3rd Parliament · 2nd Session
The President took the chair at 10.30 a.m.,andread prayers.
– I desire to ask the Minister of Home Affairs, without notice, whether if, as stated, no particulars as to tenders for the construction of the Government Trawler are yet to hand from distant States, the following paragraph, which appeared in the Melbourne Herald of the 10th inst., is correct or incorrect -
A Tasmanian firm has been able to send in the lowest tender for the construction of the Federal trawler, ‘which it is proposed to use in the investigation of our deep-sea fisheries. As al. ready announced, four tenders were received. The Tasmanian tender comes from a Devonport firm, and the necessary percentage deposit has been lodged. A. tender from a Victorian establishment was next lowest in price, and a New South Wales offer was third. The highest one came from Western Australia. Neither from South Australia nor Queensland was any response* to the tender advertisement received. The tenders are now being considered by Lt.-Colonel Owen, the Federal Works Director, who may be in aposition to make a recommendation to the Minister next week.
– So far as I am concerned, and so far as I know from inquiry of the officers in myDepartment, the paragraph has no authoritative sanction from the Department. I ask the honorable senator to give notice of the question*.
– I desire to ask the Minister representing the PostmasterGeneral, without notice, whether an instruction has been despatched to the Postmaster at Charters Towers, to alter the regulations relative to. cypher telegrams in conformity with those which are in force in the South, and also to refund overcharges?
– Last night the honorable senator showed me a telegram which he had recently received from Charters Towers. I placed myself at once in’ communication with the PostmasterGeneral, and this morning I have been supplied by him with the following information -
Prior to the alteration and the instructions issued on the 13th of July, the regulation as to counting and charging was as follows : -
Ordinary rates shall be charged for tele- grams in any one of the following languages, viz. : - English, French, German, Italian, Dutch, Portuguese, Spanish, and Latin. Every telegram consisting of words in any admitted language other than English having no connective meaning, . and any word in Webster’s English Dictionary, containing more than fifteen letters, shall be treated as code, and all such words shall be charged as two words: Provided that the extra charge for code words shall not in any case exceed fiftyper cent. in addition to the ordinary rate which would be payable on account of the said telegram. Isolated letters, or groupsof letters having no connective meaning shall be counted as one word for each letter.
I desire to draw particular attention to the last sentence. The regulation continues -
Combinations of two or more words shall be counted as separate words, with theexception of those words which the usage of the language allows to be written together or coupled with hyphens, and which are so written by the sender of the telegram. Names of persons, places, &c., shall be counted on the same principle.
That is the particular regulation which was in force prior to the 13th July, and the words of that regulation, which have been to a large extent the cause of what has since occurred, and on which I laid stress, are as follow -
This answer continues -
The. alteration was made at the request of a deputation from the Chamber of Commerce, Melbourne, introduced by Mr. Knox, M.P., on the 21st of June, asking that what was regarded as the prohibitive rate for words, other than dictionary words, and for groups of letters and figures (cipher) viz. :.one word for each letter or figure might be altered to admit of telegrams received over cables being sent on the lines of the Commonwealth, without translation and without what was considered an excess charge: The Postmaster-General determined to afford the relief asked for, and instructions were issued accordingly. . In Melbourne, this instruction was misnnderstood, and English dictionary words not exceeding fifteen letters having no connective meaning were charged as code instead of as plain language. This error was, on representation by the Stock Exchange, Melbourne, at once corrected, and all overcharges refunded. A subsequent and full instruction as to counting and charging was issued to all States on the27th of July.
The following is a copy of thatinstruction, which the Secretary to theCentral
Department sent by wire on the 27th July to every Deputy Postmaster-General -
Circular 519.- “My circular 478 of 13th inst. re codeand cipher telegrams within Commonwealth, it has now been approved (1) following shall be counted as plain language : - (a) telegrams consisting entirely of words in Webster’s English Dictionary, even though words would have no connective meaning; [6) telegrams consisting of words in one or more of admitted languages other than English having connective intelligible meaning. (2) In telegrams in plain language, each word is to be counted at the rate of one word for each fifteen characters. (3) Following shall be counted as code words : -(a) Words in any admitted language other than English having no connective meaning ;(b) Words pronounceable according to usage of any of admitted languages. (4) In code language maximum length of word is ten characters.(5) Following shall be counted as cipher words : -(a) Any group of letters other than plain or code language ; (b) Any group of Arabic figures. (6) Groups of letters other than plain or code language or groups of figures shall be countedat the rate of one word for each five figures or five letters which they contain. (7) Any telegram in mixed plain and code language is to be counted as code, but if cipher words are included they shall be counted as cipher and remainder of telegram as code. (8) The whole of any telegram containing code or cipher words is to be charged in accordance with instructions in circular 478. (9) In other respects, regulations as to counting plain language or code or cipher words in international telegrams are to apply also to those within the Commonwealth. Please note and act accordingly.”
The answer proceeds -
The regulation as altered and the new method of counting and charging has been highly appreciated by the commercial section of the community, and since fully stated appear tohave satisfied everybody except a. few persons at Charters Towers, as no complaints nave been received from any other place in the Commonwealth.
To revert to the previous practice wouldbe to inflict a hardship upon an important class of the community; as it would in effect shut out the pentelegraph and similar codes now largely used in commerce, as well as words which, though pronounceable, are not to be found in any dictionary, while the existing method allows any person to send words which, though really code (as they possess no consecutive meaning), as plain language, provided that they do not exceed 15 letters in length, and are to be found in Webster’s English Dictionary.
As. illustrating the operation of the new method, as compared with that previouslyin force, it may be stated that a telegram to Perth which, under the old system would have cost 22s.5d., under the new cost 16s.1d.
-Arising out of the answer which has just been givenby the Minister of Home Affairs, I desire to point out that Iasked hima plain question-
– I cannot allow the honorable: senator to argue the matter. He may ask a further question ifhe chooses, but I cannot permit him to go beyond that.
– That is what I am attempting to do.
– Then I wish the honorable senator would not use so much prefatory matter. .
– I desire to know whether the same instructions have been issued to the postmaster at Charters Towers as have been issued to the postal authorities in Melbourne, and whether the same rates are charged at the former place as the latter?
– I am informed by the Secretary for the Postal Department that the answer to the honorable senator’s question is “ Yes.”
– I desire to ask the Minister of Home Affairs, as representing the Postmaster-General, without notice, whether he. will inform the Senate of the result of the inquiries which he has been making into the alleged negligence of the postal authorities in delaying the delivery in Hobart of the English mail which, reached Melbourne on Tuesday, by having it conveyed to Tasmania by the steamer Glaucus, till the following Saturday?
– I have no recollection now of the exact date upon which the mail in question arrived in Melbourne, and was delivered in Hobart, but in reply to an inquiry which Imade the other day in consequence of a question by Senator Clemons, I was informed that the steamer Glaucus was timed to sail from Melbourne upon the evening of the day upon which the English mail was landed here. But instead of sailing upon that day, the steamer did not leave until the following morning. The postal authorities were not advised of this delay in her departure, and the mails were landed at Stanley. Thence they were taken by coach and rail to other parts of the Island: It appears that as far back as December last, the Deputy Postmaster-General of Tasmania intimated to the authorities in Melbourne that if delay had to occur in. the transit of Tasmanian mails, it was preferable that it should occur in connexion with the English rather than with the, Inter- State mails.
– What on earth made him do that?
– I do not know. That is the information which has. been supplied to me. Further inquiry is being made as to the ground upon which he based that recommendation, and steps are being taken to prevent a recurrence of the trouble.
– I wish to ask the Minister of Home Affairs, representing the Postmaster-General, whether he is aware that a large number of mail bags have been placed upon the steamer running from Gladstone to Townsville without being entered upon the ship’s way-bill, and also that a number of mails for the north of Queensland have been taken on to Rockhampton, and consequently have missed the steamer, with the result that they have had to wait for the next steamer?
– I must ask the honorable senator to give notice of his question. Inquiries will be made.
– I think, Mr. President
– Order. I have already told the honorable senator several times that questions cannot be debated. The Minister of Home Affairs has stated that he will make inquiries into his complaint, and has requested the honorable senator to give notice of his question. The Minister may please himself as to whether or not he answers any question which is put to him in the Senate.
– I desire to ask the Minister of Home Affairs whether, in view of the information which the Government have recently received in regard to wireless telegraphy, they contemplate abandoning the proposal to connect King’s Island with the mainland or with Tasmania by means of that system?
– The Government have not decided to abandon consideration of the proposal for establishing communication with King’s Island and other outlying portions of the Commonwealth by wireless telegraphy. Although the latest information supplied to the Department shows that great developments are still taking place in connexion with this means of communication ; the Department is aware, from the proceedings of the Royal Commission at present, or recently, sitting in” England, that other informationgoes to discount many of the claims advanced for the -system or means in general without reference to any particular system. As illustrating the fact that the Government do not intend to abandon consideration of this matter, I would point out that upon the Estimates for the present year a sum of money is provided for wireless telegraphic purposes.
– Then there is still hope that the undertaking will be carried out ?
– I wish to ask the Vice-President of the Executive Council whetherhe can see his way to have the copies of the Tariff Commission’s reports, which are at present being circulated in single form, bound in such a way that one binding will contain the recommendations of one section of the Commission and another binding those of the other section? I am sure that the adoption of my suggestion would be to the convenience of honorable senators, and that the documents would be very small in bulk.
– I quite recognise that the convenience of honorable senators should be consulted in every way. I will discuss the matter with the Minister of Trade and Customs, and see if something cannot be donein the direction suggested.
Bill received from the House of Representatives, and (on motion by Senator Best) read a first time.
Bill returned from the House of Representatives with a message intimating that the amendment made by the Senate had been agreed to.
Tobacco Combine : Tariff.
– I have received an intimation from Senator Pearce that he desires to move the adjournment of the Senate to an unusual hour, in order to discuss a definite matter of urgent public importance, viz., “ The increase of prices of tobacco and the throwing out ofemployment of a large number of workmen by the Tobacco Combine, and their allegation that this action has been caused by the new Tariff proposals.”
Four honorable senators having risen in theirplaces,
– I move-
That the Senate, at its rising, adjourn until 9.30 a.m. to-morrow.
I have taken this action for the purpose of asking the Senate to give consideration to the fact that the tobacco manufacturers in Australia have largely in creased the price of their products, thereby causing great expense to consumers of those articles throughout the Commonwealth; that they have closed down some portions of their factories in two States, and I understand are likely to continue that course with regard to other States ; that by so doing they have caused loss and suffering to some hundreds of workmen who are their employes, and that they allege, as their justification, the action of the Commonwealth Government in bringing in new Tariff resolutions. I invite the Senate to consider the fact that we have upon our statute-book a law which, I think, is intended to deal with such combinations, where they are found to affect, prejudicially, Australian industries or Australian workmen. I ask honorable senators to express their opinions on the question.’ of whether the Government should be in vited to give consideration to this aspect of the matter, with a view to putting into operation’ what is known as the Anti-Trust law.
– Is the raising of these prices any more evidence of a combine than the raising of the prices of grocers’ goods?
– I hope to be able to show that later on. The first intimation of an intention to raise prices was the issue of a public notice, a copy of which I hold in my hand, and which was circulated throughout Victoria. I am not sure about the other States, but I presume that a similar circular has been distributed there.
– By whom?
– I am not sure. I can get no direct evidence, because the only signature on it is that of “ A. H. MacDonald, Printer,” but I think that I can bring indirect evidence to show where it has emanated from. It notifies anincrease of the retail prices of tobaccoes. It was not issued directly by the retailers themselves, and, therefore, it must have emanated from some other quarter.
-I gives a list of tobaccoes.
– It gives a list of both local and imported tobaccoes, and the increase in price in each case. I direct the attention of the Senate to that increase, and shall try to show from what source it has originated. I have here a copy which I have made of a letter issued to all retail tobacconists in Victoria, by Kronheimer Limited, tobacco and cigar merchants, 540 to 544 Bourke-street, Melbourne.
– Who are the distributors for the Combine.
– Yes,, and they are a part of the Combine themselves. The letter is as follows - gth August, 1907.
Owing to the higher duties and Excise on tobaccoes, cigars, and cigarettes, now in force under the new Federal Tariff, we beg to intimate that the following advances will be charged on former rates : -
Plug and twist tobaccoes - previously listed at 3s. and under (Starlight), &c, 3d. per lb. additional.
Previously listed at 3s.1d. to 3s.11d. (Confidence twist and curls, &c’-), 6d. per lb. additional.’
Previously listed at 4s. and over (Havelock, Yankee Doodle, &c), qd. per lb. additional.
Capstan and Vice-Regal, 6d. per lb. additional.
Cigarette tobaccoes, subject to special quotations owing to uncertainty of Customs interpre. tations.
Plug tobacco, duty raised 3d. per lb. additional.
Cut tobaccoes, 6d. per lb. additional, imported in cut form, &c.
Cut locally from imported plug, 3d. per lb.
Cigarette tobaccoes, special quotations - cigarettes Australian, Capstan, Havelock, &c,1s. per 1,000 additional.
Three Castles, Richmond Straight Cut,1s. 3d. per lb. additional.
Imported Old Judge, 2s. per lb. additional.
Cigars; quotations on application.
The above prices are subject to alteration without notice.
– Are the rises indicated there only those provided for by the increased duties in the Tariff?
– I may say that the rise in the price of imported plug tobaccoes is accounted for by the increase of the import duty, but I shall ask the Senate to concentrate its attention particularly on the locally-made plug tobaccoes, upon which there has been a rise wh.ch is not warranted by the increase in duties. In order that honorable senators may grasp the importance of this circular, I refer them to the report of the Royal Commission on tobacco manufacture, from which they will find that Mr. Louis Philip Jacobs, who is a director of the States Tobacco Company, and of several other tobacco companies which are members of the Combine, and a shareholder also in Kronheimer Limited, stated the formation of this Combine, as reported on page 57 of the evidence, as follows -
An arrangement has been concluded between certain firms in the tobacco trade, some of which are Australian, and one English, a list of which is given herewith.
Under this arrangement, each of the manufacturing companies holds a proprietary interest in every other such company. Every one of the companies concerned, however, carries on its business separately from the others. These manufacturing companies have purchased an interest in the distributing house of Kronheimer Limited, and have appointed this firm the sole distributing agents for their products to wholesale houses-
– Why should they not?
– I am not saying why they should or should not - for which service they receive a commission. Kronheimer Limited, however, also do a wholesale business themselves, i.e., they supply retail tobacconists in competition with the other wholesale houses.
Mr. Jacobs gives the names of the firms in the Combine, among which are the British Australasian Tobacco Company, the American Tobacco Company,Sydney, and last, but by no means least, the BritishAmerican Tobacco Company Limited, London, which company includes the Australian business of Williams and Dunlop. There are several other local companies in the list, but I have omitted them. Those I have quoted are all that are important at the present juncture. Honorable senators may be interested to know that the British American Tobacco Company is the American Trust which is now being proceeded against by the United States Government under the Sherman law, upon which our Anti-Trust law is founded. In the petition by the United States Government official, it is stated that that Trust -
Distribute 80 per cent, of the smoking and plug tobacco, 95 per cent, of the snuff. 80 per cent, of the” cigarettes, 75 per cent, of the small cigars, 95 ; per cent, ofthe liquorice products, 8 per cent, of the tinfoil, and10 per cent, of the cigars and stogies.
That wili give honorable senators an idea of what I am trying to bring out. Neither free-trade nor protection offers any remedy for the state of affairs that I shall disclose, because the imported brands are almost as much controlled by the Trust as are the local brands. In a London cablegram published in the Argus of 13th August, honorable senators will find the connexion between the Australian companies and the British-American Company clearly set out. Putting that together with Mr. Jacobs’ evidence, they will see thatKronheimer Limited is merely a distributing house for the Combine, and that this circular is founded upon the letter which I read, or originates from the same quarter. It conveys the same meaning; except that in the schedule now displayed in the retailers’ shops the price per plug is stated, whereas in the letter from Kronheimer Limited to the retailers what is given is the price per lb.
– Are the two schedules in sympathy ?
– The price per plug works out exactly the same’ as the price per lb.
– Every item in that list is al tobacco sold by the Trust.
