4th Parliament · 1st Session
Mr. Speaker took the chair at 10.30 a.m., and read prayers.
– The following extract is from a newspaper report of remarks made by the honorable member for . Wilmot during my absence the other night -
A statement made by Sir William Lyne, that the present association had prevented a paper being started in Hobart,was without foundation, for every chance was given the promoters to take advantage of the association’s terms, and they would not do so.
– That is scarcely what I said.
– I do not think that the honorable member would unwittingly make an incorrect statement. I was informed by a resident, of Launceston, who is a newspaper proprietor, and who tried to obtain possession of a Hobart newspaper, that he was blocked by the Association, because he could not arrange for a cable service.
.- I did not say last night that the honorable member’s statement was without foundation. I said that I had been informed, by persons who ought to know, that the statement . was without foundation.
– SenatorPearce has made the statement that a provisional site for the proposed Military College has been chosen within the Federal Capital’ areaand that he hopes to proceed further in the matter at an early date. It is also stated in the press that the first work at the Federal Capital will include-
– The honorable member may not ask more than one question at a time.
– The questions which I wish to ask are related, and one answer would reply to both. I desire to know from the Minister of Home Affairs, whether he proposes to spend money on the
Federal Capital before calling for competitive designs. It is stated in the press this morning that there is , £50,000 on the Estimates for expenditure on the Federal Capital within the present financial year?
– We shall go right on with the preparation of the Federal Capital Site, without regard to the calling for designs, because a great deal of preliminary work must be done before we can commence to build.
– That place will never be the Federal Capital.
– As to the amount which will be spent this year, that can be only guessed at, but it will be a big sum.
– Will the Government give the House an opportunity, before money is spent, to discuss any proposals for expenditure?
– The subject can be discussed when the Budget debate is proceeding, and there is an item on the Estimates which will give an opportunity for its discussion.
– Will the Minister, in negotiating with the Government of New South Wales, press for the transfer to the Commonwealth of a larger area than the miserable holding now offered at Jervis Bay?
– We are in friendly negotiations with the New South Wales Government, with a view to having the area at Jervis Bay increased. I think that it will be all right.
-According to the press, there seems to be some doubt as to who will control the water supply for the proposed Federal Capital. I ask the Prime Minister and the Minister of Home Affairs whether they will insist that, before the building of the Capital is commenced, the water supply shall be vested entirely in the Commonwealth, and shall not be controlled by a State.
– We are in friendly negotiation with the Government of New South Wales, and I think that everything will be right.
– I wish to know from the Minister of Home Affairs if he will negotiate with the Government of New South Wales to secure to the Commonwealth paramount rights over the Snowy River for the generation of electricity?
– I ask the Minister if he will press the New South Wales Government to give the Commonwealth con trol over every drop of water in New South Wales? That seems to be the desire of some honorable members.
– We are asking only for control of the watersheds of the Molonglo and Queanbeyan rivers, over which we desire sovereign rights. No doubt in due time we shall get the rest.
– Is it the intention of the Government to ask for sovereign rights over the Snowy River for the generation of electrical power?
– We can look into the matter, but it is so far away that I have not thought of it yet.
– Then the Minister cannot have read the agreement.
– Is it true that water can be supplied to the Yass-Canberra site only by a pumping scheme?
– That is so, But the honorable member must not forget that the same thing applies in the case of Chicago, and all the great cities of America.
– Seeing that there is a very large number of new members in the present House, many of whom wish to visit the suggested site for the Capital at Tooma, will the Prime Minister make it convenient for them to visit the place, so that they may form an opinion about its merits ?
– Ministers have determined that, as the Parliament has, rightly or wrongly, selected the Yass-Canberra site, facilities should be afforded to new members to visit it; but we do not propose to expend money in providing for a tour to other sites.
Mr.FENTON.- Has the Treasurer read the report in to-day’s Age of a speech by the chairman of the Queensland National Bank, in which he said -
There could be no question that a uniform issue throughout the Commonwealth was desirable, whether by the banks or by the Government. It was a matter for congratulation that the Federal Government had decided to create a note issue on such a sound basis as the Queensland TreasuryNotes Act, which had given such general satisfaction for the past seventeen years in this State.
– I have not read the paragraph, but, knowing the advisers of the bank, I feel sure that the statement is correct.
– Will the Prime Minister ascertain if the Government of
Queensland has yet got back the £2,000,000 which it lent to the bank during the financial crisis?
– You, Mr. Speaker, as well as myself, were in the Queensland Parliament when what is referred to occurred. I am glad to say that the bank, notwithstanding its difficulties, will be able to fulfil all its obligations.
Pennant Hills Wireless Telegraph Station - Hobart Telegraph Operators - “ All Red “ Cable Service - Federal Liberal Newspaper
– Has the PostmasterGeneral any objection to lay on the table the papers dealing with the negotiations in connexion with the removal of the site for a wireless telegraph station from Sydney to Pennant Hills, and the cost involved ?
– I have no objection.
-Will the honorable gentleman have inquiry made as to the hours worked by the telegraph operators who are employed on the Hobart end of the Melbourne-Hobart duplex line, with a view to reducing them, and so making them uniform with those worked by the Victorian operators on the line?
– I shall have a report made.
– Can the PostmasterGeneral inform the House as to the progress of the negotiations for the establishment of an “ All Red “ cable service?
– The present Government has always favoured an “ All Red” cable service, and has now communicated with the High Commissioner, asking him to impress on the Pacific Cable Board the advisability of acquiring a Stateowned Atlantic cable. The land line across Canada is now leased to the Pacific Cable Board.
– Is not this a matter for the States rather than for the Empire?
– The Pacific Cable Board represents the various Governments interested in the cable service.
– It could not authorize the expenditure necessary to acquire a cable across the Atlantic.
– The proper thing to do is to approach the Pacific Cable Board, on which we are represented.
– The proper thing to do is to approach the Prime Minister of Great Britain.
– Every step will be taken to bring about an “ All Red “ cable service, if it be possible to establish one. When Ministers were in office before, they took action on similar lines.
-Has the PostmasterGeneral seen a paper called the Federal Liberal, the official campaign organ of the New South Wales Federal Liberal League, registered for transmission by post as a newspaper at the General Post Office, Sydney ? I hold a copy of it in my hand. Will the Minister inquire whether the paper has ever been issued since this number appeared, or whether it is merely an electioneering manifesto franked through the Post Office under the Postal Act in the guise of a newspaper? If so, will he take steps to see that the persons responsible are prosecuted?
– I have not seen the paper before, and know nothing of it, but in view of the honorable member’s remarks I shall have a report made on the matter.
Motion (by Mr. Tudor) agreed to -
That leave be given to bring in a Bill for an Act to repeal certain sections of the Customs Act1901.
Bill presented, and read a first time.
asked the Minister of Home Affairs, upon notice -
– The answers to the honorable member’s questions are -
asked the Minister cf Trade and Customs, upon notice -
In regard to the statement made by members of a deputation which waited on him on 1st August, 1910, will he, before taking any action in regard to oyster duties, have the fullest inquiry made concerning the whole industry, and specially in regard to -
The number of persons employed in the industry in New South Wales, Queensland, and elsewhere in the Commonwealth ?
The proportion which the local supply bears to the local market?
The price at which oysters can be farmed and profitably sold by the oyster farms?
The present and probable competitors (if any) from places outside the Commonwealth ?
– As I have no intention of taking any action which would prejudice the oyster industry of the Commonwealth, I suggest to the honorable member that it would be hardly necessary to incur the expense of making the inquiry proposed.
Debate resumed from 16th August (vide page 1580), on motion by Mr. Fisher -
That this Bill be now read a second time.
.- The question of the currency gives rise to many interesting speculations, and a vast amount of what is, in a measure, entertaining literature has been published concerning it. It is not my intention to take up the time of the House by quoting authorities on that section of the currency dealt with by the Bill, because many of the more striking passages have already been read to the House. A State note issue has been undertaken before now by different countries, and, broadly speaking, the results have usually been more or less disastrous. I think it is Macleod who states that China was one of the first countries to go in for a State issue of bank notes. In Europe, France, Russia, and other nations adopted a similar method, and in America the United States and other countries have followed suit. In South America, the Argentine Republic has not been very successful in its attempt to deal with the currency in this direction. I do not argue from those facts that this proposal is, therefore, doomed to failure, because many of the cases that have happened in other parts of the world are not at all analogous to Australian circumstances, or to the proposal now before the House. At the same time, one peculiar feature about this measure is that the Government are introducing it in circumstances that are practically unique in the history of State note issues. I know of no previous instance where the Government have stepped in and issued the notes without some good reason for their action. Some countries have been forced to do it in order to raise money for war purposes; others have stepped in because their currency needed Government support to give it stability, and in other instances again the State has come to the rescue of certain banks, and prevented the sacrifice of their assets. -We have heard a good deal about Queensland and Canada during the debate, and the Prime Minister seemed to think that the case of Queensland completely justified his action on this occasion. But in Queensland, the Government came to the assistance of the banks, which were on the brink of insolvency. Had they been forced to realize their assets at that time immense loss would have resulted. The Queensland Government had two and a half millions pounds worth of securities in the banks, but although they were liable for large amounts the banks had exceedingly valuable assets. The depression, however, was so great at the time that, if those assets had been forced on to the. market, they would not have brought anything like their proper or normal value. The Government were pressed to come to the rescue, and did so, and that was how the Queensland Government were induced to go in for a State note issue. In Canada also the . Government really stepped in to do what the private banks were failing in. In that country to-day there are bank notes issued by private institutions, and also Dominion notes. All the smaller value notes are practically issued by the Dominion, and, as is proposed here, the Dominion notes are legal tender, but the private banks’ notes are not. In 1893, the Queensland Treasurer said that unless the banks gave the Government hearty co-operation in the undertaking it would be a failure. ‘ The banks gave the Government the necessary help, taking so many notes, and giving the Treasurer gold to the extent of one-third, while crediting the Government with, and paying interest on, the other two-thirds as a deposit. The circumstances of the case warranted the Queensland Government in doing what they did at that time, and the history of the Queensland issue has justified their action. But both there and in Canada there was a good reason for Government interference. The credit of the country demanded it. But how different is the case here ! What danger is to be averted? There never was a currency sounder than the Australian bank note currency of the present day, and in that respect the Bill is unique. The present Australian note issue meets all the requisites of a good currency. It is sound and stable, elastic, and convertible. A man can cash an Australian bank note at any of the banks in the States, and get gold for it over the counter, less, of course,, an amount for exchange in certain instances. Moreover, in Australia, the bank notes are a first charge on the assets of the banks. Since that was enacted, and, in fact, even before it, although individual banks have gone under, I do not think there has ever been an instance where the holders of bank notes did not receive full payment for them from the banks.
– Oh, yes, there has been in Victoria - the Provincial and Suburban, and also the Australian and European.
-Many of the notes issued by the banks doubtless passed from hand to hand during the time of panic, at less than their face value, but I do not think there is any instance of a properly constituted bank, which could fairly be called an Australian institution, that has failed to meet its notes by paying 20s. in the £1 sooner or later. The present system meets the needs of the country, and is based on the Scotch system, the soundest yet devised. The idea is that the notes should be there to meet the needs of the trade of the country. When more currency is wanted, the notes go out automatically, and when they are not required, they come back to the banks, and the currency contracts again. The Scottish banks occupy a particularly enviable place in history, and a most flattering reference is made to them in the report of the Select Committee, appointed by the House of Commons. According to Macleod, up to the year 1844, Scotland enjoyed for 150 years the most perfect banking system, and I do not suppose that any honorable members will deny that Macleod is one of the leading authorities upon this subject. The scheme now before us differs probably from all others of the same sort because it is not the result of an appeal to the Government to go to the assistance of any private banking institution and will not provide a sounder paper currency than that which it will displace. Indeed, it will introduce a currency that will not meet the trade requirements of Australia as well as that at present in existence, and it will not be of any material gain to the people. Leaving out of account the profits derived from the Treasury note issue in Queensland) the note tax brings into the coffers of the State Treasuries, and therefore to the people, a return of - about £70,000 per annum. That revenue will be lost to the States by the adoption of this system. The Australian note issue will enable the Commonwealth Government to obtain a certain amount of money on which they will not pay interest; but, having regard to the cost of administration and collection, the saving of interest effected will amount to very little more than the revenue now derived by the people from the State note tax. This Bill will also open the way to the possibility of serious danger. It provides that a gold reserve of 25 per cent, shall be maintained in respect of the note issue up to £7,000,000, and that the Treasurer shall hold a sovereign for every £1-note issued in excess of that amount.
– That is the worst part of the Bill.
– There will be no profit from the issue in excess of £7,000,000, and there will be no material gain to the people as the result of the adoption of this scheme. It may provide the Government with a free, or, what some people may regard as a forced, loan, possessing the advantage, so far as this or a succeeding Government is concerned, that it is not likely to have to be repaid by them.
– Will not the Government spend that loan on the people and thereby benefit them?
– The people will not gain any benefit. The saving of interest will be counterbalanced by the loss of the present note tax revenue. I have no desire to pose as an alarmist, and do not anticipate any danger from the adoption of the Government proposal. My point is that it is unnecessary, because the existing currency meets the’ requirements of the people, and meets them better than the new system will do. There is always a danger of an over issue in connexion with a Government scheme of this kind, and the probability is that it will soon be found that we have brought into operation a more rigid system than that which we now possess - a system which will not adjust itself so readily to the currency needs of the community as does that now in force. That may not be serious, but it will prove inconvenient, and may lead to temporary tightness in the money market. A Government is not in such a good position as is a private institution to know what are really the trade demands of the country. It has not its fingers, so to speak, on the pulse of trade as our private institutions have, and that will be found to be one of the defects in the practical working of this scheme.
– Until we get our National Bank.
– I am dealing with the proposal actually before us, and not with any question relating to the establishment of a National Bank. This interference on the part of the Government with the existing currency seems to be prompted by nothing more than a desire for a change for the sake of change. It is not a statesmanlike policy to adopt. That eminent authority Bagehot says -
The best thing undeniably that a Government can do with the money market is to let it take care of itself.
– He was a banker.
– He was a great banker. In a little book published of recent years by Mr. David Kinley, Professor of Economics in one of the Universities of the United States, the following passage occurs -
While we may not admit that Governments cannot take care of the interests of their people, even in the matter of the issue of paper money, it is better not to rely on their intelligence and wisdom in such a matter. We should aim to secure to the country as much as possible of the gain from the use of paper money, while avoiding as much as possible of the loss that comes from its excessive use. It is easier for the Government to control the banks in their issues than it is to manage the business itself.
