization of the monetary system he said -
This is largely due to the policy pursued by leading nations of throttling trade and bottling gold. When more friendly relations between nations arc restored, it appears likely that gold will resume its function as an international medium of exchange, though not on the same basis as existed before nations left the gold standard.
I emphasize that point because during the passage of this bill it is just as well that we should hare regard to the opinion of men of Mr. Pitt’s standing. The great trouble in Australia is that our currency has no stabilizing factor. There is no proper anchor, and I have grave .doubts whether, under this bill, the Government will be able to avoid inflation. Although I.’ know that the Government has high hopes of checking inflation by means of the discipline of rationing and price control, I greatly fear that these safeguards will be insufficient to prevent inflation. For that reason I regret that there is no mention in the bill of the provision of an adequate gold reserve which is the sheet anchor of a nation’s currency. I go further, and say that until we return to a properly based currency in the form of gold, the danger of inflation will remain.
– The honorable senator is 30 years behind the times.
– The Treasury will be the last bulwark against any attack on a paper currency because the restoration of gold currency would mean an entirely different outlook on the part of the Administration. The re-establishment of a proper gold reserve is one of the first steps towards a stable currency which will stand the cold blast of a depression. There are many people, especially in Western Australia, who are thinking along these lines, and they will be greatly disappointed to learn that this measure, about which so much has been written and said, does not contain specific provisions to safeguard the currency. The Government has a wider range of saving .bank depositors and taxpayers to consider now than in the past, and many people are asking in what form their savings will be returned to them on the expiration of the period of their war loan bonds and war savings certificates. An assurance that they would he repaid in a currency with a substantial gold backing, would allay any fears that they may have regarding the future. But if they are to meet the position as it will exist under the conditions set out in the bill they will face a Commonwealth Bank politically directed by one man. Such a prospect is not calculated to give depositors in the savings hanks any degree of confidence. I urge the Government to seriously consider introducing a measure for the restoration of the gold reserve so as to give some substance to a currency which, under this legislation, may have a grave tendency to become inflated. When I was in London in 1943 I met a number of men who were vitally interested in the progress of Western Australia and the Commonwealth, generally. Among them was a business man who has had from. 45 to 50 years experience of gold production in Western Australia. Since then we have maintained correspondence with each other regarding, among other things, the necessity for a gold reserve as backing for Australia’s currency. In the last letter which I received from him he wrote -
There appears to be a growing, although quiet feeling here that gold can and must come back into its own, that the worst danger we face is intiation, which really means, of course, the non-purchasing power of currency, and tills can only bc rectified by its being given solidity by an internationally accepted gold backing. As so much paper money has been printed and circulated it may be necessary to increase the stocks of gold by increasing the value of gold in order to permit of a percentage of currency being put out in gold coinage, interchangeable with paper money. The leading bankers in many parts of the world are very frightened of the effect the non-purchasing power of paper money would have on the public and they are, therefore, strongly advocating that an effort should be made to try and bring some stability to it, as if this is not done, they realize that continuation of paper printing will start a real inflation which will be unable to be stopped until financial ruin has overcome the world in general. The .basis of their argument, which appears to me to be perfectly sound, is that fluctuations in the price of goods, namely, whether they go up, on account of a momentary shortage of the article, or become cheap because of an increased quantity, is a matter which automatically rectifies itself within a small compass of time, on the basis of supply and demand, but the purchasing power of the paper money, once it starts to drift, cannot be in any way prevented from becoming worse, which necessarily increases the costs of living, demands an increase of wage for the workers and end* up by neither the worker nor anybody else having anything of value whatsoever, as fa as currency is concerned, lt brings in its train absolute poverty and the nations who have suffered it have to start off at bedrock again to build up a currency that has a solid backing, which they should have originally kept to.
That is a danger which we face after the orgy of currency issue through which of necessity wc have to pass ns one phase of war finance.
