9th Parliament · 2nd Session
The President (Senator the Hon. I. Givens) took the chair at 3 p.m. and read prayers. -
– I should like .to know, Mr. President, if you have yet received the certificate of the Governor of Victoria announcing that the State
Parliament has chosen Mr. J. F. Hannan to fill the vacancy in the Senate caused by the death of Senator Barker?
– Not yet.
– They do not do things as quickly in Victoria as they do in Tasmania.
The following papers were presented : -
Arbitration (Public Service) Act - Determinations .by the Arbitrator, &c. - No. 27 of 1924- Commonwealth Public
Service Clerical Association.
No. 28 of 1924 - Australian Letter Carriers’ Association. Lands Acquisition Act - Notification of land acquired for Postal purposes at Cressy, Victoria.
Post and Telegraph Act - Regulations amended - Statutory Rules 1924, Nob. 68, 76.
Public Service Act - Appointment of T. K.
Burns, Department of Trade and Customs. Wireless Telegraphy Act - Regulations -
Statutory Rules 1924, No. 101.
asked the Minister representing the Prime Minister, upon notice -
– The Prime Minister has supplied the following answers to the honorable senator’s questions: -
DEPOSITORS’ Unclaimed Fund.
asked the Minister representing the Treasurer, upon notice- -
– The Treasurer has supplied the following answers to the honorable senator’s questions: -
In order to get the exact figures to date, it would be necessary to communicate with each branch of the Bank. The above figures are to the 30th April, 1924, and do not include amount of old balances under £1 or old balances unclaimed transferred from the late Government Savings Bank, Queensland, or the late State Savings Bank of Tasmania.
asked the Minister representing the Treasurer, upon notice -
– The Treasurer has supplied the following answers to the honorable senator’s questions : -
Bill read a third time.
Debate resumed from 18th July (vide page 2273), on motion by Senator PEARCE -
That the bill be now read a second time.
– In the opinion of a considerable number of the employees of the bank, it is desirable that an appeal board should be established. They are not satisfied to have their cases dealt with by the board as outlined in the bill. Their request for the appointment of an independent board is a reasonable one and should receive favorable consideration. In nearly every other service of the Commonwealth appeal boards have been established, and are giving a fair degree of satisfac tion. The suggestion is that the board shall consist of a chairman - who shall possess the qualifications of a stipendiary magistrate, be experienced in the weighing of facts in matters of procedure, and conversant with the law of evidence and interpretation of broad principles of jurisdiction - a representative duly elected or appointed by the Commonwealth Bank branch of the United Bank Officers’ Association, and one representative of the Commonwealth Bank, such representative not to be a person employed by the bank in a particular department or branch in which the appellant officer is employed. I desire to stress the importance of this proposed amendment. The fact that in nearly every other branch of the Public Service appeal boards have been established should be sufficient to warrant the acceptance of the proposal which I have outlined, and which I intend to move when the bill is in committee. Another very important matter which has a far-reaching effect upon the welfare of the bank is the transfer of officers from other banks or services. The Parliament, for reasons best known to itself, did not provide that employees transferred from a state service should have their existing and accruing rights preserved, and that has had the effect of preventing the. Commonwealth Bank from securing the best officers available. Nothing should be embodied in the act which would in the remotest degree prevent the bank securing the services of the best officers available. Clause 16 a of the act provides -
Where an officer of the Commonwealth Public Service becomes an officer of the bank he shall retain all his existing and accruing rights.
That is satisfactory so far as officers transferred from some branch of the Commonwealth service are concerned, but it must be remembered that the bank would be convenienced if it were permitted to engage officers employed in state banks, and that such officers’ existing and accruing rights would be preserved.. As it is impracticable at present to secure the services of the . best men available, it is my intention, when the bill is in committee, to move an amendment to overcome the present difficulty. From its inception, the Commonwealth
Bank Las been handicapped by Parliament, owing to the determination to deprive the bank of a portion of its profits, which up to the present amount to about £4,500,000. One-half of the profits of the bank are now placed to the credit of the national debt sinking fund, and the other half are retained by the bank. The whole of the profits of the bank should be utilized in extending the bank’s operations. The notes issue branch showed a profit of £711,760 for the half -year ending the 31st December, 1923, and that amount should also be used exclusively for the extension of the bank’s operations. I wish to direct the attention of the Senate to the dilatory manner in which the Commonwealth Bank has been extending its business. A large number of people throughout the Commonwealth appreciate the” work performed . by the late Sir Denison Miller and .those who have succeeded him, but at the same time the Commonwealth Bank has not extended its business, as it very easily could have done. That may be- due to a number of causes, on©’ of which is the fact that* the whole of the . profits of the bank are not available for that purpose. Notwithstanding the fact that the bank has behind it the resources and credit of the Commonwealth, it is interesting to note that in New South Wales only sixteen branches have been established, whilst in the other states the numbers are - Queensland, 31 : Victoria!, 9 ; South Australia, 5 ; Tasmania, 4 ; and Western Australia, 3 : making a total of 68. It was the intention of those who supported the establishment of the bank that it should enter into active competition with other banks, and be the bank of the Commonwealth. If this important bank is to continue to be a comparatively small institution it cannot serve the purpose for which it was established. It was originally intended that it should’ be the chief bank of the Commonwealth, and conduct the general banking business of the Commonwealth. It has completely failed to do that, and, so far as I cam see, unless strong pressure is brought to bear upon those in control, it is not likely to extend its operations. In The Australian Insurance and Banking Record of May 21, 1924,. a list is given of the towns- in the Commonwealth in which the Bank of New South Wales has branches. They are almost too numerous to count. The same may be said of the Commercial Banking Com- * pany of Sydney, and a considerable number of other banks. In visiting various parts of New South Wales I have frequently heard surprise expressed at the failure of the Commonwealth Bank to establish more country branches. There are, of course, branches of the Commonwealth Savings Bank operating in various centres, but they do not meet the requirements of the people. It is interesting to note that in such important towns as Adelong, Armidale, Bathhurst, and Goulburn, the Commonwealth Bank has no branch establishments. It is quite true that the bank has a few more branches in Queensland than in any of the other states, but that is because’ it transacts all the savings bank business of that state. We should give the management to understand, clearly and unmistakably, that unless it is prepared to take reasonable and proper steps to extend the bank’s operations it will have to make way for men who genuinely support the real objects of the bank. The present practice operates most unfairly towards the bank’s officers. No matter how qualified they may be, they have very little hope of advancement while they remain in the service of the bank. The private banks- are constantly on the look-out for opportunities to open new branches, and every branch that is established means improved positions for members of their staffs. The officers of the Commonwealth Bank, however, very soon come to a dead-end. The management appears to- be satisfied with doing large items of business, and disregards altogether the real objects of the . institution.- It was expected that the bank would readily come to the assistance of struggling farmers, home-seekers, and small business men who were in meed of financial assistance. So far from doing that, however, it is content to advance all the money available to municipalities, and large institutions, which could just as easily secure accommodation elsewhere. The bank should have a rural branch and a homes branch. Its business would then expand rapidly. It is exceedingly detrimental to the interests of the bank that the authorities who control its savings’ bank branch have not seen fib to pay to depositors the same rate of interest as the state savings hanks pay. The security behind the state savings banks is, of course, very good, but so is that behind the Commonwealth Savings Bank. The general public have been deliberately prevented from depositing their money in the Commonwealth Savings Bank branch by the consistent failure of the management to pay the same rate of interest that the state savings .banks allow. Small depositors, in consequence of this attitude, are forced to put their money in the state savings banks. If the Commonwealth Bank management is not prepared honestly to do the fair thing towards the savings bank branch of the business it should be changed without loss of time. It was not intended that the Commonwealth Bank should remain a small concern. That is entirely opposed to the idea the advocates of the bank had in mind. Parliament should give the present management a broad hint .that unless it alters its tactics it will be superseded. If I had the power to deal with it I should tell it, very clearly, that I would not tolerate . for another five minutes its methods of conducting the business.
– Does the honorable senator mean that if the management is not prepared to do what the Government of the day desires it to do, it should be removed ?
– I do not say that the bank should .be completely under political control, but Parliament should have a measure of authority over it. If the bank were directly under parliamentary control numerous difficulties would frequently confront us. At the same time, Parliament should have some control. Practically the only opportunity we get to discuss the operations of the bank is when an amending bill of this character is introduced by the Government. I say unhesitatingly that the management is not taking reasonable steps to advance the interests of the bank. That is shown by its neglect to establish branches in many country towns, and by its consistent failure to pay the same rate of interest on savings bank deposits as the state savings banks do. Neither is it doing as it ought to do with regard to overdrafts. I could understand it re fusing to increase the rate of interest on deposits if it had decreased the rate of interest oil overdrafts, but, as far as I am able .to understand the position, the actions of the Commonwealth Bank in respect to the rate of interest on overdrafts always coincide with those of the private banking companies. All the bank does is to notify its customers that on a certain date an increase of £ per cent, will be made in the charge for money on overdraft. The Commonwealth Bank, as at present constituted, is of very little more sendee to the general community than the private banks. .That is due very largely to the reasons I have just given. I doubt very much whether it offers as good terms to its customers in some cases as do the private banks. In these circumstances it is not Surprising that it has not made the progress that we had a right to expect it to make. An examination of its halfyearly balance-sheets certainly shows that it has made a small advance regularly, but it has not by any means done all that it might have done. I took the opportunity to make some inquiries about the unclaimed deposits it holds. . These do not appear to amount to a very large sum, but, all ‘the same, I can see no reason why we should allow it to retain the large power in this regard which, we gave it under the principal act. Section 51 of that act should be substantially amended. At present, it is proposed to amend it only verbally, making it read -
The period of seven years is too short, especially in a country like Australia, in which people are continually wandering :about from place to place. The period of .ten years also is too short, and should be increased to, perhaps, twenty years. These may be minor details, but they appear to me to be of such importance as to warrant my referring to them. The proposal that the board shall be entitled to re-issue old notes has not my approval. When a note has been returned to the bank, it should be replaced by a new note. The Senate should endeavour to alter the provisions of section 60 J of the principal act,, which sets out the manner in which the profits derived from the note issue shall be dealt with. That section reads -
The profits derived from the issue of Australian notes shall be expended - («) in the payment of the working expenses of the Note Issue Department;
in the payment of commission, at a rate to be approved by the GovernorGeneral, to the bank for the purposes of its general business.