Private institutions working in accordance with the Scottish system of allowing the currency to adjust itself to trade requirements have a better chance of meeting the demands of the community than the Government have under such a rigid system as this is going to be. I should like to refer the House to one more quotation from an eminent authority, the late President Garfield, who declared that the sort of currency that is wanted -
Must be founded 011 ye demands of business, not upon ye caprice or ignorance or ye political selfishness of ye party in power. . ‘ . There never did exist on this earth a body of men wise enough to determine by any arbitrary rule how much currency is needed for ye business of a country. The laws of trade, the laws of credit, the laws of God impressed on ye elements of this world are superior to all legislation.
The Australian note issue will give rise to another difficulty, inasmuch as it will have a tendency to displace gold. Gold will probably be sent away to other countries where more profitable employment can be found for it, and when it is needed here at short notice, it may not be forthcoming. That would lead, no doubt, to only a temporary trouble, but it would certainly tend to tightness of the money market, and consequently to loss on the part of some people. If such a state of affairs prevailed for some months, it would indeed entail upon the community very serious loss. Both Canada and the United States have had experience in that direction. Under this Bill, when anybody goes to the Treasury to exchange notes, and the gold is not there, the proposal is to issue Government bonds. Although that makes the notes safe enough, I cannot see that there is any great gain to the country ; and if the monetary tightness lasts, and bonds have to be sold in order to get gold to meet the notes, the Government will probably have to dispose of them at a large discount, which, to say the least of it, will not be flattering to the people of Australia.
– What happens to depositors under the present system if they wish to exchange notes for gold that is not there ?
– This is not a question of depositors, but a question of meeting notes; and I have already shown that the notes of the Australian banks are perfectly safe. To dispel any doubt on the point I refer honorable members to Knibbs, where it is shown that, on the 30th June, 1909, the total liabilities of the banks were £122,545,543, and their assets £131,717,700, while the coin and bullion held was £26,297,843, and the notes in circulation were £3,510,000. This shows the percentage of coin and bullion to liabilities at call at 52.26 ; and that is very high compared with the figures of other countries and of the Bank of England.
– How would the other 50 per cent, of the creditors get on.
– That is not the question before the House.
– They would not get Government bonds, but closed doors.
– As an illustration of the position I am presenting, I may refer to the crisis in the United States in 1907, when the Government failed to meet the occasion, and the banks were compelled to break the law, and, in fact, create a special currency of their own. by instituting what they called clearing-house certificates. As soon as these certificates began to operate the public saw that the banks could cope with the trouble, and, confidence being restored, the crisis ended. It was found that individual owners -throughout the country had plenty of gold stored that they were afraid to lose hold of until the banks made this successful move, and then the gold flowed in and the currency was secured. One of the most serious of the possible consequences of this Bill seems to be the great danger of over-issue which has overtaken almost every attempt by a State or a Government to deal with the currency. When over-issue takes place and there is not a sufficient gold backing, the consequence is that the notes depreciate; in fact, as soon as a note is presented and a sovereign is not forthcoming, this Jesuit follows to a certain degree. It must not be supposed that because Canada and Queensland have not felt the pinch yet, this danger is excluded, for throughout the world we find that sooner 01 later a Government which takes charge of the currency does over-issue. I may point out that Queensland has had a very peaceful time since 1893, but this seventeen years of her history is no guarantee that the danger may not arise.
– Does the honorable member think that the banks would combine to rush the notes on the Government?
– I am not saying so. I have just intimated that, in my opinion, this proposal of the Government will not lead to any immediate trouble, and possibly may not do so for many years ; but, at the same time, it is replacing a better system, which is as sound and more convenient than that to be initiated. The fact remains that when the State does step in it cannot avoid this danger of over -issue, which may arise sooner than we anticipate. It may be taken as settled by economists that, as a rule, the quantity of money determines its value; and if money or notes are issued over and above the trade requirements of a country, the probability is that local prices rise, and that the metallic currency is superseded to a certain extent, while the notes do not buy as much as previously. If people begin under such circumstances to ask for gold they cannot get it; and, as I have already said, the Government will have to exchange their bonds for gold at a discount. The probability is that if a Government could not meet the occasion a panic would arise.
– Who would suffer most?
– The wage-earner, who is the very man honorable members opposite ought to protect. When a panic arises we know the people do not act, as a rule, with common sense, and it is not so easy to restore confidence then as in a time of peace. It is very hard to know what to do when the people take it into their heads that their financial institutions are in an unstable condition, because nothing in the shape of legislation can cope with such a situation.
– The Government are always rushed to for help.
– At any rate, if Government notes are depreciated, who suffers ? The person who suffers first and longest is the wage-earner. These notes are to be made legal tender, and if a worker’s wages come to £5 a week, and he is offered five Government j£i notes, he will be compelled to take them, though when he goes to his grocer and other tradesmen the purchasing power may be only 15s. or 17s. 6d. The workman is the man who is always turning his money over, because he is not in a position to hoard or use a bank, and having less margin to work on, he feels the pinch more quickly than any one else. If honorable members do not care to accent my opinion they may take note of what Daniel Webster, the great American writer, said in these words -
The very man of all others who has the deepest interest in a sound currency is the man who earns his daily bread by his daily toil.
Daniel Webster was a man who knew what he was talking about, and I commend his opinion very seriously to honorable members opposite. A note issue by a Government is more liable to inflation than a currency in the hands of private institutions, because it is an easy source from which a necessitous Government may get money quickly, and the temptation is insidious.
– If the Government break the law. we can easily settle them .’
– But is it not competent for Parliament next session to increase the note issue, and to lower, or even take away altogether, the gold reserve?
– Parliament is responsible then.
– Of what good to the people who are suffering is Government responsibility? It is harder to get at Parliament or any other State institution than to control a private institution. As I say, when the issue is in the hands of a Government there is more likelihood of a gradual increase and consequent depreciation, than if this business be left to private individuals. Mr. Kinley, whom I have already quoted, has one pregnant sentence on page 387 of his little volume -
It is easy enough for Government issues to expand, but very difficult for them to contract.
While we are on this point, I should like to direct attention to a few lines by the same author on page 386 -
It may be said, however, without fear of successful contradiction, that the experience of Governments that have issued paper money has been so generally disastrous as to establish in a high degree the improbability of success in maintaining the notes convertible at par in times of fiscal exigency. Experience, therefore, is against Government issues. The argument that the issue of paper money is equivalent to coinage, and, therefore, is a sovereign function to be exercised by the Government, is based on a wrong notion of the nature of coinage. The coinage of specie and the engraving of paper money differ in a very important particular, and that, too, a particular which justifies us in calling the issue of one a sovereign function and that of the other not so. Notes are a species of credit instruments; gold is not. For the Government to go into the business of issuing paper money is, therefore, to draw on its credit and to lay itself open to the possibility of financial weakness in times of sudden fiscal stress. In performing the function of coinage proper, Governments incur no liability; in issuing notes, they do.
That passage should commend itself to the consideration of honorable members. The same opinion is expressed by most of the leading authorities on the subject, and therefore we might well pause before taking a step which must sooner or later lead to serious trouble, and even financial panic. Another objection to the proposal is that it would give us a mixed currency, based partly on credit and partly on coin. As to this objection, I cannot do better than call the attention of honorable members to two or three sentences written by that very eminent American authority on this branch of economics, Professor Francis Walker. The passages were quoted by the Honorable William Shiels, when delivering, in Victoria, in 1896, one of the most brilliant speeches on -this subject that has ever been uttered in Australia. Were honorable members to take the trouble to digest it, they would not hold such dogmatic opinions. Professor Walker wrote -
The more there is issued of a mixed currency the more will be wanted. The supply does not satisfy the demand ; it excites it. Like an un natural stimulus taken into the human system, it creates an increasing desire for more. There are two reasons for this; one, that, as the currency is expanded, prices are raised accordingly, and more currency is demanded to effect the same exchanges; the other, that the speculation inevitably following the rise of prices leads to an enormous extension and repetition of indebtedness, which requires for its discharge a greatly increased amount of the circulating medium.
Secondly, of contraction. The cause which limits the expansion and finally produces contraction is the liability of the notes to be presented for payment in’ money. The occasion for this cause may be almost anything - a political convulsion, an adverse balance of trade, a failure of some large trading or banking company, or an unaccountable mood of the popular mind. A mixed currency has in itself no power whatever to satisfy a foreign creditor.
With a value currency, the fact that it was especially wanted would be a reason why it should stay. Not so with credit money ; it won’t bear to be looked in the face….. It should be borne in mind that these contractions and expansions are not imaginary, not possible only, not merely occasional, nor at all local, but they occur frequently, and everywhere within the field of such a currency.
Those statements show the danger of a mixed currency. When the Bill becomes law, the Treasurer will probably find that he will have to keep more than 25 per cent, of gold as a backing for his notes. It is the practice of other countries to keep a larger backing for paper currency than is required by law. For instance, on 31st March last, the Dominion notes of Canada in circulation were equivalent to almost £18,000,000, arid there was then in the Treasury about £15,500,000 in specie, or about 80 per cent, of the value of the notes. The Canadian Government -is therefore enjoying the advantages of a free loan only in respect to about £3,500,000. It is not likely that 25 per cent, will be regarded as a sufficient reserve behind the Australian notes. If our notes are to be convertible into gold only at Melbourne, that will make them very inconvenient. The notes of the Bank of France can be converted into gold at branches throughout the country, and if all Australian notes must be presented in Melbourne to be converted into gold, there may be a curtailment of the banking facilities which our people now enjoy, because the sending of gold from one part of the country to another is very expensive.
– In that respect paper money has an advantage.
– It would be very much better if the Government were to provide for the conversion of notes into gold at each of the State capitals.
– The Prime Minister assured the House that he would give consideration to that suggestion.
– I am glad that he is prepared to take a reasonable view. We must all desire the stability and soundness of the currency. My chief objection to the measure is that it substitutes for a currency which has fully met our requirements, and which causes no risk, one that may create considerable trouble. The Government does not propose to make our currency sounder or better, but the change which it is bringing about will probably create great inconvenience, and leave us open to the grave dangers which always attend State issues of paper money.
.- I have listened with a large amount of interest to the discussion of the measure now before us, and, if I rise at this juncture, it is not because of presumption on my part. I do not hope to be able to add much to what has been said, but I must break the ice at some time or another, and I may as well do it on this measure. The Bill has been lauded by the more ardent of its admirers as the most radical piece of legislation that has been presented to us, and it has been said by those who are opposing it that its provisions are fraught with evil. For my own part, I see in it neither radical principles, nor dangerous elements; it does not go to the root of things, nor does it change a system. There is no proposition within its clauses which has not at some time been suggested and supported by the very institutions whose interests are now said to be assailed. All that it contains has at one time or another been put forward on behalf of banking institutions, with this difference, that, whereas the representatives of those institutions have always desired to share in the profits of any note scheme, the Government now proposes to give those profits to the people. Whatever amount of testimony may be brought forward, the fact stands out that no result to flow from this Bill will any more affect the power, the prestige, or the existing profits of the banking corporations than existing legislation has affected the power, prestige, or profits of the banks in Queensland. I can quite understand that this proposition, in so far as it is a cheap method of raising money, must be a subject of keen disappointment to those money lenders who to the extent of this Bill have lost a market, and to those commission agents who to the extent of this
Bill have lost a commission. But beyond that, there remains this fact, that whatever security stands behind the bonds stands behind the notes. The security that is good enough for the foreign bondholders ought to be good enough for the people of our own country, and the interest that would otherwise go abroad will remain in our own country for utilization for domestic pur-‘ poses. Then, in so far as it consists of a currency proposition, it has been repeatedly charged that it is a proposition for an unlimited issue,, or for an inflation of the currency. It is neither the one nor the other. Whatever may happen as the re- suit of this Bill, two things are certain - that it does limit the issue and that it is not an inflation of the currency. It will not diminish the assets of the existing banks by a single farthing or inflate the currency of the country by a single fraction. Those are facts which stand out in connexion with the Bill. It has been said that the proposition is novel, but there is no indication of novelty in it. All the Bill proposes to do is to extend to the Commonwealth generally a principle which is already in operation in the State of Queensland. The principle was brought into existence in that State in 1893, by a Parliament of which it was said upon the floor of the Chamber at that time that the Treasury benches were packed with directors of banking corporations and men who had large interests in the financial institutions of Queensland. They propounded it. One honorable member on the other side said it was panic legislation. Be it so or not,’ the fact remains that it was a demonstration of the superiority of the security which was afforded by the country generally . over the credit and resources of the private institutions of that period. It was an evidence that those men who were financially interested in the private institutions were prepared to use the agency of their own Government to do for those institutions what they were not capable of doing for themselves. In any case the panic has passed, a calm has followed, and although the same men have since had the Government of Queensland in their hands, at no period during those seventeen years have they even attempted to withdraw the law which they then enacted. Again, in 1895, we had in this State a proposal for a Royal Commission. The bankers had a conference and laid propositions before that body. These went far in excess of anything contained in this Bill. They proposed that there should be issued by the various States notes to an extent far in excess of what is provided for in this measure.
– I understood the honorable member to say that the effect of the Bill would be to give greater security to the banks.
– It* will not hurt the banks.