The suggestion that the control of the currency is in the hands of the private banks, as was suggested by Senator Grant, is too ridiculous for words. Any control of the currency was taken from the private banks in 1911. Since then the banks have not been able to issue currency as they did before, and that is now entirely a matter for the Treasurer, acting on the advice of the Commonwealth Bank. That has been the position since 1911. Therefore, to suggest that these “ villains the private banks, are robbing the people and making huge profits by manipulating the currency is arrant nonsense. I do not believe that honorable senators will give credence for one moment to such a statement.
– Why does the honorable senator say that the control of the currency was taken out of the hands of the private bank in 1911?
– Because it was. One of the first jobs I had as a youth was to cancel1 private bank notes. I do not know why the private banks should he singled out for attacks of this kind. I do not know why they should be thought more deserving of such attacks than other institutions engaged in commerce and business. Banking is not some strange and mystic business affair. It is a natural business undertaking governed, more or less, by scientific rules. In fact it is practically an exact science. But when stump orators, usually to be found in the Sydney Domain or on the Yarra Bank, wish to draw a crowd which is very often composed of people who can find no other means of entertainment, they love to attack the private banks, which they describe as “ these ogres, or monsters, which are sucking away the life-blood of our citizens “. I know of many more profitable avenues for investment than shares in private banks. When one looks at facts and figures without being swayed by mob orators one finds that over a period of many years the return to shareholders in private banks has been relatively very small.
I am now only voicing views which were expressed by the Treasurer (Mr. Chifley) as a member of the Royal Commission on Monetary and Banking Sys tems. In his minority report, Mr. Chifley drew attention to the fact that shareholders who had £70,000,000 invested in private banks in 1937 were receiving only 4.1 per cent, return for their money. Any honorable senator opposite could tell Senator Grant that thousands of commercial institutions return investors a higher rate of interest than 4.1 per cent. As a matter of fact the Commonwealth Government charges to ex-servicemen of the war of 1914-18 on advances made to them in respect of their war service homes approximately the same rate of interest as is received by shareholders in private banks. Nevertheless, we hear inside and outside of this chamber endless tirades against these awful people, the shareholders ‘of private banks, who. although their holdings average less than £500, are described as bloodsuckers. People who hold such views declare that it is the Government’* duty to destroy the private banks. But the private banks are no more deserving of destruction than are hundreds of other institutions in the commercial world. Pastoral companies and trustee and executive companies look after their clients’ money in the same way as do the banks. The country storekeeper is, in some respects, a banker. But attacks are not made on the grocers, although they lend their goods in the same way as the private banks lend their money. In each case it is their stock in trade. I do not know why the private banks have been singled out for this frontal attack unless it is because this legislation is the Government’s first step to clear the deck before it embarks upon its programme of expenditure without tears. I suggest to honorable senatoropposite that they should refresh their minds by reading the report of the Royal Commission on Monetary and Banking Systems. Such reading will enlighten them on ‘many phases of this legislation and also on many important omissions from it.
The Minister for Trade and Customs, in his second-reading speech, dealt with the major proposals of the bill. The first of these, he said, was to strengthen the central banking functions of the Commonwealth Bank. Part 3 of the measure deals with central hanking and lays down the functions and duties of the central bank. But I have failed to find in that part of the bill any provision which would justify the Government in claiming that one of the primary purposes of the measure is to strengthen the central bank functions of the Commonwealth Bank. Nothing in the bill gives added strength to the Commonwealth Bank in that respect. However, that, purpose could have been achieved by a provision to restore the gold reserve. The absence of such a provision is one of the major, defects of the bill. The Minister said that the second important feature of the bill was that it ensured that the financial policy of the Commonwealth Bank would be in harmony with the main decisions of government policy and in the interests of the people of Australia. Such expressions savour of the language of Mr. King O’Malley; they have an O’Malley ring about them. That gentleman had much to do with the dissuasions which led up to the introduction of the original Commonwealth Bank Bill in 1911. The Minister’s remarks, however, were merely pious hopes. Clause 9 provides, in effect, that the Government will be the controlling factor in determining the policy of the bank.