Those provisions are all right. I take exception to paragraph c, which reads -
In the payment of the balance to tho Treasury.
The Treasury ought to obtain its revenue from some other source. It was not in- . tended that the Commonwealth Bank or the Notes Issue Board should be a taxing machine to increase the funds of the Treasury. Whatever profits are made by the Notes Issue Board should be used to extend the business of .the bank and make it realize anticipations. I notice that a new provision proposes that all architectural work estimated to cost over £5,000 shall be thrown open to public competition. T5ie building erected for the head office of the Commonwealth Bank in Sydney, and that which was recently completed in Collins-street, Melbourne, will stand comparison with any building in the Commonwealth. Very few buildings equal them for architectural beauty and utility. I do not know that good will accrue from the proposal to submit such works to public tender, but at the same time I do not offer serious objection to it. Summarized, my objections to the bill are -
That too many directors are proposed.
That no home-building or rural sections are included.
That no provision is made for rights of transferred state officers.
That the management are not directly instructed to extend the operations of the bank.
That the proposed distribution of the profits is faulty.
That no provision is made for the appointment of an appeal board.
That the periods relating to unclaimed deposits arc altogether too short.
That power should not be given to re-issue used notes.
That provision is not made for the retention by the bank of the whole of the profits of the Note Issue Department.
For these and other reasons I oppose the second reading of the bill, and trust that it will be referred to a royal commission for report.
– The Government regards this bill as one of the most important that is likely to engage the attention of honorable senators this session. A very important speech upon it was made last Friday by Senator Greene. That honorable senator suggested that the Treasurer (Dr. Earle Page) had neither banking nor commercial experience. The inference appeared to be that that constituted a disqualification of the Treasurer as the sponsor of the bill. His statement, however, must be considered in the light of the fact that the Treasurer, for eighteen months, has successfully managed the Treasury Department, which may justly be denominated the greatest financial institution in Australia. Banking and commerce are not necessarily learned by those who tot up long rows of figures, or stand behind a counter, but, very often, they are mastered by persons who never draw salaries from any banking institution. The subjects of banking and currency are so wide that they require lengthy and close study. Many leaders of thought on those matters would, under Senator Greene’s narrow definition, be contemptuously referred to as having had neither banking nor commercial experience. The names of many famous men could be mentioned in that connexion. The honorable senator made an allusion to the authorship of the speech delivered on the introduction of the bill in another place.
– I rise to order.’ Is it permissible, . under the Standing Orders, for an honorable senator to read a speech of this description’’
The DEPUTY PRESIDENT (Senator Newland). - Strictly speaking, under the Standing Orders, a speech may not be read. The Minister is refreshing his memory from his notes as he proceeds.
– Senator Greene’s experience as a Minister of the Crown must have acquainted him with the fact that when a Minister is making a statement of very grea.t importance it is unquestionably necessary for him. in the public interest, to confine himself largely to his notes.
– The honorable senator is reading every line of his speech.
– I hope that the honorable senator is not going to take exception to hearing the truth, as the Government views it, or to being made acquainted with the views of the Government regarding the bill.
– I wish to hear the Minister’s views; not those tha’t’ have been prepared for him.
– All Ministers of the Crown receive assistance in the preparation of speeches on such important matters as that now under consideration, and I crave the indulgence of the Senate and of my honorable friend.
– So long as that is quite clear, very well.
– I wish to adhere to my notes, in order to be perfectly fair.
– Senator Greene read every line of his speech when introducing the Tariff Bill in another place.
– I did not read one line of it.
– An allusion was made by the honorable senator to the authorship of the speech made on the introduction of a bill in another place, and, if I remember rightly, he said, “ The voice is the voice of Jacob, but the hand is the hand of Esau.” I take it that the speech of the Treasurer (Dr. Earle Page) was his own, and it was generally regarded as being informative, useful, and convincing. Apparently Senator Greene regarded the Secretary to the Treasury as Esau, and thought that his hands had fashioned the bill. It should not be neces- . sary to say that the bill is the result of much thought and reflection by all the Ministers who are jointly responsible for the measure. In coming to their decision they were guided by the advice furnished them by Treasury authorities, and by their own knowledge of all the circumstances. That the Government acted without competent advice is quite a new allegation, and I am quite certain that Senator Greene will be willing to admit that, in a “ matter of such great importance to the people, the Cabinet did very fully and carefully consider the whole of the circumstances before the bill was introduced. This is not the bill of one Minister; it is the bill of the Government, of which the Treasurer happens to be a member. I feel convinced that my honorable friend, Senator Greene, will realize that the usual practice has been followed. Indeed, previous critics of the Opposition side took the Government to task for having consulted various banking institutions and those outside Parliament who are interested in banking. References made in the Senate to the personal qualifications of members of the Public Service are usually couched in generous terms, but Senator Greene did not dp himself justice when he said that the Secretary to the Treasury had had no practical experience of banking. On reflection, and ou my reminding him of Mr: Collins’s knowledge and experience, I think the honorable senator will agree that that officer has undoubted ability in that direction. In his career as permanent head of the Treasury, his experiences have covered the whole field of finance, which necessarily includes banking, and of some of the experience of that officer Senator Greene must have: personal knowledge, since the Ministry of which he was a member entrusted that officer” with most important duties and placed upon him very great responsibilities. For example, Mr. Collins was appointed to be the sole representative of Australia at the International Financial Conference held in Brussels in 1920. The conference was attended by delegates from all the important countries of the world, and it reported upon the measures to be taken towards the rehabilitation of the world’s finances.
No more important gathering of financial experts has ever been held. In 1921 Mr. Collins was directed to confer with English officials, and, finally, to enter into an agreement as- to. the amount owing by Australia to the Mother Country in connexion with the late war. The amount was settled at £92,000,000, and the agreement was ratified by this Parliament. I am certain that honorable senators realize that, if we could trust Mr. Collins to go into such a momentous “ question outside Australia, his opinions are surely worth having on matters arising in our own country. Another example of tha high regard in which this senior public servant was held by a Ministry, which included my friend Senator Greene, is furnished by the- appointment of Mr. Collins, in 1920, to- be a director of the Notes Issue Board.
– I rise to a point of order. I should like your ruling, Mr. Deputy President, as to whether the question before the Chair is. the second reading of this bill, or the merits or otherwise of the Secretary to t)he Treasury.
The DEPUTY PRESIDENT.- The remarks of the Minister, up to the present time, have had a distinct bearing on the bill, and I rule that he is perfectly in order in proceeding with his speech on the lines he is following.
– I think that Senator’ Foil, on reflection, will admit that, since comments have been made on the one side, it is fair to allow me to put the other side of the case.
– I have said nothing derogatory to the Secretary to the Treasury personally.
– I appreciate that.
– I said a good deal in the opposite direction.
– Let us clear, the air. There is no suggestion that there has been a personal attack on the Secretary to the Treasury. It was purely a question of his qualifications.
– It was simply whether he had the necessary . qualifications toadvise the- Government’ on a matter that had to do with banking, and banking only.
– A financial matter. ..Senator -Greene. - No; a- banking matter.
– I am endeavouring to deal with the .position as, the Government sees it. Mr. Collins: has occupied- a position on the directorate of the Notes Issue Board- for three and a half years, and he has shared in the great responsibility of controlling the note issue during what, I think, all honorable -senators will admit has been a very critical period. The control of the Australian paper currency in- the last few years has been a banking function, of supreme importance, . and it must be remembered that,, prior to the transfer of the notes to the Commonwealth Bank, the Treasurer of the day, supported for some years by the advice of Mr. Collins, was the only manager of the note issue. It will be agreed that an officer occupying such responsible positions must of necessity be a man of the highest financial attainments. Mr. Collins became permanent head of the Treasury early in 1916, and,, in the eight succeeding years, it has been his statu tory duty to act as adviser to seven Treasurers. It will thus be seen that he has been required to have seven different view-points. The biggest problems, which the banking institutions of Australia have had to face during the last few years have been connected, with Government finance, and with business which the banks could not have carried through without Government co-operation. Honorable senators will agree that we have been passing through a period of great financial stress. There has been a tightening up with regard to finance on every hand. This solution of many difficulties was usually found as the result of a number of important conferences between the Treasurer of the Commonwealth and the management of private banking institutions’. Mr. Collins took part in all those gatherings as the chief adviser’ of the Government. His assistance was always of the greatest, value, and his services were appreciated to the fullest extent,, not. only by the Government, but also by the banks with which he was associated’ in conference. In view of these facts it must be admitted that Mr. Collins has had sound experience of banking in its higher branches which has been of great value to the Com’monwealth, and that personal employment in a bank would not have afforded him a better equipment. Senator Greene also made the statement that other banks were opposed to the bill. This, is news to the Government. For many months the Treasurer and other Ministers had been in close touch with leading bankers on this subject, and was unaware of any opposition to the bill. We realize, of course, that private banking institutions will not go out of their way to “ boost “ the Commonwealth Bank in regard to its general banking business. We admit, also, that there is necessarily a difference of opinion as to many of the minor details in the bill. But nothing has occurred to justify the belief that the banks are opposed to this measure. The Government has not had any inkling of this fear on the part of the private banks. Therefore, it seems strange that Senator Greene, at this late stage in the debate on the measure, should have been entrusted with so important an announcement. In the circumstances I am justified in suggesting that his criticism can carry no weight, unless he is prepared to substantiate it “by disclosing the names of those authorized to speak in that manner on behalf of the banks.
– Why do they favour the bill? ‘
– Because they believe it will be good for the country.
– - Does the Minister say that the banks are in favour of the measure?
– I say unhesitatingly that the Government is not aware of any objection on the part of the banks to the measure. Only to-day a leading banker informed me that they welcomed it, because it would assist to- solve the financial difficulties of this country.