– Of course, it will not. All it will do is to provide a cheap loan for the community on the one hand and to give more security to the private banks on the other. ‘ There is nothing in the Bill which the private corporations have not themselves put forward and indorsed, so long as it gave them a share in the profits of the transaction. ‘ The only objection urged against the measure to-day is that it does not give the banking corporations that share in the profits for which their proposals provided. That which was professedly sound at that time they now denounce as unsound. In 1895, and again in 1905, the banking corporations, through their representatives and their journals, said that the propositions put forward in this Bill were good and sound, and supported them, provided that they ran side by side with a system that gave them some share of the profits to- result from the operation. The Commission of 1895 presented its report. The first seven clauses of the proposals of the Bankers’ Conference, as submitted to it, put forward exactly what is contained in this Bill. They proposed that the private banks should withdraw their notes. So does this Bill. They proposed that the private corporations should for those notes give the various States absolute gold as a deposit, that there should be a Commission of issuers, and that they themselves should have a half share in the control, and a half share in the profits. Then they went beyond that, and in the eighth clause of their proposals they stipulated that if the volume of notes supplied to them was not sufficient, they were to have more, on condition that they supplied a backing of 80 per cent, in Government securities, and 20 per cent, in gold. The ninth clause said that without Government securities, and without gold, the Commissioners, composed of representatives of the private banks and representatives ‘of the Government, could issue additional notes, provided that there were behind them approved securities, which might be neither national bonds, State bonds, municipal bonds, nor gold. That ninth clause practically said there might be an issue of notes by private corporations on condition that they deposited some security. Then they went further. They outlined what the scheme meant to the State of Victoria. They laid it down that Victoria alone would require £2,000,000 of notes, £1,000,000 to go into the banks’ tills instead of gold, and the other million to be put ‘into circulation. Then they drew up a scheme by which a backing of 25 per cent, of gold was to go into the Treasuryvaults, while against the other 75 per cent, of the note issue Government bonds should lie issued, and placed in trust at 4 per cent. This 4 per cent, was £60,000 on £1,500,000. Deducting £10,000 as the cost of the publication of the notes would leave a balance of £50,000. Of that sum under their scheme the State of Victoria was to take £25,000, and the banks the other £25,000. Therefore, instead of the 2 per cent, which they previously paid in the shape of a tax, they proposed to receive a profit of £25,000 per annum, and, said Mr. Gyles Turner, and, said the Bankers’ Conference, “ The paper money so issued by the community on good security is as sound as the Bank of England itself.” That is not the statement of any shin-plaster advocates, or extreme Radicals, but of men who were said to be sound upon finance. Their propositions went far in excess of anything in this Bill. We come then to 1905. Is the Insurance and Banking Record a Radical journal ? Is it extreme? No, it is the journal of the banking corporations of Australia. In April, 1905, when Mr. Watson was giving some publicity to the Canadian system of financing, that journal contained an article, written, if I .remember rightly, by Mr. Russell French, which went even beyond the propositions of 1895, and far beyond anything contained in this Bill. The new proposals were that there should be a Federal Bank of Issue - a Federal Bank of Issue only. They do not object to that, but what they do object to is a National Bank that shall interfere with and enter into their business. They proposed then a Federal Bank of Issue, with three Commissioners, and there were to be National notes issued to the private corporations up to 40 per cent, of their capital. Their capital being £18,000,000, it is evident that the notes . which were to be issued to them, backed and guaranteed by the Federal Parliament, would amount to £7,200,000, and what would be the security? None at all, except that of the general capital and resources of the banks. Then came the second proposition, that not until there was a note issue in excess of 40 per cent, of the capital in the banks should they give security. Then they were to furnish such security for the additional notes issued as the Commissioners might think necessary. What were the conditions which they offered to the Federal Government in return? They said, “On condition that the Federal Government issue to the private corporations notes to the extent of 40 per cent, of their capital, we are prepared to justify a proposition that the Government shall issue on their own behalf notes equal to the net issue which they permit the private corporations to use on their own .behalf.” So that the propositions of the Insurance and Banking Record meant a note issue, not of £7,000,000, but of at least £14,000,000, half of it under the operations of the private banks and the other half to be issued by the Federal Government for public purposes. They said, “ We shall hold no security or deposit in gold for the- notes we use, but against the notes which the Federal Government issue on their own .behalf they must hold 40 per cent, of gold, of which 30 per cent, shall he held in liquidated securities, “ or, in other words, in charge of the private corporations, “ and the other 10 per cent, by the Commissioners of the Federal Bank of Issue for testing from time to time .the parity of notes with gold. ; ‘ So that, if there was to be only 40 per cent, held against the issue of the Federal Government on their own behalf, it is evident that on the bankers’ own proposition the total gold reserve behind ‘ the whole note issue of £14,000,000 was to be only .20 per cent. In short, whether we take the experience of Queensland on the one hand, or the propositions of the Bankers’ Conference of 1895, or the scheme, put forward by the Insurance and Banking Record in 1905. there has never been a period when it has not been demonstrated by the banking corporations, through their journals and their speakers, that everything contained in this Bill is, if not absolutely sound from the stand-point of Radicalism, at least sound and correct from their particular point of view. They have always supported this proposal when it has been embodied in a scheme b) which they were to participate in the profits.
I have not yet heard the voice of the representatives of the banking corporations raised in opposition to the scheme. T have seen the expression of the personal antagonism of some bank directors; but I noticed in the press to-day’ that the Queensland National Bank itself, speaking after seventeen years’ experience of the State note issue, indorses the extension of the principle throughout Australia. Therefore, however little the Bill may mean from the stand-point of Radicalism, tested by the standards of the ordinary financier it is a sound proposition to incorporate in the administration of. the affairs of the Commonwealth. There can be no authority quoted against that contention ; but honorable members opposite may affirm, for merely party purposes, that the issue at stake is between a sound and an unsound currency. When you examine the evidence put forward by the Opposition you come up against a mass of theories. The issue is charged with being a paper currency. The one side combats the authorities quoted by the other; asserts that they are incorrect, or denies the accuracy of the quotation. The Attorney-General, for instance, refers to Lord Overstone. The objection is raised at once by the other side that that .authority is bad, because he happens to be -dead,, and against him are quoted other authorities who are equally dead. One honorable member has to take us back to .a period B.C. i,.20o years, to refer .to men whose names are as undiscoverable as their very bones, and rakes out of the ashes of Greek traditions what he calls a lesson to guide us in the solution of problems that arise out of the living facts of to-day. Such are the arguments against this Bill. Then we are told of the experience of certain honorable members .and of the knowledge they have gathered. I have listened with surprise to the story. I know that life is very short, and that experience is hard to gain, but, judging from the statements that have been made by the Opposition, there are on that side of the House men who ‘have as many lives as a cat. One honorable member has spent at least a lifetime in acquiring a knowledge of Statute law; he has spent four other lives in four of the States in acquiring a knowledge of agriculture, and he has spent yet another life in gaining’ banking experience. Apparently no one but the honorable member is supposed to be competent to express an opinion on this subject. I make no apology, however: for addressing, myself to it. I have never swept the door-step of a bank, nor have I had the honour of a bank overdraft, but I venture to say that this question is just as capable of comprehension by public men as is any other. I absolutely decline to recognise in it a sacred sausage only to be touched by the fingers of self-anointed prophets. The experience which some honorable members opposite have had is truly remarkable. Is it farming of which you speak? Is it mining to which you refer? They are intimately acquainted with each industry. There is nothing with which they are not absolutely conversant. There is no question in respect of which they are not experts. There are some subjects of which they may touch the fringe, but upon which we are not presumed to be fit to speak. In this connexion I arn reminded of what Mr. Gilmour Brown, a gentleman who had spent his life in a bank, said when giving evidence before the Victorian Banking Commission. For twenty-two years he had been, the manager of a. bank, so that it may fairly be assumed that he knew of what he was speaking. He was asked to describe the modern banking system, and he did so practically in a sentence. He said, “ You take a deposit and you take a deed ; put a skewer through both, and place them in a pigeon-hole together. Then you deduct 10 per cent, from the owner of the deed, give the depositor as little as possible, and pocket the difference.” I venture to say that we know as much as our critics do, and that the very material upon which they draw in forming their opinion. is equally accessible to us. We can examine it, and form opinions as to the value of that material just as well as any other class of men can do. Reference has Been made during this debate to Mr. Shiels. Take him as one of the many authorities who are quoted,, and of whom some honorable members say, “ He has spoken ! “ What is the position taken up when we mention- an authority? One honorable member says, “You refer to Brown; Brown is- no authority. Do you refer to Jones? He is no authority. Now, had you referred to Professor Thomson on Professor Johnson, we might have accepted such an authority.” Then you furnish your authority. Here is the sacred book ! Here is Thomson ! He looks, his knees tremble, and immediately reason topples from, its- throne. -This line of argument is only a few degrees removed from that of the uncultured savage, who tremblingly stands before the wooden image that represents nothing but the crude artistic fancies of his progenitors. The Prime Minister quoted Mr. Shiels, and some honorable member at once denied the accuracy of the quotation. How are we to judge the quotations of men? We may take a man’s speeches,, whether recent or old, and extract from them sufficient to prove almost any contention. What we have to do, however, is to read a man’s speech fairly in order to determine what are his general opinions. Mr. Shiels was opposed to the proposition for a State Bank put forward by the Turner Government. Then, again, he was a bimetallist. He defended his position on the ground that all the latest occupants of chairs of political economy in Great Britain were bimetallists. He quoted Mr. Balfour, also at that time an ardent advocate of bimetallism, as saying that the existing system of currency is the worst of all conceivable systems, because it gives you a standard continuously appreciating, throwing a burden upon every producer, to the exelusive benefit of the owner of fixed debts in gold. Mr. Shiels may have furnished no argument to the Prime Minister, but unquestionably he furnished none to support, the opponents of this measure. His strongest opinion was one of the strongest hostility. Mr. Shiels dead, is an authority ; but Mr. Shiels, if living to-day, and in this Chamber, would be regarded as the advocate of an exploded bubble. To what other authorities do our opponent’s turn? What else do they resort to? They turn to the testimony of human history. One honorable member has made a remarkable reference to the question of a paper currency. In the name of Heaven, what is the currency of to-day? Is it not paper? Is there any one who denies that it is? I see a smile of supercilious superiority on the face of an honorable member opposite, who has been associated with so many callings, but it does not disturb me. Let me remind the Opposition of an opinion expressed by one of their own party. Let me quote the honorable member for Angas. He is not. an extremist. He is a rational man. What does he say? He says distinctly that cheques are the modern currency. He declares that notes and gold are but an insignificant proportion of the currency of the day, and his word, I presume, is as good as that of any other, honorable member on. that side, at least. Then, again,. the writer on “ Currency “ in the Encyclopedia Britannica, says that the idea of the intrinsic value of money is given up by all the best speakers and writers on the subject. Mr. Finlayson, a gentleman of long banking experience, and Mr. Henry Gyles Turner, also an expert, when examined before the Banking Commission, admitted the same thing. They, at least, knew it. They admitted that the currency of modern times is paper and nothing else, and that the world could not go on if its paper currency were abolished. Then again, may I ask the Opposition whether Sir Robert Giffen is not an authority. He has said in his Financial Essays -
As long as the intention is riveted on, not the real currency, paper, but upon its assumed basis - gold - correct calculations upon currency questions are impossible.
Sir David Barbour, himself a banker, wrote an article in the National Review for July, 1894, in which he said that the credit of the world and the business of Great Britain is carried on with £6,000,000,000 of paper resting upon a base of £100,000,000 of gold. Bagehot, in Lombard Street, says that no one can contemplate the existing paper credit on which the world is carried on, and the minuteness of its gold base, without trembling. Look where you will, in short, as the writer of the article “ Currency “ in the Encyclopedia Brittanica has said, and as the honorable member for Angas has admitted, and you find that the idea of the intrinsic value of money is given up by all the best writers and speakers in the world. We have presented to us the spectacle of the owner of the loom, the plough, the factory, and the farm - the owners of all the necessary and active forms of capital - being called upon, day by day, owing to the peculiarities of modern society, to pledge their plough, their loom, their factory, their farms, and all the active forms by which men acquire wealth, in order to get a medium of exchange. In short, owners of capital are compelled by the monopoly of the medium of exchange given to private corporations to pledge their capital in order to get a medium of exchange which represents only the security they put in and nothing beyond it, and’ they pay interest upon a circulating representative of their own capital. That is the position. The honorable member for Bendigo referred us to Conant’ s History of Banking. I venture to say that no one can learn from it the character of the legislation passed in particular cases or what actually transpired. No one can say that he has ever read a book in which history was so distorted as it is in that work. It does not present the history or give one word as to the successful paper ventures of the world. Take, for instance, the Pennsylvania case, to which the honorable member for North Sydney referred. It is well known - indeed, it has never been controverted - that for fifty years, until the British Government suppressed its issue in 1773 the Colony of Pennslyvania enjoyed the highest degree of prosperity upon a paper currency which represented nothing but the security of those who wanted the medium of exchange.
– Benjamin Franklin said that it was eminently successful.
– It was, and it was the act of suppression of the British Government that brought it to an end. Yet Conant has nothing to say about it. All these particulars of successes are as nothing. All that Conant’s history gives us is a record of failures. It points to results and ascribes those results to causes for which in many cases the students of the history of legislative records and legislative enactments know there is absolutely no foundation. I do not wish, however, to thresh out that point. Suppose it were true that all these failures had taken place. What of it? Is society to ossify ? Is progress to stop ? Is civilization to come to an end because we cannot find a road upon which disaster has not walked? What is there in private banks that makes them an exception to the general rule of the world? What is the very society in which we live but a reflex of the triumph of the human race over the follies and failures of the past? What will be the highest civilization of the future if it is not a reflex of conquest over the evils and errors of to-day? The honorable member for Angas put the position in a sentence when he said that the dangers of the past are infinitesimal to-day. That is true; and why? Because we benefit from the experience of the past, and we are no longer exploring an unknown sea. We traverse a course where, in almost every direction, the reefs are known and every rock is charted. It may be that every rock and every hidden reef is an indication of some wreck and some loss of life; but once there has been a wreck, a record is taken, and we thus reap the benefit of past experience. Progress is the history of men who have taken for their motto, “ Try again.” The appeals of the honorable member for Bendigo, and those who think with him, are appeals not to do anything, because some one has broken his neck. It is the policy of the man who said, “ Don’t work, I have known men to die at it.”
– Does the honorable member think that the proposal of the Government is an improvement on the present system?