– Perfection tobacco is not. It is the property of Dudgeon and Arnell, who are not members of the Trust. I am not in a position to say that the price of that tobacco has been raised.
– The honorable senator is not in a position to say that it has not been raised?
– I have not had time to make a comparison. I know that Dudgeon and Arnell are advertising that they are not connected with the Trust. They make that statement on oath. I understand that they are the owners of Perfection tobacco.
– I venture to say that the Trust controls the sale of that tobacco, also.
– It is significant that the new schedule of prices found its way into the windows of the retail shops before the retailers themselves had had am opportunity to meet and consider it. In the Argus of the 12th inst. there appeared an announcement that the higher prices, were to becharged, and on the 14th inst. a meeting of retailers was held to consider the schedule.
– To consider the orders they had received.
– Yes. According to the Argus of 15th inst., at a meeting of retailers held at Rubira’s Cafe, the chairman said that -
On Monday, an amended list of retail price was issued by - he understood - the semiwholesalers. It was the best -they could do in the circumstances. Shapes of tobacco must be altered to fit the prices.
The Age, in its issue qf the same date, which gives a more detailed report of the meeting, states that Mr. T. Simpson said that he - considered the Schedule should never have been issued. It would have been better to have waited for a full meeting of the trade to fix the prices.
Evidently the Tobacconists’ Association up to that time had had nothing to do with the issue of the schedule. In to-day’s issue of the Age, Mr. Neal E. Rice, retail to bacconist of Prahran, defends the retail tobacconists from the allegation that they are responsible for the increase in prices. Writing to the editor, he says -
Sir, - Would you kindly give me space in your valuable paper to say a fewwords in reference to the retail tobacconists and their prices re new Tariff. The wholesale association issued printed price lists, and sent them to the retailers to hang up in their windows, and to charge the increased prices. In justice to the retailers, I wish to explain that the wholesale men charged the increased prices immediately the new Tariff came out, and the retailers who got their supplies last Saturday (for the week) had to pay the increased prices, namely, 3d. per lb. extra on imported manufactured, and 9d. per. lb., extra on locally manufactured. Now, the public can see and judge for themselves that the retailers are not making the good thing out of the consumer at the increased prices as one would think.
That is not a complete history of these proceedings. As a matter of fact, I am informed that prices were raised in Adelaide and Sydney before the new Tariff came into operation. I am advised that last Thursday week in Adelaide the price of “Eureka” and “ My Pet “ - twist tobaccoes - was increased to the extent of 2d: per lb., and that in New South Wales “ Army and Navy,” “Home Rule,” and “Red Seal” tobaccoes were raised 2d. per lb. the day before’ the introduction of the new Tariff. Since Fridav last, in S’ydnev, “ Signet;” “ Yankee ‘ Doodle,”: and “ Mazeppa . “- locally-made tobaccoes - have gone up 3d. to 7d. per lb. These, it is said, contain about one-third of American leaf. I wish the Senate to consider whether there is any justification for increasing the price of tobacco.
– Does not the same con sideration apply to all manufactures?
– Let us deal first of all with the tobacco industry.
– The Customs reports presented to the Tobacco Commission show that 5½ per cent, of material other than leaf is used in the manufacture of plug tobaccoes, and that no duty is paid upon that foreign material. I base that statement not on the report of the Commission itself, but upon a return submitted to it by Mr. Ferguson, Chief Inspector of Excise, and appearing as an appendix to the report. This return shows the quantity of leafin hand on 31st December,1903, the quantity of leaf which entered the factories during the succeeding twelve months, and the quantity in hand at the end of the year 1904. If honorable senators compare these figures with the Excise duty paid during tKe year they will find that the quantity of tobacco manufactured during that period was over 300,000 lbs. in excess of the leaf actually used in the factories in which this tobacco was worked up. In’ other words, 5½ per cent of material other than leaf was used.
– Excise was paid on the added weight?
– It was, but no Customs duty was paid on the foreign ingredients. The dutiable goods delivered free to, the tobacco manufacturers of the Commonwealth during the financial year 1904-5 under the powers given by the Customs Act consisted of spirits, 11,244 gals. ; glycerine, 19,445 lbs..; liquorice, 227,005 lbs.
– I rise to a point of order. I wish to know, Mr. President, whether the Senate is atliberty to take into consideration the details of the Tariff which have first to be considered by. another place
-I submit, Mr. President, that Senator Pearce, to whom I have listened most attentively, has not transgressed any of our Standing Orders as to anticipating a debate.
– I do not think that Senator Pearce is out of order on the grourid suggested by Senator Gray, but I would remind him that the specific purpose for which he moved the adjournment of the Senate was to consider -
The increase of prices of tobacco, and the throwing out of employment of large numbers of workmen by the Tobacco Combine, and their allegation that such action has been caused by the new Tariff resolutions.
I think the honorable senator is gradually drifting from the text of his notice, and that he ought not to attempt to deal with- the whole question of the manufacture of tobacco.
– Then I . shall not further pursue that phase of the question. The list of foreign ingredients isto be found at page 254 of the report of the Commission.
SenatorClemons-The honorable senator might supply the date on. which Senator Pulsford asked a question in regard . to. dutiable goods delivered free to the tobacco manufacturers.
– Thequestionwas asked by SenatorPulsfordon25thOctober, 1905 . The dutyonimportedleaf under the old Tariff wasis6dperlb, whilst under the. new Tariff it is is.9d. per lb.. The Excise duty under theold Tariff was is per1b., and under the new Tariff is is. 3d. In other words,’ we have raised the duty on the raw material used by the local manufacturers to the extent of 3d. per lb., and we have increased the Excise duty on the finished product bv 3d; oer lb., or a total increase of 6d. per lb. Kronheimer and Co.’s letter shows that they have three grades of tobacco, and that in respect of the best locally made article they have raised the price by 9d. per lb. I desire to draw special attention to the significant fact that the old Tariff did not differentiate between stemmed and unstemmed leaf, and that all tobacco here manufactured up to the present has been made from leaf on which a duty of rs. 6d. per lb: has been paid. No honorable’ senator can say whether a duty of 2s. per lb. or of1s. 9d. per lb., under the new Tariff is going to be paid. The stemmed leaf may be brought in just as It has been in the past, without differentiation between the two. It may be that the unstemmed leaf will be introduced in larger quantities and stemmed here’, or it may be that a larger quantity of stemmed leaf will be imported. The fact remains that , for some months to come all tobacco smokedin Australia will have been made from leaf on which a duty of rs. 6d., and not is. 9d., per lb. has been paid. : But if is.9d. is paid there is an increase of 6d. per lb. They have increased the price on that particular brand by9d., and gained 3d. per lb. thereby, even if they pay the new duties on every pound manufactured.
– Is the honorable senator allowing for the Excise?
– Yes, for 3d. per lb. duty on leaf, and 3d. per lb. Excise duty ; a total of 6d. per lb.
– Is it 6d. in every case ?
– I am dealing now only with one item, the best brands of locally-made plug tobacco. I have here some tables which I shall not weary the Senate by reading in detail, but I propose to give some figures in order to show that the contention that these tobaccoes are made wholly from American leaf can be very seriously challenged on the figures supplied by the Excise officers. For instance, I find that during the year 1904, duty was paid on 6,588,175 lbs. of manufactured tobacco. The total quantity of tobacco manufactured during the year was 6,601,194 lbs. The return showed that there were used 2,941,327 lbs. of Australian leaf, and 4,678,411 lbs. of imported leaf. If we deduct from these figures the quantity removed outside Australia, and the allowance for refuse, which together represented 1,381,691 lbs., it leaves a total of leaf used amounting to 6,238,048 lbs. From that weight of leaf the manufacturers produced 6,601,194 lbs. of tobacco. There were, therefore, 363,146 lbs. representing added materials upon which no import duty was paid. If we add to this the Australian leaf, we shall find that 3,304,473 lbs., or more than 50 per cent, of the total raw material used, paid no import duty whatever.
– The honorable senator mentioned spirits amongst the added materials, which he said paid no import duty.
– That is so. Spirits imported for the manufacture of tobacco do not pay import duty. Mr. Davis, director and secretary of the New York and Brooklyn Tobacco Company, of Sydney, said that his experience was that of every 1,000 lbs. weight of tobacco manufactured and sold by the company, the proportion of the three grades of tobacco worked out in this way: - No. 1 grade, 454 lbs. were made from imported leaf;
No. 2, or medium grade, 210 lbs. from mixed Australian and imported leaf; and No._ 3, inferior grade, 336 lbs. from Australian’ leaf only. The percentages from, these figures are : - No. 1 grade, the best grade of imported tobacco, represents 45 per cent. ; No. 2 grade, medium tobaccoes, made from mixed leaf, 21 per cent.; and the poorer grades, made from Australianleaf, 34 per cent. These percentages are borne out by the Customs figures for the whole of Australia, and not merely for New South Wales. If they are further considered, it will be seen that over 5c* per cent, of the material used in the tobacco factories pays no import duty, whilst only 45 per cent, of the turnout is represented! by the higher grade tobacco, so that there they have a further advantage equivalent to 5 per cent. Taking into consideration the highest import duty on leaf the figures I have given show that Australia uses about 73 per cent, of imported leaf. I1 may say here that the Sydney factories use very much more Australian leaf than do the Melbourne factories, and taking Mr. Davis’s proportions of the various qualities sold we find that 2,970,495 lbs., representing tobacco of the highest grade, 1,386,231 lbs. the medium grade tobaccoes. and 2,244,374 lbs., the wholly Australian or lowest grade tobaccoes. These totals of the amount of Australian leaf are within 3,838 lbs. of the totalshown in the Excise officer’s returns, and therefore Mr. Davis’s percentages must be assumed to be very nearly correct as applied to Australian manufactured tobacco
– Has this anything to do with the closing of factories and the throwing of men out of work?
– The honorable senator is not out of order so far.
– I am coming to the question of the profit which the tobacco manufacturers are making. If they are making an increased profit of 3d. per lb. on the No.1 grade tobaccoes, as I have shown on the figures . for 1904, they will take from the people of Australia £37,1313s.9d peryear in increased profit which is not justified by the increased duties under the Tariff.
– Why say “ if “ ?
– I do not think that I need say “if.” I thank the honorable senator for drawing my attention to the matter, because I really have not the slightest doubt on the subject. Whatever opinions we may hold on the question of the nationalization of the industry, I hope we can look at this question from the people’s stand-point. Up to the present the Combine have not paid a single pennyover is. 6d. per lb. on their imported leaf, but they are charging, and propose to charge, the people of Australia on the stocks they have in hand 9d. per lb. additional. Even when the new Tariff comes into operation on the leaf they will use, I contend that they will not be in any worse position than they were before. They will pay 6d. per lb. additional, and will collect 9d. per lb., and will therefore collect 3d. per lb. from the people of Australia on the quantitv I have stated.
– What would thev have done if the duties under the Tariff had been reduced?
– They would have charged the old prices.
– I understand that the medium grade tobaccoes are, roughly speaking, manufactured of equal parts of Australian and American leaf. In the case of these tobaccoes, the increased retail price is 6d. per lb. The duty on the leaf will be1½d. more than previously on each ½ lb., of imported leaf used ; the Excise duty will be 3d. more, which makes a total increase of 4½d., so that on every pound of medium grade tobacco the Combine is going to make a clear additional profit of1½d. On this line, on a consumption of 1,386,231 lbs. they will make an increased profit of £8,663. On the No. 3 grade tobaccoes they have increased the. price by only 3d. per lb., and as that is justified by the increase in the Excise duty, I make no comment upon it. They are in a position to say that the Excise duty is increased, whilst the cost of production is not lowered, and they are therefore justified in increasing the price to the extent they have done. On the other two grades of tobacco, as I have shown, they will take from the people of Australia £45,794 per year increase over their previous profits.
– And they will blame the Tariff for it.
– They will blame the. Tariff for it. I point out that they have not only done what I have said, but have closed down portion of their factory in Melbourne to such an extent that some 200 or 306 men and women are now out of employment, with no indication as to when their work will be renewed, and the manager of the factory can give themno rea son for the action taken. There have been statements made in the press to the effect that there was a desire on their part to instal the electric light, though the men were told that the electric light would be installed in September. The menwere not told that their discharge was due to the installation of the electric light; and, further, it is a known fact that the machinery necessary to an installation is not at present in the factory. We see, therefore, that that excuse does not hold water. Then there is the further fact that men have been discharged from the Adelaide factories, in reference to which there has been no expressed intention to instal the electric light.
– To what does the honorable senator attribute the discharge of the men ? To the Tariff ?
– I attribute the discharge of the hands to the fact that, by intuition or otherwise, the Combine became aware of what was coming. For some weeks prior to the imposition of the Tariff the factories were kept at full speed, with hands working overtime ; and, vast stocks having been accumulated, the Combine have determined to cease manufacturing until those stocks have been disposed of. That is the only reason - at any rate, I can see no other - for the closing of the factories. It may be possible, of course that the Combine hope to obtain better terms under the Tariff, and is seeking to excite the sympathy of Parliament by laying the operatives idle. That, however, would be a very cruel and heartless proceeding with such an object in view.
– I think the first reason suggested is about the right one.
– At any rate, an honorable senator, who will follow me, will, I understand, prove, from the Customs returns, that the Combine has sufficient tobacco in hand to supply the market for many months.
.- The public are being rapidly educated tq the fact that, unless they own and control the Tobacco Combine, the Tobacco Combine will own and control the public.
– Now we are get- ting the real thing !
– I hope this ques- tion will be dealt with quite apart from any party considerations. I trust that no honorable senator will be willing to permit of any exploitation of either the general public’ or of theCommonwealth. The monopolistic institution known as the Tobacco. Combine has the grower, the worker, the retailer, and the consumer within its grasp; and by its recent action it stands convicted of wholesale and retail robbery. I suppose Senator Pearce was referring to me when he said that another senator would endeavour to show that this Combine has, so to speak, been raiding the Customs during the last two. weeks insuch a way as to be able now to make immense sums of money.
– I cannot allow the honorable senator to take that line of argument.
– I desire to prove how this Combine, by its action, will be enabled to make large sums of money at the expense of the public. Although it is clearly understood in most circles that Tariff proposals and recommendations are kept sacred and secret, I am inclined to believe that members of the Combine, or others interested in the Combine, must have received a whisper from some source.
– That is a serious charge.
– It is ; but I think the facts I shall produce to the Senate will confirm the statement.
– I point out to Senator Findley that Senator Pearce’s motion is very distinct as to what he desires to call attention to; and it would be out of order to go beyond the wording of it. The motion is to call attention to the increased prices in tobacco, and the throwing out of employment of a large number of workers by the Tobacco Combine, the allegation of the Combine being that such action has been caused by the new Tariff resolution. I ask the honorable senator to keep within the scope and purport of the motion.
– With all due deference, sir, I think I shall be able to keep as close to the motion as any honorable senator who has spoken, or any who will follow me. I shall show by the’ clearances at the Customs House how the membersof the Tobacco Combine have succeeded in exploiting the public. My information as to the clearances I have received from Dr. Wollaston, the Comptroller of Customs. I find that for the two weeks prior to the Tariff proposals being laid onthe table in another place, the’ clearances’ of unmanufactured tobacco represented duty paid to the amount of
– Were there any corresponding clearances of other lines?
– I am at present dealing with tobacco. The figures I have mentioned represent duty paid at the rate of1s. 6d. per lb.
– Were there any similarly, large clearances in the case of manufacturers in other lines of business?
– I hope the honorable senator will allow me to proceed. I know that’ he is anxious to do what he can on behalf of monopoly.
– I call attention to the fact that it is very disorderly to interrupt an honorable senator; especially when he is limited to time. I also call the attention of Senator Findley to the fact that it is hot right to tell other honorable senators that they are actuated by feelings in favour of monopoly.
– Senator Gray will not permit me to proceed ; and I can come to no other conclusion than that he is here to say what he can on behalf of monopoly.
– Order ! .I will not permit any honorable senator tomake allusions of that character. I have already told Senator Findley that he is out of order in so doing; and I ask him to accept my ruling.
– Would Senator Findley, or any other honorable senator, be in order in saying that Senator Gray holds a brief for the Tobacco Trust ?
– Yes, he would.
– Order! Let Senator Findley proceed.
