17th Parliament · 3rd Session
The PRESIDENT ( (Senator the Hon. Gordon Brown) took the chair at 3 p-n)-> and read prayers*
Motion (by Senator Keane)- by leave - agreed to -
That, during the unavoidable absence of the Deputy President, the President be authorized to call upon any one of the temporary Chairmen of Committees to relieve him temporarily in the chair without any formal communication to the Senate.
re-allocation of Ministerial Duties.
– by leave - The following statement has been made in the House of Representatives to-day by the Acting Prime Minister (Mr. Forde) : -
I inform the House that, owing to the illness of the Prime Minister (Mr. Curtin) and consequent on my return to Australia I shall occupy the position of Acting Prime Minister, in addition to that of Minister for the Army.
The arrangement already notified to the House that the Vice-President of the Executive Council (Mr. Beasley) will act as Minister for Defence and as AttorneyGeneral, and that the Minister for the Navy, Minister for Munitions and Minister for Aircraft Production (Mr. Makin) will act as Minister for External Affairs will he continued.
The Minister for Health and Social Services (Senator Fraser) will cease to act as a member of War Cabinet and the Minister for Post-war Reconstruction (Mr. Dedman) will cease to act as a member of the War Council.
I have called on the Prime Minister and have received a report from his medical advisers. Mr. Curtin’s condition is not satisfactory and I am sure honorable members will join with me. when I express the hope that we will soon have a reassuring report.
Releases - Long-servicetroops - Dependants’ Allowance.
– by leave - read a copy of the statement made on the motion for the adjournment in the House of Representatives by the Acting Prime Minister (Mr. Chifley), on the 29th June (vide page 3902).
asked the Minister representing the Minister for the Army, upon notice -
Will the Government undertake to provide members of the fighting services, who are to be discharged after five years’ service, with an opportunity to fill base jobs now held by staff officers who have not seen active service?
– The Minister for the Army has supplied the following: answer to the honorable senator’s question : -
Provision is already made for staff appointments at Hear Head-quarters to be filled as. far as practicable by officers who have had operational service, and in selecting the officers for such appointments length of service is taken into account.
Personnel who are discharged are entitled to preference in civilian employment under the provisions of the Re-establishment and Employment Act 1945.
SenatorO’FLAHERTY asked the Minister representing the Minister for Air, upon notice -
Where an Air Force man is the father of a child, other than by his legal wife, which was born whilst he was on active service and since the legal wife’s allotment was made, does the child come within the category of “ service man’s dependant “ for allotment purposes ?
– The Minister for Air has supplied the following answers : -
If it were established that the member is the father of an illegitimate child, the child would be accepted as a dependant.
Dependant’s allowance would be granted in respect of the child if the member had already made the standard allotment in favour of his dependants.
If the member had not already made the standard allotment in favour of his dependants he would be required to make an allotment in favour of the mother or guardian of the child. The amount usually required is one shilling a day and dependant’s allowance of a similar amount is usually granted. The actual rates - would depend on the cost of maintenance of the child and whether a maintenance order had been obtained by the mother.
Assent to the following bills re ported : -
Invalid and Old-age Pensions Appropriation Bill 1945.
Invalid and Old-age Pensions Bill 1945.
Appropriation Bill (No. 2) 1944-45.
Supply Bill (No. 1) 1945-46.
Child Endowment Bill 1945.
Re-establishment and Employment Bill 1945.
– I understand that the Postmaster-General now has available an answer to a question asked by Senator Allan MacDonald on 27th June.
– On that date Senator Allan MacDonald inquired as to the possibility of providing additional land lines between Port Augusta and Western Australia. In reply to the honorable senator’s question, it has been ascertained that there are at present three telephone speech channels between Adelaide and Perth and two additional channels are in course of installation. It is hoped that they will be completed and ready for service within the next few weeks. In addition to the speech channels referred to, there is also one high quality circuit available which is suitable for broadcast transmissions in either direction between the west and the east. The matter of duplicating the broadcast transmission facilities is receiving consideration but in view of the technical difficulties involved it is not practicable at this stage to indicate when the additional circuit will be provided.
– Can the Minister for Supply and Shipping say whether it is true that leaders of British and Australian Forces are greatly concerned about a likely shortage of penicillin for front-line troops as the result of a strike of glass workers in Sydney? If so, will the Government take action to ensure that adequate supplies of this valuable drug shall be made available for battle areas ?
– I have not had any indication from the services that there is likely to be a shortage of penicillin or any other drug. The Government will take all steps necessary to ensure that supplies of penicillin shall be made available.
Rationing - Styles
– Will the Minister for Trade and Customs consider reducing the coupon value of women’s and children’s underwear, pyjamas and nightdresses, especially in the warmer States of Western Australia and Queensland?
– I have already raised that matter with the Rationing
Commission. If the honorable senator will give notice of the question, I shall supply a full answer as soon as possible.
SenatorFOLL asked the Minister for Trade and Customs, upon notice -
– The answers to the honorable senator’s questions are as follows : -
asked the Minister for Supply and Shipping, upon notice -
Is it the intention of the Government to lift the clothes styling restrictions in the very near future?
– The answer to the honorable senator’s question is as follows : -
Clothing styling restrictions are under continuous review. Many of the restrictions have already been removed and certain relaxations in regard to knitted goods will be announced almost immediately. Further relaxations will he made immediately the supply and manpower positions permit.
– On the 28th June, I asked the Minister representing the Minister for Commerce and
Agriculture a question relating to supplies of superphosphate. Has the honorable senator any further information available on that subject?
– The Minister for Commerce and Agriculture has supplied the following answer: -
The Commonwealth Government realizes the importance to Australia of the phosphate deposits on Nauru and Ocean Island, and strong representations have been made to the appropriate authorities on this subject.
This matter was recently the subject of a full statement by the Acting Prime Minister.
port facilitiesat esperance.
– Will the Minister for Supply and Shipping instruct the Harbours Commission, soon to visit Western Australia, to examine the facilities at the port of Esperance, so that this natural outlet for the gold-fields and South Eastern districts of Western Australia will be utilized to its full capacity?
– I have already received requests relating to the matter r aised by the honorable senator, and will endeavour to have the port of Esperance included in the surveys made by the Harbours Commission.
Statements in the Senate.
– Last week when the Postmaster-General (Senator Cameron) was speaking on the Commonwealth Bank Bill he advocated that a capital levy should be made.
– I did not. I said that if the necessity arose, the matter would be considered.
– The Minister’s remarks caused considerable concern amongst Government supporters. If a Minister makes a statement inconsistent with Government policy, will the Leader of the Senate instruct his fellow Ministers that when such remarks are made they will indicate that they are then speaking as private senators and not as members of the Cabinet?
-Cabinet Ministers have the right to express their own views in debate. In the case in question, had I been asked whether the Postmaster-
General’s statement represented Government policy, I should have immediately answered in the negative. I was not asked, however.
asked the Minister for Trade and Customs, upon notice -
– The answers to the honorable senator’s questions as as follows : -
Government Contract Payments
asked the Minister representing the Treasurer, upon notice -
-The Treasurer has supplied the following answer: -
Instances have not come under my notice where there have been any unwarranted delays in making payments to primary producers for produce grown under contract for the Commonwealth. It will be appreciated, however, that before payment is effected, it is necessary that proper verification ofthe service which involves any such payment must be made. My colleague, the Minister for Commerce and Agriculture, has specifically directed that in any matters where payment to primary producers is the responsibility of his department, there shall be no delays. If the honorable senator can advise me of any individual cases where settlement has been protracted, I will undertake to have them investigated immediately.
asked the Minister for Trade and Customs, upon notice -
St. If so, is it a fact that several applications have been received by the Prices Branch over the past two years from the Eucalyptus Distillers’ Association in Victoria requesting an investigation into the industry with the object of fixing reasonable prices to the distiller based upon “ cost of production “ ?
– The answers to the honorable senator’s questions areas follows : -
asked the Minister representing the Acting AttorneyGeneral, upon notice -
– The Acting Attorney-General has supplied the following answers: - 1 and 2. As stated on the 27th June, in reply to a question previously asked by the honorable senator on the same subject, Captain Rixon lost his life when the trawler Millimamul was sunk by enemy action while engaged on a fishing cruise. His death could in no way be attributable to any endeavour on his part to protect the assets of the insurance company referred to. Neither did the insurance company deprive the personal representative of the deceased of any moneys due under the policy as Captain Bison died from a cause expressly excluded from the policy.
Bill received from the House of Representatives and (on motion by Senator Ashley) read a first time.
Bill received from the House of Representatives and (on motion by Senator Keane) read a first time.
Debate resumed from the 29th June (vide page 3S73), on motion by Senator Keane -
That the bill he now rend a second time.
.- When I spoke on Friday, I dealt with the causes of the depression. I propose now to refer to some of its effects, not the least of which was the lowering of the standard of living, and the resultant malnutrition of large sections of the community. Another effect was that the minds of the people were affected by the strain, resulting in many instances of persons committing suicide rather than face the future. Other effects were noticeable in the ill-nourished children born of mothers suffering from malnutrition. It can be said with truth that the results of the depression were more calamitous to Australia than were the results of the war of 1914-18. It will be remembered that the then Treasurer endeavoured to alleviate the distress among the community by a fiduciary issue of £18,000,000, and it is to the eternal shame of those who then sat in opposition in this chamber that that legislation was defeated. When the present Government announced its intention to introduce legislation to control banking in Australia, members of this Parliament were inundated with communications from interests closely associated with the private banks. Fortunately, supporters of the Government were not diverted from their loyalty to the party by the communications that they received. I am not astonished that the financial interests of this country became frantic when the Government’s proposals were made public, or that they should have taken every means in their power to divert the Government from its purpose. I have never known of a burglar who has successfully looted property, after many weeks or months of preparation, willingly dropping the loot. He only does that when he is forced to do so. The private banks have so long enjoyed their illgotten gains that I did not expect them to submit quietly to the Government’s proposals.
– Why describe their profits as ill-gotten gains?
– Had the honorable senator listened to my remarks on Friday he would have known that I likened .the private banks to the merchants of Lombardy who used for their own purposes assets which were not theirs. Riches so obtained are, in my opinion, ill-gotten gains. It may be that the banks adopted a more scientific method, but their practice does not differ in principle from that of the usurers of Lombardy.
– The fact that the honorable senator describes the profits of the banks as ill-gotten gains does not necessarily make them so.
– On many subjects, my opinion differs from that of the honorable senator. Had I been in this chamber when the proposal for a fiduciary note issue to provide employment came before it, I would not have voted against the bill, as he did. The honorable senator represents certain interests in this chamber, whereas I represent other in”terests. In this legislation, the Government has set out to provide economic security for the masses. Its social welfare programme aims at providing for the care of children and of the aged and infirm, as well as ensuring economic security for all. If the Government can achieve that objective, it will deprive the Opposition of one of its greatest weapons - the bogy of communism. There will be no need to fear communism if the Government can perform the job that it has set out to do. I warn honorable senators opposite that in offering uncompromising hostility to the Government’s, legislative programme, they are treading a dangerous road. Honorable senators opposite may giggle and smile; but when we analyse the position we find that only the progressive policy of the Labour party stands between the people and red revolution. I have no doubt about that. But for the fact that this Government is able to ameliorate the conditions of the un-emancipated we should certainly be faced with revolution. Therefore, I warn honorable senators opposite not to go too far in their hostility to the progressive policy of the Government. The Labour party stands for economic security. We realize that in order to implement our policy we must not only occupy the treasury bench but also control the banking system in this country. We must accept that responsibility in the best interests of the people. That is the objective of the Government’s banking proposals. I have never had any doubt that, regardless of any endeavour we might make to control the production and distribution of goods, we must at the same time control exchange, because without the control of exchange any other effort on our part would be as useless as the fluttering of the wings of a butterfly trying to escape from the hand of its captor. Therefore, if we wish to implement our progressive legislation we must control credit. That is the object of the measure before us. if embers of the Bank Officers Association have threatened me with political extinction at the next general elections; and I know that similar threats have been hurled at my colleagues. In the main, the members of that association do not lean politically towards the Labour party. In my long political career I have learned of no action on their part which could be interpreted as support for the Labour party. Therefore, I ignore those threats. At the same time, members of that association exhibit concern over the possibility that in the transition from the existing banking system to the system proposed by the Government some of them may be displaced. In that respect I sympathize with them ; but I do not share their pessimism.
I am hopeful that during the post-war period, industry, business and commerce will expand to so great a degree, and economic conditions generally so improve that we shall attract to Australia migrants of the best possible type. In such circumstances the number of employees now engaged in banking activities will certainly not diminish. At the very worst, all now employed in that calling will have work to do ; whilst the probability is that a greater volume of man-power will ;be required in banking activities to meet improved economic conditions. We have witnessed the almost complete extinction of the harness maker. To-day he is almost as extinct as the dodo. And I have seen the sheet metal trade contract to a substantial degree because of the development of other industries. To-day, blacksmiths and boilermakers are practically members of a vanishing trade. Therefore, whilst I sympathize with members of the Bank Officers Association in their fear that the system proposed to be established by the Government will displace many of them, although I, personally, ‘believe that that is most unlikely, I can only say at this juncture that should they experience the bad luck which they appear to contemplate, such bad luck would be only in line with that suffered by others who have gone before them. I had not intended to speak at such length and would not have done so, but for the necessity to answer interjections by honorable senators opposite. I heartily support the bill.
.- I have listened carefully to the speeches of honorable senators opposite in the hope of learning something about banking generally; but the views expressed by those honorable senators who have spoken in support of the bill have made me only more confused than ever concerning the Government’s real intentions since the Minister for Trade and Customs (Senator Keane) attempted to explain them in his second-reading speech. Although the bill now before us deals exclusively with the Commonwealth Bank, certain provisions are linked with the activities of private banks, and it is impossible to debate the bill without going over much of the ground which we shall have to cover with respect to banking generally when the Banking Bill comes before us.
Each honorable senator opposite who has already spoken has given different reasons why the Government has found it necessary to introduce this measure. After listening to them I have come to the conclusion that the Government has introduced its banking proposals as the result of its study of the life of Ned Kelly, the famous Australian bushranger, but with the one qualification that Ned Kelly used to wear a mask in order to hide his shame, whereas the Government has adopted the principle of wholesale bank robbery naked and unashamed. The periodica] hold-ups perpetrated by that notable Australian character were hold-ups of branches of banks, whereas the Government proposes “ to go the whole hog” and wipe out the private banks altogether. The bill now before us deals mainly with the Commonwealth Bank, but most of its provisions embody powers already possessed by the bank, the main exception being that the bank is now controlled by a board whereas the Government proposes to place the bank under the control of one individual. I shall deal fully with that point later.