The second point made by the Minister fails to be sustained inasmuch as clause 9 is, in itself, an admission that the bank will become the political tool of the government of the day. The third objective of this measure is -
To ensure the development and expansion of its general banking business by active competition with the trading banks. [ should like to know in what respect the power of the Commonwealth Bank to engage in active competition with the trading banks is restricted? I know of no such restriction, either in the original act, or in any of its amendments. The Commonwealth Bank has the. right as a trading bank to enter into full competition with the private banks. In fact, it is in a favoured position, because it has behind it the Commonwealth Treasury - in the form of a capital account. Its own capital account, as far as its trading bank activities are concerned, is a mere bagatelle. In many instances the general banking department is able to negotiate loans at a lower rate of interest than can be obtained by clients from the private banks. In regard to overhead expenses also, the Commonwealth Bank has an advantage over the private banks, which have to pay income tax, municipal rates, land tax and so on. These charges must be met by the private banks out of their annual profit and loss account. I do not think for a moment, although I have no direct information on the matter, that the private banks object to the Commonwealth Bank entering into competition with them.
– They do, very much.
Senator ALLAN MacDONALD.The Minister must be m.ore closely associated with, the private banks than I am.
– The Commonwealth Bank Board has issued an instruction that the bank shall not accept business from any individual or organization which previously held an overdraft account with a private bank.
– I know of no such instruction, and I doubt if it was given, although I am open to correction on that point. The Commonwealth Bank has been in competition with the private trading banks for many years and to suggest that the development and expansion of the general banking business of the Commonwealth Bank is dependent upon the passage of this legislation is quite incorrect.
The fourth objective of this measure, according to the Minister, is -
To return the control of the Commonwealth Bank to the Governor, who will be assisted by an Advisory Council.
I do not say that that is not the intention of the Government ; but I regard the return of control of the bank to a Governor as a retrograde step, which certainly will not be conducive to the peace of mind of the public of this country. Depositors will know that the Governor, no matter how capable he may be, will be a creature of the Government, whatever may be its political complexion. I am strongly opposed to this proposal.
The next objective is - 1*o assist in developing small industries and enabling people to secure homes.
An amendment of the Commonwealth Bank Act is not required to enable the bank to assist small industries,- or to help the people of this country to secure homes. The bank already has that power. Ever since 1911 it has advanced loans for the development of small industries, and has provided finance for the construction of homes. After the last war, the Commonwealth Bank was used to provide finance for the construction of many hundreds of homes for ex-servicemen, and right down the years it has assisted ex-servicemen and civilians alike to purchase cottages.
The Minister said that the main responsibilities of a central bank were to control the issue of bank credit. When the Commonwealth Bank was set up in 1911, it was virtually a central bank, and since then, to a large degree, it has exercised control over the expansion and contraction of credit. As we all know, it played an important part during the last war, but it was not the only banking institution which assisted this country during that war. If my recollection be correct, when the war broke out in 1914, the first institutions approached by the then Treasurer were the private banks, which advanced £10,000,000 free of interest for war purposes. I have yet to hear any commendation by honorable senators opposite of the private banks for that action. To them, private bankers are still black ogres who should be destroyed. It is well that we should examine all the facts, and not be oneeyed in our approach to this matter.
I have already said what I -think should be done in regard to the stability of the currency, namely, that we should build up an adequate gold reserve.
The Minister dealt at length with the note issue of £185,000,000, practically the whole of the reserve for which is held in sterling, but he did not say where that sterling reserve was kept, or what form it took. I dare say there is a reasonable explanation of this, and I hope that the Minister in his reply will say whether the sterling reserve is kept in this country or in London.
I have already stated that the Commonwealth Banking Act does not require an amendment to enable the bank to make housing loans. However, this bill provides that the limit of any such advance shall be 85 per cent, of the value of the security, with a maximum of £1,250.
From the evidence taken by the committee, of which I was a member, set up to deal with the proposals to form a Mortgage Bank Department of the Commonwealth Bank, it would- appear that the limit in the case of land security, should be 65 per cent, or 70 per cent. The Treasurer agreed that it would not be wise te exceed that limit. Therefore, the S5 per cent, limit specified in this measure would appear to be rather high.