– My opinion, in a sentence, is that the proposal of the Government is a cheap way of raising money, and to that extent it is good. It is a financial proposition which can be made by a Government, no matter how Tory or how Radical, just as we saw it put into operation by the Tory Government of Queensland, and is now taken in hand by the Radical Government that controls the destinies of Australia. To the extent that the proposal saves people money that would otherwise find its way into the pockets of foreign bondholders, it is good. So far as it gives to the private corporations of the country a Government guaranteed note, instead of a private note, it takes from the private corporation a responsibility that they bear to-day, and to that extent it confers on them no injury ; and in so far as it substitutes a Government guarantee for a private guarantee - and there is no possible argument as to which is best - it is good. To those who oppose the proposal on the ground that it is radical, it is only necessary to answer that a Government security has been availed of time after time by every private corporation in every community in the world. If there have been past failures these are no proofs of failures in the future ; and in support’ of this I propose to give” a few illustrations. In the colonial period in America we had new countries with poor securities, no gold, and no capacity for bor rowing; and by the very necessities of the situation they had to resort to paper currency. However, there is no need to turn to America, because we can find equally good examples in Australia. In the early days what was the currency in New South Wales? Rum gallons because there was no gold. In 1825 the Government of New South Wales lent a few thousand pounds to the New South Wales Bank in order to maintain the bank’s existence. The currency was nominally on a gold basis, but was quite unable to comply with even normal conditions. In the year- 1827 the Government demanded that the bank should restore the gold of which it had had the care for two years, and the bank was compelled to do so, leaving itself with the sum of £29 on which to conduct business. Similar conditions have prevailed in every country in the world in its early stages. The early colonists in America were as far removed from Europe and the centres of civilization as Australia is today, and they were fighting for existence against enemies on their borders. Their fields were being laid waste, and they had no gold. As a matter of fact the gold production . of the world was theh insignificant. Gold was a scarce commodity everywhere, and those countries which could not produce sufficient security for loans had to resort to paper; and it is marvellous the large amount of success they attained. What an absurdity it is to try to bar the path of progress by reference to isolated instances of failure ! In the case of the American Colonies in the early period, other circumstances have to be taken into consideration - the circumstances are the very essential. The fact remains that the three Colonies of New York, New Jersey, and Pennsylvania were conducted absolutely on a paper currency ; and for a long time until its active suppression by the British Government in1773 - the credit of those Colonies stood undiminished. Now let’ us turn to another period referred to by the honorable member for Bendigo - the year 1820, just about the time of which I was speaking of New South Wales. The honorable member quoted Conant ; but we know that in the United States a State bank is not a bank owned and controlled by a State as we understand it. The difference between a State and a National Bank is not the difference between National and State ownership” but the difference between the laws under which they are registered ; and nearly every instance quoted by the honorable member was that of a State bank under State laws. It is true that in some cases, as in Kentucky, the Government became stockholders and took shares, but the banks were under private administration for private profit; and the mere fact that there was corruption has nothing to do with the question. In September, 1837, when Webster and J. C. Calhoun, in the Federal Congress, were raising the question of the charter to the United States Bank and the veto on the proposition by Andrew Jackson, Calhoun made the statement - in an Assembly, be it remembered, of men who were conversant with the conditions in America, and knew contemporaneous facts - that they could not, either in American history, or the history of any State, where there had been an issue by the Government and where the currency thus issued had been redeemable in all. the debts, dues, and obligations of the Government, point to a single instance of failure or repudiation. That statement remains uncontradicted. We had illustrations given by honorable members opposite of note issues in countries, suffering the horrors of insurrection or invasion. Without going into particular instances, we may ask what happens at such times? All forms of wealth that are irremovable begin to depreciate, while gold, jewellery, and other valuables, easily removed, appreciate. It matters not what the particular currency of a country may be, gold augments in value and begins to disappear as the invader approaches. Gold,, precious stones, and jewellery are the first to increase in value when a country is in danger, and there has never yet been a country able to rely on them. The anxiety in times of war is to- turn landed possessions’ into gold, silver, and other portable valuables, and - in all the history of the world there is no exception to this - we find gold augmenting in value until it gradually disappears and becomes absolutely unpurchasable. By the very necessities, of the situation all countries are, at such times, absolutely driven to resort to paper currency, and this has marked the progress of the world. A paper currency is the most economical, and the tendency of the world in every direction is to use that which most effectively serves its. purpose, and to follow the line of least resistance. In war time it matters not whether it be private” security, resting on property liable to be destroyed, or a public security, resting for its redemption on the existence of a Government liable to be swept away - both will diminish- in value in proportion- to the proximity of the danger. The fact that we call one security a note and another a bond does not matter. I know of no particular period when private securities did not diminish in value to the same extent as securities issued by a Government. War means the diminution of values, and there is no variation of that law. In the colonial days America was fighting against England. No« sooner did war take place in 1775 than the gold disappeared, and the Colonies could not meet their obliga- tions. But the Congress was not a Government. It had no constitution, no assets, no land, and no taxing power; it was a mere delegation from the various States. And everything depended upon whether it would be able to maintain its existence. For long years there was a doubt on that point, and we know that the British Government instituted an organized system whereby the financial position of the Colonies might be embarrassed. From a document written by himself, we know that General Clinton had to obey the instructions of the Government to embarrass the Colonies as much as possible by the injection of counterfeit notes, which of course made largely for depreciation. Nevertheless the colonists were able to maintain their land and make a new empire in combination against the most powerful nation of earth and the mistress of the seas. The war was successful in its purpose, and every penny was honoured by the _ American Government. Now I turn to another period, that of the French revolution, when what were termed assignats were issued. What happened? Insurrection broke out, the nations of Europe were round France in packs, and fell on her like wolves. Gold was lacking, and’ paper currency had to be issued. Oh what was it based? On the value of the lands of the emigrant nobility, and of the clerical orders and religious houses, which had disappeared. There was no hope of getting help from any outside source, -and not much prospect of the redemption of the paper currency. Under what conditions would such a currency be more likely to depreciate? This paper currency was first issued in 1790, but in 1796, under the Directorate, it was recalled, when there was a counterfeit currency in circulation to the nominal value of ^600,000,000.. But the soldiers who came back from thewar were able to use the paper money which had been issued, to buy up the lands, of the emigrant nobility. The energy of the people was stimulated, the productive forces of the country were set free, much wealth was produced, and a mighty population wascreated, the mothers of France giving birth, to children more rapidly than the battlefields could devour them. If ever there wasjustification for the extension of paper currency, it is the history of the events towhich I have referred. Never has there.been a time when a paper currency has depreciated more than the securities of private institutions and individuals. For twenty years even Great Britain was driven to re”sort to a paper currency. But let me take, as an example, a paper currency which may be regarded as typical of dozens of others. The history of the American greenbacks sums up the history of paper currencies throughout the world. Lincoln was elected President in i860. In February, 1861, South Carolina declared its secession from the Union. On the 12th April, following, the southern Confederates marched north, and commenced the war. Gold disappeared, while France and England supported the slave States. The Federal Government tried to float loans in the markets of Europe, but could not raise money there. The northern States were unable to raise money by loan. In December .the private banks of America suspended payment, and for the succeeding seventeen years’ paid no one in gold. The fact, therefore, stands out that there was no repudiation in the United States until the private corporations had suspended payments. When Chase was representing the Government, an attempt was made to raise £50,000,000 partly on a twenty years’ loan, at 7^ per cent., or seven years’ Treasury notes at 7 per cent., or one year’s Treasury bonds at 3 </inline> per cent., and the Government also took power to issue “ demand “ notes to the value of £12,000,000, provided that there was gold in the Treasury to that amount. The Government were compelled to follow the example of private banks, and to refrain from paying gold. One £6,000,000 of “ demand “ notes issued up to date of suspension went into circulation, and they were followed by another £6,000,000, making in all £12,000,000. They could not be redeemed in gold, because specie payments were suspended, but they passed from the soldier and the sailor to the baker, the butcher, and the grocer. They paid the import duties at the Customs House, and so returned to the Government, and then went into circulation again. At all periods of the war the “demand” notes maintained their parity with gold. Then there were three issues of greenbacks of £30,000,000 each, making in all £90,000,000. The first issue was in March, 1862, and the second in July. The issue was agreed to in the House of Representatives, but in the Senate **Mr. Gallatin, President of the Gallatin bank of New York, headed the opposition to the measure and refused to allow the Tender Bill to pass until there had been inserted in it a provision to the effect that the paper money should be good enough security for every one but the banks. Every one, except the bondholders who had to be paid in gold, was to be paid in paper. To enable the bondholders to be paid in gold, it became necessary for the Government to collect their duties in gold. This interfered with the circulation of the legal tender greenbacks, because the Government were prevented from accepting them in payment of duties. They passed from the soldiers and sailors to the bakers and butchers, but when they came to the wholesale merchants, these latter found that they could not use them in the payment of duties. The greenbacks in the hands of the merchants would not be accepted in payment of obligations to the Government. The Government said, “ It is obligatory on us to pay gold to our bondholders, and, therefore,, we cannot accept greenbacks from you.” The holders of greenbacks were thus compelled to go to the banks or to the bullion brokers, the agents of the banks, and to sell the currency of the country at a reduction. What was the next thing that happened ? No restriction was placed on the issues of the private banks, which persisted in putting their currency into circulation, with the result that the Government currency was depreciated. Chase, then Secretary to the Government, in December, 1862, said that there could be no question but that the greenbacks would be at par with “ demand “ notes, or with gold, were it not for the action of private corporations, which had inflated the currency to the extent of $167,000,000.- He proposed what is known as the National note issue of 1863. The Government said, “ We will put National notes into circulation to drive out of circulation the notes of the banks. These National notes will be based on the bonds of the country.” Certain advantages were offered to the private banks in return for their acceptance of National notes, but it was made conditional that they should register under the Federal law, instead of under State laws. Banks which registered under the Federal law had to withdraw their inflated issues, and to accept National notes, based on the deposit of bonds, receiving interest for the security thus deposited. But when these proposals went before the Senate, that body proposed a still further restriction on the use of green backs.
Mr. HANS IRVINE (Grampians) £12.50]. - I desire to make a few remarks on this measure as a commercial man. Fol.lowing after the orator who has just sat down, and who has treated us to a tornado of words, I feel that, speaking to his own. class, to men without any knowledge of commercial or industrial affairs, he would carry them with him. They would believe in his views, but I venture to say that the commercial men of this great city and continent would not give the same weight to his statements. I want this assembly to look at the matter from the point of view from which - 1 have endeavoured to approach it, and if they are true representatives of the people I am certain they must do so. I view with great apprehension the proposal of the Government to establish a gold reserve of only 25 per cent. 1 am not in opposition to the issue of Australian notes in one sense, but I am in another, unless there is an adequate safeguard for those whose earnings the Government propose to take in the interests, and I hope for the benefit, of the people. Twenty-five per cent, of gold reserve is not sufficient, because this is a country that has never known any other than a gold currency. We have always relied upon that. We have established our credit all over the world, and no country stands higher in that regard than the Commonwealth. The Prime Minister should consider that fact, and ask himself why he should make such a drastic change at this stage. There is no better system in operation than our present currency. No system has proved so effective as a gold currency, and to-day throughout Australia we can, through the Associated Banks, get gold for our notes wherever we present them. Under this Bill the Federal notes can be redeemed. in gold coin only at the Seat of Government for the time being. To me that appears to be a hardship, and I think the people generally will feel it to be such. Our currency presents many advantages which will disappear unless the reserve which the Government propose to establish is increased. I propose to prove by arguments later on why it should be doubled, or, at all events, augmented. To make the Australian note issue a success, the Commonwealth Treasurer must rely upon the banks as agents for the Commonwealth, and upon their good will, because every business man knows When he has an article to sell or place that he must advertise it or put it through certain channels to bring it before the notice of the public. At present the Associated. Banks pay 2 per cent, on all their note issue. In that they have paid a fair tax, although I have heard some honorable members practically imply that the Government receive nothing from the present note issue. It must be evident to all honorable . members that as gold has been plentiful in this country, the banks have not forced their notes upon the community. If they had been desirous of doing so to an undue extent they would not proffer gold . as they do today anywhere and everywhere. I have seen the evil effects of an over - issue of paper currency in Canada, which I have heard quoted frequently in this debate. A few years ago, at one place in Canada I changed a £5 Bank of England note, and got in return a great pile of small paper money. The storekeeper apologized, saying that he had only half-dollar and dollar notes. I am glad to notice that the Government do not propose to issue notes of a lower face value than 10s., but even 10s. is too low. I believe in the £1 note, and in the existing Australian currency. Do we want to safeguard the people and the country’s credit? The country is crying out for people to make it a success, and we must have cheap money to develop our industrial resources. We do not want to frighten capital. It cannot be the object of the Government to frighten capital, but unless they amend the Bill materially I think it will have that effect, because their legislation in other directions has the same tendency. I have figures regarding the existing note circulation. Practically a very small amount of notes has been issued by the banks. To take four leading institutions, the Bank of New South Wales has in circulation £885,000 in round figures; the Union Bank of Australia Limited, £303,000 ; the Commercial Banking Company of Sydney, £574,000; and the Bank of Australasia, £365,000. The average note circulation of all the banks in the Commonwealth is £3, 735,000. That is a comparatively small amount, seeing that our capital cities are so far apart and Australia a country of great distances. To redeem all the notes in circulation, the banks have to keep practically notes to the value of two-thirds of the amount in their tills. In order to meet their requirements under this Bill, and maintain their coin at a figure below, which it is inadvisable to allow it to go, they would have to call in, at the present time, a sum equal to about £7,000,000. It will not be fair if the Federal notes are issued, and the banks receive no consideration for circulating them. I have -heard some honorable members suggest that the banks should work for the Government for nothing, but they are not philanthropic or benevolent institutions. They are working for the benefit of their shareholders and of the public also, and I venture to say they have played a most important part in the development of the lands and industries of Australia. If this country had not possessed the confidence of capital, money would not have flowed to our doors to enable us to develop our resources.
Sitting suspended from 1 to 2.15 p.m.
