House of Representatives
23 April 1931

12^th Parliament · 1^st Session

QUESTION
- PUBLICATION OF CONFIDENTIAL DOCUMENTS : PAPER
QUESTION
- FEDERAL AID ROADS
QUESTION
- PETROL DUTY
QUESTION
- FINANCIAL RELATIONS OF THE COMMONWEALTH AND NEW SOUTH WALES
QUESTION
- COMMONWEALTH BANK
QUESTION
- ALLEGED CANBERRA APPOINTMENT
QUESTION
- WIRELESS BROADCASTING
QUESTION
- CANBERRA GOLF LINKS
QUESTION
- ROYAL AUSTRALIAN NAVY
QUESTION
- REGISTRATION OF MOTOR VEHICLES
TARIFF DEBATE
NEW STANDING ORDER
- Recommendation of Standing Orders Committee -
ORDER OF BUSINESS
INTERNATIONAL DISPUTES : PACIFIC SETTLEMENT
- Accession to General Act
WHEAT BILL
COMMONWEALTH BANK BILL
- Second Reading
ADJOURNMENT
PRIVILEGE

Mr. Speaker (Hon. NormanMakin) took the chair at 2.30 p.m., and offered prayers.

page 1221

QUESTION

PUBLICATION OF CONFIDENTIAL DOCUMENTS : PAPER

Mr BRENNAN:
AttorneyGeneral · Batman · ALP

– by leave - In accordance with a promise made in the House, and because on the grounds of public interest it appears to the Government desirable, I have to inform the House that I have caused an inquiry to be made through the investigation branch of my department into the publication of official secret cables which passed between the right honorable the Prime Minister (Mr. Scullin) whilst in England and at sua, and the Acting Prime Minister (Mr. Fenton), and the Acting Treasurer (Mr. Lyons). Ilay the report of the investigator on the table.

This matter, in its political aspects, was discussed on a motion for the adjournment of the House, moved by the Leader of the Opposition (Mr. Latham) on Tuesday, the 17 th March, 1931. Reference was made more particularly by the Prime Minister to the more important aspect of the subject, namely, the violation of State secrets, and the access to cabinet documents by unauthorized persons. I assume that all honorable members will realize the importance of tracing to their source leakages of official matter not intended for publication, and especially will its importance be acknowledged in the case of cabinet deliberations or communications passing between Ministers of State, which, apart from their traditionally confidential nature, are to be considered also in their relation to the oath of secrecy taken by every Minister on his assumption of office.

The question is involved also of the apparent purloining or theft of documents, the property of the Commonwealth or Ministers. My investigators directed their attention in the first place to finding the source of the leakage, with the subsidiary object of exonerating, if possible, certain persons who were known to have had access to the documents in question, at one stage or another, and might, therefore, be under suspicion. In this regard the report states -

The published matter does not appear to have its source of leakage from the files of the Private Secretary to the Prime Minister or the file under the control of the Private Secretary to the Attorney-General, and it can, I submit, bc taken that the messages, as published, came from copies of cables in the files of one or other of. the two Ministers (the Acting Prime Minister or the Acting Treasurer ) .

The investigator supports this statement with what I regard as conclusive proof, inasmuch as the report goes on to state -

The words as deciphered in Canberra are the words published, and they agree entirely with the copy of the decipher in the file of the Acting Prime Minister, which is a carbon copy, the original of which no doubt went to Mr. Lyons.

Then the report goes on to compare the matter published in the press with the deciphers in the possession of the Acting Prime Minister and the Acting Treasurer. These are found to be substantially exact, but both contain inaccuracies when compared with the original messages despatched by the Prime Minister. The report proceeds -

There are other variations not quite so pronounced as in cable No. I, but, nevertheless, supporting the view that the published matter came from copies of decipher of messages made at this end.

Further evidence is adduced by the investigator to prove the conclusion that the cables in the custody of the Acting Prime Minister- were not tampered with, and later matter set out in the report goes to show conclusively that the file in the possession of the Acting Treasurer was tampered with, and that the contents of the cables were obtained from that file directly or indirectly by one Joseph Alexander, a reporter in the employ of the Melbourne Herald. ‘ My investigator, therefore, followed up the history and treatment of the cables addressed to the Acting Treasurer from the date of their reception by him to the date of their first publication in certain Sydney newspapers. The Acting Treasurer gave an unqualified denial - although not a very prompt one - df having been directly or indirectly responsible for the leakage: I make no comment upon the statement of the Acting Treasurer that he did not wilfully’ disclose the contents of the cables, but as to whether he was indirectly responsible for their disclosure is a matter of opinion, which must be regarded in the light . 0 the facts revealed by the report from which I quote the following passage : -

An examination of the file of the Acting Prime Minister, held by Mr. Duffy, and the statements made by Mr. Swanson, show a considerable laxity in the way theBe cipher messages were handled. Ministerial Messenger Swanson, who went to Tasmania, and’ whilst there acted as Private Secretary to Mr. Lyons, and coded and decoded messages passing between Mr. Lyons and the Prime Minister and the Acting Prime Minister, states that prior to his (Swanson’s) arrival in Tasmania Mr. Lyons received a message (cable No. 6) in cipher “B “-

This was a highly confidential cable of a personal character - and being unable to decipher it, he telegraphed to the Prime Minister’s Department to have the message deciphered and transcribed into the Government confidential code, and forwarded to the Premier’s Department, Hobart, where it was to be decoded and the message telephoned to Mr. Lyons. The practice appears to hare been for Swanson to decipher the message in his office in the Post’ (mice (Devonport) and telephone the contents to Mr. Lyons at his home.

Attention is also directed to cablegram No. 3, as in Mr. Duffy’s file an original message, repeating the message from Mr. Scullin to Mr. Lyons, was sent en clair to the Acting Prime Minister, Canberra, by Mr. Lyons on the 8th November, 1930.

Mr. Swanson, who was ministerial messenger to the Acting Treasurer, states -

I have seen the copies of cablegrams published in the Sunday Sun of the loth March, 1931, Nos. 1 to 10. I remember cable No. 8.

That I have referred to as being peculiarly personal and confidential.

On the 24th December, 1930, the day on which I arrived in Tasmania, Mr. Lyons handed me this message and asked me to decipher it, and telephone it to his home. He also informed me that prior to my arrival in Tasmania he had received the message, but being unable to decipher it, he telegraphed the Prime Minister’s Department asking that it be transcribed into Government code and forwarded to the Premier’s office, Hobart, where it was to be decoded and the decode telephoned to Mr. Lyons. After I deciphered the message in cipher “B” on the 24th December, I rang Mr. Lyons at his home, and he told me that the message had already been telephoned to him from the Premier’s office, Hobart, and asked me to read my decipher over the telephone to enable him to check it. This I did. I made one original copy of the decipher. Mr. Lyons then directed me by telephone to send a copy of the message in cipher to Mr. Fenton, and at the same time ask him to forward to Mr. Lyons the message he (Mr. Fenton) had received from Mr. Scullin, and which Mr. Scullin desired Mr. Lyons to see. I destroyed the draft deciphers of both messages, and kept the typed originals of both cipher and decipher in a locked despatch case which was kept locked or in my custody during the whole time it was in my care. On Boxing Day I received a message from Mr. Fenton, which I deciphered and made one original copy, and telephoned the decipher to Mr. Lyons at his home about midnight. This, I think, contained cables Nos. 7 and 8. It was received partly in cipher “ B “ and partly en clair, and was sent from Melbourne. 1 remember the terms of cable No.9. This message was telephoned by Mr. Lyons to me with instructions to cipher it and send it to Mr. Scullin on the SS. Ormonde.

Cable No. 10 was also given to me by Mr. Lyons over the telephone, with the request to code and despatch it to Mr. Scullin, SS. Ormonde.

On this statement being submitted to the honorable member forWilmot, he stated that while naturally he could not remember details, he was prepared to accept Mr. Swanson’s statement as being correct. We may, therefore, take as established -

The confidential cables sent to the Acting Treasurer were allowed to fall into unauthorized hands.
Among these was a personal confidential coded message intended for the Acting Treasurer alone.
This personal message was by direction of the Acting Treasurer sent per medium of a common government code, where it was transcribed by one or an unknown number of employees of the Tasmanian Government and transmitted openly in English by the Acting Treasurer’s direction to his private house.
The cables numbered 7 and 8, also of a highly confidential character, were telephoned in. a similar manner.

I leave it for honorable members to form their own opinions as to whether or not the investigator was justified in finding, to use his own words, “ considerable laxity in the way these cipher messages were handled.”Returning to the part played by Alexander, I have already stated that there is no doubt that the text of the cables was obtained by him from the file under the control of the Acting Treasurer. Although I have referred to the extraordinary laxity shown by the Acting Treasurer in dealing with the cables, it was not by reason of those negligent practices that the contents of the cables came to the knowledge of Alexander, though they may and probably did come to the knowledge of many others in that way. Alexander has admitted that he had possession of the cables, and suggests, without actually admitting so much, that he obtained them second-hand from some unauthorized custodian. I will quote again from the investigator’s report -

On the 16th instant I interviewed Mr. J. A. Alexander, of the Melbourne Herald. I informed him that I was making inquiries on behalf of the Government into the leakage of cables, and as his name had been mentioned as the pressman who had obtained particulars of such cables, I desired to know if he could assist me in any way towards clearing up the matter. Mr. Alexander, after some preliminary general observations as to the source of his information said, “ I will say readily that I did obtain the text of the cables and if you wish I am prepared to make a statement in my own way.” He made a written statement.

The only material part of the statement was as follows: -

I obtained the text of the cables and passed them on to my own and other newspapers, with the exception of the Argus and the Sydney Morning Herald.

That is the only part of the statement which has any bearing on the cables, but as the rest of the statement contains a fantastic theory of ethics supposed to be peculiar to journalism I shall quote it in full-

Of course you realize that I cannot tell you where I obtained it. You will not think that I am lacking in any courtesy to you personally if I decline positively to answer any questions designed to discover the source from which it came. If I answered one such question you would soon arrive at the information by a process of elimination. No pressman who revealed the source of his information would ever be trusted again and he would soon cease to obtain important information at all. This is a principle which is regarded as absolutely vital to all journalists who would regard it as a grave lapse and breach of the traditions of their calling for any one of their number to divulge his source of information. Apart from any other consideration the supreme importance of this principle would make it impossible for me to give you or any one else any information whatever regarding the source from which I obtained the text of these cables.

Mr. Alexander was asked whether, at the time that he obtained the text of the cables, any other person shared their possession with him. He answered, “ No other pressman.” Enumerating the papers to which he distributed the matter, he stated that he sent it to the Sydney Sunday papers, the Sydney Sun, the Evening News, the Melbourne Herald, the Sun Pictorial, the Age, and the Queensland papers. He also gave it to the Australian United Press.

Having compared the deciphered cables with the matter first published in the Sydney Sun, I have no doubt that Alexander either had the deciphered messages in his possession, or was supplied with an accurate copy thereof. In view of his statement, I asked him to see me in my office, and he called at the office of the Attorney-General, where I said to him, “I have read the statement which you made, and I note that part of it which sets out that you obtained the text of the cables, and sent them on to certain newspapers.” I said further, that I did not, for a moment, accept as a principle of reputable journalism that a reporter, having admitted that he had in his possession, or had had access to certain important secret State documents, was protected by any journalistic code from disclosing the source of such information, or the custody from which such documents were obtained. I added, further, that in any event, I was not so much concerned with journalistic practice as with the administration of the law. I then asked Alexander the following question :-

From what source did you obtain the text of the cables as admitted by you?

Mr CUSACK:

– I shall endeavour to do so. Is the Minister for Home Affairs’ aware of the antagonism caused by the endeavour that has been made to appoint a Teddy Bear from Tasmania to a certain position?

Question not answered.

page 1227

QUESTION

WIRELESS BROADCASTING

Mr ELDRIDGE:

asked the PostmasterGeneral, upon notice -

Is it a fact that on or about the 27th April, 1929, the Secretary of the Postal Department published a statement that in connexion with the new broadcasting contract (then about to be allotted) arrangements would be made for the appointment of honorary local committees “ for securing cooperation towards the development and maintenance of broadcasting services of the highest possible order “ ?
If so, will the Minister say why the department apparently has not taken steps to have these committees appointed?
Is it a fact that musical organizations in the various capital cities are anxious that the department should honour this undertaking?
Is it a fact that the Choral Association of Australia, which represents at least 1,000 Victorian singers, may be taken as the type of organization which is willing and anxious to give its co-operation, without reward, if the Government will honour the undertaking referred to?
Will the Minister take immediate steps to set up the committees referred to?

Mr A GREEN:
KALGOORLIE, WESTERN AUSTRALIA · ALP; FLP from 1931; ALP from 1936

– The answers to the honorable member’s questions are as follow : - 1 and 2. I understand that the previous Government had considered the setting up of local committees, but subsequently decided that the committees would not be appointed. 3 and 4. Four musical bodies, including the Victorian Choral Association, have indicated their willingness to take part in the activities of such a committee.

At the present time the Government does not intend to appoint any committee.

Mr ELDRIDGE:

asked the PostmasterGeneral, upon notice -

Has he seen the Year-Book for 1930 issued by the Australian Broadcasting Company?
Has he noticed on page 13 of that book the recommendations of the Advisory Committee on Wireless, made about two years ago, pertaining to the establishment of a national wireless service?
Can he explain how these recommendations came to be printed in theYear-Book mentioned ?
Does he regard these recommendations as confidential ?
If so, will he institute an inquiry within his department toascertain and inform the House how these recommendations came to be published in the Australian Broadcasting Company’sYearBook ?
If not, will he state what departmental officer was responsible for an answer being given to the honorable member for Martin by the Postmaster-Geueral, through the Acting Prime Minister, on the 2nd October last, when he asked for information as to the recommendations of this committee, the answer being that the committee’s recommendations had been regarded as of a confidential character, and that advice with regard to them could not therefore be furnished?
How does the Minister reconcile these conflicting attitudes of his department in refusing this information to an elected member of the Federal Parliament, and then allowing the information to be published in a book produced for profit by a private company?

Mr A GREEN:
KALGOORLIE, WESTERN AUSTRALIA · ALP; FLP from 1931; ALP from 1936

– The answers to the honorable member’s questions are as follow : -

Yes.
Yes.
The information was supplied by the department.
No. They have been published on former occasions in the press and in Hansard.
See answer to 4. 6 and 7. As explained in reply to 4, the information in theYear-Book has already been made public. It relates to the broad outline of policy adopted by the Government. The detailed recommendations of the committee have never been made public.

page 1228

QUESTION

CANBERRA GOLF LINKS

Mr ELDRIDGE:

asked the Minister for Home Affairs, upon notice -

What has been the total cost (including the cost of land, buildings, &c., to date, of (a) the Canberra Golf Links; and (b) the Acton Golf Links?
What is the annual cost of upkeep of and the annual revenue derived from the Canberra Golf Links?

Mr BLAKELEY:
DARLING, NEW SOUTH WALES

– The answers to the honorable member’s questions are as follow : - 1. (a) £10,113 10s. 8d.

£777 10s. 9d.
1. From the beginning of the current financial year to date, the cost of upkeep has been £1,736 19s.1d., and the revenue received was £1,098 13s. 6d.

page 1228

QUESTION

ROYAL AUSTRALIAN NAVY

Promotion of Rear-Admiral Kerr

Mr CROUCH:

asked the Minister for Defence, upon notice -

Has Rear-Admiral W.U. Kerr, of the Australian Navy, been promoted to the rank of. Vice- Admiral?
Was this promotion made by the Australian or the English authorities?
Is it usual for an English authority to promote an Australian officer?
Was the consent of the Australian naval authorities first obtained?
Does the promotion carry extra pay; if so, who pays it?

Mr CHIFLEY:
MACQUARIE, NEW SOUTH WALES · ALP

– The answers to the honorable member’s questions are as follow : -

Yes.
By the British Admiralty.
No; but Vice- Admiral Munro Kerr is an officer of the Royal Navy on loan.
The consent of the Australian naval authorities was not necessary.
No.

page 1228

QUESTION

REGISTRATION OF MOTOR VEHICLES

Mr SCULLIN:
ALP

– On the 18th March, the honorable member for Riverina (Mr. Killen) asked me the following questions, upon notice -

Is it a fact that there has been for many years past a reciprocal arrangement between New South Wales and Victoria, under which registered motor vehicles were allowed to enter either one of those States from the other without re-registering ?
Is it a fact that the Victorian police are now requiring owners of commercial motor vehicles from New’ South Wales to pay an additional registration fee when entering Victoria?
Is it a fact that such action is a breach of faith on the part of the Victorian Government and calculated to cause a serious restraint of interstate trade?
Is such action constitutional; if not, will tlie Prime Minister take action to prevent its continuance ?

I am now. in a position to furnish the following reply: -

The Premier of Victoria advises that for many years it was the practice to allow motor vehicles registered in another State to enter Victoria without being required to pay registration foes in the latter State.
By an amending act passed by the Parliament of Victoria last year, re-registration in Victoria of commercial motor vehicles registered in other States is required. The Victorian Government, however, has decided to repeal the recent amendment except in so far as it applies to motor cars carrying passengers for hire where such cars proceed more than ten miles within the Victorian border. The Premier states that, pending the necessary amendment of the act, the police have been instructed not to take proceedings against owners or drivers of interstate motor cars, which comply with the law as modified by these decisions. 3 and 4. As the honorable member will appreciate, it is not the practice to express opinions on matters of law in answer to questions.

page 1229

TARIFF DEBATE

Mr SCULLIN:
ALP

– I inform honorable members that the Government expects the general debate on the tariff to be entered upon next week, but not before “Wednesday.

page 1229

NEW STANDING ORDER

Mr SCULLIN:
Prime Minister · Yarra · ALP

.- I move-

That the first report of the Standing Orders Committee be adopted.

I do not propose to discuss the report, for copies of it have been made available to honorable members. The proposals contained in it received the unanimous approval of the Standing Orders Committee, which is representative of the various parties of the House. I believe the members of the Committee consulted the leaders of their parties in regard to these proposals. I am sure that if the report is adopted the debates in Parliament will be improved and the transaction of public business expedited.

Mr BEASLEY:
West Sydney

– I wish to ask whether it will be in order to deal with the recommendations seriatim? Some honorable, members desire that the time proposed to be allowed for the discussion of certain business shall be extended.