– Since the Tariff proposals have been before the country, the clearances of unmanufactured tobacco represent duty paid amounting to only £3,586. If we take the average clearances per year, and make a calculation on a two weeks’ basis, we find that the excess of clearances represents a sum of £52,000. The old duty on all leaf stemmed and unstemmed was is. 6d. per lb. ; ‘ and the hew proposal is to increase that duty by 6d: per lb. on stemmed leaf, andby3d. per1b, on unstemmed leaf. The representatives of the Tobacco Combine, in a statement published to-day, say that all the leaf utilized by them in connexion with manufactured tobacco, particularly . Havelock, is stemmed.
– It isnot.
– However, the reason is not far to seek. The leaf is stemmed in America by coloured labour under sweated conditions ; and, when imported in this state, it saves freight owing to the fact that it is almost ready for use. The saving of 6d. per lb. duty, on clearances representing an excess over the average of .£52,000, means a clear profit to the Combine of £17,500. Further, ft would appear that the Combine received a whisper in regard to the proposed increase of the Excise. In the two weeks prior to the submission of the Tariff proposals to Parliament, the Excise paid on manufactured tobacco was £38,166,’ but since then the ‘amount paid has been only £138. Under the old Tariff, the Excise was is. per lb. on manufactured tobacco. Under the new Excise it is to be is. 3d. So that they save in Excise about £9,500. Adding together the two sums - £9,500 and £17,500 - the total is £27,000. . That tobacco, as I have endeavoured to show, was cleared before the new duties -were imposed, and most of it was manufactured before the new Tariff was placed on the table of the House of Representatives.
– The honorable senator’s argument applies to every line of imported goods.
– No line stands out so prominently as this does. In this business there is only one buyer. It is a matter of indifference to that buyer whether we have a high or a low Tariff, because he has a monopoly in manufacturing and distribution. For some time there was an agitation on the part of the workmen employed by the Combine for increased remuneration. As a result of it the Combine recently increased the wages of some of its overworked and underpaid employes - voluntarily as it said - to 7 s. a day, or about £2 2s. per week. The men, stimulated by the increase, started to work harder than they had done when they were receiving a sweated wage. It was only natural that they should. But the harder they worked the quicker they worked themselves out of a job. The normal output of the factory is, I am informed on reliable authority, about 18,000 lbs.- of tobacco per day. The output on two days last week was 26,000 lbs.
– Were the men working regular hours?
– I am not in a position to’ say absolutely. During busy times they, work more than eight Hours a day, and are, I expect, paid overtime. They worked harder in order that the firm might be able to reap advantage from the increased Tariff by charging more to the consumer ; and when the factory was full of manufactured tobacco the workmen were suddenly one morning told that there was no more work for them. About 200 flake coverers were discharged by the British-Australasian Company on the 10th of August.
– Were they discharged without notice?
– They came to work in the morning, and were told that there was no employment for them.
– It was very cruel treatment.
– Those engaged in the tobacco industry before the Combine came into existence occasionally closed down work suddenly, and sought to urge the men to deputationize or interview their “ parliamentary representatives and try to bring influence to bear upon the Legislature to have duties altered in a direction that would be suitable .not to the men, but to the persons running the industry.
– Did the Combine advise the men on this occasion?
– The effect of the treatment of the men on this occasion has been that they are” convinced that there is but one solution of the difficulty in which they are placed, and that is that the industry should be nationalized.
– We knew what the honorable senator was driving at.
– I feel sure that honorable senators opposite will be no party to allowing the Combine to exploit the public. If we cannot get at them in any other way, I trust that the Government will impose an Excise on clearances at the Customs House a fortnight before the Tariff was imposed.
– Carry out the recommendations of the free- trade members of the Tariff Commission and the Combine will be “ burst up.”
– Senator Pearce has pointed out that not only were men discharged in Melbourne after the Tariff proposals were laid on the table of the House of Representatives, but they were actually discharged in Adelaide before the Tariff was introduced. The same influences were at work all over Australia. This monopoly extends, not only throughout the Commonwealth, but throughout- “the ‘ world’. ‘ “On Tuesday last thirteen] hands were discharRéd and last Friday the foreman stopped the workmen when they came to work, though they were allowed to finish the work upon which they had been engaged.
– The honorable senator has exhausted his time.
– The subject that has been introduced by Senator Pearce interests me personally very much, but, at the same time, I am, to a slight extent, hampered in what I should like to say for more than one reason. First of all I have to respect the Standing Orders and to remember that the Tariff has been introduced; and, secondly, I cannot help remembering that I am a member of the Tariff Commission. But, if I may express my opinion tersely, I have not the slightest hesitation whatever in saying, from the knowledge of this subject that I have acquired from various sources - from sworn evidence especially - that Senator Pearce is abundantly justified if he says in the most emphatic way that the Tobacco Combine can find no pretext whatever under the pro: posed new Tariff for the course which it has adopted. I go thus far, unhesitatingly, and I say that if the Combine had not in any way. anticipated the new Tariff, if their factories had not been, as Senator. Findley has said, full of unmanufactured tobacco imported at a lower duty, but if they had found themselves to be extremely short, and had been compelled to buy under the new and higher Tariff, there would not have been the slightest justification for the prices up to which they have put tobacco since the Tariff has been introduced. _ The truth is this - it is an unpleasant thing to have to make reference to the matter - that the Combine was perfectly justified in anticipating the Tariff, because it could not go wrong.
– That is the crux of the matter; everybody knew.
– The Combine could say, with perfect equanimity, “ We cannot possibly co wrong in paying duty under the old Tariff on enormous quantities of unmanufactured tobacco.” They had a splendid opportunity for increasing stock, and in the circumstances the temptation was irresistible. Outside the Combine, at least, one fairly genuine attempt is being made - I am afraid only on a small scale - to import tobacco for sale within the Commonwealth, and there has been no increase in the prices of imported plug tobacco sold by those interested in this business. We are confronted with the very significant fact that those in the tobacco trade who stood to make most, whether the duties were increased or left unaltered, have raised prices, while the small number of tobacco importers who have had to pay an extra duty of 3d. a lb. have not done so. We ought to unanimously condemn the Tobacco Combine for its action in this matter, whatever excuses it may put forward. The information which we possess in regard to the manufacture of tobacco proves conclusively that the alterations in the Tariff do not justify an increase in prices. If the Combine took advantage of the opportunity to use homegrown leaf, the new rates of Excise and Customs would hardly affect it at all.
– There is an’ “ if “ in that statement.
– That “ if” is the essence of the whole question. I hope that the matter will be seriously considered by senators of every party when we deal with the Tariff. The intention is, I suppose, to compel tobacco manufacturers to use homegrown leaf, which, as Senator Pearce has shown, is produced in very large quantities. If they use that leaf, they will have no excuse for putting up their prices.
-; - Are not the smokers to be considered?
– Those who use tobacco have a ‘right to demand that prices shall not be increased.
– They should not be compelled to smoke tobacco which they do not like.
– Does the honorable senator wish to smoke tobacco composed of all the ingredients which Senator Pearce was unfortunately prevented from enumerating ?
– Manufacturers have this inducement to use the local leaf, that by so doing they can get the greatest profit.
– We should not in any way qualify our condemnation of the action of the Combine in regard to its employes. ‘ It should be condemned in unmeasured terms throughout the Commonwealth. Consumers must occasionally put up with an increase of prices under a new Tariff, but the action of the Combine in regard to its employes was obviously predetermined, and I can describe the excuse given for it only as an idle and lying pretext. “
Senator de LARGIE (Western Australia) [11.46]. - As I am a non-smoker, the increase in the price of tobacco does not affect me, though I am concerned about the stoppage of its manufacture and the consequent throwing out of employment of workmen who depend for their existence upon the wages which they gain in the industry. I am not, however, surprised at what has occurred. I do -not wish to pose as a champion of the Tobacco Trust, or to treat this gigantic concern unfairly, but. to my mind it was to be expected that the raising of the duties would throw, a number of tobacco operatives out of employment. Had I- been in business, I should have anticipated an increase in Tariff rates. It was the prevailing opinion that there would be an increase, and, consequently, importers increased their stocks as heavily as possible. It- is useless to growl about what has happened, but the lesson we ought to learn from it is that concerns’ which, like the Tobacco Combine, are monopolies pure and simple - though there are a few persons in the tobacco industry who are not in the Trust - should be under the control of the people. We cannot blame business men for trying to make as much profit as their opportunities allow; but the only remedy for the evils of private monopoly is one which the people have not yet determined to apply - the resumption of the industry by the State. Until this remedy is applied, there will be occasional slumps in the trade, and men will be thrown out of employment, while prices will be raised on every convenient pretext. I have given this matter considerable attention, and I was one of the first to b, i,:8 it before the Senate early in its existence. I have already pointed out that, soon after the inauguration of Federation, two small tobacco factories at Perth were closed down as the result of the formation of the Trust, and a similar result has occurred at Adelaide, and, to a lesser degree, in Melbourne. We can, I think, expect the people in time to. see the wisdom of placing the industry in the hands of- the Government. . By taking that course, we should have a definite number of hands regularly employed, and so. avoid the evil of having a large body of men thrown upon the labour market from time to time. The profits from the industry would go into the public exchequer.
– I ask the honorable’ senator not to discuss on this- motion the advantages of nationalizing the tobacco industry.
V Senator DE LARGIE. - I regret, sir, if
I have transgressed the rule, and I shall not continue that line of argument. So far as I can see, it is idle on our part to complain of the present results,- because we know that the Tobacco Combine possesses great power, and seizes the opportunity of making an enormous profit from any change in the Tariff. When a change in the Tariff results in throwing a large number of employes on the labour market, we may deplore that result, but we can do very little to remedy the evil, except by nationalizing the industry.
– As I am not a smoker, I am not very well acquainted with the intricacies of the tobacco trade, but the discussion has show”n me that there is very good evidence of the existence of a tobacco monopoly in the Commonwealth. I think that Senator Pearce would have done better if he had put more point to his motion, by adding a request to the Government to inquire into the matter, and, if they should find that there is a monopoly in tobacco, to prosecute the monopolists. According to some papers, which my honorable friend kindly lent to me, it appears that there is indirect evidence ‘of a monopoly to be gathered from what the tobacco companies are doing. As I understand their operations, they have evidently taken the course which all or most of the American trusts take to hide their monopolies, of having a close combine in restraint of trade. Iri America, the trusts rob the producers at every moment, but each carries on in such a way as to try to hide the monopoly which is increasing its wealth. To my mind, there is very good evidence of that being done in Australia. I hope that the Government will most seriously consider the matter, and, if they find evidence of the existence of a tobacco monopoly, they will immediately commence to prosecute the monopolists under our law. I cannot do otherwise than express my abhorrence of the cruel and harsh manner in which the tobacco companies have treated their employes. I cannot understand how any manufacturers with humane feelings could, in order to line their pockets, have induced men to work at their hardest for months, and dismissed them at a moment’s notice when they saw that their fortune had been increased by the new Tariff. I do not wonder now at the existence of ill feeling between workers and capitalists. If capitalists behave in that manner, it is no wonder that there is a wide breach between two bodies of persons who ought to go hand in hand down the avenues of progress. If capitalists behave as the tobacco companies have behaved, the fault rests with the capitalists for any industrial disturbances which take place. I desire to express my abhorrence of the action taken in this instance.
– I consider -that the position which has been brought before the Senate is due entirely to the miserable and wretchedprohibition policy which has been dangled before the Commonwealth during the last six months. Every importer, as well as every manufacturer, has known, almost absolutely, that there was no hope of expecting a reduction of duty on any item. If I have been asked once, I have been asked fifty times during’ the past three weeks what would be the amount of the advance which the Tariff would bring. Not a single question has ever been put to me as to whether there was. a probability of the duty on a single item .being reduced. Every one has had the conviction that the Tariff would be framed on prohibition lines, and would include revenue duties even on the raw materials which were necessary for local manufacturers. Therefore, I take it that the woollen manufacturers, the boot manufacturers, in fact, every manufacturer in Australia did, so far as his capital would allow him, exactly the same thing as, I assume, the tobacco manufacturers have done. I venture to say that’ if an analysis were made in connexion with other industries, especially Victorian industries, it would be found that to the extent of their capital, the manufacturers did take advantage of the fact that money was to be made if they could only buy sufficient stock at the old prices.
– If the honorable senator can tell me of any Victorian manufacturer who cleared his goods “to the same extent at the Customs two weeks before the Tariff was introduced, worked his hands at excessive speed and overtime, and then gave them- a holiday, I shall be much obliged to him.
– I believe that to the limit of his capital, every manufacturer availed himself of the opportunity to do that which the tobacco manufacturers did. The latter are very wealthy, and therefore, were able to buy more’ largely than perhaps ordinary manufacturers could. ‘That is; the. only difference between; them. . :
– There is no limitation to the rapacity of the tobacco manufacturers.
– Time will not allow me to go into the details of the charges which have been made by Senator Pearce. 1,’ in common with every other honorable senator, think that the tobacco manufacturers behaved very hardly to their employes in. discharging them at a moment’s notice, because it must be patent to every one that the clearing of their stock at the old rates was a profitable transaction to them. f cannot blame them any more than I can blame other manufacturers for doing the same thing; but I do blame the Government who allowed every one to know practically that it was intended to raise the; duty on every article manufactured or consumed in the Commonwealth. I propose to read a short extract from an article iri the Age of yesterday, written, presumably,” at the suggestion of persons who are interested. It reads as follows -
Considerable misapprehension appears to exist concerning the tobacco duties. Even officers of the. Customs Department are uncertain as to the effect of some of the charges, and business is greatly disturbed owing to the difficulty of de,ciding under which particular items of the. schedule certain lines are chargeable. In the Age of yesterday it was stated on the authority” of a leading Customs official that, although the duty on Havelock tobacco had been increased by 3d. per lb. only, the public was being charged at least 8d. per lb. more than formerly, giving the tobacco combine, or the tobacconists, a profit of sd. per lb. more than they would be ‘ entitled to because of the alteration in the Tariff. This conclusion we find is based on the entirely erroneous conception. Havelock tobacco is made from what is called “ pure American leaf,” which comes from the United States in a “ stripped “ form - it is what is known as stemmed tobacco. We are informed by the British Australasian Tobacco Company Limited, which imports practically all the tobacco received here from America, that they do not import any but stemmed tobacco. They declare that no unstemmed tobacco is used in Australia’ for pipe smoking. While the import duty on unstemmed tobacco has been advanced 3d. the duty on stemmed tobacco has been increased by 6d. .
The tobacco therefore from which the Havelock brand is made, having been stemmed before leaving America, has, under the new duties, to pay 6d. per lb. more than the former impost, and in addition to that it has to bear an Excise duty of 3d. - making a total additional duty of ()d. per lb. The reason why unstemmed tobacco has not hitherto been imported into Australia is because the stemming can be done mud more cheaply in America than here.
It will be seen, therefore, that the extra duty is gd.. per lb., and Messrs. Kronheimer in their price list have quoted gd. “extra for all their leading, brands. The retailer, we are informed-, has not passed the whole of the9d.increase on to the customer, but has added only 8d. per . lb., so that under the. new Tariff, upon tobacco stocked since9th August, the tobacconist is receiving1d. per lb. less profit than he did before. The exact position in’ regard to the leading brands of tobacco made in Australia from imported leaf when contrasted with the old Tariff is as follows : -
SenatorClemons’ statement was most unfair. The tobacco manufacturers ‘ - as everybody knows - would make an enormous profit if the Australian public would “only smoke tobacco made from Australian leaf. As a matter of fact, all manufacturer’s carry on their- businesses by favour of the consumers. The latter are their masters. If the Australian public will have tobacco manufactured from other. than Australian leaf-
– I notice somebody in the gallery leading a newspaper ; that cannot be permitted.
– It is idle to assume that they would use American leaf at a cost of1s. 6d. per lb., if they could get Australian leaf at a very great reduction, unless the consumers preferred the former. Therefore I think that the argument of Senator demons entirely falls to the ground. I do not wish it to be assumed that I desire to favour the tobacco manufacturers as against other manufacturers in the country; If it can be proved that the Combine is unfairly handicapping the public by its charges, I think that the action of Senator Pearce will have been justified. At the same time it is notfair to quote the increase in the prices of tobacco by manufacturers as an isolated example. As a matter of fact, we know that throughout Australia prices are always increased whenever a new Tariff is introduced which imposes higher rates of duties’ than those which have formerly prevailed. When lower duties are imposed, the manufacturers and retailers suffer a very great loss upon their stocks, and in such circumstances I have never yet heard of any proposal to compensate them for that loss. .