Senators Large and Grant related the very interesting history of banking since the days when the merchants of Lombardy entrusted their jewels and other precious possessions to each other, but I fail to see what that has to do with the Australian banking system. Speaker after speaker on the Government side of the chamber placed at the door of the private banking institutions of the world the responsibility for all the troubles that have occurred during the last century, including wars and depressions. Senator Large went even further and added murders and suicides. These charges are without foundation. The PostmasterGeneral (Senator Cameron) contradicted Senator Grant to some degree by declaring that the banks were not responsible for depressions, but that they prolonged them. What possible reason could the private banking institutions of this country, or of any other country have for creating or prolonging depressions? We all know what the effects of depressions are. First of all, share values fall, and that applies to the shares of banking institutions as well as business organizations. What then have the private banks or their directors to gain by depreciating their own stock?
– When the value of the stock has been depreciated they are able to buy it up very cheaply.
– That allegation is about as intelligent as other observations which have come from the Government side of the chamber. Can any honorable senator explain why holders of stock in a bank or in any other joint stock company, should desire to prolong a set of conditions which have resulted in the depreciation of their assets? The entire business of banking suffers considerably in a depression. Is it not to the advantage of public companies whether they be banks or ordinary business enterprises, to have full employment in the community, brisk business, and prosperous conditions ? Honorable senators opposite have .given a ‘long dissertation on the evils which they contend have been done in generations gone by in the name of international finance. These include, as I have said, wars, depressions, and general’ suffering, but after all, what are the Australian banking institutions? Are they not simply organizations built up by the savings of our own people? Figures have been quoted showing that of the nine private banks operating in this country, all except two belong entirely to the Australian people, and that shareholders in these institutions number 80,000, the average holding being £500. What nonsense it is then to say that the owners of these organizations are engaged in some form of plot to cause wars and depressions, or even to have prolonged depressions! Our private banking institutions are no different from other public companies except that they have specialized in finance. Without the confidence of depositors, the private banks could not live. An organization could have the biggest list of shareholders of any company in this country, and a palatial building, but unless it had the confidence of people who wished to deposit their money in savings banks accounts, or current accounts, it would not do any business.
My colleague from Queensland, Senator Cooper, in a very able speech, traced the history of banking in this country. He pointed out that the bank of New South Wales had started- in humble circumstances 125 years agc- -17 or 18 years after the first settlement in this country was established, and that our banking system had grown since then as part and parcel of the life of the people. The private banks were started with small capital and small deposits, and they have been built up by the Australian people, not by international financiers. As Senator Gibson has said, the Australian private banks have not paid huge dividends. In fact, the average dividend, paid by these institutions is low and unattractive compared with dividends paid to investors in other business organizations.
Bank shares are recognized as a trustee investment, and usually are bought by people seeking a safe return for their money. They invest their money in banks because of the capable way in which these organizations have been managed in the past, and because such an investment is not of a speculative nature.
This measure which deals primarily with the re-organization of the Commonwealth Bank is divided into various parts including housing, rural loans and industrial finance. Most of the activities provided for in the bill are . already being carried out by the bank, and could lie carried out in the future in competition with existing organizations, without the creation of a government monopoly in the banking field which undoubtedly is the objective of the Government in introducing this legislation. For instance, the State Savings Bank of Victoria operates a Credit Foncier department, which in the past has enabled it to discharge satisfactorily many of the functions for which provision is made in this bill.
– For one section of the population only.
– That is unfair. The Credit Foncier system of the State Savings Bank of Victoria has never been limited to one section of the people. It lias been available to all sections, and many people have that organization to thank for the fact that they are now living in their own homes or on their own properties. Various co-operative building societies have been voluntarily subscribed to for many years which have been of tremendous benefit to the workers. “Without their assistance the workers would not have been able to buy their own homes, and I hope nothing will bc done to interfere with their activities.
– Nothing will be done to interfere with them.
– The bill proposes to establish a Rural Credits Department of the Commonwealth Bank, but such a department is already in existence and deals promptly and fairly with applications made to it. A further proposal is to set up an Industrial Finance Department. In (his field the activities of the Commonwealth Bank are limited because it is necessary for it to ensure that its advances are properly secured. Irrespective of its charter or the extent of government control, or what party is in office, no Commonwealth Bank would eVer rendel’ service by way of advances to industry comparable with that of the private banks. No government bank would dare to take the risk that a private bank is willing to take. -Under the proposed set-up constant references will be made by the Commonwealth Bank to the Government and the Treasury Department, and the Auditor-General’s Department will keep a watchful eye on its activities. All these factors will be detrimental to the making of advances to industry. A further important consideration is that the bank will be handling the taxpayers’ money, and if it sustains failures in respect of any undertaking, it will not be government funds but taxpayers’ savings that will be lost. Every one knows the length of time involved when seeking to have an application granted, because of red tape and the set-up of government departments. With a similar set-up in the Commonwealth Bank the possibility of securing a quick loan in a time of emergency will be practically non-existent. In country areas primary producers sometimes require financial accommodation at, perhaps, half an hour’s notice, for the purpose of buying stock or new machinery. A manager of a private bank with which that man may have dealt for years will take a chance and make the accommodation available to him. As Senator Gibson pointed out, many country men who have been dealing with private banks over a lengthy period have never been asked to lodge security in respect of overdraft accommodation they have been given. When that type of transaction is brought under the control of the Commonwealth Bank, in respect . of which the final say will rest with the Treasurer, it is extremely doubtful whether such accommodation will be made available under similar conditions and at short notice. Government departments are strangling the lifeblood of industry continually.
The Government proposes to abolish the Commonwealth Bank Board, but that would be a retrograde step. Each private bank has its board of directors, consisting, as a rule, of men who have had wide experience in the financial and business world and are thus able to give sound advice to the general manager. But the Government proposes to take away the board - at a time when more and more responsibility, and a greater variety of work is to be given to the Commonwealth Bank, and when the Governor would be in greater need of advice from the board. It has been pointed out that when the Commonwealth Bank was first instituted, Sir Denison Miller was the sole executive authority. The bank, however, was then a tiny organization with a very small turnover, and did not justify the existence of a board of directors. Through the years it has expanded more rapidly than its creators dreamed possible and it is now a huge organization. In spite of the fact that the Government proposes to enlarge its functions and powers still further - which one would imagine would necessitate an increase in assistance from a directorate - the Government proposes to abolish the body capable of giving advice. In the bill the Government envisages the undertaking of housing schemes and the provision of finance by the Commonwealth Bank for the purpose. An Advisory Council is proposed, but will it include among its members a person with a practical knowledge of housing problems and the cost of building?
– Has not the Commonwealth Bank officers in its service who are experts in those matters?
– There may be such men among the permanent officers of the bank, but they are not to be members of the Advisory Council. It is essential in times like the present, when values are fluctuating so widely and other economic difficulties have to be dealt with that experts should be appointed to advise how millions of pounds of the depositors’ money should be handled so that failures and losses may not result. Is there any other organization in Australia handling funds to the extent it is proposed that this bank shall handle the depositors’ money, which has not the benefit of. a board of directors ? Yet the Government proposes to place in the hands of the Governor - and in the event of a dispute, in the hands of the political head of the Treasury - the responsibility of directing how these savings shall be invested. What section of the financial world involves a more delicate business than that of making rural advances, particularly in the light of fluctuating values of land, stock and all commodities associated with primary production?. Does that not call for the most expert consideration and advice? But the Government proposes to repose all responsibility in the hands of the Governor or the Treasurer. Ever since the establishment of the board, at least two members have been men actively associated with rural industries. They have been appointed so that the board may have the advantage of their wide knowledge of primary industries.
Under Part X. the Commonwealth Bank will have power to advance money for the purposes of industrial development. I do not know exactly what that implies. If the Government desires that loans shall be advanced without sound security to persons who wish to establish new industries, I predict that a good deal of trouble will be experienced. A sound case can be presented for the retention of the present board and the strengthening of it, particularly as the bank will have greater powers under this bill than it has previously exercised. When a member of the Opposition was speaking, an interjection came from the Government side casting a reflection on the present board. An honorable senator opposite said that the members of the board had been looking after their own interests. That was most unfair. The majority of them are known personally to us, and, as far as I am aware, each has given disinterested public service, and has been of great help to the present Governor and his predecessor. They were not appointed because of their financial position in the community. Some of them came from the ranks of the workers. Two of them have spent the greater part of their lives in the organized Labour movement, and others have been engaged for many years in primary production. Sir Claude Reading severed his own business connexions in order to devote the whole of his time to the work of the board.
Clause 9 takes all power from the Governor of the bank and transfers it to the Treasurer of the day, thus placing the bank under political control. In the event of a dispute arising between the Governor and the Treasurer on any matter, the Treasurer has the final voice regarding it, and the bank must conform with his wishes. Even if the Governor thought it sound policy to make an advance not favoured by the Treasurer, he must, irrespective of his wide experience of banking affairs, give way to the Treasurer of the day, who might have no qualifications whatever to control a great financial institution like the Commonwealth Bank.
The general criticism levelled at the trading banks has been most unfair. The associated banks are quite able to defend themselves, and I have no doubt that they will be able to furnish ample proof that the charges made against them of having created depressions are quite untrue. The proposal of the Government to take complete control of banking is bitterly opposed not only by the trading banks, which have about 80,000 shareholders throughout Australia, but also by the employees of those banks and of the Commonwealth Bank itself.
– That is not so.
– A ballot was held amongst the whole of the employees of the Commonwealth Bank recently on two aspects of this bill, one in relation to their classification, and the other with regard to the publication of salaries, and the vote was overwhelmingly in favour of the retention of the present method of control. The employees of both the Commonwealth Bank and the private banks realize that they will be under great disadvantages in the event of the Government achieving its purpose of having one banking organization controlled and conducted by itself. The spirit of competition which exists between the trading banks is beneficial to both the banks and the employees.
– There is no competition between the trading banks.
– I was waiting for that’ interjection, but I did not expect it to come from the honorable senator, as I regard him as a good deal more conversant with matters of this kind than some of his colleagues who have given us the benefit of their views in this debate. He must know, however, that there is keen competition between the private banks. In, the smaller country towns that competition becomes more apparent than elsewhere.
– I have known of a bank manager being catechized for having gone after another bank’s business.
– I should be surprised if that practice were adopted. If a bank is already giving satisfaction to a customer and another bank asks him to transfer his business to it, that might be a different matter, but the keenest competition arises for new business. “When a customer states that he is not satisfied with the treatment received from his bank, it is not long before another bank is prepared to offer him better service. There has been just as much competition between the private banks as between traders in other lines of business. It is true that during the war the competition between the banks has not been so keen as formerly because of the efforts of the Department of War Organization of Industry to save man-power by restricting the number of banks operating in certain districts. Present conditions may not reflect the normal practice of keen, even fierce, competition between the private banks.
– I was speaking of normal times, and I stated my experience then.
– The honorable senator’s experience has been different from mine. The people have been puzzled to know why this legislation should have been introduced at this time, because the Government already has the powers which it seeks, and they will continue for six months after the cessation of hostilities.
– The honorable senator admits that there is reason for this legislation?
– I am trying to ascertain the reason for the introduction of this legislation at this time. As I cannot obtain any authentic statement from the Government I am forced to place my own construction on its action, and to conclude that the Government is trying to “ soft-soap “ communism, instead of fighting it.
– Does the honorable senator say that Communists were responsible for the establishment of the Commonwealth Bank in 1911? That is the only inference from his remarks.
– I did not say anything of the kind. The Commonwealth Bank was established long before my entry into politics. I frankly admit that it has served a useful purpose, and I hope it will continue to do so; but if it is to continue to have the most beneficial effect on the community, it should operate in active competition with other banking institutions. Whatever banking business I have transacted has been done through the Commonwealth Bank; the members of my family also do their business with that institution. I cannot find any reason for the introduction of this legislation, except that the Government has been influenced by the growing leftwing section of the Labour party. Senator Sheehan said that the framers of the Constitution were wise to provide that the Commonwealth should have power to control banking, but I submit that no Constitution would be complete in the absence of such a provision. There is a great deal of difference between giving to the Commonwealth power to control banking, and the use of those powers to destroy the existing organization by swallowing up the private banks and establishing one big banking monopoly in the Commonwealth. That is what the Government proposes in this bill.
– That is only incidental.
– Senator Large told us that the Government cannot give effect to its policy of socialism until it has socialized finance. That means that all private financial institutions, and insurance companies, must come under the control of the Commonwealth Government.
– That will be incidental.
– If that be the policy of the Labour party, members of that party should 11Ot pretend otherwise.
– I am not running away from what I have said.
– I know the views of the honorable senator, and I give to him credit for not pulling his punches. The difference between the Government and the parties in opposition is that the Govern m en f has set out to control the financial institutions of this country whereas we on this side believe that the private banking institutions should continue to operate. The policy advocated by Senator Large can lead only to inefficiency, and ultimately to disaster.
On the eve of the last general elections the Prime Minister (Mr. Curtin) said that a Labour government would not use the circumstances of war as a means to implement a policy of socialism, but would concentrate on the war effort.
– Has not the Government concentrated on the war?
– For a time the Government did concentrate on the war, but for the last twelve or fifteen months it has presented to the Parliament legislation of a most contentious nature - legislation, moreover, for which it received no mandate from the people. This is not the time to introduce legislation to divide the people into opposing camps. In the committee stage Opposition senators will move a number of amendments, and I hope that decisions of a regimented caucus will not operate in connexion with this measure as they did when the Reestablishment and Employment Bill was under consideration. The storm of protest which followed the Government’s rejection of Opposition amendments to that measure was nothing to the storm of protest which will come from the people when they realize what the Government’s objectives are in connexion with banking. The reason why the banks of this country, with the exception of a government-controlled bank in New South Wales, have weathered the storms, is that the people have had confidence in them, and that they have not been the plaything of party politics. No institutions in Australia have earned greater respect for their sound methods of finance than have the banking institutions of Australia; in saying that I include the Commonwealth Bank. Under this bill, the banking institutions of this country will become the plaything of party politics. Unfortunately, the Government has yielded to pressure from “ left-wing “ organizations outside the party, but in yielding to that pressure the Government will bring about its own undoing. The only real pleasure that I get out of the introduction of this legislation, is due to the knowledge that only about fifteen months will elapse before the present Government will be driven from the treasury bench by an irate public, and that another government will then be able to undo the mischief which the passing of this legislation will cause. Honorable senators who support the Government may think that they arc doing something clever and are fooling the public, but I assure them that the reaction of the people to these proposals is stronger than, in connexion with any other proposals with which I have been associated during the whole of my public life. The only “ kick “ I get out of it ‘is the knowledge that about this time next year when the next general elections are held, a new government will be returned and will be able to undo the mischief perpetrated under this legislation.