– Before we adjourned for lunch I was referring to the average note circulation of four of our principal banks. Let us take, as a specific example, a bank having a note circulation of, say, £300,000. Actual experience proves that the bank also holds in the tills of its branches throughout Australia, for the current needs of its customers, notes amounting practically tp £200,000. That bank, therefore, would have to call in about £500,000 to enable it to purchase Federal notes to replace its own issue, and on- that estimate all the banks will find it necessary to call in altogether about £7,500,000 for that purpose. That undoubtedly means that they will have to curtail advances. Their only hope of getting in that amount will depend upon their calling it in from customers to whom advances have been given. Consequently, there will be a restriction of trade, and our resources will not be developed as we should like them to be. I am sure that that is not the desire of the Government. Their desire must be to cause our credit to expand rather than to diminish. I have already said that I think that the gold reserves proposed by the Government should be doubled, and I have a suggestion to make with that object in view in the event of the Government refusing to allow the banks to issue their own notes. As a matter of fact, in Canada, the banks are allowed to issue their own notes to the amount of their subscribed capital, but here banking institutions have issued their notes to the extent of only a small percentage of their subscribed capital, and they have to’ pay a tax equal to 2 per cent. Why force the banks to call in all their own notes ? Why not, if necessary, raise the tax to 4 per cent. ? There is another suggestion which is possibly a better one. I should like the Government to allow every bank to pay in gold £750 in respect of every £1,000 worth of notes purchased, the remaining £250 to bear interest at the rate of 2½ per cent., and to be payable on demand. It should also be provided that that balance should be a first charge on the assets and the uncalled capital of the banks. We should thus have a gold reserve of 50, instead of only 25, per cent. In a country like Australia we have never had anything but a gold currency, and it would be most unfortunate if, in case of panic, we had not a sufficient reserve of gold to pay out in exchange for all the notes that might be presented. At the present time a man can get gold for the notes of any of the Associated Banks, wherever he chooses to present them. The Commonwealth Government must rely upon the good will of the banks to assist them in putting their notes into circulation, for the public can absorb only a limited amount of paper currency, and I certainly think the suggestion I have just made would be a reasonable one to adopt. If it were adopted we should not prevent that expansion of our resources which I am sure we must all desire. We have to consider in this connexion what is best in the interests of the people. At the present time no country has a better credit than has Australia, and I do not want to see it curtailed in any way. The honorable member for Bourke referred in most eloquent terms to-day to the American greenbacks, but he forgot to tell us, when dealing with the paper currency of America, that the banks were reconstructed upon a gold basis, because that is the only solvent currency. Canada has been quoted during this debate, and I should like to place before the House a few facts relating to the note issue of the Dominion. Notes are issued there in the following denominations - 25 cents, * 1 dollar, 2 dollars, 4 dollars, 50 dollars, 100 dollars, 500 dollars, 1,000 dollars, and 5,000 dollars. The average total of the notes in circulation in Canada, in June, 1909, was equivalent to from $60,000,000 to $63,000,000, and that amount was made up of the following totals of the respective note issues -
These figures are taken from statistics supplied by the Insurance and Banking Record. The first two items, fractional and onedollar, and two-dollar notes, are “ change “ notes, and are not likely ever to be presented for exchange into gold. The larger notes are usually in the hands of the banks, while the 5,000-dollar notes are issued only to banks for use, in the clearing house system, as exchange vouchers. Against this amount of $63,000,000, in round figures, the Government hold gold to the value of $45,259,000 and guaranteed sterling debentures to the value of $1,946,000. We have thus a total of $47,200,000, or £9,440,000 sterling, leaving a shortage of $15,800,000, or, roughly, £3,160,000 sterling, which the Canadian Government employ, from the total operations of their note currency, as a free loan from the public. These notes have been in circulation for forty years, but Canada has obtained from her people, in this way, free money to the extent of only £3,160,000. Yet I heard the Prime Minister declare the other day, in reply to the honorable member for Fawkner, that he hoped we should in a few years have a note issue extending to £10,000,000. He forgets that Canada, with a population pf about 7,500,000, as against the Commonwealth’s population of barely 4,500,000, has obtained only £3,150,000 from the public free of charge - and it is as much entitled as the banks are to that free money - although its note issue has been in operation for forty years.
– If we base our calculations on the results obtained in Queensland
– But that is only a small State issue.
– There are three notes to each person there.
– If it were possible to tender simultaneously all the notes issued by the present banking institutions gold would immediately be forthcoming for them. Indeed, the banks could produce two sovereigns for every one of their notes, for there is no more elastic currency than that of Australia. The course I am advocating is certainly in the interests of the people. I know many men who have overdrafts ; I know small men who, in buying land, have had to rely upon the banks for assistance, and if, as the result of the Australian note issue, the banks have to curtail their advances, these people will be injured and industry will be curtailed. 1 have said that a gold reserve of 25 per cent, is insufficient.
– Three bank managers told the Victorian Banking Commission that it was sufficient.”
– I do not think that statement has been made publicly.
– -Yes, Mr. Finlayson was one of those who made it.
– I feel satisfied that if I gave the honorable member a promisetopay £1, and I had only 5s. with which to meet it, he would Claim at once that I could not meet my liability. We need to have an elastic, and, at the same time, stable, convertible reserve, such as could be secured by allowing the banks to purchase our notes on the basis that I have suggested. The amount left at call with the banks would bear interest at the rate of2½ per cent., and would go into circulation to the advantage of the people. If the Government desire to bring their scheme into operation at once they must have the co-operation of the banks, and the more they work in harmony with them the better for the people. Surely the banking institutions should receive some consideration? They are entitled to be paid - whether you call it brokerage or commission - for their labour. We shall have to rely upon them to make the Australian note issue popular-
– It will be popular.
– It will not be if it has the result of crippling the banks. Canada never knew anything but a paper currency. I think it was in the year- 1866 that the Canadian Government, in order to raise, roughly speaking, £1, 000,000 to discharge floating debts, assumed the right to issue approximately £1,500,000 sterling in notes. But having assumed that right it rested with them to get those notes into circulation. They could not do so. The Bank of Montreal, to whom they were indebted to the extent of £1,000,000, would not accept their notes without a consideration. The Government had to pay that institution 5 per cent, to induce them to take these notes, and under that arrangement they took them up, and distributed them amongst other banks, with the result that they gradually went into circulation. Seeing. that we have the best currency in the world, why should we try an experiment, which may create a panic?
– The honorable member ought to mention that in Canada it is not an exclusively national currency.
– There are other currencies, but to a limited amount. The English sovereign and the. English £5- note circulate there as here.
– But the National note has to be issued on the public per medium of bank’s that use their own notes.
– Unfortunately, under the Canadian Act, the banks in some cases are allowed to issue notes up to the full value of their subscribed capital.
– But thosebanks must use Dominion notes to the same extent that they use their own.
– Quite so.
– Does the honorable member think that it would be better to have the Sacking of the subscribers of individual banks than the backing of the National Government ?
– I. do not say that for a moment, because I always like to put the National Government first. Even with a reserve of 25 per cent., what guarantee is there to prevent the money being used in case of political necessity. We may have in power a Government without the high ideals of the present Government. We have heard how the Argentine notes are discounted ; and I am sure we would all agree that such a contingency ought to be provided against by a sufficient backing for the proposed notes. Our currency must be elastic, stable, and convertible, and by doubling the reserve we shall gain all these advantages, and, with the assistance of the banks, popularize the notes. As an Australian, I desire to see our note currency regarded with respect by all. The remarks of the honorable member for Fawkner the other night were perfectly justified. We cannot expect to always have the same prosperous seasons we are enjoying now ; and I say this with a vivid recollection of 1902-3, when the conditions here were worse than any I have ever heard of in any other part of the world. Assuming that during prosperous times values are inflated, and, when bad seasons come, are unduly deflated, and advances are called in, what will happen if there be not a sufficient reserve behind the note issue? What will be the result if we are suddenly called upon from the other end of the world to pay large sums of money that have been borrowed ? As the honorable member for Fawkner pointed out men who are paid wages in £1 notes, or the storekeeper who accepts them, may find that they are worth only 15s., because that is the result which follows, as the night the day, in times of panic and stress, and it is only reasonable that we should safeguard ourselves against any such possibility. Our desire is to establish not only the credit of the Commonwealth, but our own credit, and do the best we can in the interests of the whole people. We have history to guide us ; and in every part of the world where there has been a paper currency without sufficient backing, that currency “has been offered at much below its face value, and that is just as likely to occur with us with an insufficient reserve. Instead of having to bring the notes to the Federal Treasury they ought to be convertible at any branch of an associated bank, thus giving them the desired elasticity. I am sure that we all desire to see this scheme a success, and I am in accord with it, if vested interests are considered, that is, if the rights of the people who have been thrifty and industrious, and have accumulated little or much wealth, are respected. The party in power, as honest men, must desire to respect those rights, and to that end there must be a sufficient reserve as the first call.
– Are not the assets of the country greater than the assets of the banks ?
Mr.HANS IRVINE.- The present proposal is to issue notes for £7,000,000, but we are told that in a few years the figure may be £10,000,000, whereas in Canada, after forty years’ experience, the note issue represents only £3,000,000. In 1907, President Roosevelt, in his message to Congress, said- -
In my message to the Congress a year ago I spoke as follows of the currency : -I especially call your attention to the condition of our currency laws. The National Bank Act has ably served a great purpose in aiding the enormous business development of the country and within ten years there has been an increase in circulation per capita from $21.24 to $33.08. For several years evidence has been accumulating that additional legislation is needed. The recurrence of each crop season emphasizes the defects of the present laws. There must soon be a revision of them, because to leave them as they are means to incur liability or business disaster. Since your body adjourned there has been a fluctuation in the interest on call money from 2 per cent, to 30 per cent., and the fluctuation was even greater during the preceding six months.
That was only three years ago, and I am sure we have no desire to see our currency fluctuate in a like manner. It must be remembered that this occurred quite recently in the United States, where there is possibly more money than in any other part of the world; and I ask whether it is not just as likely to occur in Australia, where there is less money than elsewhere, considering that we are amongst the larger nations ?
– Is not confidence a good asset ?
– Yes, and also “ cheek “ sometimes, but not always. Con fidence in yourself if you know you are right is a good asset, but not if you are wrong.
– I was not personal !
– I did not mean to be personal either. President Roosevelt continued -
According to this plan ‘ national banks should be permitted to issue a specified proportion of their capital in notes of a given kind, the issue to be taxed at so high a rate as to drive the notes back when not wanted in legitimate trade.
– That is an argument in favour of a paper currency.
– Yes., but. wt must not forget that the basis is gold - the reserve is there.
– Five per cent!
– I should say 50 per cent. ; indeed, I should be satisfied with nothing but such a gold reserve ; and I point out that all the reconstructed American banks are on a gold basis. The desire of honouble members opposite is to establish our credit on a firm foundation, provide more employment, and give greater opportunities to the people. There is no wish to restrict the efforts of either capitalists or employes, but rather to build up a nation here on solid financial, as well as industrial, lines, having regard to the interests of the community as a whole. I am certain that, in the opinion of the great bulk of the people, the banks have at all times treated them very fairly, and we ought not to blame these financial institutions, but the boomsters, for the crisis of years ago. At any rate, that crisis taught us a lesson which I hope has done us good, as showing the necessity for a sufficient gold reserve to tide over a period of panic. I hope the Government supporters will consider the suggestion I have made with a view to rendering the currency elastic, staple, and convertible, and, it may be, placing the banks in a position to make advances even more freely in the future than they have done in the past.
.- It is with some degree of trepidation that I rise to my feet after the oration we heard this morning. I had scarcely thought that such vim, such energy, and such great spirit could be put into the discussion of a question that seems to call for more serious and more solid consideration. But certainly I was very much impressed, and I, therefore, feel myself handicapped in now applying myself to this measure. If there is one aspect in which this question appeals to me, it is that, on the Opposition side, there has been an attempt, not to deal with it as placed before us, but to involve-^ it in a series of complications by associating it with the problem of an inconvertible currency. Almost every honorable member who has spoken on the opposite side has complicated the issue by an association with it of past times and past monetary considerations, and, as I have just said, by involving an inconvertible currency with a proposition for a convertible system of paper money with a safe and solid backing. Now, it seems to me that this has been, I will not say the deliberate attitude, but most certainly the attitude, of the Opposition to an extreme and ill-advised .extent. What is the position put before the House ? The Government propose that, in place of the issue of notes by the private banking institutions, mere should be a Commonwealth note issue which will circulate throughout Australia. On the face of it this seems to me a well-advised change, since it substitutes for the issues of many banks, operating in seven States, one uniform note issue. It would have been an advantage to secure this uniformity in regard to a private note issue, but the advantage is still greater when the note issue is made by the Commonwealth. The members of the Opposition have, complicated the question by speaking of the proposed note issue as inconvertible, when it is really convertible. Last week the honorable member for Richmond went back hundreds of years to find what he deemed a parallel to the present situation, but his illustration had no application. The society to which he referred was a socialistic community, which, according to its law-giver, Lycurgus, was compelled for its well-being to eliminate from the transactions of its people the commercial methods of outlying centres. To prevent the introduction of the commercial spirit he established an iron currency. This, however, is merely a side issue. We are told that the banking institutions today are so much concerned in securing the welfare and financial development of the Commonwealth that no harm can be feared if we leave the note circulation under their control. . The day of repentance has come too late.
– No one would regard the banks as philanthropic institutions.
– I should be surprised to hear them so described ; but it has been said that it would be better to leave the note issue under their control than to have a Government note issue. In that I differ from honorable members. I cannot forget what happened in 1893, and feel that, there is always a possibility of the repetition of the trouble which then occurred. The honorable member for Fawkner, who, I believe, has large financial interests, said that the banks are prepared to alter their attitude regarding their obligations to the community. We have been told from time to time that, whatever may have happened in the past, the banks are now quite stable, and that it is therefore unnecessary for the Government to interfere with the currency. But let me quote a passage from the Official Year-Book for 1901-9 -
Under the existing laws banks are required to furnish quarterly statements of their average assets and liabilities, but these statements are not equally complete in all the States. Until the close of 1907 these quarterly statements, together with the periodical balance-sheets of the banks (generally half-yearly, but in a few cases yearly), were the only information available in regard to banking business. During the year 1908 the Commonwealth Statistician, under the provisions of the Census and Statistics Act, asked the banks for quarterly returns, giving slightly more detailed information than had previously been obtained. As, however, a few of the banks have found it impossible up to the present to give all the particulars required, while promising to do so in future, the returns for the years 1908 and 1909 have been practically left in the same condition as those for 1907 and previous years.
We really do not know what is the position of the banks to-day. We have no adequate information. According to the Government Statistician -
The paid-up capital of the twenty-one banks, together with their reserve funds, and the rate per cent., and the amount of their last dividends is shown in the table hereunder. The information relates to the balance-sheet last preceding the 30th June, 1909. In regard to the reserve funds, it must be stated that in the case of some of the banks these are invested in Government securities, while in other cases they are used in the ordinary business of the banks, and in a few instances they are partly invested and partly used in business.
In the face of that statement, I- say that we do not know what are the reserves of the banking institutions, nor can we be certain of their financial stability. They may have 52 per cent, of assets, but we do not know absolutely what their position is. Professor Jevons, whose authority no one will dispute, says, referring to the cash reserves of bankers -
It is important, but very difficult, to decide what is the amount of real cash held by the bankers of the United Kingdom in readiness to meet their liabilities. Many banks publish balance-sheets professing to show the reserve of ready money.