– The banks want it.
– Senator Greene believes that the bill will give the Commonwealth Bank power to control the private banks, and hold them in their grip. He added that if he were a member of the Labour party he would not oppose the passage *pf the measure, because it would really be an instrument for the nationalization of banking. That is Labour’s objective.
– Quite right.
– I have not the slightest objection to my honorable friend airing his views on the nationalization of banking. That is his party’s policy, but it is not mine, and it is not the policy of the Government.
– -Of course it is not. Senator WILSON. - Another voice in the night. Senator Greene did not make it clear how this bill would make the nationalization of banking easier. The bill has two main purposes. In the first place it is seeking to abolish one-man management.
– What is the reason for doing away with the present system ?
– Because we believe .it will, be better.
– What was wrong with the late Sir Denison Miller?
– He did very good wonk, it is true, but the bank has grown to be such a huge concern that it is desirable to strengthen the hands of the management–
– And this bill will further -extend the operations of the bank.
– The policy of “the Government iB to develop the activities of this great national bank. .Senator Graham. - There should be no private banks at all.
– The bank, as honorable senators are aware, is to be converted into a central bank. Tie appointment of directors will certainly not assist the nationalization of banking, and while a central bank functions as such, other banks must continue their operations, because a central banking system, is impossible without a number of ordinary trading .banks. These banks are doing a useful and valuable work. My honorable friends opposite may not agree with me., but the fact remains that the successful banking institutions in Australia are a very valuable adjunct to the Commonwealth Bank. It has to be admitted, of course, that the control of the note issue is a very important function, and will, at all times, place the Commonwealth Bank in a position of supremacy, but that is an inevitable condition of central banking, and has never yet led to’ the injury of private banks. The value of the power over currency may easily be exaggerated. Emission of notes will always be subject to the inexorable law, that over-issue causes rise in prices and injury to all classes of the community. This is an influence which will undoubtedly restrain an inclination to use the note issue for the purpose of aggrandizing the Commonwealth Bank. At any rate, the control of the note issue already lies in the hands of tie Commonwealth Bank, and its transfer from a sectional board to a general board will not in any way increase the dangers of nationalization.
– If the note issue it at present in the hands of the Commonwealth Bank, what is the Notes Board doing)
– It is a sectional’ board of the Commonwealth Bank. The real reply to Senator Greene’s forebodings is that if any party in power desires to nationalize banking it will do so either with or without any facilities to that end created by this bill. The Government is desirous of establishing in Australia a system of central banking calculated to afford banking support and facilities to all classes of the community. This central system cannot be established without also improving the condition of the several ordinary banks, because the central bank will stand behind them at all times.
– In other words, we shall take all the risks, and they W] take all the profits.
– My experience -of banking institutions leads me to the ‘belief that it is often a case of fifty-fifty; more often, perhaps, a case of seventyfivetwentyfive, and usually I have not got the seventy-five. The banks can be trusted to look after their own securities. Under the central banking system, proposed to be established, the banks and the public will be supported and protected. It is futile to suggest that the steps being taken will make the nationalization of banking easier. The Labour party in the Commonwealth Parliament has, in no uncertain language, made clear its opposition to the bill, on the ground that it favours the ordinary banks, and grants them facilities and resources to which they are not entitled. Certainly, the Labour party will not agree with Senator Greene that this bill is going to help the nationalization of banking.
– What does the honorable senator know about the Labour party’s policy?
– No man could be associated as I have been, for four years, with Senator Gardiner as Leader of the Opposition without being aware of the policy of the Labour party. Senator Greene further criticized the bill by saying that there was no central banking system in existence wherein the Government appointed the whole of the directorate.
– I did not say that at all.
– If the honorable senator says he did not, I advise him to read his speech in Hansard. I think it will show that he did.
– No. I will tell the honorable senator what I said. I stated distinctly that there was no central banking system in the world where a government found the whole of the capital, appointed the whole of the directorate, and had a monopolistic control of the note issue.
– And that was exactly what I was about to say. The honorable senator declared that under no other central banking system did a Government appoint the whole of the directorate, find the whole of the capital, and have a monopolistic control of the note issue. For such criticism to be effective it would have to disclose the manner in which a bank so constituted failed to conform to all the requirements of central banking. While there is no one bank which combines the features indicated, every one of them is included, in whole or in part, in one or other of the central banking systems of the world. Another criticism is that if the Commonwealth Bank is to be a central bank it must withdraw as far as possible from the actual business of banking, and devote itself exclusively to the proper functions of a central bank. Senator Greene pointed out a way in which he admits the Commonwealth Bank could be organized as a central bank. His plan is to divide the savings bank business from the general bank, and to set up two banks. The honorable senator said that the funds of the savings bank could be used in financing country enterprises, and his remarks in this regard are particularly interesting from two points of view. First, he admits that the only step necessary to enable the Commonwealth Bank to function as a central bank is to remove the savings bank. That is satisfactory, because it shows that, in spite of the alleged general insufficiency of the Government’s proposals, it is easily practicable to convert the Commonwealth Bank into a central bank. Secondly, Senator Greene entirely agrees with the Treasurer, who stated in another place on 11th July that the establishment of a rural credit bank was receiving consideration, and was to be dealt with in connexion with the savings bank, and not the general business of the Commonwealth Bank. Already the savings bank is detached from the general banking business, and is placed in a separate department. For the present at least the Government see no necessity to put the savings bank under entirely separate management, believing that the existence of a separate department will in no way interfere with the central banking function.
– If the Government acted fairly, they would allow the savings bank business to be conducted solely by the states.
– The Commonwealth Government are looking after state interests very well.
– Does the Honorary Minister agree that in so much as a bank is made a central bank it cannot be a central bank, and at the same time engage in the ordinary business of banking.
– Why cannot it do so? What of the Bank of France?
– Yes, and other similar banks. I cannot see any practical objection to such a course. Senator Greene believes that the policy of the Notes Board is a dead weight on enterprise, and that the present financial stringency is due to the deflationary policy of the Notes Board.
– So it is.
– The honorable senator has not given any considered argument to the matter, and he made no attempt whatever to reply to the facts, figures, and reasoning contained in the Treasurer’s speech on the bill. The Treasurer explained the questions of principle which are involved, and gave reasons why he could not agree that the refusal of the Notes Board to issue more notes was unjustifiable. The Notes Board has been carrying a very great responsibility, and in the face of much clamour for an expansion of the Australian note issue has had the courage to act upon its convictions. It is not sufficient for a critic to say that he believes the policy of the Notes Board has been wrong, and it certainly is incumbent upon one who submits such criticism to state his reasons in full. Senator Greene has not done this.
– Time did not permit. I am willing to supply the Senate with further information if I have an opportunity to speak again.
– The honorable senator claims that we need a more flexible form of currency, and that the Government might very well pass a general banking act on the Canadian plan, giving banks their own notes. He believes that would clear up the position. He did hot, however, give any details, showing in what way the Australian note issue is inelastic. As a matter of fact it is as elastic as any note issue could safely be. It can be expanded and contracted with, the greatest freedom so long as there is a backing of gold equal to 25 per cent, of the total issue. There is no other limit. At present, with the gold reserve amounting to £24,300,000, the total note issue might legally be as much as £97,200,000, as compared with the actual existing circulation of £56,800,000. Fourteen years ago the banks were deprived of their right to issue notes, and the Government believe that the adoption of the Canadian system of note issue would be a retrogression. The suggestion means merely that the former right of the Australian banks to issue notes would be restored.
– It does not.
– It is too late to consider any such scheme, and it is not in accord with existing Australian sentiment. Apart from this consideration there is no need for the introduction of the Canadian methods, because the existing system is quite as flexible in its nature as the Canadian system. The last of Senator Greene’s remarks are those relating to the proposed appointment of a Royal Commission. A resort to such an expedient is quite unnecessary, would, be fraught with great dangers, and would result in unavoidable delay. As to the necessity for a system of central banking in Australia, there should now be no need for argument. Every great country has a central bank, and the advantages of the system are widely understood. It is the one thing needful to place Australian banking on a modern basis. The International Financial Conference held in Brussels in 1920 advised that, in countries where there is no central bank of issue, one should be established. The International Economic Conference held in Genoa in 1922 reported in similar terms, and at the Imperial Economic Conference held in London in 1923, the following resolution was passed : -
That where difficulties have arisen in regard to exchange between certain parts of the Empire and between such parts and the United Kingdom -
The position could bo ameliorated if the note-issuing authorities were to accumulate sterling assets and to un- dertake to exchange their local currencies for sterling and vice versa.
Senator -Greene. - Can; the Minister say why that has not been done ?
– The resolution continues - “ (b) This measure might be further developed and assisted by the creation of central banks and by mutual cooperation as recommended by the Genoa Conference.
– There they show the way.
– It continues -
– South Africa has n central bank, and their exchange position is worse than ours.
– In view of the examples of other countries, and of the advice tendered to us by such important conferences, there can be no- doubt as to the propriety of establishing a central bank in Australia.. The principle of a central bank has apparently been accepted by every Australian authority whose opinion is valuable. The banks have not opposed it, and it is within the knowledge of all honorable senators that in the Australian press there has not been a single word of objection. Even Senator Greene has not objected to the establishment of a system of central banking. As a matter of fact, he went so far as to show how by a certain modification in relation to the savings bank branch the Commonwealth Bank could be converted into a true central bank. The principle of central banking is the very essence of the bill now bef ore the Senate, and in view of the general acceptance of that central feature, there is no justification whatever for reference to a royal commission.