Senator McKENNA (Tasmania) [4.30 j. - The measure before us is so important to the welfare of Australia - it embraces so many matters and is so pro-vocative of thought - that I find it difficult to determine what to say and what to leave unsaid. However, if the Opposition maintains its recent form, I have no doubt that we shall have further opportunities to discuss the different provisions of the measure at the committee stage. All that is done in this chamber is preceded by a prayer that our labours may be directed by Providence to the true welfare of the people of Australia. £ have listened intently to speeches made in this debate, most of them by honorable senators opposite, and I have yet to hear from an honorable senator opposite that the measure is either directed against the welfare of the people or is likely to adversely affect that welfare. En fact, the speeches of honorable senators opposite have been directed to the protection of the banks rather than to displaying any concern for the welfare of the people.
– But the banks hold the people’s money.
– -On that point I cross issue with the honorable senator. There are two classes of money held by the banks - that of the shareholders which is a small proportion of their total funds, and that of the depositors which forms the bulk of the money held by the banks and forms the base for the credit which the banks issue. The depositors, whose money represents the bulk of the money controlled by the banks, have no say whatsoever in banking or monetary policy. They are entirely without a voice. Reverting to my theme, time and experience have shown that many measures passed by this Parliament have not been for the true welfare of the people, and in sp: fa of the fact that all governments, no doubt, desired to achieve this objective, a good deal of legislation, even at the time of the passing of particular measures, must have given rise to doubt as to whether it would serve the true end of the welfare of the people. I am not in any doubt as to my position in relation to the measure now before us. I am sure that it is designed to bring about tho welfare of the people, and I am equally certain that it is going to go a long way in that direction. The first portion of clause 8 provides the key to the spirit that animates the whole of the provisions in the measure which are new. It reads -
It shall he 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. . . .
In my experience this is the first time that that has been written into any act of Parliament as a statutory duty imposed upon any authority set up by this Parliament. I regard it from a legal viewpoint as setting up a statutory obligation which could, if necessary, be enforced by the Attorney-General of the Commonwealth by way of injunction against the bank if it were proceeding to act in any way detrimental to the interests of the people. Therefore, that clause is not a mere pious platitude, or a mere broad expression of opinion, or desire. It is a definite imposition of a positive duty upon the bank to so conduct itself that the welfare of the people will be served. I should like to consider for a while why the welfare of the people is so intimately bound up in currency and banking problems. In the earliest days, exchange of commodities was effected by barter. That was a very inconvenient system, and one which restricted trade within very limited boundaries. I need not elaborate the difficulties that would arise in trading fowls for cows if those articles had to be exchanged. But, later, as money was set up as the measuring rod of value, trade was able to get beyond its very limited confines. It was enabled to become international; and money became a really indispensable convenience. Money had two qualities. It was endowed by law with certain powers, and it also had certain inherent qualities of value in itself. By virtue of both those powers it was able to command goods and services in a very free way; but, presently, groups who got control of money and the credit were able to gain possession of this element which was intended to be a medium of exchange and, ultimately, by virtue of the power that they acquired through the possession of money and the control of credit, they not only dominated governments and dictated the policies of governments, but, in fact, also gained a control which exceeded that of the governments of the world. At the risk of repetition, I propose to refer briefly to four statements made by prominent parsons since 1790. Three of them were made by prominent bankers, and the fourth by an ex-Prime Minister of England. I shall later bring the views recently expressed by the bankers into my statement, and so draw a clear picture of the control exercised by banks and the recognition of that control at the present time. That will lead me to demonstrate the need for a measure of control over banking, currency, credit and exchange which exercise a vital influence on every one. As long ago as 1790, Meyer Rothschild, who founded the famous banking house of Rothschild, said -
Permit me to issue and control a nation’s money, and I care not who makes its laws.
Sneaking of the peace negotiations in 3919, Mr. Lloyd George said -
The international bankers swept statesmen, politicians, jurists and journalists all on one side, and issued their orders with the impe- riousness of abolute monarchs who knew that there was no appeal from their ruthless decrees.
Sir Reginald McKenna, exChancellor of the British Exchequer, and chairman of the Midland Bank, said in 1920;
I arn afraid the ordinary citizen will not like to -be told that the banks can and do create and destroy money, and that they who control the credit of the nation, direct the policies of governments, and hold in the hollow of their hands, the destinies of the people.
My final quotation is from Mr. Phillip A. Benson, president of the American Bankers Association, who said as recently as 1939-
There is no more direct way to get the control of a nation than through its credit system.
Those quotations show the power that resides in bodies or corporations which control banking and credit; and as those powerful financial groups grew in the world, so grew the national debt system. Prior to 1694, when the Bank of England was established, it is interesting to recall that there was practically no public debt in England, but three years after the institution of the Bank of England the national debt was ?3,000,000. It has grown continuously until following the war of 1914-18 it amounted to ?7,830,000,000. There is no need for me to tell honorable senators that this figure will be vastly exceeded by the time the present greater war is over.
– Does the honorable senator blame the banks or the Government for that position ?
– I would not blame either of them, but probably both. I shall develop that theme when I deal with the financial emergency which arose during the depression from 1929 onwards. I agree with the view expressed in the report of the Royal Commission on Monetary and Banking Systems that bodies other than banks must accept a measure of blame for that condition. As the commission puts it, governments of the day, trading banks - including the Commonwealth Bank as it was then constituted - and the community at large must accept their share of blame for that position. I would not attribute it to either the banks or the governments, but to both. The establishment of the Bank of England had an interesting history.
It was formed in circumstances where King James very urgently required £1,200,000 in gold and he offered interest at 8 per cent. for that sum. He upproached a body of influential people in London and borrowed that amount, hut the lenders made it a condition of granting the loan that they be entitled to establish a bank, that they should have a charter, and should be allowed to make a fiduciary issue amounting to £1,200,000 bearing interest at the same rate. That was the beginning of the Bank of England. For the information of honorable senators I should like to quote a very interesting extract on this subject from a very well known weekly in New Zealand, The Mirror, which, incidentally, is controlled by a director of the Bank of New Zealand -
As a fine museum piece which should be displayed with much prominence the following paragraph taken from the Bank of England’s Prospectus, 1694, is hard to beat - “ The bank shall have the benefit of interest on all moneys which it shall invent out of nothing”.
Why write volumes about a matter that can be expressed so convincingly in a nut-shell?
All that I have said goes to show that banking plays a very vital part in the life of the community. It affects the life of the nation. Money controls everybody - I might even say from the cradle to the grave. As a lawyer I have a very lively knowledge of the fact that even if a person were unable to pay one penny in the £1, it would cost him a considerable sum of money to file his petition to become bankrupt. It costs money even for that; it costs money, too, to be buried. In fact, money governs us from the cradle to the grave. The days have long since passed when each of us could produce all that is required to maintain life. It is true, as Senator Large has said, that even the unborn child may be affected by the amount of money, and, accordingly, the facilities, that may be made available to the child’s mother. I say deliberately that the ultimate control of banking, currency, credit and exchange must rest in the nation, because it provides a vital national service. It profoundly affects everybody in the community, and the power given to those who control these things transcends even the power of governments themselves. I develop that by saying that monetary policy is of vital national importance, because it affects us in so many ways. I shall give brief instances. It plays a very large part in determining the degree of employment, or unemployment, in the community. The last depression was an example of its power in that direction. I have already adverted briefly to the part that the banks played’ both in the creation of, and in the recovery from that particular depression. Monetary policy affects the standard of life of everybody in the community; it affects the quantum of trade and commerce; it goes further: it determines which industries shall be established, which industries shall be developed and which industries shall be retarded. Inherent in that power over trade and commerce lies the possibilities of international conflict. That is an additional reason why ultimate control should, and must, remain with the Government.
– Does the honorable senator say that the Commonwealth Bank should have power to determine which industries should be established ?
– I say that the banks at present have power to do that. They can direct industry without regard to national interest. If the banks were concerned with” national interest, we should have had in this country long ago, an aircraft production industry, as aluminium industry, and other undertakings vital to our existence in time of danger. Disregarding for the moment war-time controls, the banks can develop and establish industries, or force industries out of existence. That is a power which ultimately should not be completely in the hands of those institutions, but in the hands of the nation. I am not pretending that the nation should step in and control every loan that a bank makes or every advance that it contemplates. The view that I expressed in my first speech in this chamber was that the Government ultimately must have the final voice in these matters. It must be able to direct that national industries shall come first. After that, private industry, banks, and anybody else, may have free play. In matters that are vital to the safety and development of this nation final power must be in the hands of the Government. That control is necessary also for other reasons. The degree and speed of our national development are dependent very largely upon banking and monetary policy. I say too, finally, that that policy has a lot to do with the determination of price levels. The amount of money and credit available in the community are vital factors in determining price levels, and the stability and economics of the nation. Unless prices are kept reasonably stable, there is an unfair differentiation between producer and consumer, borrower and lender, debtor and creditor, taxpayer and Government, and employer and employee. Without stability of prices there is no firm basis on which production and trade and commerce may be carried on. Who should determine monetary policy in the last resort? Should it be under public control and in public interest, or in the hands of private industry - the private trading banks and, if you like, the Commonwealth Bank, as it is at present? let us for a moment examine the constitution of the private trading banks. In this country they are few in number, and they arc all companies. They all have shareholders, who I understand, number approximately 80,000. Each bank has its board of directors who are the trustees for the shareholders and who are elected by the shareholders. They have a bounden duty under their appointment to protect the assets of the shareholders, and to make for them the maximum profits. Let us consider the 80,000 shareholders: Do they have an equal voice in the election of directors? Unquestionably they do not. There is one vote for each share, and it may well be that the boards of directors of the banks are elected by very few people holding a great bulk of the shares, and that a substantial proportion of the 80,000 shareholders do not have an effective voice at all. So, the appointment of directors virtually rests in the hands of very few people in the community. Another point worth remembering, is that these shareholders are a changing commodity; their personnel changes with every transfer of shares. They do not have any responsibility to the bank in which they hold shares or to the public. In fact if there is a conflict between national interest, and the interest of the shareholders, the directors of a bank have a plain statutory duty to ignore the national interest. If they did otherwise, any one of their shareholders could apply to-the court for an order restraining such action as might, be in the national interest and against the sectional interest of the shareholders.
– Can the honorable senator give an instance?
– I am not prepared to do that at the moment. I arn merely citing the proposition as a broad case.
– As a basis for argument that may be all right.
– I am not in a position to give to the honorable senator immediately the example which he seeks, but should such a case occur to mc before I resume my seat, as it maywell do, I shall certainly refer to it.
Going back into antiquity, I have quoted three bankers and one Prime Minister in support of the proposition that vast powers are vested in banks and like institutions. Coming to the Australian trading banks, I say further that it i.a recognized that in these institutions ai-e vested vast powers over industry and the economic life of everybody in the community. They themselves acknowledge that they are performing what they call a “ vital national service “. I ask honorable senators to keep those three words in mind, because they recur again and again. I have in my hand a statement issued by the general manager of the English, Scottish and Australian Bank Limited, and I understand that similar statements were issued by all the private banks. It is dated, Melbourne, December, 1944, and is headed “ Threatened political control of banks and . their customers”. Senator Aylett referred to the particular passage which I now quote -
This bank does not advocate the immediate removal of all controls after the war, but feels it must emphasize that permanent rigid political control over the banking structure would shut off the all-important safety valve of competition between banks and would permanently give the Government vast powers over industry and substantial control over the individual.
There we have a plain and frank admission by the banks that these vast powers are exercised by them to-day. Their objection is to being deprived of their absolute control, and to that control being vested ultimately in the nation or in the Commonwealth Government, which is responsible to the people. A publication issued on behalf of the banks by the Sound Finance Association of Victoria, deals with ten questions, and the answer to question number 7 is as follows: -
By removing the board of the Commonwealth Bank and placing the hanking system under rigid control, the Federal Government would be able to decide the very existence of almost any section of the community.
There again is the plain admission on the part of the banks that in them is vested this vast power which, I submit, unquestionably should be vested in the National Parliament. Let me put it this way: Who should be the repository of these powers? Should they be vested in the private banking institutions, with their 80,000 shareholders, and with the degree of irresponsibility which I outlined, or in the Parliament of Australia with its 7,000,000 subscribers? That I suggest is the question that has to be determined. Private trading banks make their profits very largely by the use of the money of their depositors which they lend at a profit to themselves. If one deposits a huge sum in a bank, at call, one does not get any interest’ upon it. However, for the payment of 10s. a year one is able to get a great deal of service. The bank will issue cheque books, keep all accounts^ and render other services. The benefit which the banks derive for those services is the utilization of the money of their depositors, realizing, of course, that the’ depositors will not all seek to withdraw all their money at one time. It is a well known banking practice that approximately 10 per cent, of all deposits is sufficient to meet all commitments which reasonably might be expected to be incurred at one time.
The real purpose of the trading bank system is to give the Australian people an essential banking service. Such a service means something more than the provision and conduct of a highly geared technical banking machine. It means the clear recognition and full acceptance of the national responsibilities accruing to them as guardians of the people’s money. They must be judged by the spirit in which they accept and discharge this great national duty.
I suggest that great national duties should, be discharged by the Commonwealth Parliament and not by a private institution designated by the dignified appellation of a bank or otherwise. Mr. McConnan further said -
But the banks recognize clearly that one of their cardinal duties is to see that the people’s moneys are used to the benefit of the people and to the advantage of the country.
Of course that is not a statement of facts. Their plain duty is to their shareholders as I have pointed out.
– And their depositors.
– Yes ; who have no voice whatever in the control of the bank, and who provide, very largely, the means of profits. A further extract from the speech is as follows: -
While this country adheres to the principle of reward for enterprise and for effort, and I trust it always will, surely the banking system, which gives such a vital national service, is entitled to its reasonable reward, just as any other industry or individual.
Again we have the words “vital national service “ obtruding. If I were asked to defend nationalization of banking I should seek no better proof than that statement, because the justification for nationalizing any item of public service is that it is dangerous to the civil well-being to allow it to be left in the hands of private enterprise. I have only to refer to items such as water supply, control of sewers; and drains, railways, postal facilities, and. that type of public utility to illustrate my meaning. Once an activity falls into the category of vital national service then, unquestionably, it should belong to the nation, and be controlled by the nation for the nation. I am not here, however, to advocate nationalization of public utilities, because that is not involved in the measure now before the Senate. Concerning the staff of the banks and how they may be affected, Mr. McConnan states -
It means the destruction of a vast organization of trained staff and an organization equipped to continue the training of staff to discharge a vital national service.