. -I feel that the public of Australia, and especially the smoking public, are indebted to Senator Pearce for having brought this question forward to-day. I should not have thought it necessary to offer any remarks upon the subject but that I desire to show that the prices of tobacco have been increased, evidently as the result of an arrangement between the Tobacco Combine and other companies which are supposed to be outside the Combine. It will be recollected that during the discussion of the proposal to nationalize the tobacco industry it was pointed out that the Tobacco Combine was not really a Trust, inasmuch as it did not control the whole of the tobacco industry in Australia. . It was shown that, other companies outside the Combine did exist. I wish to - point out that an arrangement had evidently been made between the Combine and these companies to increase the price of tobacco. even prior to the introduction of the new Tariff. Senator Pearce, I believe, referred to a revised price list which was issued in, Melbourne prior to the introduction of the new Tariff. I hold in my hand a revised list issued by the Tobacco Company of South Australia Limited on the 26th of July Jast. It is addressed to vari ous; retailers in Adelaide, and reads -
Grenf ell-street, 26th July, 1907.
We beg to notify you that owing to the con tinued advance in the price of tobacco leaf, and the increased cost of manufacture, we are reluctantly compelled to raise our price of the following brands : -
A corresponding advance in prices for larger parcels.
These rates will come into force on Monday, 29th July, 1907.
The Tobacco Company of S.A., Ltd.,
– That company is not in theCombine?
– No ; but there is evidently an arrangement between the Combine and the company.
– Did the Combine increase its prices at the same time?
– Yes, both here, and in Adelaide. That fact in itself indicates that, an arrangement had been arrived at to increase the price of tobacco, irrespective of whether or not the new Tariff had im- posed reduced .or increased duties upon that article. The reason assigned for the increase is the enhanced price of American leaf and the increased wages of employes. But, as a matter of fact, four of the brands which have been advanced in price do not contain a particle of American leaf.
– There were two reasons given for the increase.
– And the increased price of American leaf was one of them. Four of the brands;, the price of which has been increased, are entirely made from Australian-grown tobacco.’ As a matter of fact, the wages of the employes in the industry have not been increased-
– Senator Findley said that they had.
– They have not been increased in Adelaide, so that the second reason assigned for the increased price does not apply to the Tobacco !Company of South Australia Limited. That company had no reason for raising the price of its tobacco unless an arrangement had been made with the Combine that both should simultaneously increase the price of that commodity to the consumers. Whilst Senator Pearce was speaking, he was asked what could be the object of the tobacco companies in discharging, so many men from their employment, especially tobacco twisters. I am assured on fairly good authority that the object of the manufacturers is to discourage the use of twist tobacco, which is made entirely by hand labour by men who insist on having, as nearly as they can get it,, a reasonable rate of wages, and to encourage the use of plug or cake tobacco, which is made largely by machinery, girl labour, and other cheaper forms of labour.
– Do the honorable senators remarks about twist tobacco apply only to Adelaide?
– I am not aware that the twisters have been dismissed in any other cities than Adelaide.” There the whole of the twisters in one factory have been dismissed, while those in the South Australian Tobacco Company have “ been notified’ that when they have made up a few orders now in hand, they also will be dismissed, ostensibly on account of the new Tariff making it impossible for the South
Australian manufacturers to compete with the imported article. They complain that the Tariff interferes most injuriously with Australian manufacture, and I really believe it does, because, while the duty has been increased on the material from which tobacco and cigars are made up in Australia, the duty on the finished article remains about the same as it was before.
– There is an increase of 3d.
– Still the increase on the manufactured article is not so great as that on the material from which the article is manufactured. That is so at any rate so far as regards cigars. I am very glad that this question has been raised. I know that no direct result can follow from the discussion which has taken place, but it is well that the public of Australia should understand that the extraordinary increases in the prices of tobacco have not been caused entirely by the Tariff, but largely by the fact that the industry in Australia is in the hands of a Combine, who have the power, which they are exercising at present, of charging more than a legitimate profit on the manufacture of the commodity that they control.
– What is a legitimate profit ?
– The honorable senator ought to know.
.- The discussion that has taken place this morning is not only necessary in the interests of the public, but will do a great amount of good. I have been running oyer the totals of the figures given by honorable senators as to the net gain to the Tobacco Combine through the new prices. I find that the estimated additional net profit to the manufacturer, through the charges made over and above the extra duties, will amount to about £37,000 per annum.
– Is the honorable senator assuming that they pay 6d. extra duty, and charge od. extra in price?
– I anr, and the figures which have been quoted this morning clearly prove that’ to be the case. I believe that those figures are absolutely correct. There will also be a profit of about £8,000 on the ordinary stock which the manufacturers had in their control. In addition, owing to their securing information in advance, or- being very keen and clear-sighted business men,’ they have been able to clear further stock., the profit on which will approximate to an additional £27,000. They have done that by anticipating the rise in Customs and Excise duties. Consequently the total benefit to the Tobacco Combine by what has taken place amounts to £72,000, in addition to the already large profit which they make out of the consumers in Australia. It is very necessary to put that’ point of view, because I was astonished, on reading the Argus, which seems to take up the role of championing any combine in this country, to find that the increase of prices is attributed to the “ prohibitive “ Tariff which the Government have introduced. Senator Gray tried to attribute it to the same cause. If it is a prohibitive Tariff, why do not the Tobacco Combine, if they have any commercial morality or common honesty, raise the prices of tobacco to rates corresponding with the increases under the Tariff?
– If the Tariff were reduced, would not they reduce the price of tobacco ? ‘
– I do not think they would reduce anything as the result of Tariff reduction or anything else. I honestly believe - and the figures will prove it - that the only desire of the Combine is to extract profit out of the manufacture of tobacco, and if they cannot get it in that way they believe in taking it out of the blood of those who work for them. The Combine have recently been very generous in granting an increase of wages to £2 2 s. per week for males over 21 years of age. There is not an honorable senator who will dare to affirm here or on a public platform that that is more than a mere sustenance wage for a married man with a family. But before they opened their hearts, or began to. make ready for the scoop they are now perpetrating, the wages paid by them only averaged £1 ns. 7$d. per week. With all their accumulated capital and great influence, with their larger powers of purchasing, that ought to give them an advantage over any small manufacturer, their commercial morality is shown by the fact that the small manufacturers, Messrs. Dudgeon and Arnell, pay wages 25 per cent, higher than the Combine do, even after that ‘ increase.
– They deny it.
– It is possible to deny anything.
– They give figures.
– Why did not the honorable senator quote them when he was on his feet?
– How could any one go into the figures at a minute’s notice?
– I shall give my figures, and the honorable senator, or the Combine, is at liberty to attempt the task of contradicting them. For flake covering, Dudgeon and Arnell pay 25 per cent, more all round for piece-work rates. They pay id. as a piece-work rate, where the. Combine pay Jd., and they pay 1 1/2 d. where the Combine pay i£d. Some remarkable statements were made by honorable senators opposite. Senator Gray seemed particularly anxious to show that the manufacturers of Victoria would take advantage of the position which has been created according to the capital they possess. I was always of the opinion that the object of the manufacturers of Victoria, as expressed by the honorable senator himself, was to exclude importations so that they might get control of the local market.
– And raise their own prices.
– Then in what way would they be interested in using their capital to become importers? I believe that, bad and all as they are, the morality of the importers and manufacturers in Victoria is just about at as low a level as that of those in other States. I believe they are willing to sacrifice everybody else in order to make a profit. In South Australia, presumably owing to their superior taste, the people prefer a tobacco which is made by hand, and in which the pure leaf has to be used. The manufacturers have put on the price of that tobacco double the increase that they have put on plug tobacco. Where they have put an extra id. on plug tobacco, they, have put 2!d. on the hand-made article. The underlying object is to knock out the manufacture of hand-made tobacco in South Australia, and to inflict upon the people there plug tobacco which contains the sweepings of the floors of “the factories, and other undesirable ingredients.
– Does riot the handmade tobacco cost more to produce?
– It is quite possible that it does: The fact remains that the Trust does not appreciate the taste of South Australian smokers for hand-made tobacco, since that class costs more to produce than does the machine-made tobacco.
– If it costs more surely thehonorable senator would not expect the Combine to sell it for the same price as is charged for machine-made tobacco. ‘.’ I merely want to get at the facts.
– The facts are that whilst they have increased the price of plug tobacco by1d. per plug, they have raised the price of. the hand-made article by 2d. percake, giving as a reason for the increase the fact that anew Tariff has been imposed. Their real object, however, in differentiating in this way, is to knock out the hand-made article which smokers in South Australia prefer.
– Does the honorable sena”tor argue that they should not impose any increased charge?
– Certainly not. My argument is that they are endeavouring to delude the people, byurgingthat the Tariff is responsible for the specially high rate charged for hand-made tobacco, “when, as a matterof fact, they have differentiated in this way solely to cause the use of that class of tobacco in South Australia to be discontinued. The facts undoubtedly sustain that contention.I am not surprised at what has taken place; I do not knowthat it could have been otherwise. I know of no company, and of very few individuals who, if they could obtain control of an industry, as this Combine has obtained control of the tobacco industry, would not endeavour to squeezeall they could out of the public.
– The position is the same in regard to all individuals.
– Individual manufacturers would probably do the same as the Combine has done. Is. the system under which an individual, or any combination of individuals, is permitted to control an . industry, a proper one ? I should probably be out of order if I referred specifically to a remedy that has been, suggested by the Labour Party, but the fact remains that we have at various times proposed a remedy for this trouble. Honorable senators opposite ought to prove that, this Combine is carrying on its industry with due regard for what one may describe as decent morality, even for a commercial enterprise. If they cannot, and are unwilling to accept theremedy which we suggest, then theyshould beprepared to devise a means of overcoming the difficulty which they can strongly recommend to theSenate. ‘For- my ownpart. I am glad thatthis attitudehas been taken up by theCombine. It will show the people that America is not the only land of trusts - that America is not the only land where a low standard of commercial morality prevails - and that, if we are not prepared to squelch the trusts by nationalizing their industries, they will most assuredly squelch, the people by taking as much as they possibly can out of their pockets.
.- One does not need, to be in favour of the nationalization of industries to. be able, to extend sympathy to the workers who have been. dealt with in the way described by honorable senators this morning. Senator Russell, said that honorable senators on . this side, of the Chamber should be prepared to suggest . a remedy. I think that a . remedy can be suggested, and that it need not take the form of the nationalization of the industry.. In the United States, at the present time, strong efforts are being made to bring the combines within the grip, of the law. In other words, nationalization is hot the remedy proposed, but it is to be secured by means of. regulation, and I shall always be prepared to heartilysupport.regulation on fair lines. I . wish to’ express my sympathy with those whose case has been put before us to-day, and to express the hope that the Government will make a full inquiry into the matter, and report to the Senate. Our.hearts must go out to those who havebeen turned into the streets when there is no necessity to treat them in that way. Some manufacturers may have been driven to take so drastic. a step, but I do not think that all are of the character attributed to them. My opinion is, that the great ma jority . would not take such a step until they found at the last moment that it was absolutely unavoidable. So far, we have heard only one side of the case, and, in the interests of fair play, we should hear what the other side have to say. If they cannot justify their action, thenI hope that drastic measures will be taken to prevent the recurrence of such a procedure as that which has been described.
. -Ihave listened with very considerable interest to the representations made by Senator Pearce and others who have addressed themselves to this subject. I can assure the Senate that those representations will certainly be brought under the notice of the Crown Law Department, with ‘a view of steps being takentoascertainif sufficient evidence can be secured to prove a breach of the law on the part of the Combine to which reference has been made.
– Or on the part of any one else?
– Undoubtedly. It is the duty of the Government, if the necessary evidence can be secured, to see that the law is enforced. I hope that any honorable senator who has evidence likely to assist the Government in the prosecution of this inquiry will not fail to place it before us. We sympathize with honorable senators, who seem at least to be under a strong impression that a breach of the law has taken place.
– Bordering on a conspiracy to defraud the public.
– As to the clearances which have been made by various companies, I think that such a step is incidental to existing conditions. It is a legitimate operation on the part of traders: What I do complain of - and it is in this respect that we shall endeavour to seek a remedy - is that certain unscrupulous traders are. taking advantage of the situation to exploit the public.
– Why describe them as “unscrupulous”?
– Because they misrepresent the facts. They represent to the general public that the increased prices chargedby them are due to the new Tariff. Senator Gray. - And they are perfectly right.
– Whilst in a few isolated cases such a representation might at this Juncture be true, no trader is justified in endeavouring to mislead the public by representing that the increased prices charged by them are due to the Tariff, when, in fact, they are not.
– What would be the position if the duties were lowered? Would not many traders have to sacrifice their stocks ?
– Every trader is justified in charging what he pleases for his goods, but no one is justified in selling his goods under false pretences, or in saying that he has had to pay an increased duty upon them, and is, consequently, compelled to charge more for them, when, as a fact, he has not been called on to pay a higher duty. If a trader charges increased prices without making representations to the public as to the cause of his action, the position is different. But where deliberate misrepresentations ‘ are madeby the trading community - and I hope that this will occur in only a limited number of instances - then it will be out duty to endeavour to at least enforce punishment.
– The Government will not have much opportunity to do that.
– I admit the difficulty of obtaining the necessary evidence, but it will be our duty to endeavour to punish those guilty of deliberate misrepresenta-. tion. Our sympathies are naturally with the public, who are being exploited by certain unscrupulous traders in the manner to which I have referred. I do not wish to be misunderstood in this connexion. Speaking generally, the commercial morality of Australia is certainly equal to that of any other community, and, perhaps, very much better. At the same time, we have in our midst men who do not scruple to take advantage of an opportunity to defraud the public.
– It may not begenerally admitted, but practically every firm is charging increased prices.
– I have already said that every firm is justified in charging what it pleases for its goods. But what I am complaining about is that deliberate misrepresentations are made by certainindividuals that it is in consequence of the increased duties of the Tariff that they are charging increased prices.
– But is it a fact that those misrepresentations are made?
– In a few instances it probably would be true, but certainly not in the generality of instances.
– The honorable senator must see that there is a considerable difference between a statement that the prices are increased because of the Tariff and a statement that the trader has himself paid the extra duty on the goods.
– I am referring only to what has taken place in individual cases. I shall thank honorable senators for any assistance they can give the Government in supplying evidence for the purpose of sheetinghome any breach of the law.” Where we have any evidence of a breach of the law, it will be the. duty of the Government’ to enforce the law, and toinstitute a prosecution for the breach.
– I am pleased with the statement made by the Vice-President of the Execu’: tive Council that the Government are prepared to take action to punish those who misrepresent to the public the position in which traders are placed at the present time. In common with other honorable senators, I feel grateful to Senator Pearce for bringing this matter before the Senate. We must all recognise the labour and pains at which the honorable senator has been to arm himself with figures and other details for the discussion of the subject. I desire to avail myself of the opportunity afforded by the motion to . dispute some of the statements which have been made by the representatives of the Tobacco Combine and their advocates all over Australia. Senator Story has pointed out that prior to the new Tariff being laid on the table of the House of Representatives, the prices of tobacco were raised in South Australia. I can corroborate that statement, because when 1 came here the day before the Tariff was laid on the table in another place I received a wire from a representative of the tobacco operatives in South Australia asking whether the price of tobacco had been raised here, because the price of strand or twist tobacco had been raised in Adelaide by 2d. per lb. Why should the price of strand tobacco be raised by 2d. per lb., when the price of plug tobacco has been increased bv only id. per lb. ? Some persons may say that it is because there is more labour employed in manufacturing strand tobacco than in manufacturing plug tobacco. I point out that even if that be so, it is a difficulty which existed prior to the increase in price.’ The increase in the price of strand tobacco is really an attempt on the part of the Tobacco Combine to discourage the use of that tobacco. And why ? To my mind the reason has nothing whatever to do with the- Tariff, or even with the cost of manufacture. The real reason is to be found in the opportunity afforded for the adulteration of plug tobacco. Tn the manufacture of strand to- .bacco adulteration cannot take place to the same extent as in the manufacture of plug tobacco. I have in my hand a piece of unpressed strand tobacco. I saw this tobacco twisted by a tobacco twister, and it was made from the pure leaf, as honorable senators can see for themselves.