Outside of the provisions designed to giver the ‘Commonwealth Bank the functions of a central bank, there is only the question of abolishing one-man control, and on this point, too, there is a general consensus of opinion throughout Australia.. We are passing through a period of very great financial stringency. The banksare refusing overdrafts for even themost legitimate purposes, and both public and private enterprise is being curtailed. Exports from Australia, which are vital,, not only to our progress, but even to themaintenance of that degree of prosperity to which we have attained, are being; hindered by adverse exchange rates, and imports, encouraged by the existing conditions, are injuring local production.. The present situation calls for immediate action, and the existing conditions must be ameliorated at the earliest possiblemoment. A royal commission would probably take months in which to complete its work, and by the time its report waa received Australia might have received a set-back from which it could not recover for years. The provision of an up-to-date system of banking is one of the most urgent needs of the Commonwealth, and delay might be disastrous. The remodelled Commonwealth Bank will not work miracles, but it can safely be said that under the new management, and with its new powers, it will do all that is possible to ameliorate present con,ditions. This is, undoubtedly, one of the most important bills the .Senate has been asked to consider: As a business man, I may say that, in the matter of exchange particularly, greater powers are needed. We may differ as to details, but, generally speaking, it must be recognized that the proposed amendments of the principal act are necessary in the interests of the Australian people. I, therefore, ask the Senate to support the bill, and thus assist the Government in overcoming some of the difficulties with which we are now confronted.
T- I move the following amendment’: -
That all the words after “ That “ be left out with a view to insert in lieu thereof the words - in view of the desirableness of Parliament being furnished with the fullest possible information before proceeding to make any radical -alteration in the present Commonwealth Bank Act, and of the need for devising effective means of dealing with the exchange position,, and the accumulation of Australian credit in London, this Senate is of opinion that a royal commission should be appointed to inquire into and report upon the proposals of the Government, or any alternative scheme. 1 was much surprised that the Govern.anent did not give honorable senators an opportunity to express their views before ‘ ‘ putting up “ a Minister to attack a proposal, which had been foreshadowed, that a royal commission should be appointed - to inquire into the probable -effects of this measure. The Government might have been expected, at least, to listen to the views of honorable senators on both the bill and ‘ the amendment foreshadowed by Senator Greene. My principal reason for moving the amendment is that honorable senators lack information en our present financial difficulties and the exchange situation in Australia. I thought, at first, of moving for the appointment of a select committee of the Senate to investigate the matter, and, if a majority of honorable senators prefer that course, I am quite willing to withdraw my amendment with a view to permitting it to be taken; but, for many reasons, I consider that a royal commission would be much more effective than a select committee. It is highly desirable, in my opinion, that an inquiry such as I have indicated should be made before we take a step in the dark, as we shall do if we pass the “bill without such an investigation. It is only fair to. the vast interests affected by the matter that we should take all proper steps to inform our mind on the real financial and exchange situation. Judging from the procedure’ of legislative bodies of other countries, I consider that I am acting well within my rights in ‘moving the amendment. Frequently, when a measure is sent to an upper house, or house of review - and that is “what we really are - a select committee is appointed to thoroughly investigate its possible effects. That is certainly done, frequently, by the American Senate. Not long before the Queensland Legislative Council was abolished, the lower house of that state Parliament passed a bill to authorize the purchase of the Chillagoe mines. The Legislative Council considered that it had insufficient information on the matter, and appointed a select committee of its members , to investigate the proposition.
The bill was subsequently passed. In view of the very wide effects of either passing or rejecting this bill, we should, in justice to ourselves and the public in general, inquire into its provisions. It cannot be doubted that we have very little information on the real causes of the financial difficulties that confront us. In the speech in which the Treasurer moved the second reading of this bill in another place, he admitted that that was so. He said -
The automatic check of gold payments which was the prop to the pre-war financial systems having been removed, the way was clear for all kinds; of Interference with sound practice. The world was now subject to conditions of which the existing generation hod no experience, and even the teachings of the past were found difficult of application, because there never had been an upheaval of such magnitude and complication before. The finances of every ‘ country in the world have been disarranged, some of them hopelessly so, and though Australia has been spared the extreme difficulties of many other countries, we, too, have experienced periods of monetary stress.
Later on in the same speech he said -
No miracles can be expected from Government intervention, either by the issue of notes or in any other way.
He also said in the same speech that practically nobody in financial circles in Australia to-day had sufficient knowledge to be able to say what would be the effect of passing this, bill. If the Commonwealth Government considered it necessary to appoint a royal commission on taxation, which cost ‘ the country £30^000, a royal commission to inquire into the operation of the Navigation Act, and another to inquire into the advisableness of adopting a system of national insurance, surely it is not unreasonable to ask that one should be appointed to inquire into pur financial disorders. The adoption of the scheme outlined in ‘ this bill .will revolutionize the present financial and banking system of , Australia. For this reason it is highly desirable that, my amendment should’ ‘be!’ carried’. According to the Tear-Booh, “eighteen: banking companies were trading’ in ‘ Australia in 1922, and their total interest’s amounted to £302,105,648. It will be apparent, therefore, that practically every manufacturer, every primary producer”, and every retailer, to say nothing of the rank and file of the general public, will be affected ; by the operations of this measure if it becomes law. Undoubtedly the hest: interests of the country will -be served by our taking every reasonable means to ascertain whether we shall act wisely in agreeing to it. I was amazed to read in the Treasurer’s speech to ‘which I have already referred that during the whole time the Commonwealth Bank has been operating it has not entered into serious competition with the private banks. If that is so, it has not done what its founders expected it to do. I contend that the Government which was responsible for establishing the bank, and of which Senator Pearce, the Leader of the Government in this chamber was a member, anticipated that the Commonwealth Bank would enter into active competition with the associated banks. It is surprising to learn from the Treasurer that it has not yet done so. Honorable senators should give careful consideration to the possible effects on the Australian wool industry of the passing of the bill. It will not be questioned that the satisfactory financial position of Australia in the last few years has been due, to a considerable extent, to the exceptionally good prices that Australia has realized for her wool. In view of that fact, I have taken the opportunity since Senator Pearce moved the second reading of this bill on Thursday last to interview in Sydney as many prominent men in the wool industry as I could, in the time at my disposal, I ascertained that Australia’s financial position was causing a great deal of alarm amongst the wool brokers. In accordance with custom, the brokers held their annual conference recently, in Adelaide. It is the practice at such conferences to arrange the- programme of sales for the succeeding wool clip, but the brokers were so much concerned about the financial outlook that instead of taking their usual course, they did nothing. They took no action whatever. I have been assured that unless something is done to relieve the present unfortunate financial position, a considerable proportion of this year’s wool clip will not be placed upon the market, but will be held in reserve.
– And the honorable senator desires to stall off for some months any chance of taking effective action to relieve the position.
– If I was not satisfied that a royal commission could speedily suggest an effective way to remedy the situation, I would not move for its appointment.
– Delay will be inevitable if a commission is appointed.
– I do not think so. The June wool sales, held in Brisbane, showed a decided decrease in rates, because of the fact that it was very difficult to arrange credits. At the conclusion of those sales the prices were from 5 per cent, to 10 per cent, lower than those which ruled at the previous sales. If conditions were favorable, next year’s sales should bring into Australia something like £60,000,000. Honorable senators must, therefore, realize the importance of relieving the existing position. The Minister (Senator Pearce) said that the acceptance of the amendment might lead to delay in the handling of this matter. The control of the note issue has for some time been in the hands of four very capable men. I give those men credit for the work which they did during a time of stress. During the last twelve months, however, that board lias not shown any consideration towards those who are vitally affected by the financial position. Senator Wilson showed clearly that Australia occupies a much more favorable position to-day in regard to the gold reserve held against the note issue than she did a few years ago. I am led to believe, on very good authority, that all that the associated banks and the wool-growers have asked the Notes Issue Board to do is to make available for the forthcoming wool sales something like £5,000,000, as a temporary’ expedient to bridge the difficulty that faces them at present. If that sum were made available, the commission which I have- suggested could immediately get to work on its investigation, and next season’s wool sales would be held under conditions favorable to the securing of prices to which the growers of the wool are entitled, and which the world’s buyers are willing to pay.
– Does the honorable senator suggest that the Government should take the matter out of the hands of the Notes Issue Board, and itself issue the £5,000,000 ?
– I say unhesitatingly that the Government is responsible to the people of Australia, and if the people consider that, the action of the Notes Issue Board is too conservative it should take such action as will relieve the existing state of .affairs. I think that Senator Pearce will admit that the Govern- ment is not satisfied with the policy that has been adopted by the Notes Issue Board; otherwise, why should the Treasurer and the representatives of the associated banks confer in an endeavour to induce the board to vary its policy ? It is common knowledge in Australia that the Treasurer tried to get the Notes Issue Board to move in that direction, and that it absolutely refused to budge from the position it had taken up.
– It would be a very big responsibility for the Government to take the matter out of the hands of the Notes Issue Board and issue £5,000,000 worth of notes.
– I admit that; but the Government must remember that it is elected by the people, and that it is responsible for seeing that business transactions are conducted along proper lines.
– The action suggested by the honorable senator, if taken by the Government, would create a very dangerous precedent.
– If the Government is satisfied with the refusal of the Notes Issue Board to accept first-class securities to . enable the wool sales to be conducted successfully, it is easily satisfied.
– The Government proposes to set up this new authority, which it believes will effectively handle the situation.
– It is all very well for the honorable senator to say that, because the Government has appointed a board to undertake certain work, it must dot every “ i “ and cross every ” t “ placed before it by that board. That has been the attitude of the Government up to the present in regard to the Notes Issue Board. As the wool producers will lose millions of pounds this year if action along the lines suggested is not taken, and as the amount asked for is, comparatively speaking, so small, surely it is not unreasonable to. expect that the Government will not allow itself to be tied hand and foot by the Notes Issue Board ? I have had brought to my notice a number of cases in which excellent security has been offered to the Notes Issue Board to make finance available for wool sales, and it has been of no avail. The extra currency will be more than compensated for by the increased price that will accrue to the wool-growers if. compe tition is not restricted by the lack of finance. Australia is most unfortunately situated in that, because of the position that exists at present, she is unable to take full advantage of the demand that exists for her wool, and is compelled to turn away good customers. There never was a time in the history of Australia when it was more necessary to obtain for our wool, our wheat, or any other product, the best prices offering. Unless credits are made available, there is a big chance that many wool houses will withhold a large portion of their catalogues.