I now come to the most surprising statement in the speech, and when honorable senators on the Opposition side hear it, perhaps they will be less inclined to sympathize with the private banks, and recognize more clearly the value of the Government’s policy in the measure. Mr. McConnan said -
I agree that the control of the amount of credit should be in the hands of the Government and the Commonwealth Bank as it actually is . . .
Mr. McConnan was not restricting his remarks to the war period, but to all periods. I suggest to honorable senators that the control of credit is none the less necessary in times of peace as in times of war. In matters such as housing, immigration, the implementation of the Atlantic Charter, defence, social services, full employment, and national development generally, credit control will be necessary in the post-war period when the emergency will be as acute as it is now. I voice no criticism of trading banks either generally or in particular. I am prepared to concede that they have rendered a great deal of national service and that they have helped to develop this country in an appreciable way. I am aware, however, that they have done so incidentally, in serving their main purpose of preserving their assets and making profits for the shareholders. My only complaint is that the power they possess, and which I illustrated, is too vast and too important to the people of Australia to be allowed to remain in their hands. It affects the country so vitally, internally and externally that the ultimate control of that power should be in the hands of the nation. I ask honorable senators to remember that in the post-war period, safeguards against inflation now exercised will not then be available. I refer to wage-pegging, rationing, and price control, and I suggest that there will be a grave emergency existing which will call for the wisest possible control in the interests of the nation.
Coming to the bill itself I find myself happy over the constitutional position. Paragraph (xii) of section 51 of the Constitution Act sets out that this Parliament has control over currency, coinage, and legal tender, and there are no qualifications to that statement. Para-* graph (xiii) provides that this Parliament may control -
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.
Practically the only limitation of that power is in relation to State banking, and for that reason there cannot be complete nationalization of banking by this Parliament whilst the Constitution remains as it is now. The bill repeals ten Commonwealth Bank Acts, two Housing Acts and the Bank Notes Act, 1910. Because it is a repealing and consolidating measure it will be a convenience and subject to no criticism on that account. There are. new and vital provisions introduced! in the measure, however, comments on which have already been made by members of the Opposition, and I shall summarize them before dealing briefly with certain points. First of all, there is the power given to the Treasurer to ensure that the Commonwealth Bank shall carry out the monetary and banking policy of the Government. Then the bill deals with the formal constitution of the Commonwealth Bank as a central bank; creation of a general banking division of the -bank; the obligation of the Commonwealth Bank to develop its general banking business ; the abolition of the Commonwealth Bank Board and the setting up of an Advisory Council; the abolition of the note issue reserve; the creation of an Industrial Finance Department; provision for housing loans; and the abolition of the Commonwealth Savings Bank commissioners, and reorganization of the Commonwealth Bank service.
I consider that the first of the matters mentioned is of utmost importance - that is the power vested in the Treasurer under clause 9 enabling him, in the event of a difference of opinion with the Commonwealth Bank as to what monetary and banking policy should be applied, to insist that the view of the Government shall prevail. I have already shown what a vital part banking and currency played in the affairs of the nation, and I agree with what the Minister for Trade and Customs stated in his second-reading speech -
The legislation I am proposing to-day is based on the conviction that the Government must accept responsibility for the economic condition of the nation.
In other words, the Government must rule. It has the power, and it must govern. In a matter so vital to the people, their will must prevail and their will is exercisable every three years. I have already shown that the banks have admitted there must be a measure of control hereafter. Mr. McConnan’s speech plainly shows that, and the actions of the banks themselves during the war period con-firm it, because they admit now that these controls must extend some distance into the post-war period. The Leader of the Australian Country party (Mr. Fadden) stated that representatives of the private banks came to him just prior to the outbreak of war with Japan and suggested the imposition of the very controls they are subject to to-day - or something very akin to them. The banks themselves recognized that Australia was in grave danger - not only its population, but also the banks and their assets and prospects - and that in a national emergency of that kind, everything depended on wise government action and control. Therefore, they readily submitted to it. I say without hesitation that the banks are not complaining about government control in the post-war period. It was their own suggestion in the first instance.
War is not the only emergency that this country will have to face. I listened with great interest to the speech of Senator Large in which he drew a picture of conditions in the depression and I heard the criticism by Senator Foll of his remarks. Senator Large stated that he doubted whether the sufferings of the last war were any greater than those of the people in the last depression. I make bold to say that I doubt whether the sufferings during the depression, caused by bankruptcy, unemployment, malnutrition and disruption of prospects, were not greater than the damage suffered in the present war through the loss of loved ones, the interruption of careers, the dislocation of industry and all the evils attendant upon war. With Senator Large I agree that the last depression left indelible injuries on the minds and bodies of Australian citizens, and it will take a long time for the tens of thousands afflicted to recover from those effects. I promised Senator Collett, who interjected, that when dealing with the depression I would advert to the report of the royal commission on that subject. Paragraph 540 of the report which dealt with this matter reads as follows: -
Without attempting an analysis of the causes of booms and depressions, it is imperative, before we comment upon the behaviour of the Australian monetary and banking system, to express our views as to the part which monetary measures played in the depression and recovery in Australia. No action by the monetary and banking system of Australia could have avoided some depression, although the system together with the Governments and, indeed, the community as a whole, must share Borne responsibility for the extent of the depression. The development of boom conditions could have been checked and the depth of the depression could have been lessened. Monetary measures alone did not produce recovery, but their effects would have been greater had they been taken earlier.
In paragraph 543, the following statement appears : -
The proper policy for the Commonwealth Bank, as the depression developed, was one of expansion, using any necessary powers in that direction, and enabling the trading banks to do their share. As conditions improved, the proper policy was to cease expanding credit, and, if necessary, to contract, using any appropriate powers to bring the trading banks into line. Two of the most important monetary measures taken during the depression were the expansion of central bank credit hy means of treasury-bills in 1931 and 1932, and the movement in the exchange rate in January, 1931. In each case, in our opinion, the depression would have been lightened, and some of its worst effects avoided, if these measures had been taken earlier.
That is an indictment by the royal commission of the Commonwealth Bank and the trading banks in that emergency.
– And of the Labour government which was in power.
– That is not true; the Labour Government was not in power.
– One . of the main causes of the depression was the expansion of credit which had taken place prior to 1929 and the contraction of credit after that date.
– And the fall of prices.
– I point out to Senator Leckie that the Government in office from 191S to 1929 was not a Labour government. The Labour Government came into power in 1929 and was faced with the worst effects of the governmental policy pursued in the prior years, supported as that policy was by the banks. Paragraph 565 of the royal commission’s report- deals further with the depression and contains some interesting comments. A great deal of publicity has been given to one extract from that paragraph by private bank propagandists. The paragraph states -
Along with other parts of the system, the trading banks must bear some responsibility for the extent of the depression.
Now comes the part emphasized by the propagandists -
There is no justification for the view that the trading banks, in order to enlarge their profits, deliberately expanded credit to produce a boom, and then contracted so as to produce a depression.
The emphasis in that statement ought to be placed on the word “ deliberately “. Then we come obviously to what was in the mind of the “ commission, that although the banks had not done it deliberately, they had nevertheless done it either through ignorance or inadvertence. That fact plainly emerges, and was commented on by the commission. I think that the inference which I have drawn is correct, having regard to the wording of the paragraph.
– The fact is that the trading banks did it.
– That is so.
– The expansion of credit took place in 1932.
– But there was a prior contraction and a very long period of expansion prior to 3929. The honorable senator is referring to an expansion of £35,000,000 overseas and £55,000,000 in Australia. The royal commission adverted to that, and the burden of its complaint, is that that action came too late. It was not done until 1932. As the commission pointed out, had (hat action been taken earlier, some of the worst effects of the depression would have been avoided. That charge is not levelled by me, but by the royal commission, and its complaint is that the movement on the part of the banks took place far too -late.
I had a close association with the late Premier of Tasmania, Mr. A. G. Ogilvie, who drew ray attention repeatedly, when on the way from Tasmania to the mainland to attend meetings of the Loan Council, to statements that invariably appeared in the press some days prior to the meetings to the effect that it was anticipated that the Commonwealth Bank Board would declare that £10,000,000, £12,000,000, or perhaps, £15,000,000 would be made available to the Loan Council. The function of the council is to determine the amount of money to be raised and to apportion it between the Commonwealth and the States; but irrespective of what amounts the Commonwealth or the States required, no pressure from them could induce the Commonwealth Bank Board to change its mind. If the board declared that £10,000,000 was the total sum that it would make available, that was the amount which would be provided, and the Commonwealth and State Governments had to arrange their programmes at the dictation of the Commonwealth Bank Board.
– Does the honorable senator think that they should .be able to write their own tickets?
– No ; but if during the last depression the government of the day had had sufficient prevision to decide that Australia’s defences in the north should be put in order, and that some hundreds of millions of pounds should be expended for that very necessary purpose, as later appeared, and if the Commonwealth Bank had said, “ You may not have £100,000,000, but you may have only £10,000,000, and you may not expend it for this purpose “, who would be ruling this country, the Government elected by the people or the Commonwealth. Bank Board? I am not alone in urging that there should , be some governmental control of banking and currency. I have shown how the banks have gone a long way in advocating it themselves. In the Melbourne Age, of the 7th November, 1944, there was a leading article in which the following passage occurred : -
Some reform of the pre-war system there must be, if it is to bo made at once flexible enough to serve all the needs of the community and strong enough to weather future storms. I n the last resort, too, the Central Bank must be prepared to carry out the policy laid down by the Government of the day, as the 1936 RoyalCommission on Banking recognized. But this does not mean reducing the Central Hank to subservience.
I agree with that. If I view the position correctly, the Government will intervene only in the event of an emergency. It will put first things first and see that the national interests are protected. Even in the worst emergency it will not pursue control into individual accounts. In a further measure on the subject of banking, which is to engage the attention of the Senate, it is set out that there must be no direction as to individual advances. Many distortions have been made of what the Government intends to do by means of the Commonwealth Bank. It will unquestionably exercise very real and necessary control, as even the trading banks admit, in the immediate post-war period.
What is provided for in the bill is what the royal commission set out in paragraph 530 of its report. I frankly admit that the Government has made one departure in that respect. The commission recommended that before the Government enforced its will it should give an assurance that it was in a position to take, and would take, any action necessary to implement it. What is involved in the words, “is in a position to take” has been dropped from the bill before us, and for a good reason. A go vernment elected by the people may come into the House of Representatives with an exceedingly strong majority and a mandate to carry out a particular policy, but it may be confronted by a hostile Senate, which by a political accident, only one-half of the members being elected every three years, might be in opposition to the will of both the Government and the people. So the Government, in framing this bill, has departed only in that particular from the recommendation of the royal commission.
The Commonwealth Bank has never been formally created a central bank. It is in the position of Topsy, of Uncle Tom’s Cabin fame, who “just growed “, according to her own words. The bank assumed the position of a central bank by keeping control of the note issue and taking control of gold and the foreign exchange rate in the depression years. It succeeded in that regard, not only because of those activities, but also because of its own prestige and technical excellence. One of the functions of the central bank is to control the volume of credit in order to stabilize both internal and external currency, and take such steps as will preserve a reasonable level of employment and keep industry on an even keel. The central bank, in the emergency which faces us now, must go one step further in the post-war period at least, and direct to a considerable degree the distribution of credit. The proposal for a central bank contained in Part III. of the bill has the endorsement of the royal commission, which specifically advocated it.
The most desirable banking system in the present circumstances of Australia is one which includes privately-owned trading banks.
The system contemplated is one in which - (1.) a strong central bank regulates the volume of credit and pays some attention to its distribution; (2.) the distribution of credit is left to privately-owned trading banks, working for profit, but regulated in the manner already indicated.
That is a recommendation which the Commonwealth Government of the day has adopted in the measure before us.
The general banking division which is newly created as a separate department with separate accounts, is obliged under the bill to keep its transactions separate from all other departments. “With its own separate capital, the obligation is also imposed on it to develop and extend its general banking business. That, strangely enough, is also in accordance with the report of the royal commission, which, in paragraph 577, stated -
Although it is unusual for a central bank to carry on trading bank activities and to control a savings bank, we consider it desirable that the Commonwealth Bank should do both. Through its trading bank activities it possesses powers of competing with the trading banks which can be exercised as and when required. Similarly, its savings bank activities add to its ability to regulate the volume of credit and enable it to compete, if necessary, with the State savings banks. We are of opinion that the use of its trading bank activities as an adjunct to central banking policy 13 in keeping with its central bank functions and is to bc approved.
Professor Leslie C. Jauncey, of the United States of America, who wrote an interesting thesis on the Commonwealth Bank for his doctorate of philosophy at the Harvard University, adverted to central banking, and concluded his chapter on that subject with a reference to our own Commonwealth Bank in these words -
There is no reason why the hank should not conduct both general and central banking. A separate department should have charge of bankers’ banking. Central banking should he only one phase of many functions of the Commonwealth Bank.
Clause 21, which applies particularly to the special accounts which are to be kept in the central bank by the trading banks, provides that they are to be kept in the general banking division. Accordingly, there will be no unfairness. The deposits made by the trading banks with the central bank will not be used against them.
– That is a pious hope.
– It is apparent that that will be the case by reason of the fact that the capital of the bank is fixed. If we read the working capital provisions of the bill, we shall see that the general banking division itself is given a fixed capital only, and no provision is made for loans to the general banking division. With the £4,000,000 of its own capital and such transfers as come from its own credit reserves, the general division is to find its way against the private banks. Whatever profits it makes have to be divided in halves, and half will go to the National Debt Sinking Fund. Therefore, the general banking division of the Commonwealth Bank will be carrying even a heavier burden’ than the private banks in the matter of paying their own income tax.
The abolition of the Commonwealth Bank Board is an action on the part of the Government that has provoked considerable opposition, and has been the subject of a good deal of contention. As honorable senators know, apart from the Secretary to the Treasury and the Governor of the bank, six members of the board have to be selected from interests representing agriculture, commerce, finance and industry. [Extension of time granted.’] The basic objection to a board of that nature is that the men so selected would have divided interests. As the Minister for Trade and Customs (Senator Keane) has said if the Commonwealth Bank is to be a truly national bank it must be divorced from all sectional interests. That view is contained in the third recommendation of the royal commission - (3.) 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 be selected for capacity and diversity of experience and contact, and not as representatives of special interests.
It is apparent that the Government hai followed closely the recommendations of the royal commission. That recommendation underlies the objection of the Government to the appointment of six members of the Commonwealth Bank Board to represent special interests. The present board which is so constituted will be replaced by an Advisory Council consisting of officers of the Treasury and of the bank who will be entirely disinterested.