– Would it not be better to give us an opportunity to smoke it ?
– I “have no objection to do so. I have been led to believe that it is made entirely of Australian leaf, and honorable senators can smoke this tobacco without alarm. People smoke Australian leaf without recognising it. Very often the merits of Australian leaf are attributed to imported leaf, and the defects of imported leaf are attributed to Australian leaf. I wish to say that the Tobacco Combine are trying to discourage the use of strand tobacco, in order that they may make more profit from the adulteration of plug tobacco, because strand tobacco cannot be adulterated to the same extent. I hope that when the new Tariff is before another place and the Senate this matter will be taken into very serious consideration. Like Senator Clemons, I have been a member of the Tariff Commission, and it would scarcely be fair that I should take advantage of any special knowledge that I have obtained. But any honorable senator reading the evidence submitted to the Commission will find that the foreign articles used in the manufacture of tobacco in Australia and other parts of the world are almost innumerable. It is because these articles cannot be used to the same extent in the manufacture of strand tobacco that the Combine desire to discourage the use of that tobacco in this country. Perhaps it is not necessary that I should elaborate this point/further. I hope that when the proper time comes the Government will, if they are given the opportunity, punish not only those who have increased the price of tobacco, but those who have increased the price, of other articles, and claim that the increase is due to the Tariff, when it is self-evident that that is not a fact.’ I believe that Senator Dobson and other honorable senators like him are fair-minded, and would, if they could get rid of their prejudices, join the Labour Party tomorrow in an attempt to destroy a monopoly which is doing injustice and injury not only to the public, but also to the persons who are employed bv those controlling it. I am glad that this matter has been brought up, and that an opportunity has thus been given to honorable senators toexpress their views on it.
.- I listened with very great pleasure to one of the last remarks made by Senator McGregor in reference to the general desire which he attributes to honorable senators to destroy, remove, or curb a monopoly that may exist. It is rather unfortunate that Senator Pearce in bringing forward this matter, as well as honorable senators who have supported him, are unable to keep quite apart two things- which to my mind are absolutely distinct. Senator Pearce, I am sure, met with the absolute. sympathy and support of the Senate when he condemned certain evils, and, indeed, cruelties; but controversial matter was immediately introduced when the honorable senator and other members of the Senate who followed him sought to make this motion a lever by which to advance their pet project of the nationalization of the tobacco industry.
– I absolutely never mentioned nationalization.
– Then I apologize to the honorable senator. In the course of the debate, however, the subject of nationalization has been introduced.
– What is the use of sympathy without relief?
– That interjection is an admission that the subject pf nationalization has been introduced. It is a thousand pities, when an evil of this kind exists, if it does exist - and I take Senator Pearce’s statement on the point - that the question should be complicated by another and bigger question. Let honorable senators be honest and frank enough to say that this subject has been introduced, not as a means to remove injuries, if they exist, but as a means to help forward nationalization. I do not believe that Senator Pearce submitted the motion with that object. As a practical politician, he saw something which he thought deserving of public action, as a means to securing an immediate remedy. To that extent I believe he has the sympathy of every other honorable senator. But if this question is made a lever for the introduction of the policy of nationalization, controversial matter is at once introduced with the result that parties are divided. Honorable senators on this side of the Chamber gave the clearest proof of the* bona fides of their assertion that they desire to restrict monopoly and protect employes and the public in the action they took on the Excise duties last year.
– Hear, hear.
– On that occasion, as Senator Findley admits, we voted solidly for Excise duties which were to secure fair treatment of employes. I do not think for a moment that any honorable senator on this side would hesitate to take the same action if it were shown that employers were acting unfairly. That, it seems to me, is all that Senator Pearce is asking. Is it necessary, therefore, to introduce the question of nationalization ?
– Nationalization hasbeen referred to only incidentally.
– A little more thanthat, I think. The interjection by Senator de Largie is a challenge to us to bring forward our. remedy, and is itself equivalent to saying that nationalization is the only remedy.
– It is the only remedy.
– I am not speaking of those honorable senators who have been recently elected; but I ask Senator de Largie why he supported the Anti-Trust Bill if. nationalization is the only remedy ?
– We said that the Anti-Trust Bill would fail.
– The honorable senator and others supported that Bill night after night on the ground that it would deal with trusts, if trusts exist. I accept the assurance of the Minister that if there is a trust which conducts itself in the way described, so as to infringe the law, . the matter will be investigated without fear or favour so far as parties or individualsare concerned, and that the law will be enforced. I am sure the Minister will find no stronger supporters than honorable senators on this side.
– Then it is a god job> the Anti-Trust Bill was passed, although the honorable senator opposed it.
– I did not oppose the Anti-Trust Bill. The action’ I took with regard to that measure is clear enough. I heartily supported those portions of it which dealt with monopolies, and provided machinery for curbing their action, but I opposed those other portions which placed in the hands of the Minister of Trade and Customs power to constitute himself a prohibitionist in the matter of imports. Honorable senators will see that there was a great difference between those parts of the measure. I have listened with considerable interest to the statements and figures of Senator Pearce. Of course, it is impossible for any one to follow those figures other than to gather their general import ; and I do not question the accuracy or veracity of them, when I say I can only accept them subject to inquiry. That is the spirit, I presume, in which the honorable senator has submitted the figures. The honorable senator has said enough to cause us to think and investigate for ourselves; and in that course I propose to take my share. In the meantime, I cordially approve the statement madeby the Minister, and I sincerely trust that all honorable senators who have information, which may enable the Government to carry on the prosecution, if any evil exists, will place it at the disposal of the Senate.
– Senator Millen has uttered certain sentiments which I heartily indorse. Senator Pearce introduced this motion in a very able and, in many respects, convincing speech ; and he has only done a public duty. There is an old saying that when a man sets out on a good cause of this kind, what he prays to be saved from is the assistance of his friends.
– Is Senator St. Ledger one of Senator Pearce’s friends?
– I think I am oneofhisbestfriends.
– I am sorry that any heat should be introduced into the. debate. I am in exactly the same position as is Senator Millen on this question. I am prepared to assist in the object which the Senate had in view, when the Anti-Trust Bill was introduced; and it is unjust that we on this side should he accused of motives by which we are )in no way . actuated. We desire to. see absolute justice done by all employers’ to theiremployes and to the public. ‘
– And by employes to employers. ; Senator ST. LEDGER. - Exactly; there must be absolute justice, whether employers be combines or not, or whether employes be trades unionists or not.
– Cold sympathy !
– To accuse us of having no sympathy, simply because, we do not absolutely agree with the honorable senator in all things, is to play to the gallery.
– What Senator de Largie said was that the honorable senator had nothing but sympathy to offer.
– That is merely because . we will not accept the remedy which Senator de Largie supports. We may recognise that there is ah evil; but because we do not see eye to eye with (honorable senators on the other, side, we are, charged withbeing absolutely hostile toany remedy- we are’ , told that by . our expressions of sympathy we stand selfaccused of conscious or unconscious hypocrisy. I resent that construction of our attitude.. I should not have spoken, but for some remarks of Senator McGregor in regard to Senator Dobson. At the conclusion of what was otherwise a pleasing speech, Senator McGregor said that if Senator Dobson could only divest himself of prejudice he would probably be found speaking and voting almost exactly as honorable members opposite speak and vote.
– He said that Senator Dobson would almost be included in the Labour Party.
– That is so; whereas the whole of Senator McGregor’s charge against Senator Dobson rests on the assumption that the latter gentleman’s mind is prejudiced. What right has Senator McGregor to make such an assertion?
– He makes it because he himself is prejudiced.
– Yes ; does not the remark itself’ show that Senator McGregor’s mind is filled with prejudice? This is an illustration of a cardinal defect in the policy of honorable senators opposite. When they, as they are entitled to do, argue forcibly, and certainly make out a strong case for watchfulness and investigation, and we, on this side, express our anxiety to assist in remedying the evils which have been ‘alleged, we are branded with self-conscious hypocrisy, simply because we cannot follow them all the way to the conclusions they draw. Senator Findley. - We cannot help it if the honorable senator brands himself in the way . he is doing.
– I may be wrong, or even unjust-
– The honorable senator musthavea guilty conscience !
– Honorable senators opposite may be right and I may be wrong, but that does not dispose of the fact that the cardinal defect of their policy is that the moment there is a difference of opinion as to methods, however much we may agree in principle, we are charged with prejudice.
– Who has accused the honorable senator of prejudice? . .
– Senator McGregor made that charge againstSenator Dobson. . Senator. Pearce’s supporters have made it . appear that honorable senators , on, this side of the Chamber are not eager to remove the. evils from which the public and the employes in the tobacco industry are suffering, simply because we are not in favour of nationalization. We are consequently being accused of approaching social subjects as biased persons and political hypocrites. I resent such treatment, and, while I congratulate Senator Pearce and the Senate on the manner in which the question has been brought forward, I think he will agree with us in feeling sorry on account of the support which he has received from his friends.
– I admit that I do not know very much about the tobacco question, but I cannot but come to the;conclusion that a very good case has been made out by Senator Pearce. It is evident that the Tobacco Combine is deceiving the public by false pretences. Why did not the last speaker tell us frankly what the true remedy is? The only way to grapple with the Combine, and to insure that the public of the Commonwealth shall be fairly treated, is to insist that the Federal Government shall take the tobacco industry in hand. Senator. St. Ledger has talked a good deal about prejudice. I object to any honorable senator assuming an aspect of holy indignation and lecturing the Senate as he did last night and to-day. Though he is learned in the law, I wish he would bring a little more common sense to bear upon the questions with which he deals, and exhibit less of that awful thing, egotism.
– Congratulations have been tendered to Senator Pearce on all hands for having brought this question forward. In my opinion, the Senate and the Australian public generally owe thanks to him for his persistency in regard to it. Ever since he has been a member of the Senate, he has applied, himselfto it. I find, on turning up Hansard, that, as far back -as 22nd November, 1901, he -brought, the question under the notice of the Chamber. I am glad to know that, as a result of his persistency, some good has befallen the. employes of the industry. A few minutes ago, information was conveyedto me that, the Tobacco Combine had backed down in- relation, to its employes. They are . to.resume work on Mondaymorning., That news will be gratifying to the Sen ate, and especially to . Senator Pearce. It it no use disguisingthe fact that the action of the Combine has been caused by the introduction of the Tariff. One of the leading morning newspapers, of Melbourne mentioned a few days ago that a working, man could not afford to spend more than £1 per week for household purposes.The next day, the same journal stated the average number of a working-man’s family to be five. That allows 4s. per week for each individual. Now, the workers in the tobacco industry were, until recently, paid £111s.71/2d. per week. Recently, their wages have been increased to £2 2s. That wage is received by 221 of them. On the basis of the assumption of the morning newspaper to which I have referred, only 8s. per week would be available for each member of such an employees family, out of which rent and all expenses would have to be met. What a magnificent state of affairs for the workers of Australia !
– Order. I ask the honorable senator to address himself more closely to the subject-matter of the motion.
Sitting suspended from 1 to 2 p.m.
- Mr. President, in view of the ruling which you gave prior to the adjournment for lunch, I will endeavour to confine my remarks to the motion, which refers directly to the increased cost of tobacco to the consumer. An increase in the price of any article which is required by a man, whether he be a workman or a person in a better state of life, directly increases the cost of his weekly household bill. I have already mentioned that, a certain number of tobaccoemployes have had their wages increased to£2 2s. per’ week, and pointed out the difficulty with which any man is. faced in endeavouring to maintain- a, family on that wage. There are more things to be taken into consideration than the cost of mere sustenance. It appears . to me that when making a computation no, allowanceis made for . sickness,’ death, wearing apparel, recreation, or amusement. Apparently, the dictum, has gone forth that the employes in the tobacco industry shall not be sick, shall not have any recreation or amusement, and shall not travel from one part of the Commonwealth to the other.. They are to be allowed the luxury of. being born, but. not the luxury of being decently buried. . In the fixing oftheirwages, no liability, to provide for burial , expenses is recognised, consequently, if men daredietheexpensesof their,burial must be borne by some oneelse. Idesire again to thank Senator. Pearce, for bringing forward the subject,and I hope that theday is- not far “ distant when we shall be in a” position to crush those persons who have endeavoured to crush others. I do not desire to prolong the debate, because I know that under a standing order it must conclude at a certain moment, and Senator Pearce is anxious to reply. There is one thing for which we have to be grateful, and that is that by his action here to-day we have succeeded in compelling this cormorant Combine to back down, and the result will be that on Monday morning the men who have been thrown on the streets, and denied during the past week the chance of working’ for a sum ranging between £i ns. and £2 2s., will be allowed to resume work. That in itself is something “to be thankful for. I hope that the day is not far distant when we” shall be in a position to say that the employes in every industry shall receive what is really a living wage; that is, a wage which a Judge of a State Supreme Court has said does not mean that- upon which a man can live, but that which, after he has paid for the necessaries of life, will leave him a margin for recreation and enjoyment.
– I have no intention to prolong the debate, but with other honorable senators, I desire to express my sincere appreciation of the .attitude which Senator Pearce has assumed. I am sure that we are all deeply indebted to the honorable senator for the care and attention which he has always paid to the matter of the tobacco industry, and also for the excellent information which, from time to time, he has placed before us, showing, I think, almost conclusively, that after all there is but one remedy for the evil which he has pointed out. I have no desire, sir, to pursue that line of argument other than to say that I was pleased with the expressions of the Vice-President of the Executive Council, and sincerely hope that the Government will make a substantial endeavour to remedy the position by an application of the law in its entirety, in every case where it has been broken. I recognise that some of the statements made by mv honorable friends on the Opposition side are very pertinent The Tobacco Combine is certainly a very large business concern. We recognise, of course, that it does certain things which almost any business men will do when the opportunity 5s presented, but it seems to me to possess such enormous power, such a close monopoly., that it can sack its employes, make the retailers of tobacco its abject slaves, and impose such prices on the community as it may at its . sweet will dictate. This being so, I have been delighted to hear from members of the Opposition expressions of sympathy with the motion. That is so much gained. We must be approaching a useful conclusion when a gentleman like Senator St. Ledger expresses sympathy. I hope that when an opportunity presents itself, these expressions will’ be put into practice. Senator Millen has upbraided the members of the Labour Party for what they did in connexion with the Anti-Trust Act, and has stated that he rendered assistance and support to the efforts made to restrain monopolies such as the Tobacco Combine. But if my memory serves me correctly, every effort we made to insure that the provisions of the Anti-Trust Act should apply to this concern was opposed by the members of the Opposition.
– Was that Act aimed at one particular trade combination?
– It was aimed at monopolies of every kind ; but our efforts to obtain control and restrain these monopolies were always opposed by the members of the party to which Senator Chataway belongs.
– Senator Henderson is himself a member of a monopolistic party.
– I belong to that class of society which for years has been practically victimized by monopolies. I am glad that this matter has been discussed, because I think that the discussion will awaken the Government to the need of ascertaining whether there has been a breach of the law. I hope that, even if the committal of such a breach is not discovered, the members of the Opposition will recognise the necessity of passing such legislation as will enable the Government to deal effectively with concerns like the Tobacco Combine.
– I shall not address myself at length to this subject ; but I wish to contrast the action of. the Tobacco Combine in connexion with the Tariff with that of other companies and individuals doing business within the Commonwealth. It alone has singled out its employes for severe treatment, and has compelled its customers to pay higher prices. No doubt many other trading companies have suffered under the new Tariff, but, so far as we can learn from the press, none have resorted to the drastic steps which have been taken by the Tobacco Combine. This convinces me that the Combine feels that the Australian public is at its mercy, and that it can, therefore, deal with its employes and customers as it chooses. Reference has been made to the numerous brands of tobacco sold by the Combine, and one is almost compelled to express surprise that it has not branded its employes and customers, too ; because it has both at its mercy, seeing that the competition which it has to meet is so insignificant. Its action in the present instance should expose the danger to which the community is threatened by the existence of combines which have no competition to fear.