– That is a strong argument against delay in dealing with this measure.
– The Minister has not, so far, shown how these proposals of the Government will get over the present difficulty. The machinery now in existence would operate while the royal commission was taking evidence and considering its report. The Government could make such representations to tine Notes Issue Board as would ensure the granting of a relatively small sum for the forthcoming wool sales, without endangering its position, without unduly inflating the currency, and without sacrificing the. main principles of the bill, which could fee reintroduced when we had satisfied ourselves that we were taking a step in the right direction. I have carefully read the bill. The mere transfer of the powers held by the Notes Issue Board to the management of the. Commonwealth Bank will not, in my opinion, alter the existing position. I urge upon the Government the desirability of making to the Notes Issue Board such overtures as will result in relief being afforded during the next twelve months. Were it not for the fact that the credit of Australia ranks high at present because of the splendid prices that are being obtained for our wool, I would not urge the Government to take this action. Probably, never in our history has our wool been so much sought after by other nations, and it is pitiable that we should not be able to reap the fullest advantage from the demand that exists. I advocate the appointment of a royal commission, not only because the wool position is so precarious, but also, because the bill proposes to make very radical alterations in banking practice generally in Australia. The private banks in Australia to-day control deposits totalling over £302,000,000. They hold that money merely in trust for the people. We must consider the matter very carefully before we confer upon a board power to exercise any sort of control over those institutions. I am not pleading 1&e cause of the banks, but I do say that, associated with many of the big banking institutions in Australia are men who have devoted the whole of their lives to making themselves acquainted with finance generally, and it is not unreasonable to ask that before making such vital changes in our present system of banking, those who are authorities on the matter should be permitted to express their views to the fullest possible extent.
– That has been done. They have had copies of the bill for a month.
– That is so. It is a well-known fact, however, that certain amendments have been suggested which the Government has refused to consider.
– The Government has considered every suggestion that has “been placed before it. Some of those suggestions have been accepted. Those that were rejected related only to minor details.
– The Minister would foe correct if he said that the suggestions which were accepted related only to minor details.
– I invite the honorable senator to mention one of the principal propositions made by the banks that was rejected by the Government.
– It is because I cannot get the information I desire on this matter that I am proposing the appointment of a royal commission. If that step were taken we could acquaint ourselves fully with the matter, and instead of signing our names to. a blank cheque - as we should do if we voted for the bill at present - we would be quite sure that we were acting in. the interests of the people of Australia.
– The Government would regard the carrying, of Senator Foil’s amendment as a most serious matter. Speaking with a full sense of responsibility, and with the “knowledge that I have of the financial position and the:’ exchange diffi culty, I say without hesitation that it would be disastrous to the country if the amendment were accepted’. Senator Foil suggested that one reason, why the bill should be deferred was that it proposed a radical alteration in the management of the Commonwealth Bank. The first material change contemplated is. to do away with one-man control, and appoint a board of directors. In one sense that is’ a radical alteration, but does any honorable senator oppose it? Senator Foil would not oppose it.
– I am doubtful as to the wisdom of it.
– But it can hardly foe called a radical alteration. Whether there should be management by a governor or by a board is a question of opinion. The Government believes in a board, because it considers that for- the purpose of extending the functions of the Commonwealth Bank and making it a central bank, the Ministry could not find one man who alone possessed the varied knowledge needed. It is regarded as more likely that that knowledge would be commanded by a board than by any one individual. But that cannot be considered a radical alteration. Surely it is not a change that warrants the appointment of a royal commission to enable honorable senators to make up their minds concerning it. Are they not as competent as any royal commission to decide whether or not it is advisable to make that alteration ? The other “principal alteration is the proposal to make the Commonwealth Bank a central bank. This involves an extension, but it is not a radical alteration.
– How many extensions go to make a radical alteration?
– I have enumerated the two main alterations proposed. Does any honorable senator say that it is . necessary to have a royal, commission upon them ? Practically every country has passed legislation on similar lines..
– But very different from this bill. . Senator PEARCE. - There is no feature embodied in this bill that is not found in one or other of the central banks of the world, although I admit that no central bank combines; all the features” for which the measure provides. Senator Foil complained of a lack of knowledge. Knowledge of what, I ask?. He made it clear that be did not refer to the two main alterations already mentioned by me. What is troubling him is the exchange question. I agree that a royal commission might be able to discover a solution of that problem, but is that any reason why the passage of this bill should be postponed?
– Not the second reading of it, at any rate.
– Nor the passing of it. Should a solution of the exchange difficulty be forthcoming, would it not bo advantageous to Australia to have a central bank in operation ?
– ‘Most countries are in difficulties over the exchange problem.
– -No country seems to have found a solution, but, if it is proposed to postpone the bill until that problem is solved, we shall not have a central bank in Australia for a long while. Although there is much to be said for the suggestion of Senator Foil that a royal commission should be appointed to go into the exchange question, that is not a sufficient reason for shelving the measure. Would not the board of directors of a central bank have to investigate the exchange problem just as would a royal commission?
– It would not be like a royal commission if it were inquiring into the necessity for its own existence.
– The board’s first duty will be to tackle the exchange problem, not only because it is the desire of the Government that that should be one of the first questions considered, but also because it is the chief difficulty with which the banking institutions of Australia have now to contend. If the bank is to function as a central bank, the board must immediately apply itself to the consideration of this question. Therefore, Senator Foil’s objection will best be met by the speedy passage of the bill. Senator Foil was not quite fair when he said that the bill did not alter the present position as regards the management of the Commonwealth Bank and the Notes Board. He remarked that it was simply proposed to merge the two institutions into one. But that is not the position. Assuming that all the members of the Notes Board are willing to give their services on the board of the Commonwealth Bank, and that the Government is willing to appoint them, and assuming also that the Government remains in office, only four members are accounted for.; but this is to be a board of eight members. There would, therefore, befour members, apart from those now associated with the Notes Board and the bank. The passing of the bill would .result in an immediate inquiry into the exchange question. There is a thoughtful leading article in the- Sydney Morning Herald of the 21st July, dealing with this subject.
– Is it a reply to the Acting Leader of the Labour party (Mr. Anstey) ?
– Mr. Anstey’s name was not mentioned. I think the writer assumed that Senator Greene suggested the relegation of the bill to a. royal commission, but I understand from the honorable senator that he did not advocate that course. The article states, in the concluding paragraph: -
The proposal of Senator Massy Greene for the relegation of the bill to a royal commission has to be considered in relation to the present financial position. If the position is due in some measure to the (refusal of the present. Notes Board to issue adequate currency, ‘a view .which, .is widely held in financial circles, something may be hoped for on a review of theposition by the Board of the Commonwealth Bank which it is proposed to create, and to. which it is proposed to transfer the control of the note issue. There would be urgency for the passing of the bill, so that the boardcould be appointed and assume its duties. If the monetary stringency is not in part due to the restriction of currency there is no immediate urgency for the bill, and it could well be relegated to a royal commission. In our view the circumstances calling for the passing of the bill with the decision on matters of currency left to a simple majority of the full board are urgent.
– The Minister did not read the portion of the article that condemned the Government’s proposals.
– I certainly admit that the criticism was not wholly favorable. In certain details of the bill the banks have adversely criticized it, but I have read the portion of the article that is pertinent to the amendment now before the Senate.
– My contention was that the Notes Board might ease the exchange situation for the time being, and in the meantime further information could be obtained.
– The Notes Board could, if the Government wished it, take the action indicated by the honorable senator. I do not say whether such action would be right or wrong. The board could issue another £5,000,000 worth of notes. Representations were made to the board that it should increase the currency, but after full consideration the board came to the conclusion that itwould be unwise to adopt that course, and it refused to do so. There are two lines of action open to the Government. Parliament having constituted the Notes Board, the Government is bound by its decision, unless Parliament revokes the power given to the board. But while the board exercises the power that Parliament has given it, any government should hesitate to shoulder the serious responsibility of asking the board to issue further notes when it has already decided against doing so.
– It would be unthinkable to make such a request to the board.
– Does any honorable senator suggest that any government would be warranted in overriding the decision of a board that Parliament had appointed to control the note issue? It would be dangerous to do that.
– The Minister should try to be fair. My contention was that the Notes Board should have released a certain number of notes for the purpose of facilitating current sales.
– I know that was the honorable senator’s contention, and I told him that that proposal had been put before the Notes Board, which turned it down. I also asked the honorable senator, by interjection, if, in his opinion, the Government ought to have issued £5.000,000 worth of notes, and he said “ Yes.”
– If the Government had the right to do so.
– As I have already pointed out, the Government would then have been overriding the decision of the Notes Issue Board, which had been invested with definite authority by Parliament. Now let us see what will happen if, as is suggested, a royal commission is appointed. In the first place, its members will have to visit all the states. It cannot be pretended that the commission could sit down in Melbourne, take evidence here, and make a recommendation. It could not come to a decision without listening to what the other states, including Queensland, had to say on this matter. Therefore. it would be necessary for its members to visit all the states to investigate the exchange position as it affects every industry. It would not be sufficient to investigate merely the wool position. Other industries, including the wheat industry, are as vitally affected.
– The proposed commission would be in much the same position as the National Insurance Commission.
– That is so, and it would have to thoroughly inquire into all the interests involved in the exchange position. The inquiry would take months. Parliament, we all hope, will go into recess some day. In all probability the report of the commission would be submitted when Parliament was in recess. Senator Foil says that this question is urgent; that it affects the forthcoming wool sales. Well, the appointment of a royal commission will not help, but the Notes Issue Board may be able to do something. As I pointed out in my second-reading speech, there is nothing in the bill that specifically deals with the exchange position, but the Government takes the view that it will provide the machinery to improve the exchange position. The board will at once inquire into the problem, and if it finds a solution or partial solution of the difficulty it will be able to operate at once. I appeal to Senator Foll, with all the earnestness of which I am capable, not to risk the passing of the bill by insisting upon his amendment.
– I will meet the Minister to this extent: I shall not insist upon the amendment if he will agree to the appointment of a royal commission to inquire into the exchange position.