I wish now to advert to the remarks of the Postmaster-General (Senator Cameron) regarding the action of the Commonwealth Bank Board in .1931 during the depression when Sir Robert Gibson, its then chairman, wrote to thi’ Commonwealth Government that, provided wages and pensions were reduced, and social services cut down, and other steps of that nature taken, the Commonwealth Bank would come to the aid of the Government in its efforts to relieve unemployment and help industry. That wa< a perfect example of my contention that those who dictate monetary policy control governments, and ultimately control the nation by dictating the policies of governments. That bank boards are not disinterested was shown during the last general election campaign when Sir Claude Reading, the Chairman of the Commonwealth Bank Board, entered the fray on a purely controversial issue. The point as to whether money could be found in peace for the needs of the nation on anything like the same scale as it had been provided during the war was being debated, when Sir Claude Reading entered the contest to say that that would not be possible in the post-war period. That may have been his view and also the view of the Commonwealth Bank Board. At the moment I am not concerned as to the correctness or otherwise of that view, but I point out that if he were a member of the Advisory Council that kind of thing could not have happened. That incident demonstrates that political considerations and sectional interests can influence a bank board constituted as the present Commonwealth Bank Board is constituted. It is well that the people of Australia should realize that the Leader of the Opposition in the House of Representatives (Mr. Menzies) has announced publicly that if the Government is defeated at the next elections, a new government will restore the Commonwealth Bank Board as at present constituted, and will delete from the act the provision that the banking and monetary affairs of this country shall be under the ultimate control of the Government. As I have said, it will be well for the people of Australia to keep that undertaking in mind between now and the next general elections.
– The people will be reminded of it.
– I have no doubt of that. The management of the Commonwealth Bank has no difficulty whatever in ascertaining the views of any financial or industrial interests. Should it wish to assess a situation or discover trends, it is free to consult any person or institution in the community. That is one of the normal functions of a bank; it is a practice which the Governor of the bank will no doubt adopt.
I come now to the abolition of the note issue reserve. I support the proposals contained in the bill, which give effect to a recommendation of the Royal Commission on Monetary and Banking Systems. The existing provision could have been got round in either of two ways. The royal commission has pointed out one way, namely, that if the exchange rate were increased the value of sterling held by the bank by way of reserves would be raised, and, therefore, a proportionate increase of the note issue could be made. But there is nothing to stop the Commonwealth Bank from making an issue of notes, and out of the proceeds purchasing sufficient sterling or gold to bring the reserve up to the established minimum of 25 per cent.
– That would not ‘be very feasible.
– I admit that it would be something in the nature of trickery, and against the intention of the bill as it stands ; but it could be done.
– Does the honorable senator think that English sterling can be bought with Australian notes?
– That may ,be difficult, but not all English sterling in this country is held by banks.
– Notes are sterling in Australia.
– I do not think that sterling includes Australian notes.
– According to a recent decision of the High Court, sterling does include Australian notes.
– If that be so, the honorable senator is more up to date concerning High Court decisions than I am. ‘Clause 94 which sets out the functions of the Industrial Finance Department of the Commonwealth Bank goes further than providing finance to establish new and small industries. It provides for assistance being given in the form of advice. The bank will not be a cold financier, but will take an active part in the development of secondary industries.
There has been criticism of the provision empowering the bank to take shares in any undertaking that, it may help financially. It is not at all unusual for a lender to insist upon a certain number of shares being made available to him. He doe”s so for a number of reasons. In the first place, he wishes to be assured that he will get copies of balance-sheets, and profit and loss accounts, and tthat he will have the right to attend meetings. Not infrequently the lender insists that he shall be made ii director of the concern, in such cases, he is required to hold a certain share qualification. Without knowing what is in the mind of the Government, I have no doubt that the power to take up shares in (.hat way will be used only for the purposes that I have indicated. In establishing .this department of the Commonwealth Bank the Government is departing from the practice followed in other countries. In England there are four corporations set up as adjuncts to the Hank of England for the purpose1 of financing industry. It is well to remember i hat Germany and Japan adopted a somewhat similar procedure, With the result that in both countries there was a rapid development of industry, which gave to them, a great deal of the power that has been demonstrated to the world during the last six years. Whilst I do not suggest that our industries should be diverted into similar directions, it is important to this young country that its secondary industries shall be developed, because, as I read present trends, we shall have to rely more and more upon ourselves in the future.
I do not propose to deal with other aspects of the bill now, as there will be other opportunities to do so. I shall conclude with the thought with which I began, namely, that this bill is directed towards the true welfare of the people ofAustralia. This bill and the Banking Bill which is to come before us constitute, not a sten. but a leap along the path to Australian nationhood. The spirit of Australian nationhood was conceived on the 1st January. 1901. As I have wandered through the Australian War Memorial at Canberra, and have looked upon the relics of the war of 1914’-18, I have experienced a feeling of awe. Iri the Hall of Remembrance, I witnessed evidences of the birth of a nation. T realized there that this Australian nation was born in blood and travail in the war of “1914-18. It is now undergoing its baptism of blood in the present greater war. 1 believe that the measure which we are lOW C considering’ will accelerate Australia’s progress towards true nationhood, and, therefore, I feel honoured to have this opportunity to support it with my voice and vote.
Senator MATTNER (South Australia) [5.42 j. - This bill may be best described as a- botch, because it is definitely eonfusing to honest, thrifty and progressive citizens who wish to know about banks and their functions. The progeny of this measure will be paper 11011133- - by caucus out of printing press. I shall npt traverse the history of banking or discuss the views propounded by monetary theorists, as honorable senators have already had to listen for hours to almost every known theory, but those who have advanced such theories have failed to show that they constitute sound banking practice. It is evident that the apostle? of banking reform are quite prepared to experiment with the other fellow’s money, but are not prepared to risk their own. The acid test of a theory is willingness to risk one’s own money in giving effect to it. It is remarkable that nearly everyone who condemns the present bank- ing system adds that he is not a shareholder iri any bank, has never had a deposit in or has been a customer of a trading bank.
– Who has said that?
Sena to r MATTNER,- Nevertheless, such persons profess to be in a position to tell the banks how they should conduct their business. It must be remembered that banking is a business.
– Who said that it is not?
– When Senator Sheehan said that he believed that the Commonwealth Bank should be controlled by experts, he strengthened my argument that a bank should be conducted by men well versed in banking procedure.
– Disinterested experts.
– Some people s’ay that the policy of the private banks is not iri the interests of the people. The banks operate under a charter granted by Parliament. Their capital is subscribed by their shareholders. Their business is conducted in order to give service to their depositors and customers who either have a current account or borrow from the bank. They are the only people who have the right to influence a bank’s policy or its business methods. To say that the general public, including persons who are not shareholders, depositors or customers of a bank, should dictate the policy of the trading banks and savings banks is quite wrong. I am not a member of a trade union. I do not subscribe to the funds of any trade union. Therefore, the affairs and policy of all trade unions are closed to me, and rightly so. I have no moral or legal right even to attempt to say how any union of which I am not a member should be conducted. This rule holds good equally in respect of the conduct of private banks. Let us now deal with private banks as they are conducted in Australia at present. I fail to see why honorable senators opposite should hark on what happened 500 or even 50 years ago. We are not concerned with such events, nor are we concerned with the banking system of any country .except Australia. The bill must be related to conditions as they exist in Australia at present and the manner in which this legislation will affect the future of banking in this country. I propose to give my views as one who is a depositor, a borrower and a customer of one of our trading banks, the Bank of Adelaide. As a customer of that bank, I have had fair average business transactions with it for many years, in good times and lean times, in periods of boom and periods of depression. There is nothing mysterious or secret about a bank’s transactions. Provided the bank and its customer observe the sound rule of straight dealing their business transactions will develop to their mutual satisfaction. I emphasize the importance of straight dealing because Senator Aylett said, “ Our present financial system, to use a mild term, is one of the greatest rackets and swindles ever known “. Senator Aylett should substantiate that charge or admit his error. Or has he taken a course in mendacity? His charge impugns the honour of about 25,000 bank officials, because it implies that they are accessories to a swindle. But the fact is that officials of banks are honest and perform honest service. They are doing a job of national importance; they are of high standing and observe a high code of business honour. If the officials of our banks were to go on strike - and other sections of the community have gone on. strike with less provocation - the people would realize their value to the community. Senator Aylett also said that the National Bank of Australasia Limited closed its doors in 1893, and that some of its depositors are still waiting for their money. What are the facts with relation to that bank? In 1893 the bank did close its doors and could not meet its commitments immediately. It had to defer payment of approximately £6,800,000. But by March, 1900, every penny of that amount had been paid to the original depositors. In addition, interest at an average rate of 4£ per cent, was paid on the amount outstanding each year until the whole of the sum of £6,800,000 was progressively liquidated in seven years. Thus the bank paid to depositors their deposits in full, plus interest.
Reverting to banking practices, I possess a cheque-book, and use it too, and I hope to be in a position to use it in the future. I have yet to meet a depositor with a trading bank who could draw, or PaY, by cheque an amount greater than tie actual monetary deposit, or security, lodged with the bank in his name. With respect to loans, the only money a bank can lend is that which is placed on fixed deposit with it, and a proportion of the money in its current accounts. This percentage is a definite amount determined by banking practice over a long period of years. During the war, the Commonwealth Government has utilized £240,000,000 of this money at 15s. per cent. ; and because of governmental action the customers of the trading banks cannot obtain a loan, advance or overdraft so long as the war lasts. No one who trades with a bank wants to submit to such control after the war ends. The trading banks do not and cannot create credit. No private trading bank, or government trading bank, should have the right to create credit. If and when credit is required, it should be issued under a new department of the Commonwealth Bank to be known as the Commonwealth Central Bank. As I foresee the future, and I believe it will be bright for Australia, it will be unnecessary to issue credit because sufficient work will be available for every person willing and able to do a fair day’s work for a fair day’s pay. This profitable employment will establish real stability, progress and a higher standard of living. The Commonwealth Central Bank should be clothed with the necessary powers to issue credit if required ; it should control the credit already in existence and the note issue, and should be in charge of foreign exchange rates. This would once and for all the bogy that trading banks create credit. Therefore, I urge the Government to take this opportunity to set up a Commonwealth Central Bank, and a Commonwealth Trading and Savings Bank, to be controlled by a board of directors appointed by the Government, the board to consist of twelve or fourteen members selected from representatives of every important phase of business, industry, primary production and labour organizations. It is important that representatives of labour organizations take their proper place in the management of the financial affairs of the country, because it is only when men are entrusted with the responsibility that they realize there is no easy way to sound finance. Under the general supervision of a board of directors, there should be a separate administration of the Commonwealth Central Bank and a separate administration for the Commonwealth Trading and Savings Bank, because the functions of the central bank differ entirely from those of the Trading and Savings Bank. The board should work in close co-operation with the government and Treasurer of the day, but the Treasurer should not be able to direct the board on important issues without parliamentary approval. These proposals which I have outlined differ from those embodied in the measure in two vital respects: First, the board of directors should be responsible to Parliament instead of the Treasurer of the day; and, secondly, separate administration should be provided in respect of the central bank and the Trading and Savings Bank. As every action of the central bank will affect the financial position of every person in Australia, the people’s wishes mast be expressed through Parliament; and discussion in Parliament is the only safeguard to ensure the protection of their rights. The bill completely botches up the central bank’s functions and the activities of the Trading and Savings Bank, because it gives to the existing bank new trading activities together with tremendous new powers of central banking, all under the control of one man. Labour’s cry is “ democratic representation “, but here we find a Labour Government in control in both branches of the legislature reverting to a financial dictatorship under which one man will regiment and direct the finances of every person in Australia and thereby direct employment by controlling the avenues of employment of every person. The appointment of a financial dictator will never restore to the people control of the central bank.
Sitting suspended from 6 to 8 p.m.
– The proposal that an Advisory Council should replace the properly constituted board of the Commonwealth Bank is ludicrous because the Governor of the bank need not accept the advice of that council, and whatever advice the council may be able to offer, will already be available as each member of the council is a public servant closely associated with the Commonwealth Bank or with the Treasury.
This bill will open the way for unlimited expansion of credit. To prevent that disaster - the unlimited expansion of credit would be a disaster of great magnitude - there should be certain safeguards including a statutory limit to the note issue of the central bank, which could not be exceeded without parliamentary approval; and a statutory amount of gold or sterling to be held by the central bank, not necessarily as a reserve against the note issue, but as a buffer against any government squandering the overseas assets of this country. That buffer would be like a stack of hay held by a farmer as a reserve supply of fodder. When the cold winds of winter blew, he would not feel his pocket cramped. So, in the financial world, if the reserve of which I have spoken were held, when the cold winds of adversity blow, and I venture to say they may blow, we shall not feel our pockets cramped. Tinder the industrial finance” provisions, the solvency of the central bank could be impaired, because no limits are placed on advances, and these advances are of a highly speculative nature. .Speculative finance should not be the function of the central bank; it would be better suited to a special organization which could use the existing structure of the trading banks, in which to function. The Government should instruct the Commonwealth Trading Bank, in conjunction with the other nine trading banks in this country, to set up a properly constituted organization to provide finance for industry throughout Australia. Thus the great store of knowledge of our highly trained bank organization throughout the length and breadth of the land could be used. The service would be conducted efficiently and cheaply and, moreover, it would be readily available to the community. It is the small producer, either in secondary or primary industry, who relies on bank credit, and it is his strength that gives stability to Australia. The Commonwealth Central Bank would then function in one of its correct spheres, by advancing the finances required. This set-up would overcome all possibility of political interference and would curb all wild-cat ventures, which could, but must not be allowed to, destroy the efficiency of the central bank.
My remarks have been aimed at improving the bill. The measure is designed to alter the functions of the Commonwealth Bank. It is the first instalment of the programme of socialist legislation visualized by the Government. By controlling the nation’s purse, the Government automatically will control the people and the country. I am not concerned with what the Prime Minister (Mr. Curtin) may have said in 1943 about his plans, or lack of them, to nationalize finance and industry. It is true that the Government did obtain a majority at the last elections; but it was not given a mandate by the people to revolutionize the Commonwealth Bank.
What the people must know is that the Government is implementing the first plank of its policy, namely the nationalization of banking. War or no war, it is proceeding with the business of nationalizing, or socializing, the financial and industrial life of this country. Government supporters admit that this measure alone does not fulfil their wild dreams, and have threatened the country with further doses of socialistic legislation. This measure which is sugar-coated has a high sounding preamble authorizing the Commonwealth Bank to aim at currency stability and full employment; but these conditions cannot be brought about by parliamentary enactment. The plain hard fact Australians must learn is that the stability of currency and the highest level of economic activity depend upon sound financial administration and the maintenance of confidence - the very factors which this measure threatens to destroy.