Mr SPEAKER ( Hon Norman Makin:
HINDMARSH, SOUTH AUSTRALIA

– A motion for the adoption of the report of the Standing Orders Committee is under consideration, and any amendment that it is desired to make to the report can only be expressed as an amendment to the motion. The items can be discussed seriatim only hy leave of the House. The Prime Minister (Mr. Scullin) has moved the adoption of the report, and I require a seconder of the motion.

Dr EARLE PAGE:
Cowper

.- I second the motion, and in doing so I should like to compliment the members of the present Government on the fair attitude that they adopted during the discussion which took place on this subject during the early period of last Parliament. The decisions of the committee were practically unanimous, although it encountered, many difficulties, one of which has not yet been completely overcome. For instance, the Country party has difficulty in putting its case because of the fact that there is no official recognition of a third party in this House, and I take it that the additional time that will be at the disposal of this Parliament as the result of the adoption of the report will permit of such an exposition on the part of the Leader of the Country party by the general recognition of an extension of time being granted if desired. The adoption of the recommendations of the committee will not only shorten considerably the business time of this House, but also improve the attendance at, and raise additional interest in, the debates, because honorable members will not be permitted to speak at length. As the period allowed for debates is likely to be reduced by 30 per cent, or 40 per cent., I suggest that it may be possible to reduce the number of sitting days, or at any rate the actual hours of sitting. I hope that in the future it will not be necessary, except in special circumstances, for the House to sit after 10.30 p.m. At present we are sitting four days a week, and the House is not being adjourned until 11.30 p.m. These protracted hours of sitting cause a good deal of physical deterioration and mental strain, because all the remaining hours are spent mostly in arduous preparation. I, therefore, suggest that it might become an habitual custom of the House to rise at night at, say, 10.30, except in special circumstances. I find myself at that hour becoming physically and mentally tired, and there are many members older than myself. I am sure that my suggestion will be endorsed by the people generally. We are all aware that at a public meeting the audience becomes restless, and the speakers stale and dull, once the hour of 10.30 is passed. By adjourning the House earlier, we shall have a better opportunity to carry on properly the work of this Parliament, and, in addition, those honorable members who have large constituencies situated at some distance from the Federal Capital will have a better opportunity to make themselves au fait with local conditions, and to meet the wishes of their constituencies through personal contact instead of being entirely dependent upon correspondence, as at present. Another matter that we might discuss during this debate is whether some more satisfactory procedure could not be adopted in regard to pairs. At present the House takes no cognizance of pairs, and accordingly some honorable members who for various reasons, some of them highly important, have not been present at a division, find that no record is made of the fact that they have taken part in the proceedings or have recorded their views. The procedure of the Queensland Parliament might easily be adopted by this Parliament. When a Queensland member is likely to be absent on days when certain divisions are to take place, he is able to pair with an honorable member of opposite opinions, and the agreement is signed by both parties, and countersigned by the whips of the two parties, so that it may be officially recorded in the Votes and Proceedings as well as in Ilansard. Pairs in this Parliament are shown in Hansard, but not in the Votes and Proceedings. I make that suggestion to the House, and I ask honorable members who have had a longer parliamentary experience than I have to discuss it.

Mr LAZZARINI:
Werriwa

.- The members of the party to whichI belong are willing to support the motion in the main, but there are one or two slight amendments that we should like to make.

Mr SCULLIN:
Prime Minister · Yarra · ALP

– To meet the desire of honorable members, I ask leave to withdraw the motion for the adoption of the report, to enable the House to go into committee to discuss the recommendations of the Standing Orders Committee.

Leave granted.

Motion (by Mr. Scullin) proposed -

That the report be taken into consideration in committee forthwith.

Mr SPEAKER:

– That statement is a reflection on the honorable member for Adelaide, and, therefore, is unparliamentary.

Mr GABB:

– I withdraw the statement. Another reason why I welcome a reduction of the time allowed for speeches is that I have repeatedly had to call for a quorum. Only yesterday I called five times; at one stage only twelve members were present. Frequently during a session the attendance dwindles to the low teens. The proposed amendment of the Standing Orders will cause honorable members to prepare their speeches more carefully and to condense them. In my earlier years I had the privilege in church synods of delivering, on occasions, a prepared sermon at 7 a.m. to twelve old ministers ! If some honorable members had had a similar training their speeches would not wander from Dan to Beersheba. The allowance of a shorter time for speeches will require members to concentrate on what they intend to say, and come prepared to state their thoughts clearly within the time allowed. That will be of advantage to them and a relief to their audience. For these and other reasons I hail with joy the recommendation of the committee; the proposed reform is long overdue.

Question resolved in the affirmative. i In committee :

Recommendation of Standing Orders Committee -

That the following standing order be adopted by the House to follow Standing Order No. 257a: - 257b. Notwithstanding anything contained in these standing orders - (a.) the maximum period for which a member may speak on any subject indicated in this standing order, and the maximum period for any debate, shall not, unless otherwise ordered, exceed the period specified opposite to that subject in the following schedule: -

Mr ELDRIDGE:
Martin

.- The committee has recommended that in the debate on the address in reply each member’s speech be limited to 35 minutes. That is a substantial reduction of the time previously allowed, and we should be very careful to do nothing that may unduly encroach upon the privileges of this House or inconvenience honorable members. All are agreed that the time allowed for speeches should be reduced, but in this instance the reduction is too severe. I move -

That in the provision “ Address-in-Reply “, the figures “ 35 “ be omitted with a view to insert in lieu thereof the figures “ 45 “.

Mr GABB:
Angas

– I hope the amendment will not be accepted. Whilst a government may at times desire to extend the debate on the AddressinReply, because it has no business ready for submission to Parliament, that debate is usually the most tiring of all, being mainly a repetition of speeches made on the hustings.

Mr LAZZARINI:
Werriwa

.- If the Government, by means of the speech delivered by the Governor-General, submits a programme to Parliament, and desires it to be seriously debated, 35 minutes for each member is not sufficient. The debate on the Address-in-Reply sometimes occurs only once in a Parliament, and never more often than once in a session. If the Governor-General’s speech is mere window-dressing, the debate in reply is a waste of time; but if a serious expression of opinion regarding the Government’s programme is desired, 45 minutes is not too long to allow to each honorable member.

Mr SCULLIN:
Prime Minister · Yarra · ALP

– The committee on this recommendation was unanimous, because, although it is the experience of Parliament that the debate on the address-in-reply is becoming obsolete, certain disadvantages would result if it were eliminated. There may be embodied in the Government’s programme matters that call for discussion, and could best be dealt with in a debate on the address-in-reply. Again, the debate affords an opportunity for new members to make their debut, and 35 minutes is ample time for a maiden speech. The committee considered that the 95 minutes previously allotted to a speaker for the purpose was ridiculously liberal and unnecessary.

Mr Eldridge:

– The debate on the addressinreply occurs only very rarely.

Mr SCULLIN:

– That is quite true, but the Government’s legislative programme may be fully debated when the necessary bills are brought down. As the honorable member for Angas (Mr. Gabb) said, the debate on the address-in-reply is usuallya repetition of the speeches made on the hustings. While favouring the continuance of the debate on the addressinreply, it appears to be the general opinion that honorable members may satisfactorily express themselves on the subject in 35 minutes.

Mr MACKAY:
Lilley

.- I am pleased that at last honorable members are asked to deal with something like up-to-date standing orders, which restrict the time limit previously granted to speakers. This report has been before a committee consisting of honorable members from all parties of the House, and it has the approval of my party. In the circumstances, I suggest that we should merely waste valuable time if we discussed the items seriatim. The good sense of the committee surely calls for the report to be taken as a whole.

Mr Eldridge:

– I rise to a point of order. Is not the honorable member for

Lilley (Mr. Mackay) out of order in his suggestion, as we are already dealing with the recommendations seriatim?

The CHAIRMAN:

– That is correct.

Mr BERNARD CORSER:
Wide Bay

– For two reasons, I do not desire to see this item deleted. Firstly, if that weredone, there would he no time limit provided for speeches on the addressinreply, and honorable members could go on indefinitely.

Mr Scullin:

– That matter is net before the committee.

Mr BERNARD CORSER:

– My second reason is that I believe that private members should have an opportunity to engage in a general discussion on the Government’s policy. I know that certain opportunities to do that occur when the adjournment of the House is moved. The time limit of 35 minutes that is suggested by the commitee is quite reasonable, and should enable honorable members to state their case satisfactorily.

Question - That the figures proposed to be omitted (Mr. Eldridge’s amendment) stand part of the proposed Standing Order - put. The committee divided. (The Chairman - Mr. McGrath.)

AYES: 56

NOES: 4

Majority . . . . 52

AYES

NOES

Question so resolved in the affirmative.

Amendment negatived.

Mr WARD:
East Sydney

.- I move, by way of amendment -

That in the provision “ motion for adjournment of House to close the business of the day “ the figures “ 10 “ be omitted with a view to insert in lieu thereof the figures “ 20 “.

– After consulting with as many members of the committee as I have been able to get in touch with, I have agreed to accept a fifteen minutes limit as a compromise. Under the present Standing Orders, it is allowable for an honorable member to speak for 65 minutes on the adjournment, so that we have made a fairly substantial reduction for a start.

Amendment amended by the omission of the figures “ 20 “ and the insertion in lieu thereof of the figures “ 15 “ and, as amended, agreed to.

Mr COLEMAN:
Reid

.- I move -

That after the word “ for “ in the provision “ Debates not otherwise provided for “ the words and figures “mover of motion 45 minutes “ be inserted. ,

At the present time there are seventeen private member’s motions on the business paper, and in my opinion, the mover of a motion should have at least ten minutes longer to speak than those who follow him.

Mr Scullin:

– We are- prepared to accept that.

Mr. BEASLEY (West Sydney) [4.14J. - I propose to move as an amendment that all speakers during “debates not otherwise provided for “ be allowed 45 minutes. The honorable member for Reid (Mr. Coleman) has moved that 45 minutes be allowed to the mover of a motion, but not to other participants in the debate. I believe that every one who speaks to such a motion should be allowed 45 minutes. It is possible that debates under this heading may be just as important as any others, and speakers should not be too greatly restricted as to time.

The CHAIRMAN:

– If the honorable member will allow us to dispose of the motion of the honorable member for Reid we can take his later.

Amendment agreed to.

Amendment (by Mr. Beasley) proposed -

That in the provision “ Debates not otherwise provided for “ the figures “ 35 “ be omitted with a view to insert in lieu thereof the figures “ 45 “.

Mr SCULLIN:
Prime Minister · Yarra · ALP

– I cannot accept this amendment. “Debates not otherwise provided for “ relates only to private members’ motions, which are rarely called on. Debates occur from time to time on important motions such as those for the adoption of the report of- the Australian delegation to the Assembly of the League of Nations. The mover of such a motion is allowed 45 minutes, and this rule applies to Ministers as well as to private members. The House always has the right to grant an extension of time. I ask the honorable member for West Sydney not to persevere with his amendment.

Mr BEASLEY:
West Sydney

– It is all very well to say that extensions of time may be granted.

Mr Archdale Parkhill:

– Extensions should not be considered in this matter.

Mr BEASLEY:

– Quite so. Circumstances might arise in which there would be a vote similar to that taken a few moments ago. A member might he speaking from a point of view that was not popular with the Government, or the Opposition, and he should not be left entirely to the mercy of the House. A member’s rights and privileges should be of such a character that he would have ample opportunity to state his ease.

Question - That the figures proposed to be omitted (Mr. Beasley’s amendment) stand part of the proposed Standing Order - put. The committee divided.

The Chairman: Mr. McGrath.)

AYES: 53

NOES: 4

Majority . . . . 49

AYES

NOES

Question so resolved in the affirmative.

Amendment negatived.

Proposed standing order as amended agreed to.

Resolution reported, and report; - by leave - adopted.

Motion (by Mr. Scullin) - by leave - agreed to -

That proposed Standing Order 257a, as amended, be adopted.

Mr SPEAKER:

– Yes.

page 1236

ORDER OF BUSINESS

Motion (by Mr. Scullin) proposed -

That all orders of the day and notice of motion No. 1 be postponed until after consideration of notice of motion No. 2.

Mr BEASLEY:
West Sydney

– The Prime Minister may have consulted with some sections of the House as to the order in which the business is to be taken, but I think that every honorable member is entitled to know the Government’s intentions in the matter.

Mr SCULLIN:
Prime Minister · Yarra · ALP

– I regret that I inadvertently omitted to say a few words in explanation of the motion. Notice of motion No. 2 relates to the General Act for the Pacific Settlement of International Disputes, and the motion must be passed to-day, so that there will be time to have it forwarded to the Council of the League of Nations. This subject has been discussed in the House on a number of occasions, and I do not anticipate a lengthy debate upon the motion. I propose to speak briefly, and, when the motion has been disposed of, we shall return to the second order of the day - the resumption of the debate on the second reading of the Commonwealth Bank Bill.

Question resolved in the affirmative.

page 1236

INTERNATIONAL DISPUTES : PACIFIC SETTLEMENT

Accession to General Act

Mr SCULLIN:
Prime Minis ter · Yarra · ALP

.- I move-

That this House approves of the accession on the part of the Commonwealth of Australia to Chapters I., II., III. and IV. of the General Act for the Pacific Settlement of International Disputes, subject to the following conditions : -

That the following disputes are excluded from the procedure described in the General Act, including the procedure of conciliation: -

Disputes arising prior to the accession of His Majesty to the said General Act, or relating to situations or facts prior to the said accession;

Disputes in regard to which the parties to the disputes have agreed or shall agree to have recourse to some other method of peaceful settlement ;

Disputes between His Majesty’s Government in the Commonwealth of Australia and the Government of any other member of the League which is a member of the British Commonwealth of Nations, all of which disputes shall be settled in such manner as the parties have agreed or shall agree;

Disputes concerning questions which by international law are solely within the domestic jurisdiction of the State; and

Disputes with any party to the General Act who is not a member of the League of Nations.

That His Majesty reserves the right in relation to disputes mentioned in Article XVII. of the General Act to require that the procedure described in Chapter II. of the said act shall be suspended in respect of any dispute which has been submitted to and is under consideration by the Council of the League of Nations provided notice to suspend is given aiter the dispute has been submitted to the Council and is given within ten days of notification of the initiation of the procedure, and provided also that such suspension shall be limited to a period of twelve months or such longer period as may be agreed by the parties to the dispute or determined by a decision of all members of the Council other than the parties to the dispute. 3. (i) That, in case of a dispute, not being a dispute mentioned in Article XVII. of the General Act, which is brought before the Council of the League of Nations in accordance with the provisions of the Covenant, the procedure described in Chapter I. of the General Act shall not be applied, and, if already commenced, shall be suspended, unless the Council determines that the said procedure shall be adopted.

That in the case of such a dispute the procedure described in Chapter III. of the General Act shall not be applied unless the Council has failed to effect a settlement of the dispute within twelve months from the date on which it was first submitted to the Council, or, in cases where the procedure prescribed in Chapter I. has been adopted without producing an agreement between the parties within six months from the termination of the work of the Conciliation Commission. The Council may extend either of the above periods by a decision of all its members other than the parties to the dispute.

On the 27th August, 1928, Australia signed, as an original party, the Treaty for the Renunciation of War, commonly known as the Kellogg Pact. Following the signature of that document by us and other States, there arose the need for a general provision for the settlement of all disputes. On the 4th July last the House approved of the Commonwealth’s accession to the optional clause of Article 36 of the Statute of the Permanent Court of International Justice. The Commonwealth’s ratification of that acceptance was deposited with the League of Nations at Geneva on the 18th August last. The acceptance of the optional clause was really a first step. By that action Australia, like all other members of the British Commonwealth, agreed to accept the jurisdiction of the Permanent Court over justiciable disputes with another party. But the acceptance was subject to certain reservations. The disputes covered by the optional clause were those concerning -

The interpretation of a treaty:
A question of international law;
The existence of a fact which, if established, would constitute a breach of an international obligation;
The nature and extent of the reparation to be made for the breach of an international obligation.

Having provided for disputes of this kind, it remained for provision to be made for the peaceful settlement of all other disputes. The General Act for the Pacific Settlement of Disputes was approved by the 9th Assembly of the League of Nations in 1928. It provided three methods for the settlement of disputes between the parties, namely, conciliation, judicial settlement and arbitration. The act, which applies to all disputes, provides that justiciable disputes will be submitted to the Permanent Court unless the parties otherwise agree. All other disputes could be submitted to conciliation by both parties in agreement, or by only one party. The conciliation commission’s decision could be given by a majority vote, but it was not necessarily binding. If it were not agreed to by both parties they were bound to submit the matter to arbitration, unless it was covered by a reservation to which I shall refer presently. The arbitration tribunal is to consist of five members, one to be nominated by each party to the dispute, and three, by agreement, from the nationals of other States not interested in the dispute. The chairman is to be appointedby agreement. If no agreementis reached by the parties the tribunal is nominated by a third power mutually agreed on, or, failing that, by the Permanent Court. If the parties fail to agree on the terms of submission, one party may take the dispute to arbitration. All the members of the British Commonwealth have agreed to accept the General Act, but they have also agreed that such acceptance must be subject to the same reservations as those made in the acceptance of the optional clause. The most important of the reservations has relation to disputes between the Governments of the British Commonwealth of Nations. Such disputes are not to be dealt with by any Of these tribunals. The need for some means for the pacific settlement of all disputes is apparent to everybody. A general act is infinitely preferable to a series of bilateral treaties for conciliation and arbitration between various countries.

It has also been agreed that there shall be certain reservations in addition to those made in regard to the optional clause. One of these is designed to prevent the Permanent Court from hearing a legal case that has previously been submitted to, and is under the consideration of, the Council of the League of Nations. In other words, a case with which the League is dealing may not, at the same time, be submitted to the Permanent Court. It Would be regarded as sub judice. Another of the additional reservations is designed to prevent political disputes from being submitted to the conciliation commission Unless the Council of the League unamimously decides that they shall be so submitted. Another of the reservations is designed to prevent arbitration tribunals dealing with a dispute unless the council fails to effect a settlement within twelve months, or within a further period to be fixed by it. The terms of our acceptance of the General Act will be such that it will only apply to disputes with other parties to the act who ate also members of the League of Nations. At the last Imperial Conference the attitude of the various governments to the general act was discussed and the general principles underlying it approved. All the governments represented at the conference, with the exception of that of South Africa, intimated that they proposed to commend the act to their respective parliaments. The present parties to the act are Sweden, Belgium, Norway, Denmark, Finland, Luxembourg and Spain. France, Greece and Czecho-Slovakia have announced their attention to accede. The act will remain in force until 1934, after which it may be denounced Upon the giving of six months’ notice. I submit the motion to the House because I feel strongly that having renounced war we must provide a peaceful means for the settlement of international disputes. [Quorum formed.]