– I cannot do that; I cannot, offhand, agree to the appointment of a royal commission. I must consult my colleagues in the Cabinet, but if it will help the honorable senator I shall undertake to bring his request before the Government, and submit the arguments which the honorable senator has put forward. However, I emphasize that, in the opinion of the Government, the board will be a suitable body to do all that may be required. I again urge Senator Foil to withdraw his amendment. Let us get this central bank established. Let us agree to invest the board, or, the
Governor of the bank, if Senator Kingsmill objects to the board, with authority to try to find a solution of the exchange difficulty. Let this be done at once. The matter is urgent. I know, perhaps better than any other honorable senator, how urgent it is.
– Will the passing of this bill settle the exchange difficulty?
– No, but by passing it we shall create the machinery for a central bank, which is the only authority that can deal with the exchange position and apply the remedy.
– The exchange position is deeper than that.
– It is deep, but we must provide the machinery to deal with it. A central bank will be in a much better position to deal with the exchange problem than a half dozen, or perhaps a dozen, trading banks, all handling it in different ways, and probably competing one against the other. I again appeal to Senator Foil not to risk the second reading of the bill by insisting on his amendment. It is of the utmost importance that the machinery to deal with the exchange position should be created at the earliest possible moment.
.- The debate has taken on a new aspect this afternoon. In my opinion Senator Foll has taken a very wise course. He wants some further information before, by his vote, he does anything that may have the effect of destroying the Commonwealth Bank as it is constituted to-day. Senator Pearce has emphasized the point that this question is vital in the interests of the Commonwealth. We all know that. But will the passing of this bill make any difference? It is proposed to appoint a board of directors to control the Commonwealth Bank. The Treasurer, in his speech in another place, said -
With the examples of central banking in our minds, we may now proceed to a consideration of the amendments which are proposed for improving the efficiency of the Commonwealth Bank and making it a central bank. Five main amendments are proposed, namely -
Appointment of a board of directors to control, not only the general business, but also that of the note issue.
Strengthening bank by provision of further capital.
Board to fix and publish its discount rate.
Banks to settle their exchanges through the Commonwealth Bank;
A board of directors can do no more than a general manager or the governor. I have always been opposed to the appointment of these boards. 1 0 believe in securing the services of a competent man, paying him a good salary, and expecting him to make good. A man need not have banking experience to be able to understand our present difficulties. Any student of economics knows that unfavorable trade balances prejudicially affect the exchange position, and I submit that the governor of the bank will be just as competent to deal with the exchange position as the proposed board of directors would be. I cannot claim, special knowledge of banking, but 1 listened carefully to the arguments advanced by men experienced in finance when the Commonwealth Bank Bill was under discussion in this chamber twelve or thirteen years ago. Senator Greene to-day is upholding the arguments that were used at that time, and has shown that there is no necessity whatever for any change in the present system of control. When “the original bill was being debated, the chairman of directors of the Bank of New South Wales and another member of the directorate of the same bank, both members of this chamber, ridiculed this socialistic proposal of the Labour party, and laughed at the idea of any bank being established without capital. These were the men to whom we were asked to look for guidance and assistance! We now know what value attached to their opinions, and how their views have been shattered by the experience of the bank. Students of economics within the ranks of the Labour party- Senator Pearce amongst them - showed how the bank could be established and financed, and how it could control the financial affairs of this country. The bank was established, and a governor was appointed. Perhaps some honorable senators will remember that two or three prominent bankers, who were then offered the position of governor, declined. They knew they would be practically boycotted by their union.
– That is not so.
– What I am saying is quite correct. Fortunately, Sir Denison Miller was appointed, and un- doubtedly he made good. For some reason or other, since his death the bank has not progressed so well. I do not know whether it has been restricted by the management. ‘ I am not going to impute motives; but, after what Senator Greene said on Friday, I want to know who advised the Government in connexion with this- measure. That honorable senator said the associated banks do not want the bill, and the Minister says that they do. In view of these contradictory statements, we are entitled to further information before we pass the second reading. The constitution of the bank should not be altered. Something has been said about the great financial strain which is being felt on every hand, and that something should be done to afford relief. I fail to see how the appointment of a board of directors and the collection of statistics is going to do that. The men who have been through the mill,, the men who were the victims of the bank failures some years ago, realize the value of a national bank with the credit of the Commonwealth behind it. _ When we were returned in 1910 we had a mandate to put the Commonwealth Bank Bill upon the statute-book. When a Commonwealth Bank was first suggested our opponents said that it was an attempt to nationalize banking. There is no doubt about that. At the last elections the members of the Labour party received a mandate from the -people to prevent, if possible, any interference with the Commonwealth Bank. The electors were told that -
The Commonwealth Bank was established without one penny of cost to the nation - that was Labour’s answer to those who said that the bank would swamp millions. It has kept interest lower than any other country. It has saved the nation millions in brokerage. It has made millions in profits. The prophesied failure has provided the most titanic success in Australian history, and convincing proof of the soundness of the fundamental principles of Labour. The Nationalists wish to hamstring this institution. The Labour party will extend it. It will make this financial fortress of the .nation in the stress of war an instrument of the nation’s solution of the problems that confront it to-day.
The Nationalists and their supporters wish to interfere with .the operations of this institution, whilst the members of the Labour party wish its activities to extend. No other party had a mandate such as we had from the people. I can confidently assert that if ‘the
Nationalists had been returned with sufficient numbers they would have endeavoured to crash every institution created by the Labour Administration. They have already attempted to interfere with some of the fine institutions we established, and in some instances they have succeeded. The present Government now wishes to retard the operations of the Commonwealth Bank,, which is one of the most successful institutions of its kind in any part of the world. Concerning’ the note issue, the electors were told by the Labour party that -
The proposal to issue Australian notes was derided and ridiculed by anti-Labour press and politicians all over Australia. The people were told those “ Fisher flimsies “ would soon be worthless, and “ would not buy a loaf of bread or a pint of beer.” The predictions of evil were falsified. The note issue gathered up £10,000,000 of profits that would otherwise have gone to the enrichment of private hanks, and wc again draw attention to the fact that the “ National “ Government is to-day only able to hide its annual, deficits by exploiting the note issue profits accumulated as the result of Labour policy. The Labour party, in the language of the present Prime Minister, remind the people that the national note issue was “the instrument ‘by which credit was sustained and the wheels of industry kept moving - that in the hour of war every capitalist nation was compelled to adopt that which a Labour Government in Australia established in times of peace.” The Labour party affirms that the policy of’ the national note issue - testified by twelve years of varying circumstances in peace and war - can, without inflation, be so utilized as to be an active agent in the work of reconstruction. That work must be in association with the bank, under the control of experts who are the direct servants of the nation, and the Labour party will not permit either the hank or the issne to be controlled by private financiers, whose private interests are in conflict with those of the nation.
We predicted exactly what this Government .are attempting to do. They have interfered with the note issue, and are now endeavouring to restrict the operations of the Commonwealth Bank. I wish to know why. I intend to support the amendment which provides for the appointment of a royal commission, the recommendations of which would enlighten us and show what action is considered necessary. It has been pointed out that the Australian Notes Act passed in 1910 provided that -
All money received from the -issue of notes should be invested in government securities, and the profits placed in a redemption fund tobe applied to the reduction of the national debt, not to be taken into revenue. That pro- vision was faithfully observed by all governments until December, 1920, when the “National” Government made a i-aid on the fund. The accumulated profits of the notes fund up till December, 1920, were £7,780,524, and that money has been used solely for the redemption of government inscribed stock; but, in December, 1920, without warning, the Australian notes fund was tampered with, and, since then, £2,805,498 has been appropriated and spent as revenue.