.- This bill has been widely discussed both in the House of Representatives and in this chamber. We have listened to an extraordinarily vivid and comprehensive discussion of what, in the words of Senator McKenna, is one of the milestones in Australian history. To-day, this Parliament is making history as very few parliaments have been able to do in the history of this Commonwealth. We are laying the foundations of the system by which the great problem which this Government, or whatever government is in power, will have to face at the conclusion of this war, will be tackled - the problem of re-establishing in civil life discharged members of our fighting forces, and of transferring from industry those men and women who ceaselessly during the last five years have devoted their whole time and attention to our war effort. That problem can be met successfully only if the economic set-up of this country remains entirely in the hands of the Government. We cannot afford to contemplate a recurrence of events which have taken place in this Parliament in comparatively recent years. Although I am one of the “ babies “ of this Parliament, I can remember a resolution asking for £500,000 for unemployment relief at
Christinas-time being moved in tho House of Representatives. The reply of the government of the day was that money was not available for such a grant. A few years earlier, when a Labour administration wanted to take certain action to alleviate distress during the depression, and asked the Commonwealth Bank for a fiduciary issue of £18,000,000, certain individuals outside this Parliament - individuals upon whom the people of this country had no check and whose names were practically unknown to the citizens of this country - were able to tell the Government that the money would not be made available. In other words, they took the power of government away from, the Government.
I have no desire to survey in detail the provisions of this measure. They have been very well surveyed already by other honorable senators; but there are one or two aspects of it which I should like to discuss. Honorable senators opposite have spoken of the great job that the private banking institutions of this country have done, first of all, for their “shareholders. It has been claimed, in effect, that the great body of shareholders in those institutions is beholden to the banks for the dividends which have been paid and that any interference by the Commonwealth Bank such as that contemplated by this measure would place those dividends of shareholders in jeopardy. That is an interesting point of view, particularly when one surveys the actual dividends that have been paid by the private banking institutions of this country over the last ten years. In that period, the dividends have averaged approximately 3 per cent, on shareholders’ funds, and it seems to me that the best we can do for the bank shareholders is to close up these institutions as soon as possible, and allow the shareholders to get their money back and invest it in Commonwealth loans. Looking at the matter from a purely financial and pecuniary point of view, the alleged great job that these directors have done for their shareholders has been to pay them a rate of interest less than that which they would have obtained had their money been in Commonwealth loans. However, there may be reasons for that, and I shall proceed to tell honorable senators why I think that the shareholders of the banks have not received the return on their money that they are entitled to.
First, banking policy is such that these institutions do not distribute in dividends as much of their profits as other commercial companies do. They endeavour to build up terrific reserves. One of the first tasks which a bankseems to set itself is that of establishing huge edifices in the most expensive quarter of the capital cities. One finds that banking institutions go to the limits of building restrictions in the capital cities and set up structures which obviously do not return to them in rentals a very good rate of interest. That, is one avenue in which the profits of the bank are expended. As Senator McKenna pointed out, the ordinary shareholders in the banks have no real voice in the management of these concerns. T recall that not very long ago the Bank of New South Wales, the oldest bank in this country, indulged in an act of interference in private business. It walked into the political arena in New South Wales. Sir Alfred Davidson was then the general manager and tried hard to organize the Labour movement in that State. I cannot tell how many thousands of pounds the Bank of New South Wales spent in its efforts, but the story is that, in New South Wales at that time thenwas a break-away movement from the Lang Labour party. The faction which had broken away called itself the Heffron Labour party, and comprised certain trade anions that bad a large share of interests in the Labor Daily. They were opposed to Lang, and by a majority vote of the shareholding unions, the board of directors of that newspaper was changed. They discovered, however, that over a period of years Lang had invested more than £19,000 of his money to keep the Labor Daily going. The members of the Heffron Labour party immediately turned to none other than Sir Alfred Davidson who, through the Bank of New South Wales, provided about £42,000 so that these break-away unionists might buy out Lang’s share in the Labor Daily and assume full control of it. There is no doubt that when the Bank of New
South Wales finally wound up the affairs of the newspaper it lost about half the money it had provided.
When dealing with this matter in an. other chain her in 1938, Mr. Beasley detailed how Sir Alfred Davidson, by every effort at his command, tried to further the interests of the Bank of New South Wales with the Labour party. When Mr. Ernest Bevin, who was Minister of Labour in the Churchill National Government, was on his way to Australia some years ago he was met in New Zealand by a representative Of Sir Alfred Davidson, who asked him if he would arrange to meet the leaders of the Heffron Labour party when he arrived in Sydney. Mr. Bevin replied that he would prefer to find out something about the Heffron Labour party before he gave his consent. When he arrived in Australia Sir Alfred Davidson met him at the boat and arranged to have a quick talk to him then and there about the set-up of the Labour party in New South Wales. Mr. Me vin stated that he had no knowledge at that time of the breakaway movement, but he made some inquiries from Sir Alfred Davidson, who explained that it was a party that had broken away from the official Labour party in New South Wales and formed another organization. He added that the Heffron Labour party was anxious to discuss its problems with Mr. Bevin. Mr. Bevin then said that he had no desire to talk to a break-away Labour movement and pointed out that if a leader of the Australian Labour party caine to England he would not think of talking to break-away members of the British Labour party, but to the leaders of the official Labour party. Sir Alfred Davidson did not get very far on that occasion because Mr. Bevin said he would talk to the official Labour leaders and find out the position.
As Sir Alfred Davidson was not to be thwarted so easily he waited for another opportunity, and it came on the occasion nf the garden party at the home of Major-General Macarthur-Onslow, at Camden, given to the delegates to the Lapstone conference, which Mi Bevin wan attending. In the course of conversation Sir Alfred Davidson questioned Mr-. Bevin about the British Labour papen the london Herald, and then turned the conversation on to the Labour movement in New South Wales. Mr. Bevin was astute enough to realize Sir Alfred’s motive, and criticized ohe or two of the features then appearing in the Labor Daily. Subsequently, he Watched the paper closely anc! noticed that the features he had criticized were discontinued. That proved to Mr. Bevin, as it would to any interested onlooker, who had control of the Labor Daily. When Mr. Bevin returned to Sydney he had dinner with Sir ALfred Davidson at the head omeo of the Bank of New South Wales, and in the course of conversation Sir Alfred Davidson said, “ We want to alter the rules of the. Labour party in New South Wales. We want to remove Mr. Lang from the leadership of the party. We want the party and not the conference to elect the leader. Generally, a new Labour organization is required in New South Wales Referring to the leadership, Sir Alfred said that the Heffron party claimed that Labour could hot win with Mr. Lang and that he, Sir Alfred Davidson, was in accord with that view. Mr. Bevin inquired whether” it was a fact that his, Sir Alfred Davidson’s Government was in power, and if so, why he wanted Labour lo win. Sir Alfred Davidson’s reply was to the effect that Mr. Bevin did not quite understand politics in New South Wales. He said, “ It is different here. What we want in New South Wales is a ‘ properly led ‘ Opposition. We have not got that with Lang “. Mr. Bevin’s final summing up was that it seemed very strange to him to find a leading banker so deeply interested in the affairs of the Labour party as to have such a close alliance with men who claimed to be militant Labour representatives.
There, in a nutshell, is the story of the trading banks that set themselves up as being beyond reproach. They were meddling in politics. Senator Mattner has spoken about spending one’s own money and the courage needed to do it. It did not cost Sir Alfred Davidson a penny to spend that £42,000 of the shareholders’ money. One can be fairly certain that at the annual meeting of the bank he did not discuss with the shareholders what he had done with the money used tn buy out Lang’s interest in the Labor
Daily. He did that with the specific purpose of extending the power of the Bank of New South Wales over the Labour party and the grip of the private banks on politics. He wanted to reach the stage where it did not matter what party was in power, it would have to obey the voice of the trading banks. It would be interesting to know how much of the depositors’ money the private banks have spent for the purpose of villifying this Government because it has brought down bills to amend the banking legislation. It would also be interesting to know how much money was spent on newspaper advertisements and organization throughout the Commonwealth in order to build up opposition to the national security regulations governing banking. There has not been a public uprising against the bill ; on the contrary, the public, generally speaking, has welcomed the measure with open arms.
– The public has not shown much sign of it.
– They have shown every sign of it. Members on this side of the chamber have received not only sheaves of propaganda inspired by the banks, but also many letters and telegrams congratulating the Government on taking a step which it considers should have been taken years ago. The trading banks have adopted the same tactics on previous occasions to protect their own interests. In their propaganda, they began by pointing to the little man and suggesting that it is in his interests and those of the poor shareholders, and the man on the street who never had a pound, that they are working. I shall read a circular letter, which was sent to the managers of trading banks. It is as follows : -
circularLetter to Australian Managers.
The Board has decided to inform customers and others of its views on the likely effect of the reported legislation to bring about permanent control of the trading banks.
A circular will be forwarded to the branches for distribution.
Immediately upon receipt thereof branches will please make arrangements for envelopes to be addressed to all customers.
To ensure a personal atmosphere between the bank and its customers a separate letter is to be prepared and signed by branch managers as per sample below.
Each letter is to be typed separately to avoid any appearance of a copy.
This matter is urgent and managersare relied upon to take prompt steps to complete both envelopes and letters by, say, 14th November.
Then a sample letter was to be sent to all depositors, which was as follows: -
I enclose a copy of a statement by the bank on the threatened political control of banks which has been prepared in response to repeated requests from the public. The matter is one which affects your own personal affairs and is forwarded for your guidance.
Please do not hesitate to communicate with me if you desire further information.
A further confidential circular to Australian branches of the trading banks contained the following instructions: -
Do not wait for people to ask what action is to be taken. Make a special effort to confer with the leaders in your community and suggest that they take the matter up with their local organization associations, clubs, &c., who should pass resolutions of protest and have them conveyed urgently to the Government direct or through the local member of Parliament. Remember it will be they who will be affected, not the banks in themselves.
The farmer and the small businessman whose future progress may depend upon his ability to borrow in future should be specially interested.
Secure local press support where you can. Editors of newspapers who support individual enterprise against government control of industry and the individual will probably be pleased to assist in influencing public opinion.
It is possible, but not likely, that some nervous persons might become anxious about the safety of their deposits. Please be on special guard against any such reaction and take immediate steps to allay any fears expressed. There is, of course, no reason whatever for anxiety by depositors as to the safety of their money while it is under the care of the trading banks.
The last paragraph is an example of the subtle propaganda of the trading banks.
– Honorable senators have received voluminous mails on this subject and I, personally, received 32 letters at the same address at Flindersstreet, Melbourne, on the one day. I was also interested to notice the exact similarity of the letters which I received from, such places as Maroubra and Gum
Scrub, via Telegraph Point, near Kempsey. Although those are widely separated in New South Wales, the text of the letters is identical, the same words are underlined in each case. That is proof positive that the letters are part of the trading bank propaganda. That is an indication of how the trading banks were prepared to spend the shareholders’ money. I am not very impressed when I hear the story of the marvellous financial knowledge and genius of the men controlling private trading banks. Senator Leckie and Senator Mattner appear to be most anxious that there should be some one controlling the banks who knows something about financial policy. That is exactly what the bill provides, and the Government proposes to abolish the Commonwealth Bank Board, which represents only sectional interests, ft was all right to put Mr. “ Jim “ Ashton on the board, because he was an excellent polo player. That gave him the qualifications necessary to represent the agricultural industries. When he was asked about his knowledge of finance, he admitted that he did not know anything about it. This shows that the control of banking must be placed in the hands of the Commonwealth Bank, which will get its policy from the government of the day.
I am pleased that the Government has introduced this bill. The future welfare of the nation depends upon the Commonwealth Parliament running its own business. Wo can no longer afford to have the interference with Commonwealth policy which has occurred since the establishment of federation. The late President .Roosevelt truly said “ A necessitous man is not a free nian “. If the Opposition ever returns to the treasury bench it will find thai it cannot eliminate this measure from tin- statute-book, as the Leader of the Opposition in the House nf Representatives (Mr. Menzies), supported by Senator Foll, has rashly promised to do. The effect of the application of the banking proposals of the Government will be such that the community will have accepted them as a permanent policy, as they have already rejected the propaganda indulged in by the private banks in the last six months. That propaganda has fallen so flat that, as far as the community is concerned, this bill is already an accomplished fact. In country districts one hears nothing but commendation of the Government upon this measure and the Banking Bill. The memories of the people are not so short as to forget the terrifying days of the depression. A prominent business man in Sydney said to me recently - “ I support the banking proposals of the Government. The people of this country can take almost anything, whether plagues, pestilences, war or famine, but they cannot stand another depression like that of 1930. Anything which the Government can do to make a repetition of the depression days difficult will have the support of the great thinking mass of the men and women of this country “.
The farmers were brought to the deplorable position in which they found themselves in the depression period largely by unparalleled lending by the private banks. Had a Commonwealth authority been in existence for the purpose of reviewing the overall position, and had it warned the financial institutions not to continue to lend money on properties and thus inflate their values, the desperate developments of those days, which were too much for the struggling farmers, might have been prevented. When, throughout the world, spending was curtailed and we found difficulty in selling our primary products overseas, the primary producers were almost instantly “ on their uppers “ and they will not forget the treatment they received from the private banks. Farmers who had worked good properties for many years were encouraged to borrow by local bank managers who knew nothing about primary production, but the sight of easy money and a promise of increased prices for wheat and wool was too big a temptation for the farmers to resist.
– There was too much credit.
– That is true, and the fact was mentioned by the honorable senator in his speech in this debate. It would be interesting to know how many farmers were financially crippled for many years because of the ease with which credit was obtained just before the last depression.
– Some of the honorable senator’s colleagues said that the depression was due to too little credit.
– That -was never said. A definite policy of expansion was followed by a policy of deflation, and that was when the Labour party said that the continuance of credit expansion of some kind would have been of value. Had the sum of £18,000,000 asked for in the House of Representatives when Mr. Theodore was Treasurer been made available, it would have been of considerable help, but the Senate rejected the proposal.
– This Parliament voted £90,000,000 for that Labour Government in that period.