As I said in my opening remarks, this measure is a creature of the last depression which, I am afraid, ha3 been largely responsible for quite a lot of loose thinking as regards banking and the part that banks play in time of depression. I realize that it is very hard to avoid panicking when one’s life’s savings are at stake, but panic should not be permitted to influence our views on the science of banking, and we should not clothe banks in strange garments which they are not. entitled to wear. The last depression in this country made the people do a lot of serious thinking as to the best means of coping with the black cloud of economic adversity. That, however, does not warrant the Government submitting revolutionary proposals regarding the future of the people’s bank. The Commonwealth Bank had nothing whatever to do with the last depression, nor did the private banks. They were creatures of circumstances, just as were the farmers and investors. The depression was world-wide, and when international upheavals of this kind occur they are hard to check. To-day, the private banks are hamstrung in their trading operations, and until the National Security Regulations are amended or withdrawn, those banks will remain hamstrung. The Government has complete power over the trading “banks, as it has over commerce and industry generally, and that power will remain with the Government until after the war. Therefore, it cannot be said truthfully that the bill is required immediately on the ground of its urgency. The war may last a year or two longer, and the reconstruction process will no doubt extend over a further period of years. Therefore, this bill cannot be looked upon as needed at the moment to keep government finances on an even keel.
If the banking position warranted the appointment of a royal commission, whose report was submitted in 1937, I consider that the present situation justifies the appointment of another royal commission to investigate the matter, because the provisions of this bill depart substantially from many of the recommendations of the last commission. Thb Government has certainly extracted a number of its recommendations, and the Minister, in his second-reading speech, has given the impression that the bill is based largely on the commission’s recommendation. The commission is not in favour of the abolition of the Commonwealth Bank Board, and there is nothing, in its report to show that the Treasurer, who was a member of the commission, was dissatisfied with the board. Had he been dissatisfied with it, he would have mentioned the matter in his dissenting report. The report of the commission referred to the utilization of savings bank deposits. Honorable senators were inclined to jeer at my recent remarks that the Government was leaning too heavily on the savings bank deposits, but this (“bill discloses that there was some warrant for my suggestion. Sub-clause 2 of clause 77 states -
The Savings Bank may make advances to the Bank, for rise in the Mortgage Bank Department, of such amounts, and subject to such terms and conditions, as the Governor determines.
Clause 78 provides -
Except as expressly provided by this Act. iiic funds of the Bank or of the Savings Bank shall not be used in the business of the Mortgage Bank Department.
– The “ Bank “ means the Commonwealth Savings Bank.
Senator ALLAN MacDONALD.That expression is used again in the clause relating to individual loans, and T should like the Minister to clarify the apparently conflicting provisions in clauses 77 and 78. There is no doubt that the Government has been leaning much too heavily upon savings bank deposits. That is clearly demonstrated throughout the bill ,by the absence of a real capital account, so far as the Commonwealth Bank is concerned. To suggest that the ramifications of the hank could be successfully financed on a capital of £4,000,000 is too ridiculous for words. It is equally ridiculous to suggest that the Mortgage Bank Department could meet the needs of impoverished farmers throughout Australia with a similar amount of capital. Certainly provision has been made for this capital to be increased .by the profits from the general trading activities of the ‘Commonwealth Bank, but, unless the hank shows a colossal turnover at a greater profit than that of the private banks, the increase of its capital account will be a slow process. [Extension of time granted.’] Unless proper provision be made for the necessary increase of the capital account, one cannot avoid the thought that other than specific capital is being used to finance the Government’s programme of ordinary social services. In that case, the Government will have to answer an indictment that the savings of the people are (being used deliberately for financing the Government’s social security scheme. This is a matter upon which the Minister should be definite, in his reply to the debate on the second reading of the ‘bill, because the people are anxious about the future use of their savings. They do not like the idea of their money being frittered away. If the bank is to achieve what the Minister puts forward as possible, there should be a more elastic provision than at present for increasing the capital of the bank.