Mr LATHAM:
Kooyong

.- I regard it as an honour to second this motion.

It is desirable that there should be accession, on the part of the Commonwealth, to the first four chapters of the General Act for the Pacific Settlement of International Disputes, subject to the reservations set out in the motion. Some such agreement as this is the logical consequence of the adherence of the Commonwealth to the Kellogg Treaty or Pact for the Renunciation of War. If our renunciation of war is sincere it follows that we must find some other means for the adjustment and settlement of international disputes. It is the purpose of the General Act to provide such means.

As the Prime Minister (Mr. Scullin) has pointed out, since the Kellogg Pact was adopted by the Commonwealth and other members of the League of Nations, the Commonwealth has acceded to the optional clause.

The General Act provides, in the first place, that all disputes of every kind between two or more parties to the act, which it has not been possible to settle by diplomacy, shall, subject to the reservations made in Article 39, be submitted, under the conditions laid down in chapter I, to the procedure of conciliation. Article 17 provides that all disputes with respect to which the parties are in conflict as to their respective rights shall be submitted for decision to the Permanent Court of International Justice, unless the parties have already agreed to arbitration. Article 21 provides that any dispute of any nature as to the rights of the parties, which is not the subject of agreement after conciliation proceedings, shall be submitted to arbitration. The three methods provide a complete scheme for dealing with every kind of international dispute.

I agree with the Prime Minister that accession to a general act is much to be preferred to any endeavour to arrive at a series of separate agreements between the different nations of the world. Such a procedure would he almost interminable. The right course has been taken in adopting the plan of a general act. The reservations which have been mentioned by the Prime Minister, under the first heading, are largely identical with those made when we acceded to the optional clause. The other reservations are, I think, very desirable indeed. They reserve m sphere of action for the Council of the League. Political disputes are not, generally speaking, of such a character that they are capable of being satisfactorily decided by arbitrators or judges. There is a proper sphere within which judges and arbitrators may operate; but political disputes, in my view, do not fall within that sphere. Controversies such as those which occur in this chamber are not of such a nature, as a rule, that they can be settled by judges, or lawyers, or arbitrators.

Mr Beasley:

– Because of their political bias?

Mr LATHAM:

– Because of their specific character. By means of legislation Ave declare, create, limit or negative rights and impose duties. The legislature is an original source of law and it is the duty of courts and arbitrators to interpret and apply, but not to make, laws. It would be a mistake to submit all our political disputes to tribunals which are not of a political character, and not responsible to a constituency.

Mr Beasley:

– How can controversial subjects be decided apart from politics?

Mr LATHAM:

– Many subjects are on the border line, but other subjects fall definitely iwto the legal sphere on the one hand, or into the political sphere on the other. In my opinion the subject of the establishment of industrial tribunals, with which Australia has been dealing for many years, is a border-line subject in respect to which there will probably always be a difference of opinion. As a general rule, Lt will be possible, in the international sphere, to draw a .distinction! between definitely legal questions which depend upon the rights of the parties under some relevant law, established convention, custom or treaty; and claims by parties for new rights or alterations of existing rights. These distinctions are recognized in the reservations which have been made. Provision is made for the reference to the Council of the League of Nations of questions susceptible of settlement by diplomacy and agreement between the parties. At’ the same time, provision is made that if a matter is not settled by the Council of the League the procedure of the General Act shall apply. I think it is wise that there should be provision for diplomacy as well as for conciliation and arbitration by outside persons. In many quarters there is at present a general enthusiasm for conciliation as a. method, but it has its marked limitations. Everybody will agree with that method as a general proposition, but it seems to me that if the parties themselves could be locked up in a room without any outsider, more desirable results would often be obtained than if they conferred in a room with an independent person as a conciliator, each side trying hard to get the conciliator to agree to its views. That proposition is based upon certain more or less elemental characteristics in human nature. The proposal submitted to the House by the Prime Minister provides for the utilization of all these methods, each and every one of them, and affords an option in each case for the preliminary application of the diplomatic method. For that reason I consider that the reservations are wise.

It would be easy to criticize the general act. Many objections may be made to any particular scheme for dealing with subjects such as these. It would be easy to suggest improvements in the scheme set out in this general act, containing as it does no fewer than 47 articles. It would be rendering no service to criticize the general act. After all it has been accepted already by a considerable number of nations, and I hope that it will be accepted by more. The acceptance .of any international convention of such a character must inevitably involve an element of compromise, adjustment, and less than 100 per cent, satisfaction probably in every case, and, accordingly, I do not propose to examine in detail the provisions of the general act. Even though there may be objections to any particular scheme of arbitration, judicial settlement or diplomatic negotiation, almost any of these methods is better than war. We have to take the risks of peace as well as the risks of war, and I am prepared to take them. It would be doing no service, I repeat, to examine critically the precise method suggested.

These proposals for the pacific settlement of disputes must necessarily be considered in relation to proposals for the removal of some of the causes which, although designed to guard the security of a nation, yet run the risk of increasing the liability of war.

In conclusion, therefore, let me refer in a few words to the importance of the Disarmament Conference which is to be held at an early date. After all, these agreements, with whatever goodwill we may make them, however much we may intend to carry them out, however much we may intend them to cover all possible contingencies, including vital issues that affect the existence and security of a nation, are agreements only, and if the other side does not keep them, then we are not bound by them. There must be more than the signing of a name to these agreements. Some positive and definite steps have already been taken in thb direction of disarmament. The first duty of any government, however, is to provide for the security . of its citizens, and no government that realizes its responsibility can neglect that duty. When we enter into agreements for the pacific settlement of disputes we should double our efforts to remove the economic factors which tend to create international disputes likely to lead to war. In to-day’s press I read two significant items. One is to the effect that the submarines owned by Australia have been presented by this Government to the British Government. I am not going to use this debate as an occasion for discussing the wisdom or significance of that action. Of course, the submarines still exist, and are useable, and intended to be used, as a part of the Royal Navy. The other item - and I am reading from the Sydney Morning Herald - is as follows : -

Mr. Hector C. By water, the naval correspondent of the Daily Telegraph reveals the superiority of the German 6,000-ton cruisers Konigsberg, Karlsruhe, and Koln, built in accordance with the Versailles Treaty, and running on Diesel engines only. Each of them, he says, has a radius of action exceeding 18,000 miles, which is more than that of any warship afloat. The Diesel engines develop one horse-power for each 12-lb. weight, which is 05 per cent, lighter than the usual marine oilengine. The armament is exceptionally powerful, consisting of nine 6-inch Krupp guns, three triple turrets, with each gun discharge ing eight rounds a minute. Thus the three turrets together could discharge 72 105-lb. shells a minute - a turret .of steel and explosives which only the stoutest armed target could resist. Also there arc four antiaircraft guns and twelve torpedo tubes.

Mr Crouch:

– Under the Versailles Treaty the nations are limited to six torpedo tubes.

Mr LATHAM:

– The task before the world, and perhaps the greatest task, is not accomplished and completed by signing agreements. We have to go much further than that. The news item which I have read shows that the nations of the world, in order to protect themselves, in order to conserve the security of their citizens, are, within such limits as are allowed in the case of those who are restricted in naval armament, still engaged, because of the circumstances which, in fact, exist in the world, and which it would be fatal to pretend to ignore, making the best possible provision to safeguard their own people. Every nation must do that. It is for this reason that, although some real advance has been made particularly by the British Empire, in the direction of disarmament - and Great Britain compares favorably with any other nation in this respect - still much more remains to be done. I sincerely hope that the Disarmament Conference, to be held next year, will lead to results which will be beneficial to the world at large, and to every man and woman in it.

Mr BEASLEY:
West Sydney

– I first wish to refer to the procedure that has been adopted in regard to the discussion on this subject. I know that it is not an uncommon practice for governments to place questions of an international character low down upon the business paper and. to leave them there for many weeks, and perhaps months, according to the length of the session, and then at the last moment to bring them on for final determination. That practice was adopted by the Bruce-Page Government, and apparently it is being adopted by this Government. Australia cannot separate itself from happenings in other parts of the world. We should, therefore, take a greater interest in international questions, and this House should have’ greater opportunities to discuss the decisions of the League of Nations and of various international conferences.

Mr Crouch:

– We had three international debates last year.

Mr BEASLEY:

– I am not sure whether the Leader of the Opposition (Mr: Latham) was informed of the intention of the Prime Minister to debate this subject this afternoon, but certainly no indication was given to me or to any of my colleagues. The ordinary member, looking at the notice-paper, would conclude that this subject was not likely to be discussed for another month, and the Government has not acted fairly to honorable members generally in bringing on this subject at this stage without any previous notification of its intention to do so. When the Prime Minister asked for leave to change the order of the business, I questioned him for doing so, and unless sufficient notice is given in future I will use all the forms of the House to prevent leave being given. I listened attentively to the Leader of the Opposition. It is true; as he has indicated, that while we are setting up an international court for the purpose of settling diplomatic differences among nations, we still have the mad race in respect of the construction of armaments which is now taking place among various nations. It, therefore, appears that all this talk at the Disarmament Conference recently of a reduction of armaments has no real sincerity. The reasons actuating these people to talk disarmament is that, when the war terminated, the resources of the various nations which had been engaged in it were so drained that it was impossible for them to continue to build armaments as before in the defence of their citizens. Any attempt to keep the building of armaments up to the pitch of scientific perfection which it had reached at the conclusion of the war would have required practically the whole of the revenue resources of the Governments concerned. The various nations were, therefore forced to do something, not because they believed that the conferences of organizations functioning under the League of Nations would establish peace, but because they thought that they would prevent trouble in their own countries arising out of the economic disturbance due to war. The internal danger needed immediate attention in all countries. No nation could engage with another while its position at home was unsettled. Therefore, all these moves had to- be taken. Britain could not keep peace with the United States of America, or France with Britain or Italy, so, to stem the tide temporarily, this course had to be adopted. But it will only last as long as the larger powers feel it to be necessary. I say frankly that until such time as the men who make war possible, the men who actually engage in it, have direct representation and a voice in disarmament conferences, peace will never be established. Even the signatories to the Treaty of Versailles realized that it was not sufficient to set up an organization dealing only with diplomatic questions, because real peace could not be established only in that quarter. The entering into treaties between, nations is not sufficient. That practice has long been followed without success, because it has not effectively handled the basis of all wars, namely, trade relations. Any restriction of trade on the part of one nation is the first step to a conflict with another. Therefore those who drafted the peace treaty realized that periodical meetings of diplomats at Geneva would not be sufficient, and that it was desirable to set up some institution associated with the League of Nations which would enable Labour problems to be discussed with a view to levelling up the industrial standards of various countries. The preamble to the instrument which established the International Labour Office declared that while the present disparity of wages and working conditions existed between countries, preventing competition on an equal footing, the risk of war between trade rivals would always be present. This organization, therefore, was established for the purpose of minimizing this possibility by gradually raising the industrial standard of backward countries to those of their more advanced neighbours. Although the International Labour Office has been in operation for some years I am sorry to say it has made little or no progress towards the realization of that objective. The honorable member for Reid (Mr. Coleman) differs from my view on this subject; I recollect that he criticized opinions I expressed when he addressed a meeting of a branch of the League of Nations Union in Sydney after my return from Geneva, but my statements can be substantiated. When I attended the International Labour Conference, instead of the representative of the Australian Government acting in conformity with the ideals of those who were responsible for the establishment of the International Labour Office and endeavouring to impress upon other nations the need to bring their standards up to that which Australia had attained, he voted against the proposal of the other Australian delegates and assisted to maintain the countries then under discussion in their backward state. Although the Leader of the Opposition has expressed the hope that something practical may be achieved at these conferences, the fact remains that the representative of the Government of which the honorable gentleman was a member, adopted a retrograde course. Within Australia, particularly at the present time, the organizations opposed to Labour are doing their utmost to break down the standards which have been established here, andwhich have been envied by other countries. If we sincerely desire peace and the industrial uplift of the world, we might show our bona fides by doing something at home to maintain our existing standards, and on every available opportunity try to extend them to other countries. I would like to be able to subscribe to the belief that the League of Nations and the organizations connected with it will be the means of ensuring permanent world-peace; but I am very doubtful of such a result. The League will serve the purpose for which it is established only so long as peace is to the advantage of the larger nations. When they think it desirable to impose their will on smaller nations in order to develop trade - and the money power knows no distinctions of country, flag, colour or creed - they will throw off their allegiance to the League. Meanwhile it will, like other similar institutions that have preceded it, provide a stop gap until the horrors and evil effects of tie last war have faded in the memories of mankind. Then when the necessity for extending trade relations arises, the larger and more powerful nations will move in what direction they wish, regardless of the League of Nations, the Versailles Treaty, the International Labour Office and the Court of International Justice. Nevertheless, it is incumbent upon all of us who sincerely believe in peace, to do what we can at every opportunity to educate public opinion and minimize this danger.

Question resolved in the affirmative.

page 1242

WHEAT BILL

Personal Explanation.

Mr PROWSE:
Forrest

.- I rise to a personal explanation. Prior to the Easter adjournment, I complied with the request of the honorable member for Fremantle (Mr. Curtin) to pair with him on the day before the adjournment, and for several sittings thereafter. When the pair was being arranged with the Whips of the Labour and Country parties, we discovered that we both would be voting for the Wheat Bill. The honorable member for Fremantle thereupon arranged a separate pair on that measure, and the Whip of the Nationalist party definitely promised that he would pair me with a member voting against the bill. I have since found that no pair was recorded, and I wish the House to understand that my vote would, and should have been, recorded for the Wheat Bill.

page 1242

COMMONWEALTH BANK BILL

(No. 2).

Second Reading

Debate resumed from 24th March (vide page 525), on motion (by Mr. Theodore) -

That the bill be now read a second time.

Mr SPEAKER:

– The Leader of the Opposition has intimated that he has waived his rights of speech on the second reading in favour of the right honorable member for Cowper (Dr. Earle Page).

Dr EARLE PAGE:
Cowper

.- This bill is the heart of the Government’s financial policy, providing, as it does, that in future there shall be no gold backing to the note issue. The Fiduciary Notes Bill, the Bank Interest Bill, and the measure now before us, represent practically the whole of the Government’s new scheme of finance. They are really one measured design to put Australia completely off the gold standard, set up a purely paper currency, and insure that bank interest, and therefore banking, shall, in future, be under political control. This bill proposes that the total note issue, which, in future, will have no gold backing, shall not exceed £60,000,000. The present issue is £45,000,000, of which £15,000,000 is backed by gold, and the balance by securities that represent wealth actually produced and realized. In future, the backing for the £30,000,000 worth of notes over and above those already backed by tangible securities, will be Commonwealth Government securities of various sorts which may represent not realized and existent wealth, but rather anticipated wealth. In addition, the whole of the proposed fiduciary note issue of £1S,000,000 would be backed by prospective wealth that might never be realized. Of that sum, £6,000,000 was to have been advanced to wheat farmers, and the balance was to be applied to the relief of unemployment. But there would have been no actual and concrete backing in wealth actually existent. Moreover, the fiduciary notes would have been issued for recurrent purposes. Next year, we shall again have to face the necessity to aid the wheatfarmers and the unemployed, and just as this year the Government considers it necessary to print notes for these purposes, so next year more notes will be required for another bounty to the primary producers, and the further relief of unemployment. [Quorum formed.] The three banking measures which the Government has introduced provide for an irredeemable paper -currency against which there would be not £1 worth of gold. If the Government’s policy be accepted, there will be no standard for measuring Australian currency against the monetary standards of other countries. In the Same way as the skippers of Missis.sippi steamers placed an iron bar on. the safety valve of their vessels when they were endeavouring to develop more speed, the Bank Interest Bill is being placed on the safety valve of the currency system to prevent the automatic action of interest in stopping the fluctuations of booms and crises. By this procedure, which is without precedent in the history of the world, as the Treasurer (Mr. Theodore) has admitted, no automatic corrective will be left, and Australia will be divorced from the gold standard and the monetary system of Other countries, and there will also be no governor on the engine. This is either the act of a madman or the last throw of a political gambler. Already, even the mere threat of repudiation, whether directly by default or indirectly by inflation, has caused a flight of capital from the Commonwealth. I noticed in a statement published recently by the Government that, during the last six months, our savings bank deposits had diminished by £20,000,000, while during the last 24 hours the savings bank of an important State has been compelled to suspend operations and to consider its position. The reason is not that there are insufficient assets behind those institutions, but that confidence has gone, and has been replaced by fear. If anything will tend to strengthen the feeling of mistrust in the minds of our people it will be the pursuit by the Government of a policy of inflation. Especially will that be so in the case of those European countries which have passed through similar experiences. In the words of Herr Schacht, President of the Reichsbank -

Arbitrary and irresponsible as the war itself, the inflation had claimed its hecatombs. Tears, bitterness and despair beyond all measure were the end of it.

A policy of inflation would destroy confidence in Australia, and tend to drive capital away. Every country that has passed through a period of inflation and the ruin and bankruptcy inevitably associated with it has ultimately been able to return to financial stability only by adopting in some measure a policy based upon a gold standard. Take the case of

Prance where 125 francs now go to the fi sterling in place of the 25 of pre-war days. That country has de-valued the franc and everything else, and to come to the stable currency it must embrace a policy that has a definite relationship to the gold exchange standard. Austria, Germany and other countries which have been rescued from the tears, bitterness, and despair that are always associated with inflation all began their rehabilitation by means of golden help from outside. We should now be considering, not the sending overseas of the gold that we possess, but a means whereby we can augment our present supply, so that our position may be made more stable. If that is not done, the position will inevitably become worse, and a recovery made more difficult. It is better to prevent inflation by the early use of gold than to cure inflation by the late use of gold from outside.

From my knowledge of finance, I am satisfied that the central banks of the world, and especially of Europe, are much more ready to give assistance by means of a gold loan before a country embarks upon a policy of governmental inflation, than after it has done so. Instead of following this downward path - which may, perhaps, lead to the winning of an election, but certainly not to the saving of the country - we should seek the straightforward path, face the issue, and endeavour to balance our budget. By doing that we shall ensure the sympathy and co-operation of other countries in our difficulties.