– Under a prohibitive Tariff there is always an opportunity for the formation of combines.
– ‘Combines are operating in Great Britain, which is said to be a free-trade country.
– There are coal combines in Great Britain. Senator Trenwith. - And shipping rings.
– Yes. According to the chairman of the Melbourne Chamber of Commerce, an English shipping ring has for the last twenty years bled the people of Australia to the extent of £1 per ton.
– -I ask the honorable senator not to ‘ pursue that line of argument further.
– I shall not do so. I was led off the track by interjections. It “is noteworthy that in the United States those who are for ever clamouring for the upholding of law and order, to the extent of becoming almost a nuisance, are the capitalists who to-day are striving to avoid legal processes which are being brought against them, and thus to defeat the ends of justice. Senator Pearce is a nonsmoker, but he has justified his action in drawing attention to this matter. The “Tobacco Combine alone of the traders affected by the Tariff has taken the cruel and desperate step of throwing out of work employes who were getting only a miserable and beggarly wage of £2 2s. a week, and of forcing their customers to pay more for the commodity thev sell.
– I thank the Senate for the sympathetic way ‘ in which my motion has been dealt with. Senator Findley has given Very striking figures in regard to Customs House clearances; but they apply to Victoria only. Since the luncheon adjourn ment, however, he has handed to me similar information applying to New South Wales, from which I learn that, during the last four weeks, the import duty paid in Sydney on tobacco leaf was £36,565, and the Excise paid on locally-manufactured tobacco, £46,424. Honorable senators will see what tremendous stocks of leaf they have in Victoria and New South Wales upon which a duty of only is. 6d. per lb. has been paid - stocks which I venture .to say are sufficient to keep them going for many months - and what a large quantity of tobacco they have on hand upon which a duty of only is. per lb. has been paid, but which- they intend to sell to the public at an increase of from 6s. to 9d. per lb., owing, they allege, to the imposition of the new Tariff duties. In his criticism of my remarks, Senator Gray quoted a paragraph from this morning’s Age, which, to some extent, involved the retraction of statements made by that newspaper upon the previous day. In that paragraph the Age- takes it for granted that, from the’ introduction of the new Tariff, the Combine is going to manufacture tobacco, and that tobacco sold from Friday last was to be made. from imported stemmed leaf, upon which a duty of 2s. per lb. had been paid. The figures quoted by Senator Findley show that for some time to come the tobacco which the Combine has in stock will ‘ be made from imported leaf, upon which a duty of only is. 6d. per lb. has been paid. Even when that stock of leaf has been exhausted, and the Combine has to import leaf under the new rates of duty, there is no honorable senator who can say that it will import stemmed leaf, which is dutiable at 2s. per lb. Seeing that there is a difference between the duty imposed upon stemmed and that levied upon unstemmed leaf - a difference which did not exist under the old Tariff - I doubt whether the Combine will import the stemmed variety. In its Sydney factory to-day, I am informed, the . Combine is paying girls who stem the leaf 2jd. per lb. of stem - not per lb. of leaf. The refuse is weighed, and the girls get 2 1/2 d. per lb. upon it, so that the increase in the cost of the raw material does not amount to 3d. per lb., because there would not be a pound of stem to a pound of leaf. Therefore, the differential duty between stemmed and unstemmed leaf will have the effect of inducing the importation of unstemmed leaf in the future, and the work of stemming it will be undertaken in the
Commonwealth. The stemming of the leaf will not cost the amount stated in the paragraph published in to-day’s Age. So that when the present stock of leaf held by the Combine is exhausted, it will not be in the position outlined by Senator Gray. Further, it is not correct to say that the importations by the Combine of American leaf have consisted entirely of unstemmed leaf. We have the evidence of Mr. Cameron, upon page 257 of the proceedings of the Tobacco Commission, that in 1904 the Combine imported 60,000 lbs. of unstemmed leaf for its Melbourne factory.
– Was not that intended for cigar-making? .
– No. His evidence had reference solely to plug tobacco. Mr. Jacobs and Mr. Benjamin gave evidence on behalf, of the Combine in regard to cigars, and Mr. Cameron dealt only with the making of plug tobacco. It will be seen, therefore, that 60,000 lbs. of unstemmed leaf was imported into Victoria when there was no differential duty operative, and, consequently, it is fair to assume that the Combine will import more of that class of leaf in the future. Regarding Senator Millen’s statement that I had introduced the question of the nationalization of the industry, I challenge him to point to a single reference to the matter in the proofs of my speech.
– I did not refer to the honorable senator.
– Is there -anything to apologize for if the honorable senatordid make reference to that question?
– No, but the charge was- an unfounded one to level against me. I urge honorable senators to dismiss that matter from consideration at the present moment.- This, is not the proper time to deal with it. I still hold the strong opinions upon the question that I have always entertained.- -Further, the results to which I have- pointed to-day emphasize the fact that the Tobacco Combine -is. a monopoly. Senator -Gray .says, that it- is customary for all . manufacturers tq increase their prices when a new Tariff imposing higher duties is introduced, but I beg to point but that the increase in prices which has taken place in other industries are paralleled by increases in the Tariff. If any grocer dared to increase his prices beyond the point represented by Tariff increases, competition would very soon cause him to lose his trade. But where there is no competition it is safe for a Combine to raise its prices beyond that point. Last session the Government submitted a Bill to enable us to deal with the operation of combines, such as the Tobacco Com-, bine to which I have been referring. The Vice-President of the Executive Council has promised to institute inquiries into this matter, and the question now arises whether the provisions of the Australian Industries Preservation Act cannot be put into force, and the necessary evidence obtained. In this connexion ‘ I may be permitted to point out that the Act which we passed is a copy of the Sherman Act, and that in the United States to-day there is a case under that Statute pending before the Courts. Regarding this case I find it stated in the petition -
The English Imperial Tobacco Company wilt be involved in the case which the Federal authorities intend to open against the American Tobacco Company. The Government have found a written agreement between the two companies, whereby they bound each other not to trespass upon their respective fields of commerce.
I venture to say that in the testimony submitted by the Combine itself to the Tobacco Commission, similar evidence can be found in regard to our own companies -
When the agreement was formed in 1901, they also created a third company-
So did our own companies - which was to have a monopoly in the remainder of the world’s trade in American tobaccoes.
The Tobacco Combine- was formed to give members’ a ‘ monopoly of the wholesale trade -
It was called the British-American Tobacco Company, two-thirds of its ‘ stock being owned by the American’ company-
Kronheimers” is owned entirely by the other ‘ Australian . manufacturing companies - i ‘ and the remainder being divided between the Imperial Company and ‘itself. ‘In consequence pf the discovery of this agreement, the Govern merit, will ask that the ‘.Imperial Company be enjoined from engaging ‘ in commerce within the jurisdiction of the United States until the agreement shall be annulled ; and,, secondly, that the British-American Company be adjudged an un. lawful instrumentality created, .for the purpose of securing a monopoly in tobacco exported from the United States, and also be forbidden to trade . within its jurisdiction. The Court will further be ‘asked to adjudge it illegal for any of these companies to hold each other’s stock.
I have already pointed- out that in the evidence of Mr. Jacobs, Mr. Hugh Robert Dixson, and Mr. :Benjamin, -who are members, of the Combine, we have conclusive proof- that they all hold shares in each other’s companies, and that conjointly they hold shares in Messrs. Kronheimer and Company, which has a monopoly in the distribution of their goods. Furthermore, they act in restraint of trade, for in the articles of association of Messrs. Kronheimer and Company Limited, they bind themselves not to sell in New Zealand. That is a restraint of trade, because Messrs. Kronheimer and Company are the distributers, and the manufacturers by these articles of association have bound themselves through that company not to sell in New Zealand. I shall have pleasure in putting whatever information is at my disposal before the Government, and if the debate has had the effect of ventilating the injustice , of the action of the Combine, it will have served a good purpose. If, as the result of the inquiries which will be instituted, a case can be made out against it, I hope that the provisions of the Australian Industries Preservation Act will be tested. I ask leave to withdraw the motion.
Motion, by leave, withdrawn.
SUPPLY BILL (No. 2).
asked the Minister representing the Minister of Trade and Customs -
– The answer to the honorable and learned senator’s question is as follows - 1 and 2. Such inquiry is now being made, but the final results have not been as yet reported. Prompt action will be taken in such cases as may appear necessary.
Motion (by Senator Turley) agreed
That there be laid on the table of the Senate a return showing -
The number of persons in Queensland who have applied for permits to introduce immigrants under contract.
The names of such persons.
The number of persons each applicant Stated. he required,tointroduce;
The number of’ persons introduced under such permits.
The number of persons that have arrived for each applicant.
Have any of the applicants intimated that they wish to cancel such permits.
The number and names of such applicants. 8.The number of permits for which cancellation has been applied for.
In Committee (Consideration resumed from 15th August, vide page 1973) :
Postponed clause 79 -
Subject to the provisions of this Act -
– When the clause was last under discussion, I suggested that it would be convenient to bankers, drawers of cheques, and to the general public to insert an amendment fixing the time, instead of following the phraseology of the English Act by saying that a cheque shall be “stale” when the Court decides that it might reasonably have been previously presented. 1 understood that the Minister of Home Affairs was prepared to accept such an amendment. I suggest now making the time six months. I have made inquiries in every direction, and have come to the conclusion that it would make for the convenience of every one interested if we enacted that at the expiration of six months a cheque shall no longer be good, and that there shall be no liability on the banker to ; pay it. . I hope the Minister will himself move an amendment to insert the words “six months” inlieu of the words “ a reasonable time.” If the Minister does not move that amendment, I am prepared to do so.
– Since we last met, my attention has been drawn by one of the Bankers’ papers to what they consider a misapprehension of the Senate with regard to this clause. If A draws upon a bank B, and B fails, having funds of A in its possession, it is rather hard that A should suffer, owing to the dilatoriness of the person holding a cheque given by A in not presenting it to B for payment before B failed. There is a good deal to be said in favour of leaving the clause as it stands, but adding a new paragraph so as to treat stale cheques as something quite different from the cheques mentioned in paragraph a.
– I hope the honorable senator does not expect any more banks to fail.
– Such things have happened in thu past and may happen again, especially if some of my honorable friends succeed in establishing a State’ Bank. I suggest the addition of a new paragraph d as follows -
Where a cheque is not presented for payment until six months after its issue, a banker shall not be responsible or incur any liability by reason of refusing the payment thereof.
Of course the banker’s answer would be “ Stale cheque.” There are two classes of cheques referred to. In one case the drawer has funds; the bank fails; the cheque not having been presented, the holder asks the drawer for payment, and the drawer replies, “ Why did you not present it within a reasonable time? I had funds in the bank then, but now, owing to your not having presented it, I am called upon to pay it practically a second time, and have to take my chance of getting a dividend from the bank.”
– In my desire to fix a definite time of six months, instead of leaving it for a Courtto decide, I want to protect every one concerned. I do not want to make it possible for a banker to exercise his discretion or choice at the expiration of six months, because I desire to protect the drawer just as amply and fully as the banker. After Senator Walker’s remarks, I see the danger and wish to avoid it. My desire is to amend the clause so that we may clearly indicate, for the guidance of the drawer, the banker, and the payee, that at the ex- piration of six months the cheque is wastepaper. I do not wish to allow any bank -to exercise over its customers’ accounts a discretion to which it is not entitled. I want the drawer to be able to say that, if his account shows that a “cheque which he gave more than six months previously, has not been presented, he is free from liability in respect of it, and can- not be debited with it at the caprice of any bank. I hope the Minister will recognise my object and give effect to it. It would be easy to insert in the clause words to that effect. I think it would be wise to fix a definite time, instead of leaving to the determination of the Courts the question of what is a reasonable time.
– I think that the object which Senator Clemons has in view would be achieved by an amendment such as that of which Senator Walker has: given notice. As Senator Walker has said, there has been some confusion in regard! to this clause and the question of stale cheques. When we were in Committee on a previous occasion I pointed out that this;, clause was taken from the English Act of 1882. It- was -introduced into that measure for the specific purpose of curing a very’ awkward position that otherwise arose under the common law. Previously at common law the mere omission to present a cheque for payment did not discharge the drawer until, at any rate, six years had elapsed, and Chalmers points out that in this respect the common law appears to be unaltered.
But if a cheque was not presented within a< reasonable time, as defined by the cases, and* the drawer suffered actual damage by the delay, e.g., by the failure of the bank, the drawer wasabsolutely discharged, even though ultimately the bank might pay (say) fifteen shillings in the pound ; see further sub-section as to the holder’sposition
By virtue of section 45, the. indorser of a> cheque will be discharged, unless it is presented for payment within a reasonable time(after indorsement), as defined by the Act.
That was a most anomalous position, and when the English Bill of 1882 was before the House of Lords, Baron Bramwell, having some cognisance, I think, of the exact position, by reason of the fact that tie had’ taken a judicial part in some of the cases in which the question had arisen, introduced’ this new clause. It has been in operation) in England since 1882, and is designed to meet cases where a drawer finds that hischeque has been out for an unreasonable length of time, and that meanwhile the- bank has failed, and he has been called upon by some person to pay again. This provision, however, has really nothing; to do with the question of stale cheques in the ordinary acceptation of that term. It provides that the drawer - is discharged to the extent of such damage, that is to say, to the extent to which such drawer or person is a creditor of such banker to a larger’ amount than he would have been had such cheque been paid.
A responsibility for the loss is placed upon others, as well as upon the drawer. Senator Walker’s reference to stale cheques is a very good one. I think, with Senator Clemons, that it is desirable that some limitation should be placed upon the currency of cheques, but we need not impose that limitation in this clause. If we did we should interfere dangerously with .the provision inserted in the English Act to meet the anomalous and patently unjust circumstances which would otherwise arise at common law. I am not at all enamoured of the wording of this clause. It is decidedly intricate, but it follows exactly the wording of the section introduced in the English Bill by Baron Bramwell, and, therefore, we shall have the benefit of any decision which may be given in respect of itr.’in the English Courts. It is for that reason- we have refrained from departing in any particular from the wording of the section in the English Act. The object which Senator Clemons, Senator Walker, and I have in view with regard to fixing a time limit for the currency of cheques can be met by inserting a further provision in the Bill.
– The honorable senator will make the time limit operate for the benefit of the drawer as well as for the benefit of the banker ?
– I recognise the point that the honorable member desires to make.
– I would not leave it to the bankers to say that they might or might not pay after six months of the issue of the cheque.
– If we made it imperative that a banker should not honour a cheque six months after its issue, we might give rise to an awkward position where the bankers knew that the drawer believing them to be cognisant of special circumstances in relation to the staleness of a cheque, would like them to honour it.
– That would be a matter’ concerning the trader -or the holder.
- Senator Walker’s proposal provides that -
Where a cheque is not presented for payment until six months after its issue, a banker shall not be responsible or incur any liability by reason of refusing the payment thereof.
– That would give the banker the option of paying such a cheque if he chose to do so.
– There might be dealings between a banker and his customer which would make it very desirable that a cheque presented in such circumstances should be paid. On the other hand, it may be open to question whether it would not be desirable to provide that, in the absence of any agreement or course of dealing to the contrary, where a cheque is not presented for six months after its issue, the banker shall not be responsible or incur any liability. I do not say that six months is the correct period to fix; I should like to have the sense of the Committee on that point. I draw attention, however, to the fact that if we made this provision imperative, the result might in some cases be very serious to a customer. His cheque might be out for some time without any action on his part to keep it out. It might eventually be presented, and if it were marked “ Stale cheque,” and returned to him, the consequences might be disastrous.
– How could they be disastrous ?
– Some customers might not like to have their cheques so marked. A man might say to his banker, “ You knew all the circumstances connected with the transaction, and why the cheque remained out. I did not know whether or not it had been debited to my account, and, having regard to the amount,. I think you might have honoured it.”
– The trader would not have been responsible for the staleness of the cheque.
– The drawer might feel aggrieved if his cheque were returned to him because it was stale.
– Not if it were the law that such a step should be taken by a banker.