A previous Commonwealth Bank Bill contained a questionable provision relating to the sale of debentures for increasing the capital of the bank. That clause was regarded throughout Australia as something in the nature of a menace to .the people, as it would he possible for the private banks to buy up the debentures to the exclusion of others, and by that means obtain control of the Commonwealth Bank. Of course, that was arrant nonsense, but the idea spread through the medium of the Douglas Credit advocates and other fanatical financiers, until a large number of people believed that the object of the “ Casey “ bill, as it was called, was merely a device whereby the trading banks, by the purchase of capital debentures in the Commonwealth Bank, would ultimately become the controllers of the people’s bank. That canard was too stupid for words, and the bill was not proceeded with. The Minister should explain to the people why the capital account is kept so low. As long as it is low I fail to see how the bank can hope to extend its activities and compete with the trading banks. I have every respect for the Commonwealth Bank; its senior officers are mostly former private bank officials. I think that it has done a very good job. Its function is that of a central bank, with control of international exchange. The private banks should not be singled out for this odourous treatment any more than any industry or commercial enterprise in Australia. But they are being singled out for attack, because they are included in the general designation of “ tall poppies “ whose heads are to be chopped off. I disapprove of the measure for the reasons which I have given, and I hope that, in his reply to the debate, the Minister will deal with some of the points which I have raised.
Debate (on motion by Senator Arnold) adjourned.
Australian Prisonersof War - Division of Import Procurement: Hog Casings - Storm Damage in A del aide - Migration .
Motion (by Senator Keane) proposed -
That the Senate do now adjourn.
– Earlier to-day Senator Collett asked me, as Acting Minister for the Army, the following questions, upon notice: -
Will the Minister afford the Senate the benefit of the views of the Army Medical Service on the arrangements that are desirable and associated with -
The replies to the honorable senator’s questions are as follows: -
The Government fully appreciates thata large percentage of Australian prisoners of war recovered from the Japanese may require active medical treatment and hospitalization. 2.(a) On reaching Australian forces, recovered prisoners of war will receive a thorough medical examination with particular regard to diseases to which prisoners of war in the relevant areas are likely to be subject, such as malnutrition, beri beri, anaemia, malaria, dysentery and other tropical diseases.
Senator LECKIE (Victoria - Acting Leader of the Opposition [10.1]. - Earlier to-day the Minister for Trade and Customs (Senator Keane) answered a question which I had asked relating to hog casings, and said that he would be glad of any further information on the subject which I could give to him. During the week-end I made some inquiries and obtained information which will show that the Minister himself was wrong when he said that I had been wrongly informed, as no import licences were involved. The facts are that the Division of Import Procurement obtained a large quantity of bog casings from the United States of America, involving a fairly considerable sum of money. Officers of the division decided that the casings should be distributed among importers in proportion to the quantities that they had imported before the war. Accordingly, notices were sent to importers, through an agency, that they were entitled to varying percentages of the casings that had arrived. It happened, however, that some of the persons concerned, both wholesalers and retailers, had gone into, other businesses and did not want the casings. From my inquiries I am convinced that the distribution was as equitable as possible in the circumstances; I have no complaint, on that score. There was room for some anomalies, and probably also for some manipulation, but the information placed before me indicates that, in the main, the distribution was fair and above-board.
– To-day I received advice that a serious storm had caused damage amounting to between £20,000 and £30,000 to homes and buildings in the suburb of North Adelaide. I have also been advised that a heavy storm is now raging in South Australia and that many houses have been unroofed, chimneys blown down, and considerable damage done. Will the Minister for Supply and Shipping (Senator Ashley) issue instructions to his departmental officers in South Australia to give immediate priority to people who require roofing and other materials to repair their homes, and also that the limit of £25 for repairs to any property shall not be insisted on. I should appreciate immediate attention to this matter so that the people whose properties have suffered damage may he able’ to effect repairs immediately.