Our statistician says that the information given by our banking institutions is not complete, and not adequate to enable the community to know how they stand. Professor Jevons says, regarding the English banking institutions -
I have already remarked upon the ambiguity which attaches to the words money and cash as commonly used ; and, when we inquire into the nature of the bankers’ ready money it is found to consist in a great degree of money invested in Government securities, deposited with other bankers - especially trie Bank of England - or held “ at call “ - that is, lent to speculators who invest it in negotiable securities. From the published balance-sheets we thus get no indication of the real metallic reserve of the country available for the payment of foreign debts.
Although the banks publish quarterly or half-yearly statements of accounts, we do not know what their reserves are at any given moment.
– Parliament could require them to make public all necessary information.
– That has not hitherto been required of them. We have not ceased to suffer from the ill effects of the disasters of 1893, and Yet honorable members wish to continue the old state of things, instead of substituting for bank notes an excellent Government issue. AVe cannot palter with the situation. The honorable member for Richmond spoke for about two hours and a half, and had much to say regarding the difference between paper’ credit and paper money. The distinction is purely theoretical, concerning rather economists and bankers than a Parliament faced with the issues with which we are dealing. Many economist’s make a distinction between paper credit and paper money, but in contradiction to what was said by the honorable member for Richmond, let me quote from an authority whom he himself must acknowledge, because he cited him; I refer to Macleod. In his Elements of Banking, appears this passage -
Sir Henry Thornton says : “ Money of every kind is an order for goods. It is so considered by the labourer when he receives it, and is almost instantly turned into money’s worth. It is merely the instrument by which the purchaseable . stock of the country is distributed with convenience and advantage among the several members of the, community.”
This has relation to the supposed distinction between paper credit and paper money. The same authority says -
This order or promise is what is usually called credit; and it is clearly seen that though it is of a lower and inferior form, yet it is of the same general nature as money. And because such orders, or promises, can be exchanged or bought and sold like any material chattel they are called Pecunia, Res, Bona, and Mer% in Roman law.
In this aspect the honorable member who sought to establish, as he did at some considerable length, an argument against our proposal on a basis such as this was absolutely not on safe ground. The next proposition we have to meet is as to what other evils can possibly be associated with the establishment of a note currency. I am very pleased that the honorable member for Parkes is here. The honorable member for Richmond quoted from John Stuart Mill, a passage which had the approval of the honorable member for Parkes, who, I admit at once, is a very keen student of economics. I shall not agree with either of them when they quote that great economist as one who supports them in opposition to the proposition which we have put before the House. I think that the honorable member for Calare, who had used the quotation here, found himself in a peculiar state when he had so capable a gentleman as the honorable member for Parkes in opposition to him. What is the proposition now? I take it that, apart from any emotionalism, apart from any attempt at oratory, we have solid facts at our back. When a great authority is quoted we want to know what he said, what he meant, and what the result of his utterance will be.I submit that there were two propositions embodied in the quotation given by the honorable member for Richmond. One was in the precise terms of the proposition which’ is embodied in this Bill, that is, that if there be something in the nature of .a stable mechanism the State should take over the issue. I shall read the words -
The exclusive privilege, therefore, of issuing them, if reserved to the Government or to some one body, is a source of great pecuniary gain. That this gain should be obtained for the nation at large is both practicable and desirable; and if the management of a bank-note currency ought to be so completely mechanical, so entirely a thing of fixed rule, as it is made by the Act of 1844, there seems no reason why this mechanism should be worked for the profit of any private issuer, rather than for the public treasury.
That is precisely the attitude which we take up. We claim that this is, as it were, a mechanical issue of a currency. In fact, we are following along the. lines of the Bank Charter Act of 1844, as I shall show if my statement is disputed. That is one proposition put forward by Mill.
– He put forward two hypotheses.
– That is precisely what 1 am stating. In the first place, he said, “ This is the first position. If you follow on these lines the State alone is entitled to control the currency, practically to issue a banking currency. If, on the other hand, this mechanical aspect of the currency does not arise, but there may be a larger freedom for issue, then I do not say it is wrong for the State to issue, but where the State superadds to its great and important duties, the control of banking, which may be subject to many attacks that are undesirable, I think it desirable that the State should not take it over.”
– The. honorable member is paraphrasing Mill.
– Yes, but I shall quote the words as given by the honorable member for Richmond -
If, however, a plan be preferred which leaves the variations in the amount of issues in any degree whatever to the discretion of the issuers, it is not desirable that, to the ever-growing attributions of the Government, so delicate a function should be super-added ; and that the attention of the heads of the State should be diverted from larger objects, by their being besieged wilh the applications, and made a mark for all the attacks which are never spared to those deemed to be responsible for any acts, however minute, connected with the regulation of the currency.
– The honorable member for Richmond contended that we come tinder the . second hypothesis.
– Precisely. He contended that the quotation absolutely supported the second proposition, rather than the first. But my contention is that Mill did no such thing. He said, “ I support the first proposition, provided the currency be in that mechanical form it is right. If it be in the second form, I do not say it is wrong, but I do say that it would be, perhaps, ill-advised for you to adopt it.” That is not the position which was taken up by honorable members on the other side. A great authority was quoted as an absolute opponent of the proposition put by us before the House.
– I do not think that the honorable member puts that quotation any differently from the way “in which it was put by the honorable member for Richmond. He said that it would come under the second head, but the honorable member says that it would come under the first.
– My point is that, finally, it would come under both heads. We combine with the Bank Charter Act the safeguard which is expressed in the latter portion of the quotation. We give not alone the safeguard of a 25 per cent, gold basis,, but we have an issue of Treasury notes to which Mill refers in the second proposition, and which we contend is a double safeguard in connexion with the issue.
– You would have to run to the banks to get the money.
– Treasury-bills are of no use unless the banks can give ready money for them in an emergency.
– We can put the Treasurybills out to the world.
– There is not time for the world to be consulted in an emergency.
– I think that the Treasurybills can go out, at a quick rate, if a crisis arrives, and money can be quickly made available. From that aspect I submit we stand on a much better basis than do honorable members on the other side with their private banking system, A further question has arisen as to whether the gold basis proposed for the note issue will be sufficient. Honorable members opposite profess to regard it as a most insufficient basis. I respectfully submit that it is not, and that it can be conclusively proved by reference to financial authorities that a gold basis of 25 per cent, as a backing for a note issue of ,£7,000,000 is quite sufficient for the purpose in this or in any other community. I think that an honorable member on this side asked who Francis Walker was. Of course, we know that he is a very great authority upon financial questions, and he quotes with approval the following from Lord Overstone, previously Lloyd Jones, the banker -
The proportion of note issue to specie should be one-third bullion, as sufficient even in England where communication is so apt and quick.
Here is another quotation which I think is more applicable to the conditions in Australia -
A bank whose notes circulate among a rural population going twenty or fifty miles in all directions from the place of issue where intelligence of disaster would make its way slowly, where panic would be impossible, is in a very different position from one whose notes ara mainly held in the city where they are issued.
– The honorable member would not speak of Melbourne and Sydney as sparsely-populated districts ?
– No; but I should have no hesitation in so describing the backblocks of’ Australia. If Lord Overstone could see no difficulty in the matter as applied to London, and especially to country districts twenty or fifty miles away, where there would be difficulties of transit - though we know that the development of telephonic and telegraphic communications has overcome those difficulties in England - it is clear that his contention must have double force as applied to Australian conditions, with an enormous continent with hamlets, towns, and villages at great distances from each other. Lord Overstone says that a 30 per cent, gold reserve in a city such as London is quite enough, and it is clear that in sparsely-populated and enormous areas a much lower reserve would be sufficient to meet all requirements. Now, I ask the question whether we can be sure that there is a backing of gold behind the note issues of private banks ? Honorable members op-, posite contend that there is. I propose again to quote from Professor Jevons. He says -
Mr. R. H. Inglis Palgrave, in his important “ Notes on Banking,” published both in the Statistical Journal, for March, 1873 (Vol. xxxvi., p. 106), and as a separate book, has given the results of an inquiry into this subject, and states the amount of coin and Bank of England notes, held by the bankers of the United Kingdom, as not exceeding four or five per cent, of their liabilities, or from one twenty-fifth to onetwentieth part.Mr. T. B. Moxon, of Stockport and Manchester, has subsequently made an elaborate inquiry into the same point, and finds that the cash reserve does not exceed about seven per cent, of the deposits and notes payable on demand. He remarks that even of this reserve a large proportion is absolutely indispensable for the daily transactions of the bankers’ business, and could not be parted with. Thus the whole fabric of our vast commerce is found to depend upon, not improbability that the merchants and other customers of the banks will ever want, simultaneously and suddenly, so much as one-twentieth part of the gold money which they have a right to receive on demand at any moment during banking hours.
That is backed up again by such an authority even as Bagehot, who might be quoted in very definite terms to show that there is no desire on the part of private banking institutions to hold any gold reserve, in the interests of the community. Their desire is to invest their money that they may derive a profit from it, and, when a time of panic comes, it is quite possible that the private bank, instead of being in a position to fall back upon a gold reserve, and pay out gold to every man who makes a demand, will have its money so invested that it cannot realize it, and, having no gold reserve, instead of . keeping its doors open, must close them, and so accentuate the panic, and plunge the whole industrial community into a state of destitution and want. That is why I say advisedly that we are doing the right thing in attempting for once in the history of Australia to establish a note issue upon what I hold to be a satisfactory gold reserve of 25 per cent., with the additional security of the Treasury bills to be provided for.
– The honorable member is wrong in saying that the private banks have no gold backing, because they have liquid assets which they could put into money in half-an-hour.
– The honorable member’s statement is but another form of the utterance that the bank notes are a first charge on the assets of the banks. The question is : Can private banks put their liquid assets into money in half-an-hour?
– Not always; I admit.
– When they have notes at call, and deposits at call ; to whom, noteholders or depositors, do they give the first right to be paid ? Honorable members must see that, as a matter of fact, they are unable to give gold to the man who holds their notes.
– I do not say liquid assets of all banks, but of the banks the honorable member was quoting.
– Again, the honorable member would have me deal with another aspect of the case. The honorable member’s interjections raise the question : Are the notes of the private bank a first call on their assets? When the banking and industrial world is in a normal condition deposits at call are paid, and bank notes are paid. But when the crisis comes, what is the value of a bank note as a first call? If honorable members contend that the notes are a first charge upon the assets of the private bank, they must admit, it seems to me, that the institution must say to the people who have deposits at call, “ Our bank notes have the first call,” and would not the result of that be to accentuate the panic?
– No one has suggested that the banks rely on a first call without having a cash backing.
– I say that they can give no security, and no guarantee such as we are prepared to give in connexion with the proposed note issue. If they could say -that they have a 25 per cent, or 30 per cent, gold backing, I admit that we should have to consider whether this proposal is well or ill-advised. But they cannot guarantee that, and do not wish to do so. They wish to use their gold for the purpose of profit, and then, when the pinch comes, they turn round and say to those who have claims upon them, “ If you only had waited you would have been paid in full.” The trouble is that the people cannot . afford to wait. The people who make most use of bank notes are npt the great business men, but the average individuals depending upon £5, £10, or £20 for casual operations. Those are the people who suffer from the failure of a private bank note issue,- and they are the people whose interests we are attempting to safeguard in this measure.
– The honorable member is not right in putting his argument, as if the critics of the measure on this side were advocating the cause of the ‘ private banks.
– If it is not so, I shall be very pleased to find the honorable member for Parkes assisting honorable members on this side to carry the Bill. I do not know that I need debate the matter further. It has been carefully threshed out, and I have already touched upon the points which appear to me to be essentially important. I cannot, despite th’e prognostication^ made by honorable members opposite, see what evil is going to arise from this country doing what England did in connexion with the Bank Charter Act in 1844, and which placed the note issue of that country on a safe and sound basis. I cannot see why what was a safe thing to do for England is not a safe thing to do for us. Therefore there is no reason, in my opinion, why we should not place in the hands of the community the issue of notes, rather than leave this function in the hands of private companies. For the benefit of my honorable friend the member for Wilmot, who this morning quoted an eminent authority as against the issue of notes by the State, I will in conclusion quote as against him an economist whose eminence I think no one will question. I allude to Professor Jevons, an authority on this question who is generally accepted. He writes in his book on M one -
The right of coining bank notes. According to the view which I adopt, the issue of notes is more analogous to the royal function of coinage than to the ordinary commercial operation of drawing bills. We ought, to talk of coining notes, as John Law did ;
A little while ago a question was raised as to John Law’s connexion with the Mississippi scheme in France. I will venture to say, in opposition to the view expressed by some honorable members, that it is by no means certain that John Law’s scheme was a failure. Indeed, I feel sure that it was not. Great authorities have declared that it was not. It is true that the scheme failed, but as a matter of fact it was the administration of the Regent Orleans, and the scoundrels associated with him, that killed it. They were “ out for boodle” and they got it. But it was not the weakness of the financial proposals of lohn Law which ruined the scheme; it was the fraudulent operations of men who dominated him that caused his downfall. Jevons goes on to say - for though the design is impressed, on paper instead of metal, the function of the note is exactly the same as that of a representative token. As to the right to issue promises, it no more exists than the right to establish private mints.
That is a very fair proposition -
For our present purposes that alone is right which the Legislature declares to be expedient to the community at large. As almost everyone has long agreed to place’ the coinage of money in the hands of the Executive Government, so I believe that the issue of paper representative money should continue to be practically in the hands of the Government, or its agents acting under the strictest legislative control. M. Wolowski, in his admirable works on banking, has maintained that the issue of notes is a function distinct from the ordinary operations of a banker; and Mr. Gladstone has allowed that the distinction is a wholesome and a vital one. Bankers enjoy the utmost degree of freedom in this country at present, in every other point, so that it is wholly a confusion of ideas to speak of the unrestricted emission of paper representative money as a question of free banking.
I shall say no more. I feel that honorable members on this side of the House have justified by arguments the introduction of this Bill. I admit that we are at the beginning of a great change, and that we shall have to go on carefully, steadily, slowly, and with reason. But I do maintain that there is reason on our side. Looking at the history of the past, seeing what actually occurred in 1893, we are justified. in arguing that it is wise for the community to take control of the note issue. We have no control over the banking companies. We do not know what they are doing. Seeing also that we can derive some benefit to the community, out of an issue of this kind, dominated and directed by the community through its representatives, the proposal appears to me to be an exceedingly good one. Moreover, this note issue established, I look forward to the promotion of a larger banking scheme in which we shall embody not only the ideas of to-day, but the larger ideas of tomorrow. From such a policy I feel assured that great benefit to the community will be derived in years to come.