It is remarkable that the Treasurer, in replying to an interjection by the honorable member for Fawkner (Mr. Maxwell), asking whether this was in his opinion the best thing to do, stated that it was not, but inquired what was the alternative. I shall set out a practical alternative, based on the report of the committee of experts who were appointed by the Loan Council to consider our position. All the Governments of Australia were represented on that committee, irrespective of their political complexion. Not one of these experts is a politician. All are non-party individuals who possess impartial and detached minds to apply to the problem. Many of them are government servants. The committee points out the cause of our difficulties, and the cure. Surely the Government should have the courage and wisdom to tread the path recommended.

Mr Scullin:

– Those gentlemen were not appointed by the Loan Council, but by the Premiers of the different States, and they co-operated in their efforts.

Dr EARLE PAGE:

– The document is printed by authority by H. J. Green, Government Printer, and is headed “Information based on a consideration of the facts set out in the report submitted to the Conference of Commonwealth and State Premiers and Treasurers by the committee appointed to investigate the financial position.”

Mr Scullin:

– But not by the Loan Council.

Dr EARLE PAGE:

– I understand that that was so, but it does not make much difference if the governments of Australia, whose representatives comprise the Loan Council, authorized it. The committee was appointed by the different governments of Australia, of varying political colour, and was entirely nonpartisan in nature. At page 84 of the report the committee states -

In general, there is a pronounced lack of confidence throughout the community. This so adversely affects every avenue of national life that sound measures for its removal should be the first care; the alternative is default in government payments.

Paragraph 3 reads -

It would be only too easy to gloss over our loss of prosperity by an alteration in the purchasing power of the currency. This is not a road to recovery, but to collapse. A progressive expansion in the currency though at first hardly perceptible inside Australia, could not but have a marked and unfavorable effect on credit and would in the end cause a collapse of industry and trade. Symptoms of excessive expansion of the credit currency are indeed in evidence already. Fear of » continuance of such a process has heavily affected the exchange rate. It is thus evidence that no local alteration in the monetary unit can alter the fact that within our diminished national income we must live and meet our financial commitments, both as individuals and as governments organized for common ends.

While paragraph 6 declares -

At the present time the gravest danger to confidence lies in the unbalanced condition of government budgets. Banks have been granting to governments further credits comparable in amount to their added advances to industry. The figures of short-term indebtedness in paragraph 15 indicate the ex- tent to which they have done so. Unhappily, the growing size of budgetary deficits threatens an increasing resort by governments to an expedient which must undermine the purchasing power of the Australian pound.

Finally, the committee advances a cure, in paragraph 9, page 87-

Reduction in government expenditures at the rate of £15,000,000 a year is the key to the whole position. The possibility of recovering financial equilibrium and general prosperity within a period of three years depends entirely upon the adoption of this policy by the respective governments. Any lesser reduction would not only postpone the return of financial stability, but would postpone the restoration of prosperity to the people of the Commonwealth as a whole.

What has the Government done in that regard ? It brings down a scheme for the inflation of our currency, with the professed object of trying to augment its taxation, and to stimulate temporarily the industry of the country, in the hope that that action will be quite sufficient to improve the existing financial position. I refer the Government to the history of Germany, which country followed an exactly similar course. In February of 1923 Germany was receiving by way of taxation some 31 per cent. of its expenditure. That country persisted in inflation, and by November of the same year was receiving in taxation from the inflated currency11/2 per cent. of its total expenditure. It is interesting to note the German parallel to the Australian position. In his brochure The Menace of Inflation, Grenfell Price writes -

We have seen in the history of German inflation, a series of stages, although these stages did not occur in strict sequence of time.

the Government refused to balance the budget -through this a financial crisis occurred;

the Government tried a number of ineffective remedies. These remedies were those which have been suggested or tried in Australia - the use and depletion of the gold reserve, higher taxation, and further loans:

the Government drifted into a policy of inflation. This was due to the fact that the Government hoped to reduce their debts, which were repayable in Germany and in the mark, and because the people as a whole had no knowledge of the tragedy which inflation would bring.

the issue of worthless paper aroused fear.

We have on record the following admission by Dr. Rathenau, at that time the German Prime Minister -

We are inflating becausewe must; because we can find no other means of satisfying demands of labour, and of staving off an industrial crisis which we are afraid to face. I see clearly we are steering for the abyss.

The Government received no benefit. In February, 1923, receipts from taxation were 31 per cent. of expenditure; in November, 1923, they were only 11/2 per cent.

That is exactly what is happening in Australia to-day.

When he first dealt with this matter, before he was reinstated in office, the Treasurer discussed the alleged advantages of a scheme of this nature. He claimed that nominal wages would be kept up, but that real wages would go down. The whole position is being camouflaged to the workers, and to the old-age, invalid, and soldier pensioners. By this specious means of increasing the country’s currency, the Government pretends that nominal wageswill be kept up, while actually their purchasing power will be reduced. The Government’s scheme to deal with the problem can end only in ruin and bankruptcy. Surely we should be warned by the experiences of other countries, and do something immediately that will put the nation on the right track, and bring aboutits financial salvation and rehabilitation. While such a course might cause a certain amount of hardship, it would be much less than under Labour’s scheme, and it is the quickest way for us to return to general employment, to engender confidence in Australia, and to displace the existing fear. We must do something to enable our general conditions to adjust themselves to the fall in prices that has occurred in the great primary products that we export. That would.be the first step towards the birth of hope. It would drag us out of the morass of despair and ruin into which we are being led.

It is essential that we should face the position, and do something immediately to reduce the price levels of manufactured articles in this country. I have in my hand a statement that gives an exact comparison of the prices of farm product and of finished articles for the period January, 1926, to January, 1931. Taking the 1911 level as the index figure 100, it is shown that in 1926 the figures were 181 for farm products, and 171 for the finished article, while in 1931 they were 117 and 188 respectively.

– It does. It is all nonsense to speak of gold as having no real value, and to refer to the gold standard as the gold fetish. It may be true that gold, as such, cannot satisfy any human want, but it has enormous psychological value. It is the touchstone by which nations have become accustomed to test a community’s solvency and honesty of purpose. That is why France, which has been quoted by the Treasurer in the course of this debate, has built up for herself a reserve of £400,000,000 in gold, recognizing that in that way only can she correct her overseas exchange rate and maintain that stability of prices which is the Treasurer’s professed aim. We would be absolutely mad to depart from a gold basis at this stage, because the time must ultimately come when we will have to get back to it. The earlier we make a move in that direction the sooner will confidence be restored, trade revived, and unemployment mitigated. Moreover, the sooner we begin, the sooner will overseas interests be prepared to come to our assistance.

If we are to retrieve our position something must be done in regard to overseas interest. It is obvious that we shall have considerable difficulty during the next 40 or 50 years in paying the huge amounts of overseas interest to which we are committed. We owe £530,000,000 in the Mother Country, and I am convinced that as soon as we evince a determination to face our position squarely, and to get our currency back to a stable basis, we shall be able to consolidate our British indebtedness into one long-dated loan, if necessary, in such a manner as to save ourselves 1 per cent, or 1-J per cent, interest. At the present time we are paying just about 5 per cent, on all our overseas indebtedness, the interest rate ranging from 2^ per cent, to over 6^ per cent. A saving of 1 to l-£ per cent, would save anything from £6,000,000 to £9,000,000 a year. The matter has been already under discussion in London for some years by the big underwriters, who have anticipated the great difficulties we are experiencing owing to the reduced prices of wool and wheat, and they are willing to give us this assistance. They are not benefactors; it would really pay them to do this. Let us consider the position in England, following the wars with Napoleon. There was a steady decline in the. price of money for 30 or 40 years after 1815. In 1840,’ Peel was able to fund the whole of the English debt at 2 per cent, and 2^ per cent. whereas in 1807 interest rates were over 7 per cent. Twenty years hence, interest rates may be very low indeed; but we could make an immediate gain, and it would mean a great deal to us at the present time. First of all, we must show that we are determined to return to a gold basis, and carry on governmental activities in a way that will engender confidence throughout the world. “We can. send away the last of our gold for the purpose of paying our overseas debts only once. We owe abroad, at the present” time, £38,000,000 on short call. Fifteen million pounds is far short of that, and if the gold were shipped away we should still owe £23,000,000. It would be better to secure an immediate adjustment of our overseas indebtedness along the lines that I have suggested, one that would obviate the necessity for shipping this gold. In December, 1929, we departed from the gold basis. Gold was commandeered under the Commonwealth Bank Act passed at that time. I then pointed out in this House that that was the first step towards an inflation of the currency. We went off the gold basis by the Government first commandeering the gold, and then forbidding its export. At that time, £17,000,000 or £18,000,000 worth of gold was in the banks. It was taken from them on the understanding that they were to be given an equivalent in London exchange, if they so desired. But if we sent our remaining £15,000,000 worth of gold abroad, how could we meet the obligations of the banks which owned this gold eighteen months ago? We should do something to improve the position, rather than make it worse than it is now. We have come to the stage when, having sent all the gold we can overseas, we are forced to ship away the remainder, or straighten up our financial affairs here. If we send away the last of our gold, we should still be in the position of having to straighten up a worse tangle. The legal position is that for every £4 issued in notes there must be £1 in gold in the Commonwealth Bank.

Mr Gabb:

– What would be the position in Australia to-day if the masses of the people thought that there was no gold behind the note issue?

Dr EARLE PAGE:

– There would be a worse rush on the Commonwealth Bank than there has been on the Government Savings Bank of New South Wales in the last few days. Whether honorable members believe it or not, the gold psychology is universal. Some persons are hording their few pounds in gold at the present time as a last resource.

Notes to the amount of £45,000,000 are now on issue, and we have £15,000,000 worth of gold. If a demand were made to send £5,000,000 worth of gold overseas, the gold reserve would be reduced to £10,000,000, and it would be necessary to withdraw notes now in circulation to the amount of £5,000,000. On that £5,000,000 in gold, £20,000,000 worth of credit has been built up, and such an action might mean a contraction of credit to the extent of £20,000,000, which would tremendously increase the present unemployment and distress. It is not safe for us to reduce the 33-J- per cent, gold backing that we have at the present time. If we had not to export £5,000,000 worth of gold on the 30th June next to meet the treasury-bills that fall due in London, we should still be in a difficult position. My suggestion is that we borrow £15,000,000 in gold for a long term, and at a low rate of interest, and use that gold as an additional reserve behind the present note issue. We should then have £30,000,000 in gold behind our £45,000,000 in notes. If we issued on securities on hand another £15,000,000 in notes, we should only have £60,000,000 in notes against the £30,000,000 in gold. That would be a 50 per cent, gold backing, which would be substantial, and something that the world would respect. If a country has plenty of gold behind its notes, nobody is anxious to demand gold from it ; its credit is good enough for it to do practically without gold. But, if it has no gold, everybody requires payment in gold. Immediately we established our financial position in this way, there would be increased faith in Australia:

What is the Government’s defence of its attitude? The Treasurer’s argument was mainly that the gold standard did not prevent, fluctuations in price levels. There may be some fluctuations in price levels in countries that have a gold standard, but they are insignificant compared with the fluctuations that occur in countries having an irredeemable paper currency. In England, even during the late war, the index figure as to price levels never rose above 290, as compared with 100, which was the pre-war average ; but, in France, it reached 700; in Italy, 800; and in Germany it rose to millions when the unredeemable paper currency was established. It was recognized in a court of law in Germany that 22 per cent, a day was a reasonable rate of interest to be charged in a country where inflation was in full swing. The only real argument advanced by the Treasurer, in the whole course of his speech in favour of this measure, was that the gold standard did not prevent fluctuations in price levels. But it does prevent them to a much greater degree than in countries that have an irredeemable paper currency. We have seen a 50 per cent, drop in the world prices of goods in countries having a gold standard; but a rise of 600 per cent, takes place in a day or two under inflation. The Treasurer admitted that no matter how much we might inflate or go off the gold standard, it would be necessary to obtain assistance in the form of gold in order to right matters.

The disadvantage of the Government’s proposal is recognized in clause 4 of the bill, which provides -

Any sum payable, in the Commonwealth or in any territory under the control of the Commonwealth, under any contract or agreement whether made before or after the commencement of this section may be paid in Australian notes and any provision in the contract or agreement requiring payment of any such sum in coin or requiring the payment of any further or additional amount by reason of the rate of exchange existing with any other country shall be void and of no effect.

The first thing that this precious scheme of the Government involves is that we should void our overseas contracts. The Prime Minister says that he will alter that, in so far as past contracts are concerned. The bill has been in circulation for a week or two, and it has been blazoned all over the world, not only that this Government intends to bring into being a note issue that is not based on gold, at all, but also that it will void all the old exchange contracts.

Mr Scullin:

– No. We shall insure that that will not be the result.

Dr EARLE PAGE:

– Everybody that I have spoken to fears that result. Of course the Government cannot escape from the position in which it finds itself. Inflation has been practised to the extent of 30 per cent. We have to pay, roughly, £10,000,000 a year more in Australian money now than formerly to meet our interest obligations overseas. That means £10,000,000 extra taxation in Australia. It is suggested that there will be a set-off to certain taxpayers in this regard; that the primary producers who export will get the benefit of the high exchange rates. But how will they get that, if inflation is put into operation to a degree that will make it uncontrollable? The Treasurer stated that the exchange would be pegged in those circumstances, so that the farmer and grazier will be fleeced; but how will the worker, the old-age pensioner and everybody on a fixed income, get on? They will all be plainly robbed as the result of the operation of this measure by the inevitable increase of prices.

I urge honorable members to take the same view of this proposal as the Prime Minister (Mr. Scullin) did, according to the cable that he sent from London to Australia when it was suggested that £20,000,000 worth of credit should be made available under the “ Gibbons “ scheme. On the 5th November last he cabled as follows: -

To create credit for £20,000,000 for loan works is unsound, and I expect the banks to refuse to do so. Such a proposal means permanent inflation, which could not be checked as implied, and would demand further inflation. All this talk about creating credit and inflation is most damaging.

– He is not the authority for my statement to-night. I have been informed by several gentlemen of financial standing in Australia that it is possible for us to get this money.

I appeal to the Prime Minister not to put himself in the position that Dr. Rathenau put himself in when he made use of the words which I quoted earlier in my speech. If the opinions expressed by the Prime Minister right throughout his political career until two months ago mean anything, the right honorable gentleman must know that he is to-day steering for the abyss. I appeal’ to him to take his courage in both hands, and to steer the course that he knows should be taken if Australia is to rehabilitate herself. That course is the one recommended by the committee of experts. If any steps are taken which will increase price levels, hardship will be inflicted upon the workers of this country, and on pensioners, salary earners’ and those on fixed, incomes, but if price levels can be reduced, every worker, and every other person in the community, would be much better off and we should turn the corner and face towards prosperity instead of floundering further into the morass.

Mr CROUCH:
Corangamite

.- In order to keep an Anzac Day engagement in my constituency, it is necessary for me to leave Canberra this evening, so I shall make my remarks brief. There is really not much need to reply to the speech of the right honorable member for Cowper (Dr. Earle Page), for he has already delivered the same speech, with slight variations, on three or four occasions, and his arguments have been refuted.. Had we been conducting our business under the standing orders of the Congress of the United States of America, the right honorable member could have had his speech incorporated in Hansard without delivering it.

But one new note was sounded. I was somewhat surprised to hear the right honorable member use an argument which supported the bill, although he did not intend it to do so. He informed us that he would willingly borrow £15,000,000 in gold in London because upon that he could issue 15,000,000 additional £1 notes here. That statement really amounts to an admission that the intention of this bill is good ; and that it does not matter where the gold is, so long as we have the notes and the currency.

In 1893, there was a ‘financial crisis in. Australia, and many banks ceased operations. Seven banks fell in one week, and only four of them were reconstructed. The Melbourne branch of the Bank of New South Wales closed its doors on only one day until noon; but that was sufficient to cause the Government to summon a special session of the New South Wales Parliament to deal with the situation. A bill was rushed through the Parliament which made the notes of the bank legal tender, and a special train brought the gold held by the bank from Sydney to Melbourne. The notes remained in New South Wales, and were used as currency. That bank did not have to- re-construct, simply because notes were made legal’ tender, although the gold went to Melbourne, and all the other capitals.

What is gold? Intrinsically it is of no. more value than sand, or a number of other things that can be shovelled into heaps. It has no value in itself. Of what use is it for us to> keep 15,000,000 sovereigns in Australia when we need the money overseas to pay the interest upon our debts?

Mr Gabb:

– The fact that we have the gold in Australia has an important psychological effect upon the masses.

Mr CROUCH:

– A greater psychological effect would probably be created if the people realized’ that we had only £15,000,000 in gold as a backing for- notes to the value of £44,000,000’, which are in circulation. I have no doubt that the honorable member for Angas (Mr. Gabb) could intensify the psychological effect that he talks about if he were to travel through the country telling the people that we had so little gold.

In 1872 Russia decided, iu common with other countries, to revert to the gold standard; but it also decided that it was not necessary to have the gold in Russia, and lodged it with the Bank of England. But it was used as the basis for the issue of currency in Russia. Similarly, Japan has shown that it is not necessary to have gold in one’s own country. The Japanese Government also lodged much of its gold with the Bank of England. At the close of the Russo-Japanese war it will be remembered that the largest cheque ever drawn on the Bank of England was drawn for the amount of £3,970,000 in favour of Japan, under the provisions of the Treaty of Portsmouth. A picture was painted of the Russian ambassador handing the Bank of England cheque over to a Japanese ambassador. This was possible because both countries kept their gold reserve in the Bank of England. If we had our £15,000,000 in gold in England it could be used to meet our interest bill, and save 5^ per cent, on the amount remitted overseas. That would be of great advantage to Australia. The one thing I do not like about this bill is the provision which limits the issue of notes to £60,000,000. Possibly a crisis is coming during which it might be advisable for the Commonwealth Bank to act as the Bank of New South Wales acted in 1893, In such an emergency the bank should have authority to issue notes to the extent that it deems desirable. The Commonwealth Bank Board has shown that it has the courage and may be relied upon to watch the interests of the community. The Commonwealth Government, and all the other governments and financial institutions of Australia, are at present dependent upon the Commonwealth Bank. If the bank were under political control I would say that it was desirable to tie its hands; but it is not under political control and has shown that it has the strength and determination to resist what it regards as unjust demands upon it. I believe that we should trust the bank all in all or not at all. For this reason I am sorry that the provision to limit the issue of notes to £60,000,000 is in the bill, because a crisis might require a larger currency.