We know what a Nationalist Government did with the note issue, and as we know the intentions of the present Government in connexion with the Commonwealth. Bank we: should not allow this bill to pass without further inquiry. When I first read the Treasurer’s speech I was under the impression that there was a. possibility of some improvement .being’ made in the constitution of that institution which, in 1911, it was said, would result in the ruination of Australia’s credit. When the original Commonwealth Bank Bill was before Parliament we were kept up practically all night while the Opposition were “stonewalling “ the measure, but not one of the predictions made at that time by those who opposed it, has proved to be correct. Time has shown that the so-called financial experts who opposed the bill were totally ignorant concerning the possibilities of the Commonwealth Bank. The bill was termed socialistic legislation, but socialism to-day is different from what is was fifteen years ago. It was then, and is now, our desire to make Australia one of the greatest nations of the world, and since then Australia has had the opportunity to prove that she is likely to become a great nation. The appointment of the board of directors, instead of a governor, to control the Commonwealth Bank, will not assist to achieve that end. Australia can be made great by creating industrial institutions throughout the Commonwealth. The first amendment of the principal act is to provide for the appointment of a board of directors in place of a governor. The Labour party appointed a governor to control the bank, to whom it gave a free hand, and we are still of the opinion that the “bank can be efficiently managed without appointing a board of directors. When -the Commonwealth Bank was created financial experts said that it would never attempt to undertake the work which the private banks were handling. Instead of swallowing millions, as the bankers asserted it would, it saved the country, during the war, £6,000,000 in connexion with the flotation of loans. To float loans through the Commonwealth Bank it cost Australia 5s. 9d. per £100, whilst the charges made by the private banks averaged £2 7s. Id. per £100. It is also provided in the bill that the capital of the bank shall be increased by £10,000,000, but it is unnecessary for legislative authority to be sought to do so, as there is already power in the existing act to enable the governor at any time to raise an additional £10,000,000. Why appoint a board of directors to do something which the governor did not find to be necessary? The additional capital . is to be obtained by borrowing, and although the argument used by those who favour the proposal to make this a central bank is that it will stabilize the associated banks, those banks will not be asked to put up a penny so far as that additional capital is concerned. The additional borrowed capital will cost in interest £50,000 per annum, and this amount must be made a first charge against the profits of the bank. If the Commonwealth Bank is to be a great central bank, the associated -banks, which it will assist, should be compelled to provide some of the capital, particularly as they! are in a position -to pay handsome dividends’ and erect palatial structures in the capital cities. If the additional capital is to be derived from the profits on the notes issue the . Government will .be acting contrary to the authority of Parliament. If they borrow it from the Notes Issue Board, or from any other source, they will have: to pay probably £50,000 a year interest on it, and that will be the first call on the bank’s profits. Why should the institution be called upon to bear that absolutely unnecessary expenditure? A board of directors would not be able to do any more than a governor could do for the benefit of the bank. I am opposed to the appointment of boards to do work’ of this description. The Government proposes that the board shall represent certain special interests in the community. For instance, agriculturists are to be represented. One noted banker referred to them as “dirt “ farmers. I do not know exactly what he meant by that statement. But I ask honorable members what knowledge do farmers profess to have of banking or economics ? “What works have farmers ever published on those subjects? What contributions on them have they ever mads to the public press? They know nothing whatever about such matters. To appoint representatives of the agricultural community on this proposed board would be absolutely wrong, for they would be paid a salary for doing nothing. The bill makes no provision for them to do anything except attend certain meetings of the board and pick up their fees from “ under the pad.” They would be obliged to follow the advice of the manager of the bank. Honorable senators know that in every financial institution in the world the directors, who usually have pecuniary interests in the concern, are obliged to accept the advice of their general manager in times of stress and 8 train. If a manager is capable of advising a board of directors, he is capable of acting without receiving its sanction. The manager of a bank, or of any financial institution, should always have power to§ act on his own initiative in time3 of emergency. I believe in the principle that was adopted by Mr. Andrew Fisher when the late governor of the bank (Sir Denison Miller) was appointed thirteen years ago. Mr. Fisher said to him then, “ Make good, and we will pay you whatever salary you demand.” The Labour party always adopts that principle. We expect men who are appointed to responsible positions in our public institutions to make good, and we are willing to pay them adequately. The Labour party views with great apprehension and fear every proposal to interfere with the Commonwealth Bank. It is regrettable that the Government should have suggested the appointment of representatives of sectional ‘ interests to the proposed board. When the original bill was before this Chamber, Senator Walker moved an amendment to secure the appointment of a board of directors instead of a governor. The Government of the day refused to accept his proposal, but announced its willingness to appoint a board of advice of employees of the bank to assist the governor. The members of such a board would, doubtless, have been selected on account of the wide, practical experience they had, which entitled them to the high positions they held in the service of the bank. If that proposal had been adopted, the governor would have been assured of expert advice when he felt the need of it. But the supporters of that amendment, thirteen years ago, said that they would have all or nothing - and they got nothing. Senator Greene stated that, if this bill were passed, the bank would be prevented from engaging in ordinary banking business. The Minister in charge of the measure did not accept that contention. It is apparent, therefore, that the Government and its supporters are not agreed on what will be the real effect of the measure if it becomes law. If a board of directors is given such power that it can force the bank out of ordinary banking business, and generally restrict its operations, itwill destroy its national character. The Labour party aimed at establishing a national bank in which the people could place the utmost trust. Its objective has been realized to a large extent, and many of the promises it made in connexion with the bank have been amply fulfilled. We have been told that if we do not pass this bill considerable unemployment is bound to occur. Gentlemen who are supposed to be well acquainted with the exchange situation have said that the only way to remedy the present financial difficulties is to permit shiploads of goods to come into Australia. I believe that to allow that to be done would be disastrous. The bank would be unable to stem, the disaster or repair the damage that the adoption of such a policy would do to Australia’s credit. It is the importation of an unlimited quantity of foreign goods that will cause unemployment. We should do all that we can to prevent other countries from dumping their goods here. I am afraid that if we agree to the appointment of a board of directors, on the conditions proposed by the Government, it will have Dower to wreck the solvency of the country. I do not suggest, for one moment, that rogues, vagabonds, or thieves will be appointed; but I am firmly convinced that if we are to have a board of directors it should be composed of expert financiers. To’ appoint men ignorant of the prevailing financial methods will be to create an absolutely wrong impression, both at Home and abroad. The best. thing to do, in my opinion, would be to appoint a manager or governor, and vest him with ample authority to completely control the bank/
He should be able to sit at his desk and control the destinies of the institution just as- the Prime Minister should be able to sit at his desk and control the destinies of the country. That is what a Prime Minister should do, but it does not seem to be done in Australia at present. There is too much control by outside bodies. The Prime Minister has to listen to the crack of the party whip and the ring of the bell, and is not able to act freely in the interests of the country. In my opinion, the Government is being compelled by some outside influence to interfere ‘ with the Commonwealth Bank in such a way that it will tend to destroy instead of improve Australia’s credit. Why has the bank not extended its operations much more than it has done in the last few years? I believe it has been for fear of conflict with private financial institutions. The proposal submitted to us in this bill would, if accepted, still further cripple it. Believing that, I intend to raise my voice, and shall use my vote, in the interests of the people I represent, to defeat it. The Commonwealth Bank is one of the greatest monuments in Australia to the thought and wisdom of the Labour party, and this Government has no mandate from the people to interfere with it, nor, for that matter, to interfere with any other socialistic trading concern established by the Labour party. I intend to vote for the amendment, for I think it will be wise to hold an inquiry. If the amendment is defeated, I shall vote against the second reading of the bill, for I cannot see that the bill will in any way increase the efficiency of the bank. On the other hand, it will restrict and limit its operations and place it under the control of private financial institutions. The bankhas done what bankers said it never would do. It was said that millions of money would be sunk in it. Instead of that happening, . it has earned millions, and saved millions for the country, particularly in the war period. What it could do in time of war it can do in time of peace. I trust that it will never be interfered with by any Government.
– I should like to express appreciation of the Treasurer’s very valuable and comprehensive speech on the motion for the second reading of this bill in another place. It was not at all necessary for an honorable senator this afternoon to defend, as he did, the Secretary to the Treasury, Mr. Collins, because it is well known that that gentleman has had vast experience in financial matters. Dr. Page possesses undoubted ability and capacity, which with the experience of financial matters which he has gained as Treasurer during the last eighteen months would well equip him, with the assistance of Mr. Collins and Mr. Kell, for the composition of such a speech as that which he delivered in another place. That speech, I understand, has been responsible for a large increase in the sales of standard works on banking in the book shops of the city. I have not sought the aid of any such authorities. The few remarks which I intend to make will be based upon the experience I have gained during a long commercial training. It seems to me that the bill is an amplification of the principal act, with the idea of extending, consistently with what was originally intended, the scope of its operations. The bank, up to now, has functioned in direct business of the Government, in business associated with the Government, and in savings bank business. It is now proposed to make the bank a reserve bank, or bankers’ bank, which will fix the discount rate, discount other bank’s bills of exchange, establish a clearing-house system, and have- control of the note issue. To enable it to do that, an increase of capital is provided for, which ultimately can be brought up to £20,000,000. Control of the bank, which previously has been exercised by one man, will be vested in a board of directors. I think it is highly desirable that the capital of the bank should ultimately aggregate £20,000,000, especially as it is to be a bank of banks. The total capital need not be raised at once. When it is found necessary to increase the present capital the bank will have that reserve power upon which to draw. The capital of £10,000,000 which originally was thought sufficient, is only equal to the aggregate capital of several of the private banks in Australia. In another place it was stated that interest will have to be paid on this capital if it is borrowed. Even so, in that respect the Commonwealth
Bank will be in a far better position than that occupied by the private banks. The money will not be borrowed if it is not required, and if it is necessary to raise it a profitable rate of interest will be earned by it. An honorable senator opposite mentioned - incorrectly, I think - that private banks pay a dividend of 15 per cent, per annum. Some do, but a great many do not. The money borrowed by the Commonwealth Bank will be equivalent to that invested by shareholders in private banks, and I .suppose it will cost from 5$ to 6 per cent., compared with the 10 per cent, to 15 per cent, that private banks pay their shareholders in dividends. The objectives of the bill, and the provisions for carrying them out, should be generally acceptable. There is no reason why success should not be attained, provided that co-ordination and harmonious working with the other banks are secured. The compulsory clearing-house method may not be altogether appreciated by the private banks, but as the principle is now in operation among them, and a certain period is being allowed for them to voluntarily join in the scheme, I do not think that we can anticipate any trouble in that direction. Statistics are to be compulsorily furnished, but as the present proposal is only an extension of the existing practice, I believe that the private banks will cheerfully comply with that provision. It is problematical whether the other banks, with their vast resources, will avail themselves of the facilities offered by the Commonwealth Bank for discounting their bills of exchange. The future will disclose the attitude of the private banks in regard to that matter. At first, perhaps, little may be done in that direction, but growth of the practice is certain as the facility offered becomes appreciated, and as circumstances lend themselves to the adoption of the practice. The notes issue power will require very careful handling, but it will be a great factor in securing the financial elasticity so essential in a country like this, where periodically large sums of money are required to shift seasonal primary products. This will, no doubt, have an important bearing on the difficult matter of exchange, which is at the moment against our exports. I have ‘heard a number of sug- gestions, learned and otherwise, to overcome this grave difficulty, but so far am not convinced by any, except the rather impracticable one of suspension of government borrowing in London. The present position is due to the swing of the trade pendulum. About three years ago the swing was in the other direction with a vengeance. Importers whose commitments in a single bottom would run into twenty or thirty thousand pounds, could get no banking facilities beyond a few paltry hundreds of pounds. As a matter of fact, the imports have generally to bear a fair “ wad “ of exchange; but now, because the exports have to take their turn, the grievance goes up to high Heaven in its intensity. Of course, it will be urged that in the case of imports the exchange is added to the cost of the goods. So it is. But, on the other hand, is not our principal export item., wool, bringing prices to-day which make an exchange charge of .2 to 3 per cent, a mere trifle ? I prefer to think that this question willright itself in a reasonable time! That view is held by many leading bankers and business men in both Australia and London. The progress of the Commonwealth Bank has been great, due largely to operations arising out of the war, and the. post-war activities of the Government, and due, also, no doubt, to the fearless policy of the late Governor, who, however, candidly admitted to me that the war had advanced the bank’s progress by at least 25 years. Now its progress has received a check, and I think that last year’s profits would not compare favorably with those of some of the private banks. It is proposed to continue the present ordinary banking and savings bank business, as well as to reach out for the new objective of a banker’s bank. This policy suggests some difficulty, as it will bring the Commonwealth Bank into competition with the .trading banks. I learn, (however, that the proposal is regarded with equanimity by the other banks. There is a splendid precedent for it in the Bank of France, and to a lesser degree in the Bank of England, which function dually in this way. It has been said that the Commonwealth Bank’s ordinary business is not important, but I think that statement is not correct. In my own district the bank does a very fine mercantile business, and at the time of exchange stress that I previously mentioned, by being ‘able to offer better facilities in London, secured several of the best accounts in the city. An error of judgment, to my mind, has been made in the detail of the governing body. The title of Governor was all very well when only one man was responsible for the conduct of the bank’s operations, but in view of a complete board of directors being contemplated, the aspect is different. In other respects the composition of the board is satisfactory, provided the right men with the necessary experience, business acumen and knowledge are obtained. A further mistake, in my opinion, is the proposal to place the Governor on the board, with the power to vote. He is really the general manager of the bank, and as such advises the directors on matters of policy, advances and so forth. That his recommendations will be largely adopted goes without saying. It is a most unusual thing for the general manager of a bank to have a seat on the directorate. It is against the practice of banks and important institutions in this country, and, indeed, elsewhere. What sort of a position is the chairman of directors - and, indeed, the other directors - to be placed in, with the executive officer of the- bank holding a seat on the board and voting on his own proposals? The position being given to the Governor under the bill is really that of managing director, which officer is, obviously, usually chairman of directors, combining in the one person the two offices. Again, if appeal is made by aggrieved members of the staff, there is the absurd position of the Governor adjudicating on a case with which he may be intimately connected. My suggestion is that the Governor and Deputy Governor should be known, respectively, as the general manager and assistant general manager, and that the former should not have a seat on the directorate. The interval of a month between meetings of the board, which seems to be contemplated, is altogether too 10ng. -Meetings should be ‘held at intervals of not less than a fortnight, or indeed a week, to do justice to the work and the responsibilities involved.