– I was interested to read in the press recently that the Deputy Prime Minister (Mr. Forde) had bad conversations with representatives of the British Ministry on the subject of migration. This is a matter of considerable importance to Australians who re ceived a great shock when the Japanese forces were crossing the Owen Stanley Ranges. The fright which they then received they will never forget. There is need to negotiate with the British Government at the earliest possible moment with a view to encouraging British migrants to come to Australia. Apart from our war effort, no more important subject to the future of Australia could be considered. I am pleased that the Deputy Prime Minister has had an opportunity to discuss this matter with Lord Cranbourne representing the British Government. In this connexion, I urge that members of Parliament, especially members of the National Parliament, be careful in the language that they use when referring to the peoples of other races. Senator Grant referred- to some remarks made in the House of Representatives a few weeks ago by the honorable member for Bendigo (Mr. Rankin) concerning Americans, and took the honorable member to task for his utterances. The honorable senator did not, however,, take exception to the remarks of the honorable member for Herbert (Mr. Martens), who made some disparaging remarks regarding Scotsmen. I was rather astonished that Senator Grant failed to defend his brother Scots, but probably the reason was that, on this occasion, the offender was a member of his own party, whereas the honorable member for Bendigo is a member of tha Australian Country party. This is not a party matter; all public men should be careful of the language they use when referring to other nationals. I refer to this matter, because yesterday I received a letter from a gentleman in Melbourne, whom I have never met, in which, after referring to the derogatory remarks of the honorable member for Herbert, went on to say -
His method of using communism to attack Scots has branded thousands of loyal people. This is the first time I have been insulted by a member of Parliament, and, although I have always voted Labour, it has to be a Labour member who insults me. The Scottish vote may not affect Mr. Martens, but it may affect other Labour members who, while they have not expressed support for Mr. Martens’ remarks about Scots, have not opposed him. As far as I know Scots have not been insulted by a member of any other party. I intend to send newspaper cuttings to Scotland.
If wo are to enter into negotiations with the British Government with a view to securing migrants from the Old Country, reports of such utterances by public men will not help. When I was in Inverness some months ago I met the local editor of a Scottish newspaper who said that Australians did not want migrants from the Old Country. He explained that a number of persons who had previously migrated to Australia had returned, and had paraded in the Strand, London, outside Australia House, carrying sandwichboards indicating that migrants from Great Britain were not wanted in Australia. I told him that he was wrong, and that Australians welcome British migrants, especially the Scots. These incidents may be rather trifling in themselves, but if magnified they may do much harm. Nothing would be more discouraging to people whom we hope to welcome to our shores as permanent settlers than derogatory remarks of the kind to which I have referred.
– Senator Finlay referred to damagecausedbyaseverestorminSouth Australia, and asked that instructions be given that materials to effect repairs be given a high priority, and that the limit of £25 for repairs be not insisted on. Instructions will be sent to officers of my department in Adelaide to give all the assistance within their power. The supply of materials for repairs is a matter for the Minister for Munitions (Mr. Makin), and I shall confer with him on the subject. I am sure that he will place no obstacle in the way of supplying the necessary materials to people who have suffered from the storm. I have no doubt that the limit of £25 will not be insisted upon in their cases.
Question resolved in the affirmative.
The following papers were presented : -
Air Force Act - Regulations - Statutory Rules 1945, Nos. 95, 96.
Arbitration (Public Service) Act - Determination by the Arbitrator, &c. - No. 39 of 1945 - Common Rule reSick Leave.
Customs Act - Customs Proclamations - Nos. 632, 633.
Defence Act - Regulations - Statutory Ruler 1945, No.94.
Defence Act and Naval Defence Act - Regula tions - Statutory Rules 1945, No. 93.
National Security Act -
National Security (General) Regulations - Orders -
Prohibiting work on land, and use of land’.
Taking possession of land, &c. (22).
Useofland (2) .
Reputations - Statutory Rules 1945, No. 91.
Senate adjourned at 10.14 p.m.
Cite as: Australia, Senate, Debates, 27 June 1945, viewed 22 October 2017, <http://historichansard.net/senate/1945/19450627_senate_17_183/>.