The right honorable member for Cowper has said that he does not believe in deflation, but he wants to return to the gold standard. Does he sincerely suggest that it is possible to return to the gold standard at present and to find 44,000,000 sovereigns with which to back our note issue? If I thought the right honorable member sincerely believed that, I would attempt to answer his argument; but he cannot believe it. I do not desire inflation nor deflation; I want stabilization. I know something of the evils of inflation. I was in Austria some years ago, and for the first time in my life I became a millionaire, although, at the time, I only changed £25 in cash. When I changed my money into Austrian currency I received 9,000,000 Austrian crowns. But it cost me 120 crowns for a tram ride, worth l£d. There is a good story told of a commercial traveller, who got into an Austrian railway carriage, and had his large portmanteau put on the luggage rack. He was told by the porter that it was not permissible for him to take his pormanteau into the carriage. He replied, “ That is not my portmanteau; it is my purse.” I do not desire to see inflation or deflation; but there is no doubt that we are passing through a period of deflation at present.

The report of the committee of experts shows us, according to the right honorable member for Cowper (Dr. Earle Page), the way out of our difficulties. That report advises nothing but the reduction of wages, salaries, and pensions, and the cutting down of expenditure everywhere. What would be the effect of that policy? If the workers received less wages the storekeepers would sell less goods. This would mean that they, in turn, would buy less from the factories and that factory hands would have less work. Consequently they would not have the money to buy the produce of the farmers. And so the psychology of depression is created. In my opinion the policy which the Government has adopted will assist us to tide over the defficult period through which we are passing, and enable us to survive until better times return. I suggest that it would be quite justifiable to issue fiduciary notes to the extent of more than even £18,000,000. Although this dose of inflation might be somewhat nauseating we should have the courage to take the medicine as a means to relieving the effects of the deflation of the previous Government.

Sitting suspended from 6.15 to S p.m.

Question - That thebill be now read a second time - put. The House divided. (Mr. Speaker - Hon. Norman Makin.)

AYES: 19

NOES: 17

Majority . . . . 2

AYES

NOES

Question so resolved in the affirmative.

Bill read a second time.

In committee:

Clause 1 agreed to.

Clause 2 (Governor-General may require bank to hand over gold to Treasurer) .

Mr LATHAM:
Kooyong

.- This clause involves the abolition of the gold standard in Australia. Our monetary system provides for a reserve of 25 per cent. of gold against the notes in circulation. Under this provision the GovernorGeneral may, from time to time, require the Bank Board to hand over to the Treasurer any gold held by the bank, and the gold so transferred may be used for the discharge of the indebtedness of the Commonwealth in London. The indebtedness of Australia in London is well over £500,000,000. There is also an accumulated deficit on current account of between £38,000,000 and £40,000,000. Therefore, the indebtedness which is referred to in this clause approaches £600,000,000. The £15,000,000 worth of gold held by the Commonwealth Bank cannot make any appreciable lessening of this indebtedness; it cannot even discharge the deficit on current account of £38,000,000. We, therefore, cannot expect the operation of this clause to bring about any substantial alteration in the financial position of the Commonwealth. The clause provides that the gold shall be handed over in exchange for Commonwealth securities of an equivalent amount. The phrase “ Commonwealth securities “ is vague and ambiguous. In certain acts of the Parliament, such as the Crimes Act, the Bank Act, and others, it is defined for the purposes of particular parts of those statutes. There is, however, no general definition of Commonwealth securities. According to a definition in the recent Fiduciary Notes Bill, which has not become an act, Commonwealth securities includes treasurybills. I do not know whether the Government thinks that this provision requiring Commonwealth securities of an equivalent amount to be handed over to the bank in exchange for gold will enable it to obtain the gold in return for treasury-bills which are merely documents promising to pay, signed by the Treasurer of the Commonwealth. If that is so, this part of the clause is illusory and meansnothing beyond the fact that the Commonwealth Bank is to hand over this gold reserve to the Treasurer. There may be circumstances in which it would be proper to use this gold reserve for the discharge of immediate liabilities. It is, however, surely obvious to all honorable members that no approach to a permanent solution of the financial difficulties of the Commonwealth can be made along the lines of this bill. The amount involved does not begin to approach the amount of the liability. Even if the whole of the gold reserve were used at once, it would still leave a large deficit on current account, and leave nothing for the meeting of future liabilities. Under this clause we are asked to agree to the exporting of gold for use in the discharging of the indebtedness of the Commonwealth in London. I do not suggest that there is no advantage in paying off our liabilities in London so far as we can do that, but one has to consider that the effect of this legislation will be the adoption of an inconvertible note issue. There will be no relation at all between Commonwealth currency and gold. That would be a serious step to take. I am not suggesting that the gold exchange standard is the summit of human perfection in financial matters. No monetary system can be described as entirely perfect; but the gold standard has fewer objections to it than has any other standard which has ever been suggested. If we depart from a real objective standard we are setting sail upon an entirely new and uncharted sea. If Australia were self-contained, and our legislators were alike omnipotent, omniscient and benevolent, there might be no need for a gold standard in respect of internal currency; but Australia depends upon its external trade. That is the source of our life, and. if we divorce our currency from the gold standard we shall be running grave risks indeed.

What is being done is, of course, in accordance with the policy of the Government, which considers that persons who happen to have been elected to this Parliament, and to occupy the treasury bench, are endowed in some miraculous manner - how I have never been able to understand - with a degree of knowledge in relation to economic matters, which no one would have suggested they previously possessed. The other day the Treasurer gave an interview which was published in the Daily Herald, a Labour newspaper in London, in which he declared -

Australian bankers are very conservative and very timid.

The first concern of an Australian bank, whether it be the Commonwealth Bank or any other banking institution, is to maintain its solvency, not only in its own interests, but also in the interests of the community as a whole. This alleged conservatism and timidity of Australian bankers is really attributable to their recognition of the obligation they owe, not only to their shareholders, but also to their depositors and to the community generally. The Treasurer, in this interview, said -

The credit resources of the nation are too great a responsibility and too important a factor to be controlled, manipulated, and exploited by a few trading banks and financiers.

But it is the opinion of the Treasurer that these credit resources of the nation may very well be controlled, manipulated, and exploited in the interests of the political party that, by an electoral accident, happens to have possession of the treasury bench for the time being. The Treasurer went on to say -

Frankly, I admit that I want all the banking of the community done by the Commonwealth Bank. Currency, loan issues, credit supplies, exchange, interest and discount rates should be managed and controlled by a Commonwealth central reserve bank.

We all know that the central reserve bank this Government believes in setting up is one which will be directly subject to political control, and will serve the interests of one political party. The Treasurer proceeded -

All life, accident, fire and general insurance for the community should be done by a nationally-owned Commonwealth insurance office. We should then have the credit services and financial institutions in the hands of the people instead of private exploiters. I make a candid confession, so that the public may realize why the Commonwealth Bank is so antagonistic, and why it is making a desperate bid to embarrass the Governments of Australia, in order to exert the power of money against the will of the people.

This bill is part of the policy of the Government to bring all the financial institutions in Australia under political control. Of course, it is a policy which the Government is perfectly entitled to submit to Parliament, although I do not agree with it, but it is fraught with the gravest dangers to the well-being of the community as a whole, and is not designed as a solution for our present difficulties. The Government is prepared to run enormous risks with this and other associated measures in order to maintain its occupancy of office for a little while longer, so that certain electoral difficulties in New South Wales may be surmounted. In the first and second reports of the Gold Delegation of the Financial Committee of the League of Nations, it is pointed out that the gold standard is not perfect, hut that it is the best that has hitherto been discovered by the human race in relation to these matters.

The TEMPORARY CHAIRMAN (Mr Keane:
BENDIGO, VICTORIA

– The honorable member’s time has expired.

Mr LAZZARINI:
Werriwa

– I regret my absence from the division on the second reading. With my colleagues, I was under the impression that the bells wore ringing to summon the House after the dinner adjournment. Had I been in the chamber I should have voted for the second reading. I am sorry that such a clause as this should be found necessary owing to the adverse position of Australia in London. But one can take comfort from the fact that the present situation will tend to force this country and the world generally to adopt other means of providing currency than that of keeping it attached to the stupid gold standard which brands our present system of civilization as being more backward than that of a horde of savages deluded by the hoodoos of their medicine men. The Leader of the Opposition (Mr. Latham) suggests that we should adhere to the gold standard because it is the best that has yet been arrived at as a means to meet the needs of currency. How can he still say so in the midst of the world wreckage and economic desolation of to-day, when tens of millions of people are starving in the midst of plenty ? The capacity of the world to-day to produce everything for man’s use, benefit or comfort has never been excelled, yet all this desolation exists, and in the opinion of almost every thinker it is directly attributable to the restrictions dependence upon a gold standard imposes upon the currency needs of the people. At least 90 per cent, of the troubles of Great Britain has been brought about by that country’s attempt to deflate to a gold standard. The assignats of Prance are quoted as a classic example of the folly of inflation. That note issue failed only when France stupidly attempted to revert to a gold standard. The greenbacks of America did not cause trouble until a conservative government repudiated its paper currency in the interests of certain financiers. These note issues failed only when the fetish of gold was brought into operation - when there was an attempt to revert to a gold standard. It was the Peel Act of 1844 which graf ted currency laws on to the monetary system of Great Britain. Is the Leader of the Opposition, who says that the gold standard is the best system in the world, aware that it did not exist prior to 1872, just after the Franco-Prussian war? The world had got on fairly well without one, and there had not been the same proportion, of aggregations of wealth, such as have been rendered possible in America by the manipulations of currency, because of the inability of gold to fulfil the currency needs of the people. The world’s vast increase of trade and commerce, and its vast advance in manufactures, have created such demands for currency that gold can no longer meet them. A huge currency vacuum has thus been created, and it has been filled by the adoption of the » cheque system. According to the Leader of the Opposition, the first duty of a bank is to maintain its solvency. As a matter of fact, not one bank in the world to-day can be said to be solvent. If a run took place on any bank, inside or outside Australia, such as was witnessed in Sydney yesterday, it must close its doors just as the Government Savings Bank of New South Wales has been obliged to do. The Australian trading banks hold on current deposit from £96,000,000 to £100,000,000. Cheques can be handed over the counter and currency demanded for upwards of £100,000,000; but the banks have only £47,000,000 to meet that demand. On top of current accounts are fixed deposits aggregating £208,000,000. All this credit is resting on a currency of £45,000,000. The bankers are therefore inflating. They are forced into that position. Otherwise the currency needs of the people could not be met. To-day the gold standard plays no part in the internal currency needs of a country, nor has it done so for the last 50 years in Australia. Ninety-nine per cent, of the commercial operations in Australia are carried out by means of cheques. If we believe the Leader of the Opposition when we abandon the gold standard we shall be sailing on an uncharted sea. But the sea can easily be charted. If we were to abandon the gold standard and have a purely national currency, no country could sell to us a pennyworth of goods for which it would not take goods in return. We would not be able to create an adverse trade balance overseas, because we could buy no more goods than we sold. Morocco, which is still in the husbandry stage of civilization, has only silver and bronze currency. A British merchant sending goods there sells them for the currency of the country - the only form of payment he can receive. The two or three bags of coins paid to him would be valueless if exported, so he has to expend the money locally in buying commodities to be exported to Britain, where they can be sold for British currency. If all countries managed their currency in similar fashion the greatest incentive to war would be removed. The gold standard is responsible for all our financial and economic troubles; yet honorable members opposite fight for it, because they want the financial bandits to retain their power. In 1907, a gang of financiers caused a slump on the New York stock exchange, and bought up the depressed stocks extensively. Simultaneously they bought in London demand securities to the amount of £7,000,000. Those securities were passed over the counter of the Bank of England in exchange for gold, which was immediately shipped to America. Although the wealth of Great Britain was estimated by statisticians to aggregate at that time £20,000,000,000 the shipment of £7,000,000 worth of gold caused a rapid decline in the value of 525 standard securities. The bank rate had to be raised. The shipment of gold from London restored equilibrium to the New York stock exchange, and the manipulators were able to sell profitably on the rising market. Thereupon, they shipped the £7,000,000 worth of gold back to London, thus restoring the depressed’ stocks to par, and by these tactics netted a profit of between £50,000,000 and £60,000,000 in three months. The gold standard enables the financial buccaneers to exploit the world, and to pile up “burdens on us and our children. The world would be better off if gold were allowed to remain in the ground. In the metalliferous mines the systems of men are poisoned. They are then put into sanitoria to expectorate their lives away; then we dig another hole, which we ca31 a vault, and we bury the gold in the ground again. Members of the Opposition profess to believe that there is in Australia £40,000,000 worth of gold. How do they know how much is here? They never see the gold, because the bankers lock it up in vaults, and employ armed men to guard it. No member of this Parliament knows whether the gold coin in the bank vaults amounts to £1,000,000 or £40,000,000. This belief in the gold standard is the simple faith of children. The bankers have put upon us a financial hoodoo, which exercises a more disastrous influence than the hoodoo of the medicine man exercises on the mind and body of the benighted savage. The present crisis is causing Australia to scrap the gold standard, and I hope that it will never return. We should create a purely national currency by the exchange of economic goods between ourselves, and all trade overseas should be merely the export of goods to the value of goods imported. In that way alone will the country be saved.

Mr PATERSON:
Gippsland

– By clause 2, the Government asks for authority to require the bank board to hand over to the Treasurer part or all of the gold which to-day provides a 33 per cent, backing to issued notes. Such gold, we are told by the Treasurer, is to be used to discharge a part of our indebtedness overseas. There are those who say that the gold standard is obsolete ; that has been maintained by the honorable member for Werriwa (Mr. Lazzarini) with more vehemence than supporting argument. A few may agree with him, but not many of those who have read of the methods by which international payments frequently have to be made will agree that the gold standard has outlived its usefulness. It is true that, in most countries, gold has practically ceased to be used for internal currency purposes, and so long as paper for internal currency is backed by a sufficient proportion of gold reserves and securities to give confidence, nothing further is required. Paper is a more convenient currency than gold; twenty sovereigns are a ‘heavy burden in the pocket compared with the convenient £20 note. But that paper currency is now employed internally by most nations does not mean that they have dispensed with the gold standard, even for internal use. The paper currency in one’s pocket, without value in itself, exercises vicariously the functions of the gold in the hank vaults, for which it is substituted. In regard to commercial settlements between nations, so far as such settlements cannot be made by the exchange of goods or by the creditor nation becoming N in some way a shareholder in the debtor country, gold is still the medium of international payment. “With the evolution of modern central banking systems, certain important commercial centres become clearing houses for the world, and actual shipments of gold are reduced to a minimum, even in the case of two countries whose exchange of goods shows a big disparity in values, because the buying and selling of exchange enables settlements to be effected between two countries which are hopelessly off trade balance through the participation in such settlement of a third or fourth country trading with them. In that way triangular and many sided adjustments are frequently made without resort to the shipment of gold. But, despite that, the time comes when exchange rates are so unfavorable that the actual shipment of gold is the cheapest and most satisfactory method of settling a claim if the debtor country can spare sufficient without endangering its local currency. That has been recognized by the Commonwealth Bank Board, which, since exchange has been so far off par, has made considerable shipments of gold to the United Kingdom. Now, however, we may well ask ourselves whether we can afford to dispense with any more of the gold that is behind the note issue. [Quorum formed.] While gold coins for the payment of hotel bills, rail tickets, wages, groceries, &c. may be obsolete, the gold standard is still very much up to date. I recommend to the notice of honorable members the second interim report of the Gold Delegation of the Financial Committee of the League of Nations. It is brief and not over technical, and is understandable by those who, like myself, make no claim to an intimate knowledge of the technique of banking. The Gold Delegation was composed of men of international reputation for expert knowledge of finance and banking problems, men representing about a dozen countries. The report states -

The gold standard is not a fixed and rigid mechanism, but a system of monetary and credit policy which has gradually developed in the light of experience, and has adapted itself to the needs of changing conditions.

Those experts are of opinion that the gold standard is not an old fashioned system; it is up to date, adaptable, and continually evolving. The following passage from the report of the Gold Delegation seems to be specially applicable to Australia; indeed, it might have been written of this country : -

The working reserves required by any country will depend, inter alia, upon its general economic structure.

Thus debtor States and agricultural and other countries whose exports are composed of a relatively restricted number of commodities are likely to require a larger reserve proportionately to their total external trade or average balance of international payments than are countries with a more mixed economy.

The range of Australia’s exportable primary products is somewhat limited, and the prices of these products are subject to far greater fluctuations than are the prices of products of countries engaged principally in manufacturing. Therefore, in the opinion of the Gold Delegation, the Australian note issue should have a gold backing of more than the ordinary percentage. Any honorable member who studies, in an unbiased way, the second interim report of the Gold Delegation of the Financial Committee of the League of Nations, can only conclude that it is absolutely essential that we should adhere to the gold standard, particularly if we are to retain our place among the trading nations of the world. At present our gold reserve is low enough, as we have only £15,000,000 worth of gold as a reserve against notes of approximately three times that value. Certain other securities are held for the balance. Our position has been contrasted with that of Great Britain, and the argument advanced, even by responsible Ministers, that we are in a particularly good position as compared with Great Britain. If we contrast Australia’s position, with that of Great Britain in the matter of gold reserves held against the note issue, we find that Great Britain has £400,000,000 worth of notes of all denominations in circulation behind which there is £140,000,000 worth of gold and £260,000,000 worth of other securities such as silver, &c.

Mr Lazzarini:

– Including cheques.

Mr PATERSON:

– That is one of the lies that are continually being circulated by the Labour party, the sort of untruth that was recently nailed down in another place in connexion with a statement that was made by the Commonwealth Treasurer in Queensland. The honorable gentleman declared that the Bruce-Page Government raised and spent £120,000,000 in three years. The facts disclosed that during that period the Bruce-Page Government increased the Commonwealth debt by only £4,000,000. The total increase in the Commonwealth debt during the regime of the BrucePage Government was less than £13,000,000 over the whole seven years. In 1929 there was an unprecedented wave of speculation in the United States of America, and the Bank of England raised its rates of interest to 6£ per cent, in an effort to protect its gold. An endeavour was made to induce gold to Germany, France and the United States of America by attractive interest rates, and as a result it was practically impossible for Australia to obtain accommodation of any sort. At that time the treasury-bills to which the Prime Minister referred were floated, not for the purposes of the Commonwealth Government but for the use of the State Governments. Of the £5,000,000 raised, the Commonwealth used only £150,000. At that time the discount in London was 6£ per cent. To-day money is available in that city at 2£ per cent., while the National City Bank of New York recently intimated that it had money available at call at 1^ per cent. That is how the position to-day differs from that of two years ago.