– I do not intend to make a long speech concerning this question. I do not regard it as a party matter. I am not here as an advocate or representative of any particular section. I have had no recent communication with any one interested, bankers or otherwise. I am not a banker, nor the director of a bank. But I naturally take a great interest in the matter, which I look upon as being very important. It is a public question which ought to be removed from the arena of party politics. Of course, we may have our individual opinions, but the main thing we have to look to is that whatever currency is adopted is made secure, and is beneficial to the community. I admit at once that the question is a most difficult one. Indeed, I do not feel particularly well qualified to discuss it owing to a recognition of the fact that it is so intricate that even the wisest of mankind differ with regard to it. Therefore, I do not wish to approach the subject with any idea of making others believe that I possess superior knowledge. I have noticed with regret that at the beginning of this debate there seemed to be amongst honorable members on the Ministerial side a feeling of antipathy, animosity or disapproval against financial institutions in general, and bankers in particular. If we approach the question with any feeling of that sort, it is as improper as it will be disastrous. There must be dealers in money as there are dealers in every other commodity. Those who have had any experience in money matters are well aware that banks are a necessity. Moreover, they are of great use. Banks have done much for us when we should have experienced difficulty in doing it for our selves. I can say that after having had dealings with banks for forty years, my experience has always been satisfactory, and they have been fairly reasonable on all occasions. I have, of course, noticed that when I did not want anything they were more eager to give it to me than when I did want it, but that is the way of the world. I cannot understand why honorable members on the Ministerial side are so opposed to the Australian banking institutions.
– They are not.
– They have jeered at them, and continually reminded us of the crisis of 1893, which, by the way, was not brought about by the banks’ note issue. The note issue of the banks is controlled by Parliament, and was not the reason why that crisis occurred. I, therefore, do not see why honorable members opposite should mate such a point of that unfortunate episode in our history. After all, the whole of the banks did not close their doors on that occasion. One would think that some honorable members were resenting a personal injury by the hostile’ way they have spoken and interjected with regard to the banks. I hope that none of them, were losers by reason of the note issue. I suppose they were paid in full afterwards for any notes they held.
– I did not get mine.
– Perhaps it was not an incorporated bank, but one of those institutions which some people went into to get a large profit. A man who wants unduly large profits must take some risks. I have never come across any one who lost money over the note issue of the banks, but I have heard of a great many who lost through being shareholders in banks. The depositors were obliged to wait awhile for their money after the crisis of 1893, but they were eventually paid.. Those who suffered were the poor shareholders of the banks. The shareholders are not all rich people, although, to judge by the remarks and interjections of honorable members opposite, one would think’ that they were. On the contrary, they are in many cases the poorest of the poor,«who have scraped together a small amount to put into bank shares in the hope of getting 6 or 8 per cent, interest regularly for their small savings.
– The honorable member is imagining the jeers that he speaks of.
– There were a great many or I should not have mentioned them, and I was sorry to hear them.
– Those instances have only been quoted in order that such crises may be prevented in the future.
– The honorable member is in error if he thinks that the bank note issue was the cause of the crisis. What we are asked to do now has nothing to do with the disasters of 1893, and that matter should never have been given such a prominent place in this discussion. I do not wish to debate at any length the expediency or otherwise of the Bill, nor do I want to hide the fact that I have favoured a National note issue. The Prime Minister said that previous Treasurers had “ dabbled” in the question, but I can tell him that there is a mass of correspondence in the Treasury on the subject which it would almost take a barrow to bring down here.
– Did not the honorable member go a little beyond the note issue?
– I do not know to what the honorable member refers.
– A National Bank.
– Certainly not ; that is, if the honorable member means an independent Government bank. I prepared a Banking Bill, but it was not to establish any bank. The Treasurer has the advantage of that voluminous correspondence of mine with financiers in other parts of the world and throughout Australia, mostly confidential, and covering years, on this subject and on banking generally. When Treasurer I did look closely into the matter, and favoured a National note issue, although my Bill never became a Government measure. There are two facts which I wish to mention in connexion with this Bill. In anything I say or do I certainly am not influenced by any doubt as to the solvency of the present system. We are none of us justified in saying, and it would be foolish to say, anything against the solvency of the existing institutions. They are all in a satisfactory condition, and fully able to pay their note issue in gold on demand as they purport to do. We should admit that there is no pressing necessity for the Bill, so far as the convenience of the present system is concerned. If .the existing note issue is not fully secured in any State by being made a first charge on the assets of the banks, that can be easily met my legislation. If the existing law is not sufficiently stringent, we can pass a law making the banks keep whatever gold reserve we consider desirable as security for their notes. We could also enact that notes issued by any bank should be paid in gold on demand at any of the branches of the bank. That is said to be practically the case now; but it is perhaps not the case to the extent that we could make it. As has been said, that has not been the case in the past, and I do not know that it is legally the case even now. Those who advocate this scheme ought to do so on public grounds, in view of what they consider best for the future, and not because they think the existing system is bad or incapable of being made much more perfect. There is no reason at the present time for making this change in order to help the public. The public throughout Australia are very well served, save on a few minor matters that do not affect them very much. For instance, the people of Victoria can ‘ get gold for their notes at any branch of the bank that issues them. It is only when they go across the border or want to send money from one State to another that they find any difficulty, and that could easily be overcome. If a man sends a pound note to Western Australia there may have been- some difficulty in getting it cashed at par at the other end. I am informed that the banks do cash the notes at par now, but I do not think they are legally bound to do so. The people generally are satisfied, in my opinion, with .the present bank note issue, and any isolated cases of dissatisfaction might readily be met. From the speech of the Prime Minister, one would think that the reason for the proposed change is that the public demand it, and that there are urgent reasons for the Government desiring to place the currency on a national basis. It seems, however, to me that the real object at the root of this Bill is to secure a large sum of money without having to go on the market for it, and without paying interest upon it. That has been the object in Canada and in the Old Country, and it would certainly be my object if I, as Treasurer of the Commonwealth, were making such a proposal as this. From a national point of view no objection could be taken to it. If it is possible to obtain some millions of money without paying interest upon it, and to use that “money for public purposes, I do not see why that should not be done. But, strange to say, that is not the reason given by the Government for this note issue.
– Have they given any reason?
– Yes, the Government say that it is . not designed to make money. It seems to me that one of the good features of this note issue is that it will enable a large sum of money to be obtained without interest for public purposes. The Treasurer, however, disclaims any desire to obtain cheap money, or indeed to make money out of this note issue. To that extent I cannot understand him. I believe that he will want this money and will use it. If the Prime Minister, instead of wishing to make money out of this note issue, is simply actuated by a desire to give the people of Australia a better paper currency, then there is 110 pressing urgency for this Bill, seeing that there are so many other important matters awaiting our attention.
– The right honorable member does not think that all the money obtained from the note issue will be unused ?
– I understood the Prime Minister to say that he intended to invest it in securities. I do not join with those who see any danger in the proposal, so long as this Parliament controls the issue, and controls it wisely. It is possible, of course, for the Parliament to do unwise things; but it has supreme control of the affairs of the Commonwealth, and if we cannot trust the Parliament, then whom can we trust? We must be content to trust the people of Australia through their representatives in Parliament. I rose chiefly to direct attention to the manner in which the gold received from this note issue is to be held and used. That is an important aspect of this question. The Treasurer of the Commonwealth ought not to be the sole custodian of this money. I make no personal reflection, but I say unhesitatingly that the Treasurer of the day, no matter who he might be, should not be the sole custodian of this gold. The Savings Bank funds, the sinking funds attached to loans, and other Trust Funds are all vested in trustees, who are charged with their management, and are controlled by Act of Parliament.
– They are only individuals.
– But they are removed from political influence, whereas the Treasurer is not. The £50,000,000 of Trust Funds, or thereabouts, in the
Savings Banks are vested, not in the Treasurers or Governments of the day, but in trustees who are independent of and removed from all political influence. In the same way the gold received from this note issue should be paid into a trust fund, should be held by trustees, and be invested by them. The Act of Parliament providing for their appointment could also determine the manner of investment. I should be quite content to have the money invested in Commonwealth or State securities. All the gold received in this way should be vested in trustees, who should be empowered by Act of Parliament to invest the funds in Commonwealth or State securities. The trustees would be independent of the Government of the day, and responsible only to Parliament. That is the rule which we have hitherto adopted, and I fail to see why we should depart from it in this case. It may be said that the Government could be trusted. No doubt they could.
– They could be directed to do certain things, just as trustees could.
– But they might break the law. The present Administration has broken the law more than once, -and as long as they have behind them a docile majority they may do things which a Government without such a majority would not dare to do. The amount proposed to be issued is also in my opinion too large. It is unnecessary at present to give the Treasurer power to issue notes of greater value than £5,000,000. The Government are not acting wisely in seeking to make this note issue off their own bat, so to speak, and in ignoring altogether the financial institutions which exist as going concerns all over Australia. It would be possible to make great use of the financial institutions, and thus further the objects the Government have in view, to the great benefit and convenience of the people of Australia.
– The banks are very friendly.
– ‘Quite so; but there will be a difficulty in carrying out this note issue without the co-operation of the banks; and I point out that there is such a thing as an armed neutrality - a friendlinesss above board, but not a friendliness really - and this I think must always be the attitude of those whose interests are being attacked. I am not speaking of any particular banks or institutions, but merely emphasizing the fact that when we injure any one financially he does not love us any the better in consequence, and we are, no doubt, taking away a source of profit, not only from the banks, but I regret to say, from the States also, to the extent of about £100,000 a year. My idea is that we should make use of the banks to the utmost, and pay than a fair amount for any work they do in connexion with this measure. The Treasurer might, I think, cultivate a little more friendly spirit - I do not mean only outwardly - and better business relations with the banks than, so far as I can see, he is doing. After all, the banks are great public conveniences, and do business for almost everybody in the country, for which they are not paid directly; and there is no reason why we should ask them to keep reserves of gold or notes paid for in gold all over Australia. Instead of compelling the banks to keep these reserves in their tills or safes, we should arrange to issue to them packets of notes under bond, with no payment beyond a small fee, and only ask for payment of the face value when they are put into circulation. That would cost the Treasury nothing, and would be a great convenience to the general public, while removing from the banks a disadvantage and a large expenditure for which the public will have to pay. In return the Government could require the banks to perform certain services in connexion with the note issue. I hope the banks will be dealt with generously, seeing that this can be done without loss to the Commonwealth, and at the same time insure greater convenience to the general public. The Auditor-General would have access to the notes in bond, and could see that they were intact, and regular returns of the notes issued and in hand would, of course, be rendered to the Treasury. I regard clause 11 of the Bill as very unwise, seeing that it compels the banks to pay notes instead of gold on demand ; though I understand that there is some amendment to be proposed in Committee. The clause was, I think, taken from the Canadian Act, but no matter whence it came, gold is our standard; and if any one who owes money tenders gold, we have, no right to insist on his paying notes. The proposal of the Government reminds me of a story told against one of my own constituents, though I do not think there is any truth in it, to the effect that when an old settler was selling cattle he declined to take gold, and insisted on being paid by ah order on the local storekeeper. The clause is a monstrous one ; and I hope it will not be retained.
– The honorable member would not like to carry a thousand sovereigns about.
– The amount is limited to £25, but, even so, if a person will not take what is due to him in gold he is pretty hard to please. I have already referred to the fact, scarcely mentioned by honorable members, that the States will under this Bill lose about £100,000 a year; and I think that, in the circumstances, the States deserve some consideration. My proposal is that the gold should be held by a Board of trustees, who should also hold the Treasury bills for times of emergency, and the secretary or accountant of the Treasury could act as secretary to the trustees. There is no doubt that notes as a legal tender all over Australia will prove very convenient in many respects; but, when we are interfering with interests which have grown up for generations, and taking away a source of profit from the banks, much consideration should be shown to those institutions. There is an idea in some quarters that banks are merely private concerns, and while this is technically so, they at the same time perform great public services. There is scarcely a man in the room who does not trust to his banker to keep his accounts, for which service he pays very little. Personally, my ‘banker in this way saves me a considerable amount of money every year, and the accounts are faithfully and accurately kept. Therefore, they are a great convenience to the public I hope that the Treasurer will make use of them to the utmost, not by employing force, but by making a fair and reasonable -arrangement with them. They should be our agents, just as the Bank of England is the agent of the British Government. It does all the banking business of that Government, and it is the only institution in London which is authorized to issue notes.
– It manages the Public Debt.
– Yes. We might well make the incorporated banks of Australia our agents in this matter. While I was Premier of Western Australia, I worked in harmony with the banks, and we were always anxious and willing to assist one another. Similarly this Government and the incorporated banks could be of mutual assistance. They should not be asked to give their services for nothing, but a fair arrangement should be made with them. It would be of help to the public if the Treasury arranged with the banks to give gold for notes at any bank in Australia. That would make the notes more serviceable and popular. If the Government keeps the banking institutions at arm’s length, and forces them to do what they do not wish to dp, or what it will not pay them to do, they will be either apathetic or hostile. If the notes are not convertible into gold anywhere but in Melbourne, it will make them unpopular. They will accumulate in the head offices of the banks, and will have to be shipped here to be converted into gold, so that, instead of being a convenience, they will be a source of trouble and expense. It seems, therefore, a necessity that the notes shall be convertible into gold at the Treasuries in the capitals of the States; but I hope it will be arranged to make the banks the agents of the Treasury for the circulation and conversion of the notes. The Government need not be miserly with the banks. It should pay them a fair thing for their services. As to the proposed reserve, I think that 25 per cent, of gold should be sufficient, but it might be better to make it a little larger at first, as probably, as the public become used to them, gold will be less in demand. I am not opposed to a State note issue, though I take no responsibility for this Bill; that belongs to the Government, and to their supporters. My only desire is to have a safe system established. The gold received in exchange for the notes issued should be entirely removed from political control, and it should be easy to convert the notes into gold. I have not approached the consideration of this question in a party spirit, as my speech shows. If no arrangement is made with the banks, we shall have trouble which might be obviated with a little care, and the public will not be con.venienced to the extent that is desired. The banks deserve well of the community, since they are performing a great service to the public, and we should treat them generously. As to the issue of Treasury bills, it seems’ to me that that need not be more than sufficient to cover the value of the notes issued, less the value of the gold in hand. Honorable members will notice that clause 14 says that the amount of the bills issued shall not exceed the amount of notes issued. It seems to me that we do not want to take power to issue Treasury bills to that extent. All we want is power to issue sufficient bills to meet the amount of the notes which are issued, less the amount of gold which we have in hand - 25 per cent, or whatever it is - for that purpose. I again urge upon the Treasurer that he should not try to run the note issue as a Government concern from the Commonwealth Treasury. If he does so he will give himself a tremendous lot of trouble for which he will get no thanks, because the public will not be convenienced. My advice to him is to make the incorporated banks . his agents for issuing the notes, and doing any business required to be done under the Bill, and to pay them a reasonable sum for their services. I strongly urge that he shall not ask the banks to keep, all over the country, notes to a large amount, for which they have had to pay full value in gold, but that he shall enter into some arrangement by which notes can be issued under a sufficient bond only to be paid for when put into use. At the beginning of my remarks I said that I have no fear as to the Bill doing any injury to the country. It will no doubt take away some profits from the banks, and the public will have to pay for any loss which may be sustained. The banks live on the business which they do, and it is a great mistake to think that the public have not to pay in these matters. Most of these institutions do not pay a very high rate of interest at present. They will, no doubt, endeavour to so arrange matters under the altered circumstances that they will .be able to pay as good a dividend as they have been able to pay in the past.