– But how much of it was provided to meet the short-term loans which the Bruce-Page Government had made as part of its policy ? Those loans had to be met before the Scullin Government had been in office four months, and that closed the overseas money market to that Administration. Those days should be quickly forgotten by the members pf the Opposition because they do not reflect credit on members of this Parliament who, at a time of national need, were not big enough to face up to the problems of that period. Henceforward, we shall place the responsibility with regard to financial policy upon the government of the day, and if it does not stand up to it, the people can turn it out of office at the elections. That is why I am anxious that the responsibility in this matter shall always be placed on the shoulders of the members of the government. On every street corner, the people know the names of the responsible Ministers, and they arc the men whom the people will blame if things go wrong. The names of men like Sir Alfred Davidson are not known to more than one man in a hundred in an industrial area. Why should he and men like Mr. McConnan have power to tell the Government what to do in matters of finance? No responsibility can be placed on their shoulders, because they arc not responsible to anybody, not even to the shareholders of the banks with which they are associated.
The primary duty that the Commonwealth Bank will have will be to watch for developments such as those which did much to cause the difficulties experienced in 1930, and ensure that there shall be no inflation.
Senator Mattner has referred to the issue of notes, but even before the war, when the note issue was about £50,000,000, it was increased every Christmas by £10,000,000 or £12,000,000 in order that the people might do their Christmas shopping. That proves more convincingly than anything else the value of notes in the community. They are simply a means of exchange. When I first entered Parliament in 193S, an application was made by the Labour Opposition for a grant of £500.000 for the relief of unemployment. The application was rejected by the government of the day “ because there was no money “.
– Honorable senators opposite all voted against it.
– Yes, yet to-day they are fighting a losing rearguard action against the forces of progress. In the Senate at present, they are doing the job which the associated banks desire them to do. The Liberal party can fill the columns of the newspapers by saying : “Wo will accept money, but on the conditions that there are no strings to it.” The party will always accept money from the private banks because they have gentlemen like honorable senators opposite .who are prepared to fight their, rearguard actions for them in the parliaments of this country.
– And on strings.
– Yes, they are all puppets. The private banks have brought these legislative proposals upon themselves. Had they been content to do the fair thing in their own financial sphere and keep out of politics, they might have postponed the introduction of this legislation, but because of their influence for evil as far as the common people are concerned, the present Government was unable to wait any longer and has determined to place in the hands of the people the power to plan for the future without interference. Had the Parliament had this power in 1930, the brunt of the depression would have been eased, hut we shall now make certain of having the power when our troops return from overseas, when gigantic water conservation schemes have to be carried out, when the railway gauges of Australia have to be standardized, when homes have to be built in thousands, and when other developmental works, even the construction of railways for defence purposes, have to be put in hand. That work can be done only through one channel, the Commonwealth Bank, under the control of this Parliament, which stands for the people of this country.
– I draw attention to Standing Order 364, which reads -
A document quoted from by a Senator not a Minister of the Crown, may be ordered by the Senate to be laid upon the table; such order may be made without notice immediately upon conclusion of the speech of the Senator who has quoted therefrom.
Senator Armstrong has quoted from a document purporting to be an official letter from the general manager of a bank to his branch managers. I move -
That the document quoted from by Senator Armstrong during his speech be laid on the table.
Question put. The Senate divided. (The President - Senator the Hon. Gordon Brown.)
– This bill was debated at considerable length in the House of Representatives, and has been discussed in this chamber for several days, so that there is very little that can be added to what has already been said concerning it.
Nevertheless, I take this opportunity to emphasize that under National Security Regulations the Government already possesses all the powers which it seeks under this measure. Indeed, those regulations so control all financial matters that not only trading banks and other financial institutions, but also the financial transactions of individual citizens are completely under government control. The Government now seeks to perpetuate these war-time controls by statutory authority, but it is not. in the best interests of any country that its financial institutions should be subject to the whim of whatever political party happens to be in power. I venture to say that in no other country has a government taken advantage of war-time conditions to do what the Commonwealth Government proposes to do under this bill. In a matter which affects the life of every citizen of Australia - even the boy with a few pennies in his money-box - it would have been better to have appointed a select committee, consisting of members of all political parties, and representatives of banking and commercial interests, to confer in an atmosphere free from political bias, and prepare a report for the guidance of the Parliament. Such a body would be a cross-section of the people of Australia, and its considered judgment could have been followed with safety. Action along those lines would have inspired confidence in the country’s financial structure. Finance should not be the plaything of any political party.
For many years the Labour party has advocated a change of the monetary system; since the last depression it has been more insistent than ever on such a change. No good purpose is to be served by going back to the beginning of the banking system, as some honorable senators have done, but we do well to reflect that Australia has made remarkable progress under the financial system which is condemned by the Government and its supporters. Australia’s development compares more than favorably with that of any other country. What is wrong with a banking system under which such progress has been made? The only argument advanced in favour of this legislation is that during the depression money was not made available to provide employment which would have granted relief to those who suffered from lack of purchasing power. The memory of those flays is still a nightmare to many people. [ candidly admit that the banking institutions could have done more than they did to help sufferers during the depression. The remedy which was then applied to the evil was too severe; but whatever we may think of the Premiers plan, and the injury it caused to many people in our midst, Australia recovered from the depression more quickly than did any other country, largely because of the policy of thrift and the curtailment of unnecessary expenditure which was put into operation. Those who suffered during the depression included many besides wage-earners; the people who previously had enjoyed a fairly comfortable existence found their standard of living reduced very greatly. Those people were not seen among the many who were forced to line up to accept assistance, but they were among the greatest sufferers from, the depression. How can any honorable senator charge the private banks with having caused the depression? “Why did the depression hit Australia so severely? The answer is plain. It was mainly because, as the result of the world-wide character of the depression, we lost our overseas markets. Remembering that fact, it is useless to say that we can prevent another depression merely by controlling financial policy within this country. By inflating our currency, the Government might be able to give some assistance to our people; but so long as we have a small population, and remain dependent to so great a degree upon overseas markets for the disposal of our primary products, and those markets are suddenly closed to us, we cannot continue to spend freely and, at the same time, maintain a sound financial system. It ‘s as clear as the noonday sun that, while production is the source of our wealth, the value of that wealth depends upon our trade with other countries. If Australia were developed like the United States of America and we had a population sufficient to consume all the goods we produced, we could possibly afford to adopt an isolationist policy and, as it were, live to ourselves. In such circumstances, it would not matter two hoots what system of finance we maintained so long as it was operated equitably between the consumer and the producer. However, the fact remains that Australia must take its place in the future alongside other nations. Therefore, if we commence to. “monkey” with our financial system, other countries will soon lose confidence in us, and we shall be left with no markets for our exportable products. Any government which monkeys with our financial system does a great disservice to this country. “What good will really be achieved by the measure? All of us look back with pride upon the progress made by the Commonwealth Bank. That institution started from a small beginning. Its establishment was strongly opposed by certain people, but to-day all of us realize that its establishment has been to the benefit of the nation. Originally, it was placed under the control of a governor; but, later, as its activities expanded, it was placed under the control of the Commonwealth Bank Board. Like other honorable senators, I have received circulars alleging that the BrucePage Government destroyed the original charter of the Commonwealth Bank by appointing the board to carry out all the functions which previously had been carried out by the Governor. Obviously, as the bank’s activities expanded, the responsibility of controlling the bank became too great a burden to be shouldered by one man. That was the reason for the appointment of the Commonwealth Bank Board. In addition, the members of the board represented all sections of the community. It constituted a truly representative cross-section of the people. I ask honorable senators opposite to study the wonderful expansion of the Commonwealth Bank since it was placed under the control of the board. That expansion tells its own story of achievement. “We look with pride upon the record of the bank in conjunction with the private banks in financing our war effort. I fail to see why that system, which has proved of such benefit to us in very difficult times, should now be cast aside. Senator O’Flaherty alleged that previous governments “ packed “ the board in the interests of the private financial institutions. Such statements tend to destroy the confidence of the people in the bank. Our people as a whole regard the Commonwealth Bank as the sheet anchor of our future financial structure. Honorable senators opposite are always ready to denounce monopolies, but under the bill if is proposed to make of the Commonwealth Bank the greatest monopoly we have yet known in our history. Surely, they will not deny that they owe their presence in Parliament very largely to the support of the trade unions, and that in future those bodies will dictate the financial policy of Labour governments to which effect will be given through the Commonwealth Bank under the system of control proposed under the measure. Such control should be placed only in the hands of people absolutely beyond party political influences. The record and progress of the Commonwealth Bank to date prove conclusively that that is the best form of control of the national bank. I fail to understand the criticism of honorable senators opposite of. the private banking institutions. I remind them that the Commonwealth Bank Board under which the Commonwealth Bank in association with the private banks has done such a magnificent job during the war in financing our war effort was appointed before the Labour Government assumed office. Why should we not retain the services of these great captains of industry who, regardless of party politics, gave so willingly of their services to the nation in its hour of trial. The Government has relied upon such men to establish our vital war industries. In that work those men proved their absolute disinterestedness where the interests of the nation were paramount. Is there any reason to suppose that they will be less patriotic, or will not act honorably, merely because they happen to be members of the Commonwealth Bank Board entrusted with the control of that great institution? Various Ministers have paid tribute to the achievements accomplished by our captains of industry, and their contribution to our war effort; but, honorable senators opposite now say that such men are not to be trusted in control of the Commonwealth Bank. Indeed, one honorable senator declared that through the board the private banking institutions were working a ramp and a swindle. Long before the Commonwealth Bank was established, the same interests and their representatives contributed vitally to the development of the nation. At that time the private banks were the only institutions to which people in need of help could turn. There may have been occasions when many people felt that the private banks did not assist them as they should, and were perhaps a little too strict in making clients conduct their businesses on commercial lines. In doing so, the banks rendered very good service to this country. In any case it cannot be said that those institutions acted unworthily. To-day, in association with the Commonwealth Bank, the private banks, insurance companies and other financial institutions are making a worthy contribution towards the financing of our war effort. The action of the Government in bringing down its banking proposals ‘while the war is still on is an act of base ingratitude when we remember what the private banks have done in the interests of the nation. Would it not be more reasonable to allow those interests to carry on as they are carrying on at present until six months after the war ends, that is, until the lapse of the national security legislation under which they are now thoroughly controlled? The Government should refer this problem to a select committee representative of all parties in the Parliament, or to a royal commission representative of all interests concerned ; or, better still, it should make this matter an issue at the next general elections. So long as the war lasts, the Government cannot justify its action in introducing this legislation. I oppose the bill, because the Government has no mandate from the people to introduce such revolutionary changes in our monetary and banking system. The Government is rendering a disservice to the people of this country. Under war-time measures it has all the power that it requires. Let first things come first. Let us first win the war, and then let this matter be decided by the people in an atmosphere free from party bias. Surely honorable senators opposite /10 not believe that all the financial knowledge of this chamber is on the Government side, and that the Treasurer must always have the last word. If this legislation becomes law, there will be a tendency, especially just prior to elections, tor whatever government is in power to he generous with the people’s money, whereas at present control is in the bands of a board free from political interference or bias, and therefore able to exercise impartial judgment. That is a matter of the utmost importance, not only to Parliament but also to the people of this country, and one which may have a great bearing upon the confidence of oversells nations in the stability of this country. I shall leave further remarks on this measure until the bill reaches the committee stage. I shall- vote against the second reading.
– The more one listens to this debate the more is one’s memory taken back to the depression years of 1930-32. At that time anti-Labour forces created a scare amongst investors by suggesting that the Labour party intended to assume control of the banks. People rushed to withdraw their money, and in one case the doors of a bank were actually closed. A similar endeavour is being made to discredit this Government and its banking legislation. When the banking bills were first announced, the private banks embarked upon a campaign of propaganda against the Government, Thousands of circulars bearing such headings as “Control of Bank Credit”, “ Protest Against Proposed Banking Legislation” and “Send this to your Federal Member “ were sent out. Having access to the electoral rolls of Western Australia, I endeavoured to check some of the names and addresses given on these pamphlets, and I found that most of the names were not on the rolls. The circulars which were posted to me had some value, of course, because I was able to tear the stamps off and send them to the various schools and colleges where pupils were interested in collecting postage stamps; but others, which were merely distributed by hand, had no value at all and found their way immediately to the waste-paper basket. These communications became such a nuisance that finally
I wrote the following letter to the country pres9 of Western Australia: - 15th January, 194S.
The following is a copy of the reply sent to people who write to me regarding the banking proposals, and I think it will satisfy you: - “ I am in receipt of your communication of recent date regarding the question of monetary reform.
I am afraid you have been influenced by anti-Labour propaganda which has been disseminated by those controlling the private banking institutions, who fear the loss of their power.
I feel sure you will Agree that no body of elected .representatives can govern whilst the power over financial policy is controlled by private interests. To argue otherwise would be to make our vaunted democracy a mere sham.
The Australian .Labour party .has a legislative programme to provide for the proper care of our disabled fighting men and the dependants of those who paid the supreme sacrifice in defending this country.
The full implementation of the policy of the .Australian Labour party will ensure that in future every one in this country will be properly clothed, housed and fed. By ‘the proper organization of our productive capacity we will bc able to enormously increase ‘the production of real wealth in Australia, thus making possible higher living standards and at the same time providing greater leisure tor the people to develop Intellectually and to enjoy the fruits of their labour.
The Labour party pilaus to replace -slum areas with decent dwellings, to provide for water conservation, re-afforestation and action to arrest soil erosion, and provide the best medical and health service lor the people that i.t is possible for .science to offer.
Surely you are not against such proposals! Well then, you should not be misled by in spired statements from interested quarters.
It -has been falsely stated tha.t the implementation oi Labour’s financial policy endangers the savings of the people. Actually .the reverse is the case. The savings of the individual citizen will be fully safeguarded. The Government’s programme will be carried out by the use of the national credit, to bring into productive employment the whole resources of the nation.
The Australian Labour party desires to make Australia a. really great country, and no country is great in the true sense whilst it has want, misery and degradation existent in a land capable of providing for all its people’s needs.
In this fight you must make the choice as to whether you are going to stand for progress or for the forces of reaction who desire - now that victory is in sight - to cheat the people of the fruits of victory, made possible by their personal sacrifice.”
That letter was printed in one or two newspapers, and after that I did not receive any mOTe of these fancy dodgers.
Speaking- in the House of Representatives on the 11th April, 1935, the honorable member for Indi (Mr.. McEwen) said -
Many trained .thinkers claim that our banking system, as it exists to-day, is cither wholly or partly responsible for our present condition. Some believe that the system is fundamentally wrong, while others maintain that it has merely lagged behind our industrial progress. If it is wrong, the sooner we establish the right system, or improve the existing one, the better for us all.
The honorable member for Indi, of course, is a member of the Australian Country party. Apparently he is aware that there is something wrong with our present financial system. The Australian Country party held several conferences in Melbourne recently. There was one on the 16th March, and another on the 22nd April. On both occasions, resolutions supporting the Government’s financial policy were moved. The following is an extract from the Melbourne Age of the L6t.h March:-
FARMERS SUPPORT BANK BILLS.