The Prime Minister (Mr. Scullin) has said that the Government’s accumulation of debts is a heritage from its predecessors. Actually, in December, 1929, this Government had handed over to it from the banks practically £20,000,000 of gold ; the whole of that has been dissipated. In June, 1929, the gold reserve of the Commonwealth, in the Commonwealth Bank, was something like £22,000,000, while approximately £24,000,000 Was in the possession of the associated banks. Today there is only £15,000,000.

Mr Scullin:

– Did the right honorable gentleman say that that was dissipated by this Government?

Dr EARLE PAGE:

– I did.

Mr Scullin:

– It was used to pay the debts of the Bruce-Page Government.

Dr EARLE PAGE:

– I should like to know what debts incurred by the Bruce-Page Government have been paid by this administration. This Government has not paid any debts. Indeed, it has raided the sinking fund, established by the Bruce-Page Government, to pay our debts to the extent of £2,000,000 a year. That is the sort of untruth that the Government has so persistently circulated during the last eighteen months. The commitments referred to were entered into on behalf of the State Governments and not for the Commonwealth itself. During a period of ten years in which the Commonwealth borrowed only £20,000,000 the State Governments increased their debt by £300,000,000. The statement of the Prime Minister that the £10,000,000 worth of treasury-bills raised in London in 1929 were used for the purposes of the Bruce-Page Government will not bear investigation, and is absolutely contrary to the facts.

– I have already done so. I ask the Prime Minister what chance he has of disposing of these treasurybills on the Australian market? The Commonwealth Bank Act specifically provides that our securities should be readily liquefiable. If additional treasurybills are issued, to the amount of £15,000,000, the Government will have great difficulty in obtaining real money from the public for them.

The Prime Minister scoffs at the idea that it would be possible for Australia to obtain gold in Great Britain in the present circumstances. I admit that it will be impossible while the Government pursues its policy of inflation, but if the Government went to the Bank of England and stated frankly that it was prepared to implement the suggestion put forward by the committee of experts appointed by the different governments of Australia to advise as to the balancing of our budgets, it would be told immediately that gold was available at a reasonable rate for assisting Australia to restore confidence in its currency, and ultimately to get back to a gold standard again. In proof of that, I mention the case of Austria, to which country the Bank of England advanced gold to the value of £14,000,000, in order to assist it to restore its currency, and ultimately charged it no interest. I am confident that Australia has merely to prove that it is willing to face realities and settle down to the job, to have the necessary money made available to it, and so be enabled to hold up its head as Austria now does.

Mr CUSACK:
Monaro · Eden

. ‘ - I regard this as the proudest moment of my political life. I have long desired the time to arrive when I should be able to drive a brass nail into the coffin of the gold fetish. To do so to-night affords me a very considerable amount of relief and pleasure. I am rather surprised that honorable members opposite should advance a plea for the hoarding of gold. That, of course, is why they are here. They want to make money both scarce and dear, for the benefit of their friends who are living on interest. They do not wish to afford the people any facility to finance their obligations. I understand that one-half of the £2,000,000,000 worth of gold in the world is held by America, where it is absolutely useless. It would earn £1,000,000 a week in interest if it were utilized. If Australia possessed it, and shipped it overseas, it would wipe out our national debt> If the gold that has been hoarded had been got rid of many years ago, we would have been saved £20,000,000 of our present indebtedness in interest alone. The interest on the £15,000,000 worth of gold that we are now holding would pay for all the parliaments in Australia. What do we want gold for ? I suppose it is necessary to have a certain quantity for the making of wedding rings, but it would appear not to be necessary even for that purpose, because I have been credibly informed by the honorable member for Forrest (Mr. Prowse) that Solomon did not give any of his wives a gold wedding ring. The time is not far distant when the whole of the nations of the world will discard the gold standard.. They will send to America all the gold that they have, and let that country build a pyramid with it, or use it instead of cement to dam a river. There have been occasions in the past when Great Britain has had to pay for food supplies with gold, because those who had the food would not accept its paper currency. It is necessary also for France to deal in gold with those countries which will not provide her with food without it. But in

Australia we can do without those things that we are not able to either grow or make. Consequently, I cannot see any reason for a gold reserve. I am glad, therefore, that the Government has risen to the occasion, and has ceased to worship the gold fetish. If the right honorable member for Cowper (Dr. Earle Page) owed £1,000, and held £300 worth of gold, would he not use it to come to terms with a bailiff who demanded payment of the debt? As I have said repeatedly, when I was a schoolboy, had my father or my rich uncle from Fiji offered me £1,000 in gold on the condition that I hoarded it, I would have refused it. The only justification for accepting it would have been to liquidate my debts or to issue notes on the basis of its value. I am glad that there are other persons who are now beginning to realize how idiotic it is to hoard goldThe right honorable member for Cowper is not so bereft of intelligence that he does not realize that he is merely putting up a plea for his clients. The Prime Minister has been twitted with having been converted to a currency of which he did not previously approve: When it was suggested some time ago that £20,000,000 worth of new notes be printed, he turned the proposal down because of the necessity for having a further £5,000,000 worth of gold. But when the necessary currency can be issued without a gold backing, different considerations arise. Desperate measures have to be adopted to cope with existing circumstances. When the people realize that honorable members opposite, who are supposed to be their friends, are trying to grind them down in the interests of their predatory backers, they will no longer be fooled by the clap-trap, the sophistry and the piffle that have misled them in the past. The present-day farmers cannot be so easily fooled as could their forefathers. [Quorum formed.] The obsolete ideas entertained by honorable members opposite are gradually dying out. Those honorable members now have a leader who is a self-confessed neophyte in the matter of finance, and they will have to rely entirely on the sophistry of the ex-Treasurer (Dr. Earle Page). It is a relief to find that the proposition to dis- pense with the gold standard commends itself to the Government. When it is given effect the present situation will be considerably relieved. Considering the starvation that exists throughout Australia, it is time that this Parliament adopted a monetary system that will make money cheap and credit readily available.

Mr NAIRN:
Perth

.- The Prime Minister has asked us to look into the realities of the situation. He and his Government ought to have had more regard for the realities of the situation during the last eighteen months, particularly the reality that the finances of Australia were going to the bad at the rate of about £2,000,000 a month. Had the Government made an honest attempt to face those realities, it would not have pawned all our assets, nor obtained temporary credit wherever it was available. It is the duty of the Government to make a bona fide effort to square the financial position. It is making a sham effort to cut expenses in a few directions ; but there has been no real effort to reduce costs to such an extent that the balancing of the budget would become practicable.

With a view to inducing honorable members to vote for this measure, the right honorable gentleman has held over us the threat of default. I am not scared by such a threat. The only effect of sending out of Australia our present gold reserve would be to postpone default for a little longer. It is obvious to me that the Treasurer is playing for default. If the present rate of expenditure is allowed to continue, default is absolutely certain, whether it be in June next, or six months later. When that time arrives, if we have sent away our last sovereign and cannot raise money, the Treasurer and the Prime Minister will be in a more favorable position than they now are to force on the people of Australia the thriftless and fraudulent scheme of inflation. If, as appears likely, the Government is determined to remain on the treasury bench until it is forced off it by reason of default, it would be much better if that default occurred at an early date, rather than, that the defeat of the Government should be delayed for six or eight months, by which time the country would be insolvent.

Mr LAZZARINI:
Werriwa

.- I cannot allow a statement attributed to mc by the right honorable member for Cowper (Dr. Earle Page) to go unchallenged. The right honorable gentleman advised us to follow Austria, Persia, Bulgaria and other countries. He then endeavoured to put into my mouth words that I did not utter. He said that I had advocated that Australia should fall into line with Morocco. That was a deliberate misrepresentation. I merely instanced the case of a country which, I said, was only in what might be termed a tribal state, and pointed to the advantage that it derived from a national currency that had no relation to the currency of any other country in the world. I said that when you sold goods in that country, the only way in which you could take out of it the results of your sales was by buying its products. If what I suggested were done, it would be impossible for one nation to pile up debts against another, or for a country to have a huge adverse trade balance. Under such a system our trade balance with America would not be against us as a result of the importation of motor cars. I would not be so stupid as to advocate, as the honorable member suggests, that we should govern ourselves as Morocco is governed. The right honorable member seriously advised us to endeavour to rehabilitate our finances in the same way as Austria did. Before agreeing that Australia should be rehabilitated at the price which the financiers exacted from Austria, I would be prepared to see the whole country blown to smithereens by some volcanic upheaval.

Mr Beasley:

– The Austrian scheme was the work of Sir Otto Niemeyer.

Mr LAZZARINI:

– Yes ; Sir Otto Niemeyer went to Austria as a representative of a victorious nation, wielding the big stick. He imposed the conditions of the victors upon a defeated nation; yet the right honorable member for Cowper (Dr. Earle Page) would like to see Australia, which was supposed to have been on the winning side, and which paid the price of 60,000 lives for her share of the victory, submit to the same conditions as were imposed upon defeated Austria. I pray that the men, women, and children of this country will never have to pay in sweat and tears, in misery and in woe, the same price as Austria was called upon to pay. I would hang my head in shame if I ever ca3t a vote for any proposal to rehabilitate Australia on the. same awful conditions as were imposed on Austria. The right honorable member’s statement will be recorded in Hansard, and I wish mine to follow his, in order to show that he, under the pretence of nailing down lies alleged to have emanated from members of the Labour party, took the opportunity of misrepresenting what I said, and of imputing to me sentiments which I do not hold.

Mr MARR:
PARKES, NEW SOUTH WALES · NAT; UAP from 1931

.- I happened to come into the chamber as the Prime Minister (Mr. Scullin) was concluding his speech. He said that £5,000,000 was due in London, and if we could not get the gold away as provided for in this measure, we should have to default. I heard the reply of the right honorable member for Cowper (Dr. Earle Page), and, listening to him, I remembered a statement I had read, prepared by Professors Copland and Giblin, and Messrs. Dyason and Gepp. Upon looking through my drawer for this document I came across a marvellous speech which this House had been denied an opportunity to hear. It was one which I myself had prepared on the financial statement, but when I came to deliver it I found that the Prime Minister had moved the “gag.” The memorandum prepared by the four gentlemen I have mentioned bears out in a remarkable way what has just been said by the right honorable member for Cowper. My own note on this phase of the matter was this : “Money awaiting us - Prime Minister must know, because Copland, Dyason, Giblin, and Gepp know - see memorandum tabled in September, 1930.” The memorandum, which was tabled by the Prime Minister, contains the following statement : -

Recent history shows that no country faced with similar problems has been able to solve them unaided, and Australia, as a member of the British Commonwealth of Nations, has no doubt that her efforts to reconstruct her economic life to the new world situation, will be viewed sympathetically by Great Britain. In what may help might be usefully gives may be left for consideration by Great Britain. One suggestion may, however, be made.

Before the present depression there was a growing feeling in Australia that overseas burrowing should be reduced, and the Australian Loan Council was established with this end in view. Such a reduction would have taken place progressively over a series of years. It is all the more important at present that this plan should now be carried out, in preference to the complete and sudden cessation of borrowing. It could be reasonable to reduce overseas loans from £30,000,000 per annum to £10,000,000 per annum over a period of five years. This would enable important public works that have been initiated, to be completed. It would relieve the burden of overseas interest pending an economic recovery, and it would not add greatly to the total interest burden. It is not suggested that assistance of this kind should in any way relievo Australia of making the maximum effort to help herself, but without some such assistance of this order of magnitude, it is doubtful whether the effort can be successful.

Therefore, provided that Australia makes all reasonable and possible efforts and adjustments, every argument favours consideration and sympathetic assistance on extended terms from Britain and the United States of America to Australia during the next few years.

I now turn to a report which appeared in the Sydney Morning Herald of the 28th November, 1930. It is headed: “ Credit Damaged - By Labour Caucus - Mr. Scullin’s Good Work - Bank Manager’s Statement,” and is as follows : - “ Australia had bright prospects of raising money abroad when Mr. Scullin arrived in England, but the actions of the extreme wing of his party have done much to destroy the country’s credit,” said Mr. A. Spitzer, manager of the Comptoir National d’Escompte de Paris and vice-president of the French Chamber of Commerce, on his arrival in Sydney yesterday by the Mooltan.

Mr. Spitzer said that the banks of France, New York, and, to a lesser extent, England, were concerned about the vast quantities of gold lying idle in their vaults. While it remained there it did no good, and numbers of nations were temporarily embarrassed for want of money. The bankers thought that these countries could be assisted by lending them this gold at low rates of interest.

That bears out the statement made some months ago by the right honorable member for Cowper that it would be possible to obtain a loan of £10,000,000 of bar gold at a low rate of interest. The statement continues -

The banks would benefit by the prosperity of the countries they had assisted, and would not have so much useless gold on their hands.

Loans had been arranged with small European States, such as Bulgaria and Czechoslovakia, and Australia would have had no difficulty a short while ago in securing assist- ance at low interest. When the banks of America, France, and England had practically completed arrangements to lend money to those ‘countries that desired it, the Labour caucus destroyed the good work the Prime Minister had done in establishing Australian credit.

Nobody knows better than I do that the Prime Minister while in London did good work in the direction of establishing Australia’s credit. Mr. Spitzer continues -

Talk of repudiation and not paying interest on loans when they fell due caused a pronounced cooling in the regard in which Australia was held.

Mr. Spitzer said he noticed the change very keenly. When he visited France in ‘1926, that country was passing through a difficult time, but there was implicit trust in the stability of Australia. Four years afterwards this country was regarded with a certain amount of doubt. The utterances of Labour politicians made bankers and the general public think Australia intended to repudiate loans or in some way give less to investors than they should receive if the conditions of promotion were strictly observed.

Then he goes on to tell of the awful results of inflation, and how such a policy affected France and Germany. This also bears out what Professors Copland and Giblin and Messrs. Dyason and Gepp, men well-known and trusted in Australia, have said on the same subject in regard to this country. They have laid it down that Australia itself must make an effort, but that she cannot remedy the position unaided. By whom must she be aided? A Frenchman has told us - by France if you like, but by Britain certainly, and it could have been done by now except for the appalling statements of Mr. Lang, abetted by certain members of this House, who would be prepared to drag down even the Prime Minister with them. As I have said the Prime Minister undoubtedly did good work when in London. I wrote him a letter when he came back, congratulating him on his achievement. I received numerous .letters from men in prominent public positions in England telling me of the excellent work which had been done by Mr. Scullin, but all that was destroyed, as Mr. Spitzer has pointed out, by the utterances of certain persons in this country - persons who would be prepared to draw the nation down to ruin. Of course, Great Britain will help us, and nobody knows it better than does the right honorable gentleman.

Mr GREGORY:
Swan

.- The statement of the Prime Minister in regard to our obligations in Great Britain puts honorable members in this House in an awkward position. We know that we have between £16,000,000 and £17,000,000 of gold in Australia, and that our present floating debt in London is approximately £38,000,000. Now the Prime Minister threatens us with default in the event of our not sanctioning the Government’s proposal.

Mr SCULLIN:
YARRA, VICTORIA · ALP; FLP from 1931; ALP from 1936

– It is not a threat.

Mr GREGORY:

– Well, he says that there will be no alternative but default. I agree with the right honorable member for Cowper (Dr. Earle Page) that had the Prime Minister made any serious attempt to put his house in order, and to reduce expenditure, there would not have been any difficulty in funding our overseas debt.

Mr SCULLIN:
YARRA, VICTORIA · ALP; FLP from 1931; ALP from 1936

– We are putting our house in. order.

Mr GREGORY:

– I contradict the right honorable gentleman with all the force at my command. The Government has made no serious attempt even yet to face the position. It is all very well to introduce at this stage taxation bills for the further reduction of our salaries, but it was apparent over a year ago that action of that kind was needed. We on this side of the House told the Government that Ave were prepared to share equal responsibility with it in any scheme of economy found necessary to balance the budget; but the Government refused to accept our offer and has allowed matters to drift. [Quorum formed.’] The Government has allowed matters to drift until we now find ourselves in our present dreadful position. Honorable members opposite may laugh; they do not care if the bank’s close their doors. I believe that Ave should retain the gold standard. It is dreadful to contemplate that the small remnant of our gold reserve that remains in Australia may have to be exported to pay some proportion of our overseas debt. The Prime Minister said that the present Government has inherited huge liabilities from its predecessors. I have here a document which shows that in June, 1929, the amount provided by the Commonwalth Bank to assist governments was £1,500,000. Six months later the amount had risen to £7,800,000. After a further six months it Avas £18,200,000. By December, 1930, the sum had grown to ^30,300,000. It is now £51,495,000. That sum represents the accommodation granted by the Commonwealth Bank to Commonwealth and State Governments.

Mr Scullin:

– There has been no other borrowings.

Mr GREGORY:

Mr Cusack:

– The honorable member received £3,000 to stay out of Parliament.

Mr. ARCHDALE PARKHILL.That is a lie, and the honorable member knows it.

Mr Cusack:

– I ask that that statement be withdrawn, as it is offensive to me.

Mr ARCHDALE PARKHILL:

– 1 withdraw it, and say that the remark of the honorable member for Eden-Monaro (Mr. .Cusack) was wholly inaccurate. What are the tin-pot economies made al Australia House, to which the Minister has just referred? They have yet to be discussed in this chamber, and it will be found where the salaries of .certain worthy officers have been stopped twice as much is being paid to-day to those doing the work of the retrenched officers.

The TEMPORARY CHAIRMAN (Mr Keane:

– I ask the honorable member to confine his remarks to the clause under consideration.

Mr ARCHDALE PARKHILL:

– I am obliged to you, Mr. Temporary Chairman, for your kind direction; but I am wondering why you did not direct the attention of the Minister to his divergence from the clause before the committee.

The TEMPORARY CHAIRMAN.An honorable member may not .reflect on the Chair.

Mr ARCHDALE PARKHILL:

– I submit with great respect that the Minister referred to economies made at Australia House, and surely I am entitled to reply to his remarks.