– I had determined to speak at some length on this measure, but after the eloquent speeches which we have heard, especially the magnificent speech which was delivered from this side of the House this morning, and which excels any utterance I have ever heard here, I feel that there is not a great deal to be said on our side of the question. I think that the sooner we proceed to a vote, and get the measure made law, the better it will be for the Commonwealth and the progress of business. In this matter we have a direct mandate from the people. A few nights ago the Prime Minister made a rather eloquent address on the question of a land tax, and referred to the great mandate which had come from the people to pass a measure for its imposition. Undoubtedly that will be the measure of the session, but I cannot admit that the question of currency is of less importance than the great question of land taxation. The sixth plank in the Labour platform is “Commonwealth Bank.” I think it is regrettable that a Commonwealth Banking Bill as well as this Australian Notes Bill has not been brought forward this session. It seems a pity that the movement ‘for currency reform should go so far ahead of the proposed banking reform. It is all very well for honorable members on the other side in dealing with the question before the House to express all sorts of doubts, and in making that remark I do not refer to the right honorable member for Swan. I was rather pleased to hear him say that he had no fear of this measure doing any injury to the Commonwealth. I should be very sorry to hear any honorable member from this side make any suggestion of a “panicy” . nature in regard to the private banks. There is no feeling in my mind that those banks are not doing a substantial business, or that they are not on a sound basis. For several reasons I support the introduction of a Government paper currency. In the first place I want the profits of the currency and the profits of banking to go into the pockets of the people instead of into the pockets of bank shareholders. There is no need for any pretence in this matter. My second reason for supporting a National banking system and a currency issued and controlled by the Government is that I believe in bringing about a substantial reduction in the rate of interest. I believe that the Government would be able to provide cheaper money than could any private bank.
– We shall miss our trains if the honorable member does not get leave to continue his speech on another occasion.
– I regret very much indeed that I have to forego the delivery of my speech on this question, but the hour is approaching when we have to leave in order to catch our trains. In conclusion, I would urge upon the House the desirability of quickly getting to a vote so that we may consummate the idea which we are aiming at.
Debate (on motion by Mr. Sampson) adjourned.
Mr. SPEAKER announced the receipt of a message from the Senate returning this Bill with amendments, in which the Senate invited the concurrence of the House of Representatives.
That the Message be taken into consideration forthwith in Committee of the whole House.
In Committee :
Clause 7 -
Section twenty-seven of the principal Act is amended - by omitting therefrom the words “ or by leave of the President,” and by inserting after the words “ counsel or solicitor “ the words “ or paid agent.” Amendment, inserting “ - (a)” after the word “amended,” agreed to.
Senate’s amendment - At the end of the clause add - “and
Motion (by Mr. Hughes) proposed-
That the amendment be agreed to.
– It seems to me that the Senate has succeeded by their amendment in getting round the provision we inserted to keep out of the Court paid agents as well as lawyers. If it be agreed to there will be nothing to prevent a lawyer from joining a union and getting whatever fees he pleases to demand from the union for appearing before the Court. I take it that this House did not intend to consent to anything of the kind when it agreed to keep out the paid lawyer and the paid agent. I say that if we keep out the lawyers we should keep out of this Court every one except the ordinary paid officers of the unions on either side. I should do nothing to keep out any officer paid an ordinary wage as an official of a union on either side. I do not say that the amendment carried in the Senate is not necessary, but by itself it will undo what we did here, and I therefore propose that it should be amended by the addition of a further proviso making it clear that while union officials may appear before the Court, they shall not be paid special fees for doing so. That was clearly the intention of this
House when it last dealt with this matter. I move -
That the amendment be amended by adding thereto the words, “ provided that he receives no fee, honorarium, or reward for such service other than the usual payment to him as salary or wages.”
.- I was rather surprised when we last had this measure under consideration that the AttorneyGeneral should have accepted the amendment then proposed by the honorable member for Parramatta. I could see the difficulties which it would raise. None could say who was a paid agent, and consequently officials of organizations who no longer followed their calling, though in the employ of a union, might be prevented from appearing in the Court on their behalf.. I do not wish to take up time unnecessarily now, because honorable members wish to catch their trains, as they did when we last dealt with this matter. The proviso now suggested by the honorable member for Parramatta will put the provision in practically the same position as that in which it left this House. The honorable member wishes to provide that none shall receive any remuneration over and above his ordinary wages or salary for appearance in the Court on behalf of an organization. I contend that officials of unions competent to undertake this work should, if it entails upon them substantial duties in addition to their ordinary work, .be entitled to extra remuneration.
– Is that what the AttorneyGeneral desires in accepting the amendment ?
– I can mention the. name of Mr. Curly, who is well known to the honorable member for Parramatta as a man who has conducted many important mining cases. He is well qualified for this kind of work, and is the secretary of a union. He has had to retire from his occupation, and is now in a very delicate state of health, indeed, as the result of the heavy work he was called upon to do in conducting mining cases. I am satisfied that honorable members will not contend that a paltry £3 a week is a sufficient remuneration for a man qualified to conduct such cases in an Arbitration Court.
– It was not enough for Mr. Curly’s work as secretary either.
– I admit that, but if it were it must be admitted that he was entitled to considerably more for his work in conducting heavy mining cases. Most of the officials of unions receive from £3 t0 £3 10S. a week, and no one will say that we should debar a union from paying a man £5 a week for his services in the Arbitration Court if they are worth it. I ask the Committee to reject the amendment proposed by the honorable member for Parramatta, and to accept the Senate’s amendment, because it in some way defines a paid agent which none could define under the clause as the Bill left this House.
– The honorable member for Hunter has put the one case forward which I think he could find in the whole of Australia to support his contention.
– I might have put many others, and my own case amongst them if . I had not wished not to be personal.
– All I have to say is that Mr. Curly was never paid an* adequate salary for the work he did.
– I agree with the honorable member.
– That is what the honorable member should have addressed himself to. Why was Mr. Curly paid such a miserable salary for working for that union as he did for years? I venture to say that no man was ever more underpaid than was the same Mr. James Curly for the work which he did for the miners.
– And the honorable member would now deny adequate payment to any other man who might be called upon to do similar work.
– Nothing of the kind. I say that honorable members opposite wish to keep out of the Arbitration Court men of trained ability who might have helped the Judge, and for whose services the Judge has often asked. We shall not mend matters by putting these cases into the hands of lay lawyers. It is now proposed to rule out trained ability, but do not let us get in its place a special class of laymen, who, I venture to say, may be very much worse. If Mr. Curley had been paid an adequate salary - say, £5 or £6 a week - instead of the £3 a .week, which he received, he would not have objected to do this work. Indeed, he did not object when he got his £3 a week ; and there is nothing at all which will prevent ordinary relief being given to a secretary while engaged upon this special duty. I had not in mind a case like that of Mr. Curly at all. I had in mind some other gentleman. I take it that the House does not want to stultify itself in regard to this amendment.
– The Government cannot accept the amendment of the honorable member for Parramatta. We have gone as far as we ought to be called upon to go in agreeing to an amendment made at the honorable member’s request to insert the words “paid agent.” That brought us to this position - that under the heading of “ paid agent “ it was thought that a secretary of a trade union might be excluded. But that was not the intention. It was, therefore, thought necessary to make it perfectly clear that it was not intended to exclude bona fide members or officials of unions. But now the honorable member desires to have it provided that unless a person gets a certain fee he is not to be allowed to appear. It is practically impossible to fixthe remuneration to be paid . by unions to persons who represent them. No matter what we do, trade unions , and organizations of employers will pay what they please to the persons who represent them, as they have done from the beginning of time until now. If it be desired to regulate fees, the only way to do it is by employing counsel or solicitors whose fees are to some extent regulated by law. It is impossible to accept the amendment, and I ask the Committee to reject it.
Motion (by Mr. Fisher) proposed -
That the House do now adjourn.
.- My attention has been drawn to the report in to-day’s Age of my speech yesterday in moving my motion re the sale of intoxicating liquors at the parliamentary refreshment bar. While accepting full responsibility for my statements I prefer, generally, to take little or no notice of what orhers say that I say. “ They say ; what say they? Let them say!” But it has been represented to me that the Age report is so open to misunderstanding that it will give considerable pain to the friends of some honorable gentlemen who have occupied seats in this House. Nothing could be further from my thoughts than to make any personal reflection on any past or present member. On the contrary, I may repeat what
I said yesterday - that I was very jealous of the reputation of this House and every honorable member in it, and my motion was actuated by a desire to preserve and’ improve the honour and dignity of this Parliament. There are many past members of this House who are worthily held in the greatest regard ; and only a straining of my words and a complete misunderstanding of my argument could make my statement appear to cast any personal reflection, and particularly as regarding honorable members who have “crossed the bar.” May I request honorable members who were not in the chamber during my speech to kindly suspend their judgment until they are able, by referring to Hansard, to see exactly what I did say ; and I think that they will then, as will I hope also their friends outside, be convinced that my remarks were not in the slightest degree intended as a reflection on the personal character or conduct of any past or present member of this Parliament ?
.- For many years it has been the custom in regard to the collection of letters at various pillar-boxes about Geelong for postal officers to do the necessary work. Recently, however, a contract has been made for the purpose. The contractor is employing a youth, who goes around Geelong unaccompanied to collect the letters posted by the people of that place. I wish to represent to the Postmaster-General that the interests of those people should be safeguarded. If it be necessary to have extra employes at the post-office - if the present officers find that they cannot carry out this necessary work - it is the duty of the Department to provide extra hands. It certainly is not right for the Department to sacrifice efficiency to economy.
.-I desire to draw attention to a reply made to-day by the Minister of Home Affairs in reference to expenditure on the Federal Capital. A few days ago the honorable gentleman informed the House that it was his intention to give ample notice when calling for competitive designs. But we are informed that a sum of £50,000 is to be spent within the current year.
– That is suggested.
– At any rate, it is understood that £50,000 is to be spent. It is also understood that part of that expenditure is to be in connexion with the establishment of brick works and brick kilns.
If the Federal Capital is to be such’ a city as the Minister of Home Affairs has represented - “ a thing of beauty and a joy for ever “ - surely its construction ought to be commenced on some sort of plan or design. The capital should not be allowed to grow haphazard, as some of the cities in Australia have grown. We should not hereafter, for example, have to- pull down certain buildings and clear out slum areas, as has. been the case in Sydney. If the Federal Capital is to be. what we think it ought to be, we should not spend any money upon it until we have decided upon a design. 1 urge the Minister, if he proposes to proceed with the matter at an early date, to call for competitive designs as soon as possible. I might indicate that, in my opinion, the Government should give Australians an opportunity of competing amongst themselves for the prize to be offered.
– There will be no slums in the Federal Capital, and as soon as possible we shall call for the designs referred to.
– The honorable member for Corio was good enough to tell me that he intended to bring the matter to which he referred before the House, and so I have been able to get a report on it. Some time ago the people of Geelong were complaining that the hours of some of the ietter-carriers were excessive. A senior inspector was sent to Geelong to make inquiries, and it was found, according to his report dated 18th August, that -
For a considerable time past a contract has been in existence which stipulated that the contractor should provide a horse and vehicle and drive to the various pillars in Geelong and convey mails’ to and from the Railway Station. A pillar clearer from the Post Office always accompanied the driver of the vehicle for the purpose of clearing the pillars and transferring the mails. These duties occupied that officer’s full time.
Inquiries were recently made by the Senior Inspector and it was found that by transferring the actual work of pillar clearing to the contractor, requiring him to convey and deal solely with the mails, and provide any extra assistance required, the pillar clearer could be relieved of the dutv of accompanying the contractor, and his services utilized elsewhere.
Approval was therefore given to this rearrangement to be given effect to, and it commenced yesterday, the contractor to receive an additional amount of £50 per annum for the extra work involved.
Some time ago there- was a departmental staff inquiry dealing particularly with mat ters of this kind, and the . report of the Board was- as follows : -
The clearance of Utter receivers is arranged under the following methods : -
By departmental officers (letter-carriers, porters, mail-boys and messengers) making special trips to clear receivers only.
By letter-carriers while on their rounds delivering correspondence.
In. Victoria receiver clearing work is carried out under the three systems. WheTe contractors are employed a postal officer accompanies the driver, and makes the clearance. A postal officer also’ accompanies contractor’s drivers when conveying mails to and from the station.
At Ballarat there are two contracts for receiver clearing, one of which is performed under the conditions described, and the other, namely, for the night clearance of the Ballarat receivers by a contractor, whose driver, unaccompanied by a departmental officer, performs the- whole of the: work.
In Queensland, the three systems are in use. The clearing carried out under contract is wholly performed by the contractor.
This method has, therefore, been followed in other places. It was found that at Geelong the letter-carrier was working too long hours, and we have paid the contractor £50 a year more in order that he may do some of the work and relieve the lettercarrier of many hours of duty.
– I desire to intimate to honorable members that they will be expected to sit -a little later on Tuesday, Wednesday, and Thursday of next week. The business is urgent, and we are making very slow progress.
Question resolved in the affirmative.
House adjourned at 4.45 p.m.
Cite as: Australia, House of Representatives, Debates, 19 August 1910, viewed 22 October 2017, <http://historichansard.net/hofreps/1910/19100819_reps_4_56/>.