Financial CONTINUITY Considered Essential.
Delegates to the Victorian Wheat and Wool Growers Association conference decided unanimously last night to support the Federal Government’s proposal to establish the Commonwealth Bank on its original charter and to abolish the Bank Board as a necessary measure of post-war rehabilitation. It further urged that a representative of rural industries should bc appointed to the proposed Commonwealth Bank Advisory Council.
More thou 200 delegates voiced their approval of the bank bills in their speeches or by applause. This is the first test of opinion in Australia by an organized body of primary producers. “ Control of banking is especially necessary in the post war period , declared **Mr. F. W. Mitchell (Lalbert).
He said that, unless the National Government had continuity of financial policy, it could not run the country. If credits were cut off, depression would follow. The national credit of Australia must be used for the benefit of the people. If financial policy was not stabilized, then the prices for primary products could not be stabilized.
Mr. A. C. Everett (Brim) said he wanted to remind wheat-growers that, when they were offered a stabilized price in 1930, the Commonwealth Bank refused the Government the money to pay growers. The result was that wheat sold at ls. Gd. a bushel. No stabilization plan was safe and no government could live up to its promises unless it controlled the hanking system.
When the war was over, he said, the trading banks would follow a policy of deflation to use up their excess deposits, which now amounted to f 500,000,000. “ Bankers are dealers in debt “, he added. “ No uncontrolled banking system is going to pay good prices for commodities so that we farmers can pay off our debts. If we are to have stabilization, we must have stabilized banking.”
After the last war, it was said that nothing was too good for the soldier. “ And nothing was what they got”, he added. “This was due to depression caused by an unstable financial system.”
– That was not a conference of the Australian Country party.
– At least it was a conference of primary producers. Honorable senators opposite would have us believe that the primary producers of this- country are opposed to the Labour Government. I say that they welcome this legislation. A leading article in the Melbourne Age of the 25th March, 1936, dealing with the decision of the trading banks to increase interest rates on fixed deposits, said -
If the National Government deliberately excludes itself from all participation in the making or changing of monetary policy, obviously it cannot govern except in the secondary degree.
The article went on to say -
The Government affronts public intelligence when it refuses to discriminate between political interference with the technical management of the Commonwealth Bank and a proper ministerial participation, in the formulation of a general monetary policy.
The Melbourne Herald of the 24th March, 1936, referring also to this matter, said-
If one trading bank can reverse a financial policy, who controls the financial policy of this country? Evidently, the joint policy of the Commonwealth Government and its Central Bank can be set aside by the action of one powerful trading bank.
Despite the gloomy predictions of those who opposed the establishment of the Commonwealth Bank, it has served Australia, in a capacity that no other private bank could or would have done.
The late Governor of the Commonwealth Bank, Sir Denison Miller, in a speech at a public function in 1922, said that, during the war of 1914-18, war loans were floated in Australia totalling £250,000,000. He pointed out that private banks charged £2 7s. Id. per £100 as flotation charges, hut the Commonwealth Bank did the work for 5s. 9d. per £100 and thereby saved Australia £5,170,000.
The Commonwealth Bank is community owned and caters for the nation. Surely the people can trust the Government whom it has elected to handle the affairs of the bank. Honorable senators on the Opposition side have suggested that the Labour Government cannot prevent a depression by spending money supplied by the Commonwealth Bank. If the Labour Government had been in. office in 1939, there would not have been a depression.
– The Scullin Labour Government brought about the depression.
– It was the trading banks that caused the depression and increased unemployment when they began to call in overdrafts. A relative of mine who is a farmer was given six months in which to pay off his overdraft. He applied, to a. trading bank, which immediately asked him what bank ha was dealing with. When he gave the information, he was informed that the trading bank to which he was applying could not help him. He asked me to assist him and I took him to a financier in Perth, who advanced him sufficient funds to clear his overdraft. In another case, a businessman who employed 30 men was asked to reduce his overdraft. The only way he could do so was to dismiss some of his hands and use the income formerly used to pay their wages to meet his obligations. This bill will prevent that sort of dealing, and it is designed to help industry. That is one of the great needs of the country A suggestion has been made that primary producers are opposed to the bill, but they are most favorable to it. There ie no need for the people to be afraid of the Commonwealth Bank and, whether a Labour government or a Liberal government is in office, its affairs will be administered for the benefit of the people. I also approve the principles that when municipalities or the Government finance contracts the funds should be obtained from the Commonwealth Bank. The people’s work should be paid for with the people’s money. I shall conclude by quoting a press report of a statement made by Mr. Reginald McKenna, ex-
Chancellor of the British Exchequer and chairman of the Midland Bank, England, relating to the power of those who control money. He said -
They who control the credit of the nation direct the policy of governments and hold in the hollow of their hands the destiny of the people.
The press comment on that statement is - *
Th ere is no doubt as to the truth of that statement, as has been proved over and over again, especially in the recent years of depression. -Supremacy by the banks has gone on for years. Thomas Jefferson, a great one-time President of .the United States, denouncing the banking institutions, said : “ Already they have raised up a money aristocracy that has sot the government at defiance. The issuing power should be taken from the banks and restored to the people to whom it properly belongs “.
Debate (on motion by Senator Collett) adjourned.
Gold-mining Industry - Pentct.li.in - Dr. F. A. Maguire - -TOURIST TRAFFIC - Barbed Wire - Power Kerosene - Vegetable Seeds.
Senator KEANE (Victoria - Minister for Trade and Customs [9.40] . - I move -
That the ‘Senate do now adjourn.
To-day Senator Collett asked me, as the Minister representing the Minister for Post-war Reconstruction, the following questions: - 1. (o) Does the Government consider the gold-mining industry of Western Australia as a potential factor of considerable value in any successful post-war reconstruction plans; (6) if so, when does the Government propose to release man-power so as to permit of full production of gold?
The Minister for Post-war Reconstruction has supplied the following answers : - 1. (a) Yes. (b) Plans for the release of man-power for all industries are being imple-. mented,but it is impossible to say when full production of gold can again be achieved. 2. (a) 1938-39, ?10,704,357; (b) 1943-44, ?5,058,770. 3. (a) 1938-39, nil; (b) 1943-44: Gold tax, ?347,000, less refunds ?154,000; sales tax, ?25,000 (estimated); pay-roll tax, ?37,000.
Senator Foll also asked ;
What are the Government’s post-war recon struction plans in relation to the gold-mining industry and also other forms of mining in Australia ?
The Government has approved the appointment of a Mining Advisory Panel, of which Dr. H. G. Raggatt, Government Geologist, is chairman, to assist the Secondary Industries Commission in the examination of the postwar problems affecting the mining industry. The panel is at present conducting inquiries and is working in close collaboration with the States. The Government will consider relative reports from the panel, through the Secondary Industries Commission, as soon as they are available. Terms of reference of the panel are as follows : -
An analysis of the nature and extentof mining, excluding oil and coal, of the Commonwealth in the pre-war decade, and observations of trends apparent therefrom.
Analysis of the war-time minerals development of the Commonwealth.
Identification of the post-war problems affecting the mining industry.
Advice as to the action which might be taken by the Commonwealth Government to enable it, in conjunction with the States, to determine the possible development of a postwar mining policy to be implemented by the States and the extent to which Commonwealth assistance might be necessary.
Methods of adaptation to the discovery of minerals, of war-time scientific developments, and the mining thereof.
.- I appreciate the courtesy of the Minister in furnishing the answer to the question I asked, outlining the Government’s policy relating to mining in the post-war period. The appointment of the Mining Advisory Panel should assist the gold-mining industry as well as other forms of mining. Reports have appeared during the last few days to the effect that the United States Government has lifted all bans from gold-mining in that country with a view to stimulating gold production and providing employment.
To-day. I asked the Minister for Supply and Shipping (Senator Ashley) a question concerning the newspaper report of a probable shortage of penicillin following a strike at a glass works in Sydney. I regret that, by an oversight, I did not address the question to Senator Fraser, who represents the Minister for the Army (Mr. Forde). Perhaps Senator Fraser may be able to throw some light on the matter.
Last week, Senator Amour, in a series of questions, made an attack on Dr. F. A. Maguire, who addressed a meeting at which a strong protest was voiced against the Government’s socalled preference measure for servicemen. Dr. Maguire is a friend of mine of many years’ standing, and he has communicated with me concerning Senator Amour’s statement that he, Dr. Maguire, was at one time a member of the consultative council of the Liberal party of New South Wales. He desires me to correct that suggestion and to state that he has never at any time been a member of the consultative council. If he had been a member, I would not regard it as anything to his detriment, because that body consisted of men of admirable qualities. He served with great distinction in the last war, and since then he has been an active member of the Returned Sailors, Soldiers and Airmen’s Imperial League of Australia. He was DirectorGeneral of Medical Services for the Department of the Army until ill health compelled him to relinquish that position. He has been one of the strongest supporters of the league from its early days, and is also one of the hardest workers for the Australian Red Cross Society.
– He is an agent for the “ Nats “.
– That interjection ill becomes the honorable senator.
– He is a strongly biased anti-Labour man.
– That stands to bis credit. Whatever else may be said in his favour, if he is opposed to the policy of the Labour party I greatly admire him for it. That is something for which he needs to make no apology, and he is as much entitled to his own political views as is the honorable senator. No nian has a better record of public service in the interests of returned soldiers organizations . than that gentleman. Senator Amour remarked that he was a member of the consultative council, but he has never been associated with it. As Director-General of Medical Supplies “ he held the rank of general, and was entrusted by the government of the day with complete authority in respect of the medical services of the Army. He has served his country well. He spoke at the meeting of protest organized by the Returned Sailors, Soldiers and Airmen’s Imperial League of Australia as a citizen and as a member of the league, quite apart from any political associations. I should be glad if the Minister representing the Minister for the Army would supply me with the information I sought by means of a question I asked earlier to-day as to supplies of penicillin being made available to the Australian forces in forward areas.
– I draw the attention of the Leader of the Senate (Senator Keane) to an article published in the Sydney Daily Telegraph last Saturday, And written by Mr. David McNicoll, who states “.Sydney is fine, but you must hand it to Rio “. The work of our publicists pales into insignificance compared with those of Brazil. The writer stated -
A newsreel showing surfboard riding in Australia, which I saw in a South American theatre, was greeted with ecstatic cries of admiration by the audience.
Rio de Janeiro’s outstanding advantage over Sydney is that the Brazilians know how to sell their wares. You’ll find new posters advertising Bio in all parts of America and England, despite the war. But I’ll give an inscribed gunmetal fob-watch to any one finding in Manhattan ten posters boosting Australia’s post-war tourist attractions.
South Americans marvel at the surfboard work of Australians, and pictures of it should be distributed throughout the world. We shall be wasting our time in bringing tourists to this country unless we can provide them with hotel accommodation equal to that obtainable elsewhere. I do not know whether it would be possible for private enterprise to establish a chain of tourist” hotels in Australia, but the first thing one notices in Canada is that in every city of importance there is a magnificent hotel owned by the Canadian Government. In some of the states, the Government works in conjunction with the Canadian Pacific Railway Company. In Vancouver one hotel has closed down and another is conducted jointly by the Canadian Government and the Canadian Pacific Railway Company. After a visit to Canada one cannot help recalling the magnificent hotels such as the Chateau Frontenac in Quebec. In Australia we have not one first-class hotel comparable with those of Canada. Although Melbourne and Sydney are bigger than any city in Canada there is no hotel comparable with some of those in -cities of the si se of Winnipeg, with a population of under 300,000. If we desire tourists in Australia, we must give them attractive accommodation so that they will wish to return to this country. At Petropolis, in Brazil, there is a hotel with 3,000 bedrooms with bathrooms. When a monarch like King Carol wishes to take his gold where he can spend £200 a day he goes to Petropolis
– It is fortunate for him he did not select Sydney.
– He would not have been able to keep it long there. Wherever one goes in America one finds attractive hotel accommodation. There are wonderful dining facilities and good floor shows and bathing facilities. I ask the Leader of the Senate whether we are to depend upon private enterprise to provide the necessary hotel accommodation for tourists, or whether the Government will take a step forward and co-operate with private industry in providing accommodation comparable with that obtainable in any other part of the world. I suggest that a company should be formed in which the Government should hold51 per cent. of the shares. It could possibly raise some of the necessary capital from people interested in hotels and the entertainment business,’ and the company could operate on a basis similar to that on which Amalgamated Wireless Australasia Limited is conducted.
SenatorFoll. - Would the visitors be allowed to buy a drink after 6 p.m.?
– I agree that it is absurd that people have to guzzle their beer for twenty minutes before 6 p.m., and then go without it for the rest of the evening. I urge the Leader of the Senate to consider my proposal without delay; so that hotels may be built in this country which will compare favorably with the best in any other part of the world. It is necessary to give to tourists such attention in the matter of hotel accommodation that they will be anxious to revisit this country.
– I draw attention to the acute shortage of galvanized barbed wire. Black wireis now made available, but it has a short life and is not worth using. In view of the urgent demand for galvanized barbed wire, I suggest that the Government should release supplies as soon as possible, because of the difficult position in which farmers find themselves.
Increased supplies of power kerosene should be released to the farming community, because it is necessary in agricultural production. In some of the outlying areas, the farmers experience difficulty in getting sufficient power kerosene to enable them to carry on their work, and I hope that the Government will endeavour to release additional supplies.
I also direct attention to the need for prompt payment to farmers for vegetable seeds. Farmers’ organizations have complained to me that growers have been waiting for months for payment for seeds already supplied Prompt payments would assist them to meet the interest on their overdrafts, and square their accounts.
– The matters to which honorable senators have referred will be brought to the notice of the appropriate Ministers for attention.
Question resolved in the affirmative.
The following papers were pre sented : -
Invalid and Old-age Pensions Act, Maternity Allowance Act, Child Endowment Act, Unemployment and Sickness Benefits Act and Widows’ Pensions Act - Third Report of the Director-General of Social Services for year 1043-44.
Ordered to be printed.
Lands Acquisition Act - Land acquired for - Commonwealth purposes -
South Guildford, Western Australia.
National Security Act -
National Security (General) Regulations -Orders-
Taking possession of land, &c. ( 10 ) .
Use of land (3).
National Security (Man Power) Regulations - Orders - Protected undertakings (39).
Regulations - Statutory Rules 1046, Nos. 97, 99.
Northern Territory Acceptance Act and Northern Territory (Administration) Act - Ordinance - No. 4 of1945 - Health.
Senate adjourned at 9.57 p.m.
Cite as: Australia, Senate, Debates, 3 July 1945, viewed 22 October 2017, <http://historichansard.net/senate/1945/19450703_senate_17_183/>.