The TEMPORARY CHAIRMAN.The honorable member must connect his remarks, to some extent at all events, with the clause under discussion.

Mr ARCHDALE PARKHILL:

– I am attempting to remove some of the debris spread about by the Minister who preceded me. An absurd statement has been made in this debate concerning the “workers,” by which term the Government means the favoured soldiers of industrial fortune who are protected by high arbitration awards. These are the only workers in this country for whom this Government has any concern. What of the men who have no wages to-day? What does the Government care about the clerical class, who are in a worse position to-day than the manual labourers?

Mr Lacey:

– I rise to a point of order. I submit that the remarks of the honorable member are in no way relevant to the clause under consideration.

The TEMPORARY CHAIRMAN:

– I have already warned the honorable member, and I again point out to him that he is not discussing the clause. [Quorum formed.]

Mr ARCHDALE PARKHILL:

– The question we should consider is whether default is unavoidable if this gold is not shipped abroad. In my opinion, there is another course which the Government can adopt to avoid that disaster. If it takes that course it will turn the corner and face towards prosperity. It hae been constantly alleged by honorable members opposite that the industrialists of Australia have contributed £40,000,000 to offset our loss in national income. I dispute that statement. The annual production of this country, normally, is worth about £600,000,000, but this year it is worth only £460,000,000. If the workers have contributed £40,000,000 in the manner stated, and that represents 10 per cent, of their earnings, the assumption is that the whole of the £460,000,000 is represented in workers’ wages. That is obviously incorrect. Such statements are additional evidence that honorable members opposite are experts at juggling figures. We have been told that the Government has reduced expenditure; but Professor Copland has said that the Government’s record in that respect - is very poor - a saving of £2,300,000 in a total expenditure of nearly £7,000,000 - less than 4 per cent., though the national income has fallen by not less than 20 per cent.

That is a paltry reduction.

Mr Holloway:

– What does the honorable member suggest should be done?

Mr ARCHDALE PARKHILL:

– I suggest that the Government should vacate the treasury bench with the object of allowing it to be occupied by another government which will have some regard for the welfare of the country. Such feeble interjections as that made by the Assistant Minister show the stuff of which the Government is made.

Mr Blakeley:

– The honorable member for Warringah would immediately set about making further reductions in wage’s.

Mr ARCHDALE PARKHILL:

– I should cut the wages of the Minister for Home Affairs and his colleagues to 30s. a week and then feel that they were overpaid. Some honorable members opposite have alleged that my remarks have not been directed to the clause under consideration. If that is so honorable members opposite are responsible, for I have merely replied to the arguments that they have advanced in support of the clause. The real object of the clause is to hand over to the Treasurer all the gold coin that remains in Australia, in order that he may send it abroad. 1 do not know whether he proposes to go abroad with it. I hope not. The gold reserve which we now hold represents the remnant of the confidence which the people of Australia have in our financial institutions.

The TEMPORARY CHAIRMAN (Mr Keane:

– The honorable member’s time has expired.

Mr M CAMERON:
BARKER, SOUTH AUSTRALIA · LP; NAT from 1925; UAP from 1931

– The object of the clause is,, as the honorable member for Warringah (Mr. Parkhill) has said, to give the Treasurer power to ship all the gold from Australia if he deems it necessary to do so. The Prime Minister had a great deal to say about the millions of pounds that we owe to Great Britain, but he added that unless the £5,000,000 worth of Australian treasury-bonds which remained unredeemed in Great Britain were redeemed by the 30th June, they would constitute a real danger to Australia. To my mind that is the greatest reflection that has yet been made on the financial capacity of the Government, and it is significant that the Leader of the Government should have made it. It is an admission that the Government has fallen so low in the estimation of investors that it cannot raise £5,000,000 to redeem these bonds. The suggestion has been made that the Government should resign. I would far rather see it mend its ways so that confidence in the country could be restored. If the Government would do the right thing, it would find no difficulty in obtaining finance, and it would riot be necessary to ship our gold to Great Britain. If this gold is shipped abroad a psychology will be created which will tend to undermine the confidence of the people in their own country. This Go- vernment and the Government of New South Wales seem to be moving along the some road. The policy of this Government is inflation and that of the New South Wales Government repudiation; but the difference is only one of degree. Either policy must ultimately bring disaster upon the community. Mr. Lang’s policy has already brought about the closing of the Government Savings Bank of New South Wales. I do not say that gold held in Australia has any influence upon the present position; but its presence certainly has an influence upon the minds of the people. This Government has taken no action to effect any real economy. It has scorned the suggestions of honorable members on this side- of the chamber, which, if adopted, would have brought about some improvement in the financial position of Australia. The people have gradually lost confidence in this Government. I certainly desire that this country should stand up to its obligations, but I do not believe that the exporting of our remaining gold is likely to improve our debt position overseas. If this Government continues to refuse to effect economies, the people will decide to elect some other government which is prepared to take immediate and practical steps to place this country on the road to prosperity. I regret exceedingly that the Prime Minister considers it necessary to export our remaining gold, but I trust that before the debate is finished he will alter his mind, and withdraw this provision.

Mr ARCHDALE PARKHILL:
Warringah

– I deny absolutely the Prime Minister’s statement that the only alternative to default is the despatch of our remaining gold overseas. He has said that our great task is to redeem £5,000,000 worth of treasury-bills which are maturing shortly in London. But the position is that to-day we owe in Great Britain £38,000,000, of which £25,000,000 is owing to London interests, £10,000,000 to the Commonwealth Bank, and nearly £3,000,000 to the trading banks. Were the Commonwealth Bank and the trading banks prepared to carry their portion of the London floating debt indefinitely, there would still be £9,480,000 of that debt te be provided far after the whole of the present gold backing had been shipped to London to pay off an equivalent amount of debt. Mr. Theodore has admitted that after January, of 1930, during the regime of this Government, £24,470,000 of gold, the greater part of which was commandeered from the trading banks, was shipped to Loudon to provide for interest payments. When we ship this further £15,000,000 worth of gold, we shall be utterly defenceless in respect of the exchange position, and our international obligations. The Prime Minister (Mr. Scullin) has said that we cannot send this money out of the country twice. Why, even a small schoolboy knows that we cannot export the same commodity, whether gold or anything else, more than once. The Prime Minister has admitted that, after this gold has been exported, he does not know what steps to take to meet other obligations as they arise.

Mr Hill:

– He intends to trust to luck.

Mr ARCHDALE PARKHILL:

– Apparently the right honorable gentleman intends to trust to anything that may arise. This Government, so long as it persists in its policy of refraining from endeavouring to balance its budget, is only postponing the day of default. At the international financial conference which was held at Brussels in 1920, this was stated -

The country which accepts the policy of budget deficits is treading the slippery path which leads to general ruin. To escape from that path no sacrifice is too great.

Yet this Government has made no call upon the people of this country beyond the levying of punitive and harsh taxation on one section of the community. It has refused to make the public services bear their fair share of sacrifice. Government institutions and other activities under the control of the Commonwealth have not been called upon to bear any hardships. The Government’s puny efforts at economy have hurt no one, and while it refuses to retrench, and to reduce expenditure until it hurts, this country cannot be placed on the pathway to rehabilitation. In Great Britain, when the first Baldwin Government was in power, a statement made by a member of the Cabinet, Sir Montague

Barlow, was interpreted by the public as favouring a policy of inflation, and immediately there was a flow of capital to America. It was not until some considerable time afterwards that that feeling in the community was entirely allayed, and confidence was once more restored. Yet this Government is advocating a policy of inflation which no other country would be prepared to adopt. The nations of the world have already had experience of the misery and hardship caused by inflation of currency. So long as this Government persists in its present policy we shall have the deplorable position of the Prime Minister admitting that he knows not what to do to meet the future commitments of this country. According to the report of the select committee appointed by the Senate to report upon the Central Reserve Bank Bill, the State Bank of the Russian Socialist Federal Soviet Republic maintains 25 per cent, of its currency in gold, precious metals, or stable foreign currency. Yet this Government blithely talks of exporting our remaining gold as if that drastic action will have little or no effect upon our economic position. The following statement is taken from the Sydney Morning Herald, of the 26th of last month: -

Mr. Theodore is evidently planning for the Commonwealth Bank to hold the Australian balances in London, and control the exchange business somewhat on the lines of those countries who are ou a gold exchange standard. In a case of that kind the central bank of the country concerned has a deposit of gold with the central bank of the country, through which its international settlements are made, an amount that will enable it to meet all demands made upon it for buying or selling its currency for abroad at the fixed rate. But the Commonwealth Bank will have no gold deposit of that nature with the Bank of England. All its gold will have been taken and used by the Commonwealth Government. To meet the exchange business of Australia, Australia will have to depend upon the widely fluctuating balances which her seasonal trade gives her in London. Those balances will fluctuate so widely, and the demands upon them will be so erratic that exchange rates will vary widely in the course of the year. Both import and export business will be more than speculations, they will be gambles. That is the outlook should Mr. Theodore succeed with his bill.

No more fatal policy has ever been suggested to the people of this country than that which has to-day been put forward by the Government now in office. No more hopeless outlook has ever faced the people of Australia than the statement of the Prime Minister, that he knows not what will happen if this bill goes through. It is the duty of every patriotic citizen, every native of Australia with a desire to see his country progress with safety on the road to prosperity, to vote against this proposal, and at least give his country a chance to rehabilitate itself.

Mr BAYLEY:
Oxley

.- The Prime Minister to-night read extracts from a letter written by Sir Robert Gibson, Chairman of the Commonwealth Bank Board, purporting to show that he had approved of sending gold out of Australia.

Mr Scullin:

– That is not correct. I said definitely, in answer to a question, that Sir Robert Gibson had not advocated it in a letter. He showed us the obligations he had to meet, and I said that conversations in interviews with me purported to show his advocacy of it.

Mr BAYLEY:

– I am glad to have that assurance from the Prime Minister, because it is almost impossible for me to believe that Sir Robert Gibson would put forward such a proposal.

Mr Scullin:

– He has, in an interview with me.

Mr BAYLEY:

– I can only imagine that at that interview Sir Robert Gibson laid down certain conditions, and that when the Prime Minister said that neither he nor his party was in favour of fulfilling those conditions, he would say, “ Failing that, the only course open is to send the actual gold out of the country.”

Mr Scullin:

– No conditions were laid down.

Mr BAYLEY:

– The despatch of gold overseas will weaken instead of strengthen our position, and as more and more gold goes out, we shall have smaller reserves as a backing to our note issue. The people of Great Britain who have lent us money are not so anxious about their interest as they are about their principal. They would far rather know that the money they have advanced to us is safe, and the best assurance they could have in that regard would be a statement from the Prime Minister on behalf of his Government, that the people of Australia have decided to live within their means or as nearly as possible ; that they “will, as far as lies within their power, balance their budget,’ and that no stone will be left unturned to send money overseas, but not in gold. Indeed we have already sent away too much gold. As the honorable member for “Warringah (Mr. Parkhill) has pointed out we have only £15,000,000 of gold in reserve. According to the Gold Delegation of the Financial Committee of the League of Nations, there is scarcely a nation in the world that has not a higher percentage of gold backing to its note issue than Australia has. Honorable members supporting the Government have endeavoured to prove that adherence to a gold standard is a fetish, and the honorable member for Werriwa (Mr. Lazzarini) says that the quicker we depart from the gold standard, the better off we shall be. I do not agree with him, or with others who have spoken on the same lines. The gold standard may not be a perfect system, but nothing better has yet been devised. It is true that there are nations who carry on without a gold standard, but that is because they are forced by circumstances to do so. Each of them is endeavouring to revert as fast as possible to the gold standard. China, which from time immemorial has had a currency based on a silver standard, is now endeavouring to replace it by a gold standard. Why is the little State of Columbia, in South America, obliged to have a 60 per cent, gold reserve? Why have other countries practically a 100 per cent, gold reserve? It is because investors have no confidence in them. Aus.tralia has progressed on a low gold reserve because it has possessed the confidence of investors overseas, but once we lose that confidence, we shall get nothing in the way of loans. Confidence in Australia has, however, been sadly shaken by the present Government. As the honorable member for Warringah has pointed out, it has done next- to nothing to improve the credit of Australia overseas. We have been asked what we would do if we were on the treasury bench. Months ago the Leader of the Opposition (Mr. Latham) told the House what we would do if we were given the opportunity, and the people are with us. The name of the honorable member for Wilmot (Mr. Lyons’) has been cried from, one end of

Australia to the other because he has said that certain steps should be taken to restore confidence in this country. They are the steps which, for the last eighteen months, the Leader of the Opposition has been saying should be taken. The people are waiting for such a lead. They are willing to make the necessary sacrifices if the . Government will point the way; yet the Prime Minister (Mr. Scullin) has told us that the only way in which Australia’s commitments overseas may be met is by further debasing the gold standard and if necessary hypothecating the gold reserve. Such a policy, instead of strengthening our position, would weaken it, and I urge honorable members to vote against this clause, which is the crux of the bill, and adopt a saner means of meeting our overseas liabilities.

Mr LATHAM:
Kooyong

.- By this clause the committee is asked to deal with a very complex and difficult problem. The measure relates to a fundamental problem which since the Great War has been examined all Over the world; yet no practical guidance has been afforded to us by the Government. The second reading of the bill was moved by the Treasurer (Mr. Theodore), who made a very inadequate speech covering not more than six pages of Hansard. It is true that he lightly dismissed the gold standard as a fetish. His argument was : “ We have gold here, we owe money abroad, let us export the gold to pay portion of the debt”. No consideration appears to have been given to the ultimate effect in Australia and on Australian interests abroad of such a fundamental change in the financial, banking and economic policy of the Commonwealth. The committee is asked to determine the matter in a couple of days. Honorable members have recently been supplied with copies of the first and second interim reports of the Gold Delegation of the Financial Committee of the League of Nations. These documents contain expressions of opinion of the gold standard by many eminent authorities and the committee should carefully consider those views before consenting to so important a change in the monetary system as is involved in the abandonment of the gold standard.

Gold has always been the foundation of Australian currency and ultimately of the credit of Australia, providing an objective standard to which all currency and prices might be related. Admittedly since the outbreak of the world war in 1914 very serious economic disturbances have occurred and financial and economic disequilibria have prevailed in many countries. Yet the Gold Delegation of the Financial Committee of the league of Nations agrees substantially with the report of the Genoa Conference that the gold standard is better than anything else yet devised. In the first of the two reports under the heading “ Remedial Measures “ the Gold Delegation states -

The amount of cover against notes and sight liabilities which any country needs is determined by a number of different factors.

It is assumed by the committee that there must be some cover against notes and sight liabilities -

An agricultural country or a country whose exports are confined to a small number of commodities the prices of which are liable to wide variations will necessarily want a larger proportionate reserve than one which enjoys a more varied economy or a strong creditor position. It is impossible to lay down any general rule. But the minimum reserves which are required by law to-day are, to a large extent, the outcome, not of these considerations, but of past tradition, of convention and habit, of the natural fear which each individual legislature has, that a departure from general practice may impair confidence in the currency.

That is a recognition that if a general international agreement can be obtained a country may safely and wisely, having regard to the present demands upon gold as a standard, reduce the amount of cover. In the second report the Gold Delegation says, under the heading “ The functioning of the Gold Standard

The gold standard is not a fixed and rigid mechanism, but a system of monetary and credit policy which has gradually evolved in the light of experience and has adapted itself to the needs of changing economic conditions.

The report states that in all gold standard countries gold is no longer used as coinage, transactions being carried out mainly by notes and cheques. The proportion in which these different classes of currency media are employed varies with the practices and requirements of different countries. The report proceeds -

But the amount of notes which could be issued was, in almost all cases, restricted by law in such a way as to link them, directly or indirectly to the goldheld in reserve by the note issuing institutions.

And later -

Gold has come into general use as the foundation of the monetary systems of the vasi majority of the civilized countries of the world for historical reasons into which we need not enter here. But the traditional belief that gold is in a peculiar sense representative of wealth remains and cannot be ignored. Gold reserves serve to some extent, therefore, to maintain that confidence in the whole credit structure which springs from the knowledge that a certain quantity of gold is physically held by the central bank. Now that gold coin is no longer in circulation and an internal drain cannot take place, the reserves are required to meet possible deficits in the international balance of payments.

Recommendations are made for a reduction by general agreement of the existing minima required by law, and the opinion is expressed that such reductions could be made by general agreement without weakening the existing credit structure. It is impossible to ignore the recommendations of such an important body as the Gold Delegation of the Financial Committee of the League of Nations, and simply to say that the gold standard is a fetish. If the House passes this measure it will be taking a step which may be fraught with the most serious consequences to the whole of the citizens of Australia.

There has been no inquiry into this matter by any independent body in a position to advise the Government with any degree of authority. The Treasurer (Mr. Theodore) in his secondreading speech read a letter fromthe Chairman of the Commonwealth Bank Board, and admitted, as indeed was obvious, that the board did not recommend this procedure, but had called attention to the difficulties which would inevitably arise with respect to both internal and external finance unless provision were made by some means to meet our immediate liabilities. It is clear that the proposal embodied in this clause can reduce only to a comparatively small extent the volume of our overseas liabilities. It is not a solution or even a beginning of a solution of any of the difficulties with which the Commonwealth is confronted. Supposing that in pursuance of this clause gold is sent overseas and used as is intended - it can he used only for the purpose of discharging indebtedness in accordance with the provisions of the bill - how is our future position to be improved? It is merely a postponement of the difficulties. It does not solve the problem. If this measure becomes law it will have a profound and far-reaching effect upon the whole of our economic life. One of the things which we ought to endeavour to do at present is to try to make Australia once again a country which will be attractive to investors. I am aware, as of course every honorable member is aware, of the tremendous difficulties which lie in the path of reaching such a desirable objective. But this particular step, involving as it does a removal of any gold backing to our currency, will make Australia still less attractive than it has ever been from an investor’s viewpoint. I think I am right in saying that in this respect we will stand alone among all the dominions of the British Empire. In such circumstances surely we must recognize that we are taking a step in the wrong direction. Unfortunately capital is leaving Australia as quickly as is possible. The Prime Minister suggested the other evening that capital was not leaving Australia to the extent generally believed. I do not know whether that is so, but it is within my own knowledge that large sums of money have been withdrawn from Australian investments owing to the general lack of confidence in things Australian. There is no doubt that this measure must still further increase the unfortunate lack of confidence which at present exists. Every other alternative should have been most carefully explored before action of this character was recommended by the Commonwealth Government. There is another course of which the Prime Minister was aware in August last. It is a hard course - a difficult and unpopularcourse - but we should endeavour to follow it. I do not want any one to think that I am suggesting that the objective the agreement reached in Melbourne in August of last year could be attained in such a short period as one year;but a determined effort to follow that course would have opened up chances of a return to prosperity. I regret that this bill is introducing still another obstacle in the way of returning to prosperity, and I trust the majority of honorable members will oppose it.