– I am merely placing these considerations before the Committee. We have no objection to fixing a’ time limit in this clause, but we wish to conserve the interests of every banker, customer, and third party. It would perhaps be advisable in this connexion to add a new sub-clause to clause 79. Paragraphs a, b, and c relate distinctly to one class of circumstances, and I should be prepared to insert a further provision, to be known as sub-clause 2. That would necessitate a consequential amendment in sub-clause 1 ; but I cannot at present consent to insert in this clause an amendment providing for a time limit and making the action of the banker imperative. As my honorable colleague has just reminded me, if the drawer of a cheque had left the Commonwealth for a time, or was about to leave, it might be very difficult to obtain from him a cheque to replace a stale cheque returned to him. There are various like considerations that must occur to the minds of honorable senators.
-Colonel Gould. - A cheque might be held as a guarantee that certain things would be done.
– That is so. A cheque is occasionally locked up in a safe in that way and held for a considerable period.
– Will the honorable senator accept my amendment and agree to its insertion as sub-clause 2 ?
– I am prepared to accept something in the form of the honorable senator’s amendment.
– I beg to move -
That the following new sub-clause be added - “ 2. Where a cheque is not presented for payment until six months after its issue, a banker shall not be responsible or incur any liability by reason of refusing the payment thereof.”
I think there is. a great deal of force in the remarks of the Minister of Home Affairs, and it would be a pity to make the provision regarding the time limit imperative. It might be that some persons would be very much inconvenienced if that course were adopted. Speaking of the practice in Great Britain, as far back certainly as the year 1861, a cheque outstanding for fifteendays in the City of London was always returned as a stale cheque.
– The circumstances there are not the same as in Australia.
– I admit that; but there is a considerable difference between fifteen days and six months.
– It would be hard in the case of a cheque sent to Port Darwin to make it a stale cheque within fifteen days.
– I believe that the amendment I have proposed would be a very fair compromise.
– There is some reason in the demand that, cheques should be presented within a reasonable time, but we should be very careful in . making such a provision that we do not inflict very great hardship. Assuming that there should be a time limit, the time suggested is, in my opinion, altogether too short. The statutory limitation in the case of ordinary debts is six years. That is to say, if a man does not take the necessary steps to collect an ordinary debt within six years, the law says he has a right to lose it. A cheque represents a debt, and is a more secure form than a debt in connexion with which legal proceedings have to be taken. And if a man does not take steps to collect the debt represented by a cheque within reasonable time, he should run the risk of losing it. I would say, however, that the time limit in this case should be twelve months, or even two years. This is a very large continent, with a very scattered population. So far as business relations are concerned, it is a country of magnificent distances, and sometimes of very great inconveniences due to difficulties of locomotion and transit. In consequence, cheques might very frequently be held in Australia for very much longer than we should expect them to be held in other countries.
– There is a good deal of difference between fifteen days and six months.
– The honorable senator should remember that the difference in area between a city like London, with a diameter of perhaps 10 miles, and a continent such as ours, is very great. I think that if we are to make the change proposed in the law, the limit should be twelve months or two years, and certainly not less than twelve months.
– I have been informed by the general manager of a bank that the banks would prefer that the time limit should be very much less than six months.
– No doubt that would be very convenient for the banks.
-Colonel GOULD (New South Wales) [2.56].- I think that Senator Walker does not quite apprehend the nature of Senator Trenwith ‘s proposal. I understand Senator Trenwith to suggest that if a cheque is not presented within twelve months from the time it is drawn it should become absolutely valueless. That is to say that not only the bank should not be called upon to pay it, but the drawer should not be called upon to redeem it. The honorable senator’s argument appears to me to be that, in order to attain finality, a time should be fixed within which a cheque should be presented, and if the holder of it does not present it within that time, 1 it should cease to be of any value.
– And the holder must get another.
-Colonel GOULD.- I did not understand that to be Senator Trenwith’s proposal.
– The cheque should cease to be of value, but the holder should not lose his claim.
– Then I misunderstood the honorable senator. There is no doubt that a time limit of six months, as suggested by Senator Walker, would be ample for the banks. If the holder of a cheque did not present it within that time, the banker would be able to say, “ This is a stale cheque. I shall not pay on it. You must get another cheque from the drawer.” It ought not to be forgotten that within six months many things, might happen which would render it very difficult for the holder of the cheque to obtain a new cheque from the drawer. Whilst the drawer of a cheque might say that it ‘was his intention that it should be paid into the bank in reduction of a debt for which it was given, why should the holder of the cheque be told that if he does not present it within six months, he will be put to all the trouble and inconvenience of finding the drawer in order to get another cheque from him if the bank be prepared to pay it. Why should he not be in a position to take the cheque to the bank, and have it cashed if there are funds available for its payment. I do not see the justice of requiring the holder of a cheque to obtain a second cheque when, if the first cheque was given bond fide, it is the duty of the drawer to maintain a balance at his bankers to cover the cheque whenever it is -presented. If we are to adopt the course suggested, and, after a period of six months, twelve months, or two years, declare that a cheque is. valueless, and render it necessary for the holder to go to the drawer for a new cheque, we shall depart from one of the merits of the Bill, and that’ is the simplification of the law and its assimilation, as far as possible, to the law of Great Britain. It is one of our boasts in connexion with the consolidation of laws dealing with bills of exchange, cheques, and promissory notes that we take advantage of the consolidation made in Great Britain, and thus are able to depend on the interpretation of ‘the law given by the Courts of Great Britain as to the meaning of the consolidated provisions. When it is remembered that in Great Britain there is a nation of 40,000,000 of people,, mainly engaged in mercantile pursuits, the advantage of such an opportunity to a small community like ours, will be realized. We should hesitate to depart from any of the essentials of the law, as it stands in Great Britain to-day, upon matters of this kind. Why should we say not only to traders in the Commonwealth, but also to traders in other parts of the world who receive cheques sent from the Commonwealth in payment for goods, “If you do not present this cheque within six months, twelve months, “ or two years, as the case may be, you must go back to the drawer for another.” I have always taken the broad ground that a cheque is given in good faith, with’ the intention that it shall be paid when presented,- and that it is the duty of every drawer to see that there is money to his credit to meet it.
– And that he leaves money to meet the cheque until it is presented.
-Colonel GOULD. - It should be a perpetual obligation controlled only by the Statute of Limitations. I earnestly impress upon honorable senators, as a matter of justice to the trading community, the advisability of not attempting to render a cheque valueless in the way proposed. The amendment of Senator Walker is all that is necessary to protect the banker.
– I hope the Government will not accept the amendment proposed by Senator Walker. It seems to me that the money belongs to the drawer of the cheque; and if the banker has any reason to doubt its genuineness it, is his duty to communicate with him. and not refuse payment. This country is very- differently circumstanced from Great Britain. Cheques given in the back-blocks are often months on their way before they reach the banks. Labourers up country carry cheques about in their pockets for a long time, and even when they change them with storekeepers, many of the latter, who have only small accounts, keep them still longer before sending them to the bank. No injustice is done to a bank in requiring the payment of a cheque after six months. The “ reasonable time” mentioned in the Bill must have regard “ to the nature of the instrument, the usage of trade and of bankers, and the facts of the particular case.” That is a proper basis on which justice may be done, not only to the drawer, but to the banker, who, so long as he. can pay, ought to pay. According to the amendment, the banker will, as a matter of course, return the cheque when it becomes stale.
– It is optional.
– My experience is that a banker is veryquick to take all the advantage he can of his customer.
– I agree with Senator Trenwith that there ought to be a longer period than six months. As Senator Macfarlane has indicated, cheques are practically common currency in the back-blocks. Cheques are not only paid’ as wages to labourers, but when they have been exchanged in return for goods at a store, the storekeeper very often gives them away again as change for bigger cheques. So long as the name on the cheque’ is believed to be good, so long will a cheque travel from one end to another, precisely like a bank note: If I hold a bank note for ten years, I am not refused payment at the bank; and I cannot see why a cheque should not be cashed when there is money to the credit of the drawer. It is not the banker or the customer who will suffer, but the unfortunate swagman or labourer, who may have travelled for a long time with the cheque in his possession. He may find himself compelled to go half the length of the continent in order to get a new cheque, and then be called upon to prove that it had legally come into his possession.
– He might have to sue trustees or executors.
– Quite so, and I think Senator Walkerought to endeavour to meet the suggestion made by Senator Trenwith as to a longer period. To compare the old country or London with Australia is absurd. A period of fifteen days would not enable a cheque to be sent to Port Darwin or Palmerston ; and these are just the sort of places where cheques are used as ordinary currency.
– One point appears to have been overlooked by honorable senators.Some- times a person loses a cheque, and applies for a duplicate to the drawer, who suggests that there should be some delay in order to see whether the cheque comes in. In such a case my amendment would, I think, be useful.
– The payment of the old cheque may be stopped.
– That is not always satisfactory, because an innocent holder has an action, not against the bank, but against the drawer. However, if a period of twelve months would bemore satisfactory to the Committee I have no objection to amend my amendment.
– After all that has been said, I think Senator Walker will see the desirability of extending the period he has proposed ; and, perhaps, twelve months would better meet the circumstances.
– I am prepared to accept that suggestion.
– In the second line of the proposed new sub-clause, I’ see that the word “issue” is used. A cheque might be issued post-dated four months; and, under such circumstances, there would bea currency of only two months. I suggest that the words “ its issue “ be struck out, and the words “ after it becomes payable “ substituted.
– Post-dated cheques are not taken into account.
– A cheque may be issued now, dated the 1st October.
– I always understood that in such a case a promissory note had to be given.
– Very often cheques are dated in that way when they are to be sent through the post. There is nothing illegal in issuing a cheque today dated Wednesday next, and made payable in Hobart. What I suggest is that we should leave out the word “six,” and insert “twelve,” and that we should leave out the words “its issue,”, and insert “ it becomes payable.” The clause would then read -
Where a cheque is not presented for payment until twelve months after it becomes payable, a banker shall not be responsible or incur any liability by reason of refusing the payment thereof.
– I will accept that. Amendment, by leave, amended accordingly, and agreed to.
Clause, as amended, agreed to.
Postponed clause 81 -
Where to) a cheque, drawn on a banker by a customer, has been drawn by the customer with negligence ; and
– I move -
That all the words after the word “ banker,” line 14, be left out with a view to insert in lieu thereof the words “ may recover from the drawer in a Court of competent jurisdiction any amount expressed in the cheque over and above the original sum so drawn.”
Honorable senators will observe that the clause, as drafted, provides that if a cheque has been negligently drawn or fraudulently altered, and has been paid by a banker in good faith and . without negligence, the banker shall not incur any liability by rea son of having paid the cheque, but shall be entitled to charge the customer with the amount paid by him. The objection to it seems to me to be that it leaves the banker to be the sole judge as to whether there has been negligence on the part of the customer, or whether fraud has been employed, or whether he or his employe’ has cashed the cheque without negligence. My amendment throws upon the banker the onus of recovering from the drawer the amount of the cheque over and. above the original sum drawn. The position is this : Large corporations, shipping companies, local authorities, banks, and similar institutions, when threatened with a suit, always stand on their rights. When, on the other hand, a case in dispute is such that -it will not become public unless the institution actually takes it intoCourt, they do not regard it as one of principle, but of convenience. We are accustomed to imagine bankers as wonderful people, full, of knowledge, but we know perfectly well, as a matter of fact, that the cashier of a bank is often a mere lad. Say that a bank cashes a cheque, and that afterwards the customer goes to his banker and says, “ You have made a frightful blunder.” Under this clause the banker would stand on his rights and say, “ If you don’t like it, sue us.” The clause would compel the customer to sue the banker. But under my amendment the banker would be compelled to sue his customer, and would be put in an entirely different position. He would have to come into the limelight, and prosecute a man probably in a small way of business. The banker would have to prove how his business was carried on, and show that he had not been guilty of negligence. He would have to justify his right to charge the customer with the extra . amount for which the cheque had been honoured. Speaking not as a lawyer,’ but as an ordinary layman, I venture to say that, under my amendment, the customer of a bank would be able to recover damages against the bank for dishonoring his cheque unless the bank had already taken the remedy provided for in the clause. I believe that the amendment would be in the best interests of the community, and I doubt whether the banks require to be placed in any better position, especially since Senator Walker has told us that bankers are always philanthropists.
– I understood, when the clause was previously before us, that the Government recognised that an amendment was necessary, and undertook to provide a definition of “negligence,” so as to make it more definite. Has ‘ the Government any proposal to make to that effect ?
– I could not undertake to define “negligence” to meet all cases in less than a week.
– If Senator Chataway will consent to withdraw his amendment, I shall move to insert the word “ gross “ before the word “ negligence,” in sub-clause a.
– Negligence is always gross.
Amendment, by leave, withdrawn. Senator O’LOGHLIN (South Australia) [3.21]. - I move -
That before the word “ negligence,” subclausea, the word “ gross “ be inserted.
As has already been pointed out, there are men who have not an exact knowledge of the law relating to cheques, and do not possess the advantages, of a commercial education. I admit that Senator Chataway’s amendment, to the extent to which it transfers theonus of proving negligence from the customer to the banker, is an improvement, and. I shall, therefore, support it, but I think that something more is necessary..
What would be negligence in the case of an educated man,, and might well be so construed by a Court, ought not to be regarded as negligence on the part of an ignorant man, although he might have drawn his cheque in such a way as to make its alteration possible. I have proposed the insertion of the word “ gross “ to emphasize the fact that great carelessness must be proved against an ignorant customer before he can be made to suffer for any’ fraud that may be committed in connexion with a cheque which he has drawn. I think that the amendment may be a useful one, although I have been told that the insertion of the word “ gross “ before “ negligence “ will have no legal effect.
– There is no doubt that the Courts of law, after much and careful consideration, have decided that adjectives such as ’ gross “ used to qualify the word “ negligence “ are of little effect. After all, the question of negligence is one for a jury to decide. But, as Senator O’Loghlin has stated, the insertion of the word “ gross “ in sub-clause *a may be useful as an intimation to Judges that they should direct juries to give very careful consideration to the degree of negligence which must be proved against the drawers of cheques, and, therefore, I shall not oppose the amendment. With regard to the clause itself, the Government evidently had it drawn in view of the decision in the case of Marshall v. The Colonial Bank of Australasia. The facts of that case have already been detailed in this Chamber. When it first came to the High Court on appeal, the point of law in dispute had not been finally dealt with, and not unnaturally, therefore, a further appeal was made to the Privy Council, with the result that the decision of the High Court was confirmed. Our mercantile law was thus thoroughly analyzed by “these two distinguished Courts, and I take it that the Government is endeavouring to embody in this codification of the Commonwealth laws relating to promissory notes, bills of exchange and cheques, the exact effect of their decision.
– The clause does not embody that decision. It only deals with circumstances such as those under which it was given.
– In my view, the Government have taken into consideration the judgment of the High Court, . as confirmed by the Privy Council, and have embodied its substance in this declaratory enactment, which makes it a difficult and a dangerous thing to interfere with the clause. For that reason I should hot like any other amendment made than that which has been proposed. I do not think that the banks are being appreciably benefited by the clause. If the matter is tested in a Court of law, they will probably be found to be where they were originally. But the provision will be an intimation to every person dealing with cheques that if he draws them carelessly and negligently, so as to allow facilities for fraud, he will incur a certain amount of risk.
– I understand that the clause revokes the decision of the Privy Council.
– I think not.
– It is a complete alteration of the law under which that decision was given.
– It was admitted in Marshall’s case that an injustice might sometimes be done to banks ; but the rule was laid down that the mere drawing of a cheque in such a way that some person may use it fraudulently is not negligence. The Government, I take it, is endeavouring Ky this provision to declare the law to be exactly what it was stated to be by the Privy Council. Therefore I am! inclined to support the clause as proposed to be amended by Senator O’Loghlin, because I regard it as fair to drawers of cheques and to bankers alike. Beyond the insertion of the word “gross” as an intimation to the banker and to the drawer of the cheque I do not think that the clause can be profitably amended. In my opinion the bankers will be satisfied with the clause, and it is fair to them. I think that an intimation in this form will be beneficial. The provision has been adopted by the Parliaments of Queensland and Tasmania. In Queensland the Legislature carefully considered the law as it stood before the case of Marshall v. The Colonial Bank of Australasia was decided, and in the light of the decision in that case it enacted the provision.
– No, it was done long before that case came on.
– I think it was done in consequence of that case.