Question - That clause 2 be agreed to - put. The committee divided. (Temporary Chairman - Mr. Keane.)

AYES: 24

NOES: 20

Majority . . 4

AYES

NOES

Question so resolved in the affirmative.

Clause agreed to.

Progress reported.

page 1274

ADJOURNMENT

Participation of Mr. Speaker in Divisions - Exclusion of Mr. J. A. Alexander from Press Gallery and Precincts of the House.

Mr SCULLIN:
Prime Minister · Yarra · ALP

– I move -

That the House do now adjourn.

Mr.R. GREEN (Richmond) [11.3].- I desire to draw attention to a matter concerning yourself, sir, and I leave it to your discretion. It is whether, holding as you doa position in which you are required to be impartial, you should vote on various measures in committee.

Mr SPEAKER (Hon Norman Makin:
HINDMARSH, SOUTH AUSTRALIA

– As the representative of the electoral division of Hindmarsh I have the right to avail myself of my privileges in that capacity during the committee stages of business in this chamber. Previous occupants of the office of Speaker have frequently availed themselves of that right, and I offer no apology for actively representing my constituents on all occasions that I consider desirable: “While I occupy the chair as Speaker, I shall always be strictly impartial. I hope that no honorable member will ever have reason to complain of want of fairness on my part.

In view of the gravity of the statement made by the honorable the AttorneyGeneral (Mr. Brennan) in the House to-day in connexion with the report presented to it by him regarding the leakage of cables, and because of the serious admissions of Mr. Alexander contained in that report, I sought an early interview with that gentleman to afford him an opportunity of offering any explanation which he might desire to make on the matter. I regard the explanation which he made to me as most unsatisfactory. Documents of a highly confidential character are of necessity transmitted to Ministers at Parliament House, and confidential papers are continually passing between myself and the officers of the House of Representatives. Recognizing the imperative need for the preservation of secrecy in regard to such papers, I feel that, until a satisfactory explanation has been offered concerning the means whereby the text of the cables in question was obtained by Mr. Alexander, I must direct that he be excluded from the precincts of the House of Representatives. I am, therefore, notifying Mr. Alexander accordingly.

page 1274

PRIVILEGE

Exclusion of Mr. J. A. Alexander from Press Gallery and Precincts of the House.

Mr BAYLEY:
Oxley

.- I rise on a question of privilege. I regard this as a very serious action on your part, sir, and it is my intention to submit a motion-

Mr SPEAKER:

– We are now discussing a motion for the adjournment of the House. I suggest that, if the honorable gentleman desires to be heard on a question of privilege, that might more suitably be done when the House resumes tomorrow.

Mr BAYLEY:

Mr THOMPSON:
New England

– This unquestionably is a matter of very great importance, and it is to be regretted that we must come to a decision upon it at so late an hour, seeing that it may have far-reaching consequences.

It is not my intention to discuss the merits of the case, except to say that as a pressman I strongly disapprove of the practice which has grown up among the newspapers of Australia, particularly the metropolitan press, of authorizing a secret service to nose about government departments, by methods that are more or less a mystery, with a view to procuring access to confidential documents. I do not think that any member of this House subscribes to that practice, therefore I shall not waste time in attacking it. But on the question whether the Speaker should have the power to exclude from the galleries or the precincts of this House a representative of the press, whose presence has been sanctioned by the Parliament for a considerable time, I submit with all respect that that is too great a power to vest in any one individual. We all recognize that the Speaker is in charge of the House, and that in ordinary circumstances he is the authority who must be referred to when it is desired to exclude undesirable persons from the precincts of Parliament. But this is totally different from an ordinary case, and if the attitude of Mr. Speaker is subscribed to by this House very grave abuses may occur.

In the Parliament of New South Wales, in the days of Mr. Speaker Willis, a very considerable amount of public feeling was aroused by the methods which that gentleman adopted. He took it upon himself to exclude from the gallery the representatives of the Sydney Daily Telegraph, on the ground that that newspaper was unfairly attacking his conduct of the business of the House. His attitude was not subscribed to by different parties, and by a large section of the public. It aroused so much controversy that within a few days the Government was forced to have the representatives of that newspaper re-admitted. It is well known that the exclusion of a particular pressman does not prevent the newspaper that he represents from obtaining reports of this Parliament.

Mr Brennan:

– That is not desired.

Mr THOMPSON:

– Therefore, this is a definite move by Mr. Speaker to exclude an individual for some alleged misdemeanour. If that individual has been guilty of a very grave breach of public trust - and after all, a pressman, having imposed upon him the duty of safeguarding, to a very great extent, the interests of the public, is more or less a public servant - he must be punished in some way. But considering that he is a representative of the Fourth Estate, which is a recognized part of the parliamentary machine, the responsibility for excluding him, and inferentially, of passing a vote of censure upon the newspaper that he represents, should be in the hands of Parliament itself. If this House does not take a stand in the present case, which may become historic, at some time in the future there may be a Speaker who will abuse the power that you, Mr. Speaker, rightly consider is vested in you. We know that that could not possibly happen in your case, but the door would be opened wide for the very gravest abuses to creep in. I, therefore, submit that it is meet and proper that on this occasion the House should force a decision that, at all events, will show that it does not subscribe to the attitude that you have taken up.

Mr ELDRIDGE:
Martin

.- I feel that the decision under review has been made somewhat prematurely. In the main, I find myself in agreement with the views expressed by the last speaker. The position as stated by the AttorneyGeneral (Mr. Brennan) to-day indicated an incomplete situation. It may be remembered that after the

Attorney-General had made his statement I inquired of him whether it was his intention to continue the inquiries into this matter until the real culprit had been discovered, because he, and not a press representative, is the person who should be dealt with. Whatever its effects may be, and whatever inconvenience at times it may cause, the. fact remains that we have the press with us, and that newspapers have to employ journalists in this House to secure information. It is as much the business of those journalists to secure information as it is our business to attend to the legislation of this country. I felt to-day that the Attorney-General was too severe in the attitude that he adopted towards the refusal of Mr. Alexander to divulge the source from which he had obtained the information. That attitude, I believe, was an incorrect one to adopt, for the reason that it is part of the code observed by the journalistic profession, just as it is of the legal, the banking, and the medical profession, that it is imperative in certain directions that secrecy shall be maintained.

Mr Prowse:

– And of the Cabinet also.

Mr ELDRIDGE:

– That is true. From that point of view, Mr. Alexander is entitled more to commendation than to censure. I feel that the freedom of the press is involved, just as much as are the rights and privileges of this House. Altogether the matter is one which should not be left to the final determination of the Speaker. I trust, therefore, that it may be possible for you, Mr. Speaker, to vary your decision in order that honorable members may have an opportunity of obtaining more information on the subject, and that the final determination may be left to the House itself.

Mr LATHAM:
Kooyong

– I do not propose to deal with the merits of this particular case. A document dealing with the merits of the case was placed on the table of the House only this afternoon, and I have had no opportunity yet of perusing it or considering it. That, I think, is also the position of most other honorable members. It is desirable that honorable members should have an opportunity of considering the facts as submitted by the Government before determining what action should be taken on what is a profoundly important matter of principle. It appears to me that any exercise of the extraordinary powers of Parliament to condemn a man without trial, and subject him to personal penalties of a very severe character, should be made with the utmost caution. I suggest that further consideration should be given to this aspect of the case : From the information before the House, we know that Mr. Alexander, the journalist in question, obtained certain information from some unknown source and sent it to the newspaper he represents, and also to other newspapers. The newspaper he represents was distinguished by refusing to publish the information; yet it is that newspaper only which is to be penalized, through its representative, by the exclusion of that representative from the galleries of this Parliament. The newspapers which printed the cablegrams are to be left unaffected. As far as our information goes, all that the pressman in question did was to make the information available to various newspapers. His own newspaper, I repeat, did not print the information, yet he is to be excluded from the House; but, apparently, the representatives of the newspapers which did print the cablegrams are to continue to enjoy their ordinary privileges. I suggest that attention be given to that aspect of the matter, and, in doing so, I do not now suggest that any particular conclusion should be adopted. It is relevant and material, however, that the point should be taken into consideration.When attention is given to that aspect, it will be seen that the exercise by Parliament of its power as proposed, might, if logically applied, have very far-reaching consequences. I suggest that honorable members should hesitate and carefully weigh the matter before approving of the exercise of the power as proposed.

Mr BRENNAN:
AttorneyGeneral · Batman · ALP

– The reference by the Leader of the Opposition (Mr. Latham) to the particular paper which he named is entirely irrelevant to the point raised during this debate. I made a point of asking, in the course of my observations this afternoon, that the House should consider this matter, so far as my part in it as a member of the Government was concerned, free altogether from political considerations, and without regard to the policy of any particular newspaper. With those matters we are not concerned at all. It is not a matter of penalizing any newspaper. The Government has no desire to penalize even Mr. Alexander. The issue is very simple, and I appeal to honorable members to view it in its simplicity, without consideration of party interests. By his own admission, the gentleman concerned was in possession of documents which he does not pretend to have had the slightest right or title whatever. They were, incidentally, important secret documents of State.

Mr M CAMERON:
BARKER, SOUTH AUSTRALIA · LP; NAT from 1925; UAP from 1931

– Had not the documents been placed before Caucus?

Mr BRENNAN:

– No. This gentleman was admittedly in possession of the documents, and in the search for the wrong-doer, who was instrumental in abstracting those documents from their proper custody, the question arose as to how Mr. Alexander became possessed of them. I submit that it was his duty, as it is the duty of every citizen, and every member of this Parliament, to assist in righting the wrong that has been done, and in sheeting home to the culprit, who ever he may be, the impropriety, the misdemeanour or possibly the crime, of which hewas guilty.

Mr Beasley:

Mr SCULLIN:
Prime Minister · Yarra · ALP

– It is not the Government’s fault that this matter arose at this time of night. The honorable member for Oxley (Mr. Bayley) could have brought the matter up to-morrow.

Mr Francis:

– It would then have been too late. The person in question would then have been excluded.

Mr SCULLIN:

– The honorable member could have raised the question tomorrow, by which time there would have been no exclusion. I submit, Mr. Speaker, that there is no challenge to your power to take the course you have taken. It is true that Mr. Speaker is the creation of Parliament, and that Parliament can remove him ; but the fact remains that, while he holds the office, he has the power to do what you have done. I have in my hand a card issued by the Serjeant-at-Arms admitting pressmen to the press gallery of this House. There is a foot-note which reads - “ This pass is issued subject to withdrawal at any time at the discretion of the Speaker.”

Mr Bernard Corser:

– Through the House.

Mr SCULLIN:

-No. This matter is dealt with in Standing Order No. 65, which reads -

If at any sitting of the House, or in committee, any member shall take notice that strangers are present, the Speaker or the Chairman (as the case may be) shall forthwith put the question, “That strangers be ordered to withdraw,” which shall be decided without debate: Provided that the Speaker or the Chairman may, whenever he thinksfit, order the withdrawal of strangers from any part of the chamber.

Mr Latham:

– That does not apply to a pressman. Theposition is entirely different.

Mr SCULLIN:

House adjourned at11.48 p.m.

Cite as: Australia, House of Representatives, Debates, 23 April 1931, viewed 22 October 2017, <http://historichansard.net/hofreps/1931/19310423_reps_12_128/>.

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House of Representatives23 April 1931

QUESTION

PUBLICATION OF CONFIDENTIAL DOCUMENTS : PAPER

Mr BRENNAN:AttorneyGeneral · Batman · ALP

Mr LYONS:Wilmot

Mr Fenton:

Mr LYONS:

Mr Marr:

Mr LYONS:

Mr Crouch:

Mr SPEAKER(Hon Norman Makin:HINDMARSH, SOUTH AUSTRALIA

Mr LYONS:

Mr Crouch:

Mr LYONS:

Mr FENTON:Maribyrnong

Mr ELDRIDGE:MARTIN, NEW SOUTH WALES

Mr BRENNAN:

Mr LATHAM:KOOYONG, VICTORIA

Mr BRENNAN:

Mr BEASLEY:WEST SYDNEY, NEW SOUTH WALES

Mr SCULLIN:Minister for External Affairs · YARRA, VICTORIA · ALP

Mr HAWKER:WAKEFIELD, SOUTH AUSTRALIA

Mr BRENNAN:

Mr GREGORY:SWAN, WESTERN AUSTRALIA

Mr BRENNAN:

Mr HAWKER:

Mr SPEAKER:

Mr HAWKER:

Mr SPEAKER:

Mr HAWKER:

Mr BRENNAN:

QUESTION

FEDERAL AID ROADS

Mr PROWSE:FORREST, WESTERN AUSTRALIA

Mr SCULLIN:ALP

QUESTION

PETROL DUTY

Mr McGRATH:BALLAARAT, VICTORIA

Mr FORDE:Minister for Trade and Customs · CAPRICORNIA, QUEENSLAND · ALP

QUESTION

FINANCIAL RELATIONS OF THE COMMONWEALTH AND NEW SOUTH WALES

Mr NAIRN:PERTH, WESTERN AUSTRALIA

Mr SCULLIN:ALP

QUESTION

COMMONWEALTH BANK

Mr WARD:EAST SYDNEY, NEW SOUTH WALES

Mr SCULLIN:ALP

QUESTION

ALLEGED CANBERRA APPOINTMENT

Mr CUSACK:EDEN-MONARO, NEW SOUTH WALES

Mr SPEAKER:

Mr CUSACK:

QUESTION

WIRELESS BROADCASTING

Mr ELDRIDGE:

Mr A GREEN:KALGOORLIE, WESTERN AUSTRALIA · ALP; FLP from 1931; ALP from 1936

Mr ELDRIDGE:

Mr A GREEN:KALGOORLIE, WESTERN AUSTRALIA · ALP; FLP from 1931; ALP from 1936

QUESTION

CANBERRA GOLF LINKS

Mr ELDRIDGE:

Mr BLAKELEY:DARLING, NEW SOUTH WALES

QUESTION

ROYAL AUSTRALIAN NAVY

Mr CROUCH:

Mr CHIFLEY:MACQUARIE, NEW SOUTH WALES · ALP

QUESTION

REGISTRATION OF MOTOR VEHICLES

Mr SCULLIN:ALP

TARIFF DEBATE

Mr SCULLIN:ALP

NEW STANDING ORDER

Mr SCULLIN:Prime Minister · Yarra · ALP

Mr BEASLEY:West Sydney

Mr SPEAKER ( Hon Norman Makin:HINDMARSH, SOUTH AUSTRALIA

Dr EARLE PAGE:Cowper

Mr LAZZARINI:Werriwa

Mr SCULLIN:Prime Minister · Yarra · ALP

Mr GABB:Angas

Mr SPEAKER:

House of Representatives
23 April 1931

Mr BRENNAN:
AttorneyGeneral · Batman · ALP

Mr LYONS:
Wilmot

Mr SPEAKER(Hon Norman Makin:
HINDMARSH, SOUTH AUSTRALIA

Mr FENTON:
Maribyrnong

Mr ELDRIDGE:
MARTIN, NEW SOUTH WALES

Mr LATHAM:
KOOYONG, VICTORIA

Mr BEASLEY:
WEST SYDNEY, NEW SOUTH WALES

Mr SCULLIN:
Minister for External Affairs · YARRA, VICTORIA · ALP

Mr HAWKER:
WAKEFIELD, SOUTH AUSTRALIA

Mr GREGORY:
SWAN, WESTERN AUSTRALIA

Mr PROWSE:
FORREST, WESTERN AUSTRALIA

Mr SCULLIN:
ALP

Mr McGRATH:
BALLAARAT, VICTORIA

Mr FORDE:
Minister for Trade and Customs · CAPRICORNIA, QUEENSLAND · ALP

Mr NAIRN:
PERTH, WESTERN AUSTRALIA

Mr SCULLIN:
ALP

Mr WARD:
EAST SYDNEY, NEW SOUTH WALES

Mr SCULLIN:
ALP

Mr CUSACK:
EDEN-MONARO, NEW SOUTH WALES

Mr A GREEN:
KALGOORLIE, WESTERN AUSTRALIA · ALP; FLP from 1931; ALP from 1936

Mr A GREEN:
KALGOORLIE, WESTERN AUSTRALIA · ALP; FLP from 1931; ALP from 1936

Mr BLAKELEY:
DARLING, NEW SOUTH WALES

Mr CHIFLEY:
MACQUARIE, NEW SOUTH WALES · ALP

Mr SCULLIN:
ALP

Mr SCULLIN:
ALP

Mr SCULLIN:
Prime Minister · Yarra · ALP

Mr BEASLEY:
West Sydney

Mr SPEAKER ( Hon Norman Makin:
HINDMARSH, SOUTH AUSTRALIA

Dr EARLE PAGE:
Cowper

Mr LAZZARINI:
Werriwa

Mr SCULLIN:
Prime Minister · Yarra · ALP

Mr GABB:
Angas

Mr ELDRIDGE:
Martin

Mr GABB:
Angas

Mr LAZZARINI:
Werriwa

Mr SCULLIN:
Prime Minister · Yarra · ALP

Mr MACKAY:
Lilley

Mr BERNARD CORSER:
Wide Bay

Mr WARD:
East Sydney

Mr NAIRN:
Perth

Mr SCULLIN:
Prime Minister · Yarra · ALP

Mr LAZZARINI:
Werriwa

Mr CUNNINGHAM:
Gwydir

Mr MAXWELL:
Fawkner

Mr SCULLIN:
Prime Minister · Yarra · ALP

Mr COLEMAN:
Reid

Mr SCULLIN:
Prime Minister · Yarra · ALP

Mr BEASLEY:
West Sydney

Mr BEASLEY:
West Sydney

Mr SCULLIN:
Prime Minister · Yarra · ALP

Mr SCULLIN:
Prime Minis ter · Yarra · ALP

Mr LATHAM:
Kooyong

Mr BEASLEY:
West Sydney

Mr PROWSE:
Forrest

Dr EARLE PAGE:
Cowper