– No, that case occurred only last year.
– If my memory serves me aright the case was not decided by the High Court’ until about the end of 1904, and the Privy Council did not give its decision on the appeal until 1906; and it was in view of the decision of the Privy Council that the Queensland Parliament enacted the provision.
– Look up the date of the Queensland Act.
– -The Queensland Act was passed in 1905, and that was after Marshall’s case had been decided by the Full Court here.
– Exactly. It was after the case was decided in the High Court that a short amending Bill was passed in Queensland.
– I do not know whether the Act was passed after the decision of the High Court was given, but certainly it was passed subsequently to the decision of the Full Court in Victoria.
– If my memory serves me aright the Queensland Acf was passed after the decision of the High Court was given, because at that time the mercantile community, hot only in Queensland, but throughout Australia, were exercised in their minds as to what would be the effect of the decision of the Full “ Court in Victoria, and the probable decision of the High Court. The mercantile community carefully considered that aspect of the question, and in view of the opinion they held the Queensland Parliament determined that the provision should be enacted in that form. My principal point is that the clause in the Bill has been considered from that aspect, and unless grave reasons are given in favour of an alteration of it, I am not inclined to assent to any material alteration. I believe that under the clause bankers will get the protection to which they are entitled. In view of the decisions which have been given, I am one of those who think that the bankers are not asking too much. ‘ The Government have evidently considered the circumstances of the mercantile community in that relation, and beyond the insertion of the word “ gross “ I do not intend to support a further amendment.
– The object of Senator O’Loghlin, I take it, is to provide, as far as we possibly can, that the negligence which will penalize the drawer of a cheque under this provision must be negligence of a more than ordinary character. In paragraphs a, b, c, and d we set out in their regular order the circumstances which, when combined, will give operation to the provision which we have in the latter part of the clause, and which Senator Chataway proposes to amend. Those circumstances are first, the negligence of the customer, which we are asked to declare to be gross negligence; secondly, the affording by such negligence facility for the fraudulent alteration of the amount of the cheque; thirdly, the fact that the cheque has been fraudulently altered so as to increase its amount ; and fourthly, that the cheque so altered has, in good faith and .without negligence, been paid by the banker. If we are to apply the quality of gross, whatever it may be, to the negligence of the customer, we must equally apply that epithet to the negligence of the banker.
– Not necessarily. My object is to protect an ignorant man, and the amendment does not apply to a banker.
– I have set out the position. It has been, pointed out here before that a Court has held that there is no legal distinction between negligence and gross negligence. If we are going to attempt in a measure in which we cannot define negligence to cover all possible kinds of cases ; if in one part of the clause we speak of gross negligence and in another part- of it speak of negligence only, it will be an intimation to the Court that the Parliament had in its mind two different things, and the Court may say that it is unable to distinguish between gross negligence and negligence. If, therefore, we are to be consistent, then in each case it must be either negligence or gross negligence. If we speak of gross negligence in paragraph d, then the banker, if he can prove that in good faith and without gross negligence, whatever it may mean, he paid the cheque, he may recover from the customer the difference, either by debiting it to him under the provision, or in the manner suggested by Senator Chataway. If we use the word “ gross,” it will cut both ways. It will only be an attempt on the part of this Parliament to set up something of which probably the Court would take no cognisance. I think that the same object will be achieved by the clause as it stands down to paragraph d. I mention that because I think that the suggested amendment of Senator Chataway is one which should receive the support of the Committee. But, so ‘far as negligence is concerned, I appeal to Senator O’Loghlin to recognise that it has been decided by the Courts that there is no distinction between ‘negligence and gross negligence.
– Is that decision on record?
– I have not the record beside me, but that is a well-known decision in law, as has been pointed out by Senator St. Ledger to-day, and by others on a previous occasion. If we use the word “ gross “ in one instance, we shall have to use it in the other, and the question is whether the benefit, if any, attained by its use in one paragraph would not be neutralized by the disadvantage, if any, of including it in the other paragraph.
– Paragraph b defines “ negligence.”
– No; it says what the character of the negligence must be to penalize the drawer of the cheque
– - To my mind, there is one effective way of dealing with the clause, and that is to negative it. We have heard legal opinions on both sides of the question, and I venture to say that honorable senators gene rally are just as much confused as they were previously.
– On what point?
– On every point on which the honorable senator- touched. The effect of his remarks was entirely to mislead the Committee. Whether he intended that or not, I do not know.
– I certainly did not intend that.
– I think I can show where the honorable senator’s remarks were entirely misleading. He said - and I hope that I shall not misquote him - that the clause practically embodies the decision of the High Court in a certain case. That is an absolute misstatement of .the facts, because if that was ‘ the law at the time when the case came before the High Court, its decision would have been entirely different.
– With regard to that, I think that the honorable senator is not misquoting me.
- Senator Givens is in possession of the floor.
– Perhaps Senator Givens will permit me to say that the question before the two Courts really was, “ What was negligence,” and the decision of the High Court and the Privy Council was that the mere fact of the insertion of a word which permitted “another party to commit a fraud was not in itself negligence. That was felt by the whole community, including bankers themselves, to be a somewhat dangerous principle. Nevertheless, it was the law as laid down by the . High Court, and in view of its decision, the’ Government have attempted to declare in this Bill what shall be the protection of the banker and what shall be the protection of the public.
– The honorable senator distinctly stated that this clause embodied the judgment of the High Court.
– So far I was incorrect.
– In consequence .of that judgment, this clause has been embodied in the laws of two of the States of the Commonwealth. It is a well-known fact that’ bankers, like everybody else, have . the full protection of the common law, and I fail to see why we should give them a greater measure of protection. The clause in that respect is an entire departure from the law of Great Britain.
-Colonel ‘Gould. - This provision is not contained in the English Act.
– Exactly. It has only been embodied in the Acts of two of the States, viz., Tasmania and Queensland. It is a well-known legal maxim- and one which I submit . with all diffidence to the members of the legal profession - that hard cases make bad laws. There is no doubt that the case of Marshall v. The Colonial Bank was a hard one. But, nevertheless, we should take cognisance of the legal maxim to which I have referred, and Ave should not proceed to make a bad law because of one case of hardship. If we pass the clause in its present’ form, infinitely harder cases will arise - cases which will react upon poor people, who will be less able to withstand that hardship. Moreover, bankers are usually keen business people. They are on the alert to detect a - bad note or a fraudulent cheque when it is presented. Their customers pay them for looking after their business in a keen way. Many of their customers are totally ignorant of what constitutes proper business precautions. Some of them, owing to the exigencies of the place in which they live, are comparatively illiterate and uneducated. As a matter of fact, some of the wealthiest men in the community have scarcely been able to write their own names. Because these people are not familiar with every trick and dodge which is resorted to in the mercantile world, and because they have a right to rely upon their agents, the bankers, are we to exempt the latter - who occupy a very good position at the present time - from all liability to observe ordinary . precautions? Let me remark for the benefit of Senator St. Ledger, and others, that bankers are afforded a very great deal of protection now under common law. Yet we are invited to enlarge that measure of protection, and to hedge them round with further safeguards. I would like to point out what may occur under this provision if it becomes law. We may have a case in which, by means of collusion, a gross wrong may be inflicted upon the customer of a bank. My experience of bankers and bank clerks is that they do their work very well, and that in most cases they are extremely honest. But I have known some of them commit hideous frauds.
– Of course, there are black sheep in every flock.
– Exactly. Let me point out what may occur under this provision. A man behind a bank counter may be in collusion with some person outside, who may obtain a cheque from an individual, who, perhaps, has not drawn itin the most perfect manner. The recipient of that cheque may alter it so as to defraud the customer perhaps of£300 or£400, or even of£1,000. He may present the cheque to the man behind the bank counter, and the latter - being protected by the law - may pay it.
– He is not protected by the law unless he uses due diligence and care-
– There is absolutely no reference in the clause to the exercise of due diligence and care.
-Colonel Gould. - But the cheque must be paid in good faith.
– Who is going to prove that it is not paid in good faith? Prima facie there would be evidence of good faith on the part of the man behind the counter, because to all appearances he would be an absolutely disinterested party. But, nevertheless, there might be collusion between him and the person who presented the cheque. In such a case greater hardship would be inflicted upon the individual than was inflicted in the case of Marshall v. The Colonial Bank. I repeat that hard cases make bad laws, and we should not make a bad law simply because of the hardship inflicted in the case to which I have already referred. While I am prepared to vote for the proposal of Senator Chataway, I shall divide the Committee in favour of striking out the clause. I would point out that in England . the mercantile community is fully ‘represented in both Houses of Parliament, but no attempt has ever been made to sanction such a proposal as that under consideration. Are we going to be more conservative than the conservative Old Country ? Shall we go back upon the protection which has hitherto been afforded to the customers of the bank? Are we going to be reactionaries, and to protect wealthy banking corporations as against the unfortunate banking customer, who has very little protection? The banker is already as well protected as he ought to be by the common law. I shall certainly vote against the clause.
Amendment, by leave, withdrawn.
-Colonel GOULD (New South Wales) [3.49]. - I am very glad that Senator O’Loghlin has withdrawn his amendment, because I think that the reasons advanced by the Minister in charge of the Bill were sufficient to show that there was no necessity for it.
– I do not think there is any necessity for the clause, and, therefore, I shall vote against it.
– The principle which is involved ‘ here is contained in paragraphs a, b, c, and d, and it is for the Committee to determine whether those provisions are reasonable or not. Of course, we must provide reasonable facilities for the protection not only of the banker, but also of the customer. The only question which arises is as to what is the best way to deal with the matter. The law as it has been laid down makes it clear that where there is negligence, the person who primarily, is affected as the result of that negligence should not in the end suffer.
He ought to be protected. The whole question that arose in the case of Marshall v. The Colonial Bank was whether a set of circumstances as found by a jury would justify the Court in saying that there was negligence. The questions put to the jury in that case were - whether the cheque was drawn on the banker by the customer with negligence; whether that negligence had afforded facility for fraudulent alteration; whether the cheque had been fraudulently altered so as to increase the amount, and whether the cheque so altered had in good faith and without negligence been paid by the banker? Speaking from memory, those were the very questions put to the jury by the Chief Justice of Victoria. The jury found that there was negligence as specified in questions one to three, and, therefore, in favour of the banker, but it was nevertheless held that that was not sufficient negligence to justify the Court in throwing over the banker that protection to which he was supposed to be entitled. Senator .Givens spoke of this as an individual hard case, and said that hard cases make bad laws. We have all heard that saying, but the honorable senator did admit that it was a hard case. The question then arises whether,, as it is a hard case, the power of the Legislature should be invoked to alter the law in order to prevent its recurrence. I do not agree with Senator Givens’ suggestion that because there is one hard case a law should not be made to guard against similar cases arising in the future. After all, we make changes in the law in order to meet circumstances that have arisen that were not contemplated originally, or that were not properly covered. . If honorable senators agree that it was a hard case, it is reasonable to urge that protection should be afforded to persons who might in the future suffer similarly without it.
– The Judges have held hitherto that bankers have had sufficient protection under the common law.
– The Judges held that the set of circumstances, as disclosed in that case, were not of such a character as to justify the’ Court in giving protection to the banker.
– I think both the Appeal Courts held that there was no negligence whatever on which the case should go to the jury.
.- It was to the jury that those questions were put.The jury were the judges of the facts. If the honorable senator read the report of the case carefully, he would observe that the finding of the jury, that there was negligence, was clearly and unmistakably in accord with the evidence. If honorable senators had been on the jury, and those questions had been put to them, they would have found in precisely the same way. If that be so, is it not fair to throw some protection over not only this one bank, but every bank in the community, from the recurrence of a similar action? Senator O’Loghlin is perfectly correct in saying that this provision is not in the English law. I believe he is accurate also in stating that the House of Commons have not taken steps to introduce an amendment of this character, but is that any reason why, when we find that an act of injustice has occurred, we should not attempt to remedy it in our limited way, and with our limited population?
– We might do a greater injustice by passing the clause.
.- If the honorable senator can prove that the carrying of this provision will do a greater act of injustice, we shall not be justified in enacting it. But where is the evidence that it will have that effect? The honorable senator may point for evidence to the lack of education of many of our own people who draw cheques carelessly and negligently, and who, therefore, should have this protection thrown over them as against the banker. But if a man sees fit to place his money in a bank, and draw a cheque, he is surely impliedly bound to exercise reasonable care, so that by his own negligence or carelessness a fraud shall not be perpetrated on the banker. If a fraud is perpetrated, and if the customer is not guilty of any negligence at all, as, for instance, in the case of an ordinary forgery, where a man signs somebody else’s name to a cheque, the bank has no protection if it chooses to pay that cheque.
– Why should it have?
.- I do not argue that it should. Where there is no negligence on the part of the customer the bank must put up with the consequences, whether it pays in good faith or not. I . am quite satisfied that that should be the law, but if, indirectly, in consequence of an act of commission, or omission on the part of a man holding a banking account, a fraud is perpetrated, it is fair to ascertain how far ‘we can fairly and honestly protect the person who suffers from that fraud. If there are two comparatively innocent persons, and we find that one of them is absolutely innocent, while the other has been guilty of negligence, surely the balance ought to lean in favour of the man who has been guilty of none, and who has made a mistake in consequence of somebody else’s negligence. That appears to be the simple and logical outcome and to be a pure act of abstract justice. It has been urged before that a bank consists, not only of wealthy persons, but also of men specially educated in the branch of the profession which they are following, and who, therefore, can bring to bear upon these questions an amount of skill and acumen which the ordinary individual cannot be expected to possess. I grant all that, but under this clause they will have to bring all that acumen and skill to bear. If they do not, the clause will not protect them one jot. First of all, it ‘ has to be found that the cheque has been drawn on the banker by the customer with, negligence. But it is not his negligence alone that makes the customer in any way responsible.. It must be proved that his negligence has afforded facility for the fraudulent alteration of the amount of the cheque. It must be shown further that the cheque has been so fraudulently altered, and then it must be proved that the cheque so altered has been paid by the banker in good faith and without negligence. The first three conditions have to be combined, but if it is proved that these men of acumen and business knowledge have been so far forgetful of their own duty as to allow themselves to be deceived, they will get no benefit at all from the clause. They will have to show that they have used their skill and acumen, and paid the cheque in. good faith and without negligence.- Negligence on the part of men of skill and acumen would be measured much more severely and strictly than would the negligence of the ordinary man in the street in a matter of this character. It is only an act of fair and abstract justice, with all those safeguards, to grant this protection. Look at the converse of the picture - the position of the banker. A cheque reaches him with the appearance of being absolutely correct in every particular. If he declines to pay it, and in so doing makes a mistake, he will be liable for an action at the suit of his customer for dishonouring it, and will be mulcted in severe damages.
– He has not suffered any very great injustice up to the present without this provision.
– How does he fare in Great Britain ?
– The people who own banking accounts in Great Britain are a very different class from those who have banking accounts here. - They have much more skill in drawing cheques, and do not make the mistake of leaving opportunities for fraudulent alteration. I admit that in this matter all honorable senators have their own opinions. I do not wish -to inflict too many speeches upon the Committee, but desire to conclude my remarks on this occasion, and then probably I shall say no more about the clause as it now. stands. All the conditions specified in the clause have to be brought into a focus before the protection of the law is thrown round the banker, who gets no benefit unless he has paid the cheque in good faith and with ah absence of negligence, which’ will be measured in his case much more severely than in the case of a. customer. I believe that Senator Chataway proposes to submit an amendment dealing with the question of who shall bring an action, and at this stage I shall nol refer to it. I confidently submit, however, that the other provisions are based upon justice.
Amendment (by Senator Chataway) proposed -
That all the voids after the word “hanker,” line 14, be left out, with a view to insert in lieu thereof the words “ may recover from the drawer in a Court of competent jurisdiction any amount expressed in the cheque over and above, the original sum so drawn.”
Senator KEATING laid upon the table the following paper -
Land’ Acquisition Act 1906 - Culcairn, New South Wales: Post Office- Notification of the acquisition of lond for site.
Senate adjourned at 4.3 p.m. ‘
Cite as: Australia, Senate, Debates, 16 August 1907, viewed 22 October 2017, <http://historichansard.net/senate/1907/19070816_senate_3_38/>.