– If that were insisted upon, it would not be possible to secure the services of. men in the different states.
– I know that is the difficulty.
– There will be’ a small executive at the head office of the bank
– That provision will- meet the objection raised by Senator Greene. The advisory or local boards are, to my mind, comparable to a fifth wheel in a coach; they are unnecessary. It has been urged that the number of private banks is decreasing in Australia. That is true, but, instead of being a disadvantage, it is to the good, as the merges and absorptions have removed some of the smaller and strengthened some of the larger institutions. It will not be a bad thing for the Commonwealth Bank to continue its ordinary business, as the independent competition of a - government bank will have a healthy influence and be a check on rates of interest and exchange charged by the private banks. H the bank would also adopt a liberal advance policy towards the man on the land, it would be doing good developmental work,’’ and would achieve, to some extent, the former objective of the Federal Treasurer. I should like to pay a tribute to the great assistance rendered by the trading banks in developing the pastoral, commercial, and manufacturing interests of this country. I feel sure that they will co-operate and co-ordinate with the Commonwealth Bank for their mutual interest and the benefit of the whole community. I confess that the proposal to have this matter investigated by a royal commission attracted me when I considered the gorgeous trips that might result from its appointment. In the framing of the bill the Government has- drawn upon the principles of similar banks in England, France, South Africa, and the United States of America, and I visioned a royal commission visiting all those countries to obtain first-hand information. The delay in such a case would be suicidal. I think it’ has been demonstrated that there is no. occasion to appoint a royal commission to- deal with this matter. I am surprised that such an amendment should emanate from an honorable senator sitting on this side. Had it been moved- by an honorable senator opposite, I should have received it as a matter of course. My intention is- to oppose the amendment.
– Who would be affected by the delay ?
– Senator Foil himself showed that the wool-growers would be affected by the delay. They would not be able to finance their wool sales.
– There would not be any delay.
– If the commission visited other countries, delay would be unavoidable.
– The Prime Minister in another place said that arrangements had already been made which would obviate that difficulty ; that the Notes Issue Board would make an advance sufficient to meet present needs.
– We already have a Navigation Commission and an Insurance Commission. A commission on banking would practically remain in existence until the crack of doom.
– The general impression seems to be that the bill is of the utmost importance to the* people. We on this side readily assent to that contention, and we therefore believe that we should support the amendment so that additional light may be thrown on the subject. To be fair to the electors, Ministers should have intimated, when on the hustings, that there was likely to be some alteration of the Commonwealth Bank Act, but the Bruce-Page alliance left the people in ignorance. Ministers said nothing about the proposed alteration of the financial system, except that the Treasurer (Dr. Earle Page) made reference to the need for a rural bank. As all honorable senators are aware, banking has played an important part in the world’s history. It had its origin probably in the fact that in olden times people brought their coin to the bullion merchants, who placed it in their vaults, and in return gave their customers receipt notes or certificates, which they were ‘able to use as legal tender. The persons in whose care the money was entrusted - who kept these safe deposit establishments - soon realized that there was more to be made out of the business than merely receiving a low rate of interest. Seeing that a large sum of money was never called for by the customers, they decided to lend the deposits and earn further interest upon them, thereby acquiring additional capital. They saw, for instance, that if there was £50,000 in coin lying in their vaults, they could issue up to £250,000 in notes at interest. A balance-sheet would then read -
In that way, the banking business commenced, and it was a dishonest beginning. It was discovered by the safe deposit proprietors that their notes did not immediately come in for redemption, but often circulated outside for many months. Consequently, like the modern banks, the ancient safe deposit proprietors issued at least five notes for every sovereign in their vaults. Banking has now ceased to be a business ; it is a science that amounts to systematic swindle. Mr. Gilmour Brown, giving evidence before a royal commission on banking, appointed by the State Government of Victoria, remarked that he had been a bank manager for over 20 years. He told the commission that the capitalist banking system was a disgrace to civilized communities, that it placed in the hands of a small committee a power greater than that of a Government ; that the Bankers’. Association of Australia was a close corporation, bound together by the cohesive power of plunder; and that they levied direct taxes on the enterprise, industry, and production of the community, greater by far than that levied by any Government. The witness further stated that they controlled our reserves, our rate of interest, and our credit, and possessed a more absolute jurisdiction over our livelihood, our savings and monetary future, than the Government; in fact, they had a currency monopoly, a corner in credit. According to that statement, banking is no more characterized by honesty now than it was 2,000 years ago, when Christ turned the money changers out of the temple at Jerusalem, and told them that they had made His Father’s House a den of thieves. The Government claims that it wishes to ‘ make the Commonwealth Bank a national bank. What Ministers mean by that is best known to themselves. Maurice Patron, speaking on the nationalization of banking, stated, in a report on the Bank of France, that it was difficult to understand why any undertaking of such universal interest should be left to private enterprise. He went on to say that a national bank, if it was to be a purely national institution, must control credit, or fail in its duty. The Swiss Minister of Finance remarked that a national bank, supreme over and ultimately absorbing all private institutions, “ represented the most powerful bulwark for our credit, the security of our people, and the resources of our country.” Under the bill before us, the Commonwealth Bank would not attain that ideal. It was claimed by the Treasurer that the Commonwealth Bank was given greater power under the bill than it had previously possessed, for the Government wished to make it a bank of issue, deposit, exchange and reserve. I point out that provision was made in the original act for those activities. I deprecate the Treasurer camouflaging the object of the bill by endeavouring to make the people believe that these are new powers that it will confer on the bank. It was stated by Senator Greene that members of the Opposition should readily accept the bill, recognizing that it was a means of realizing the aim of the Labour party - the nationalization of banking. Members of our party, however, are suspicious of the measure, for we recognize its ulterior motives. Senator Greene went on to say that his party did not want the bill, and the private banks did not want it. I can assure the honorable senator that the Labour party is not enamoured of the proposal. In our belief the private banking institutions are its sponsors. If itwere not so, type could not be found large enough to’ express adequately the howl of indignation that would be set up in the press. “Whether the bill would result in bringing about the aim of the Labour party depends on two considerations - the personnel of the board and the forcing hand behind it. Under the bill the board is to be all-powerful. It will seemingly have more power than the Government, because it will be free from political influence, and can shape its policy as it likes. I contend that such wide powers should not be given to any board. This, or any other Government, should shoulder the responsibilities that belong to it, and should not shield itself behind a board. I wonder that the Go vernment is not sick to death of the never-ending procession of boards that have been appointed of late years. This bill presented a golden opportunity for the Treasurer to carry out the pledge he gave to the people at the last election, when he stated that in the interests of the primary producers his party would, if returned to power, establish a rural bank of credit, by which money would be ad- vanced to the men on the land at favorable interest rates. What has now become Of the rural bank?
– Members of the Country party are the best friends honorable senators opposite have.
– The honorable senator must not attack the Country party.
– It has just given the Opposition a new senator. What more do they want?
– So it has. I agree with Senator Payne that the Country party proved to be our best friends in the State Parliament yesterday, when it gave us another senator. The Labour party realizes that a rural bank is essential in the interests of the primary producers. The Treasurer stated on the hustings that the men on the land must be protected, but apparently he has forgotten all about his promise.
– He said he is considering it. It is now under consideration.
– When the Treasurer had the opportunity to make provision for a rural bank he failed to do so, and the man on the land will want to know why he did not fulfil his promise. Honorable senators opposite talk about the need of population for the defence of Australia. What constitutes the best defence if not the people of a country? If we want Australia to become a greater nation from a population view-point, our land must be thrown open to the people, who must be encouraged to remain on their holdings, instead of drifting back to the big cities of the Commonwealth.
– What has all this to do with the bill ?
– It has everything to do with the rural bank about which the Treasurer was speaking. If our primary producers are to be successful, they must be in a position to borrow money for the development of their industries at a cheaper, .’rate than’ is possible to-day. They must not be fleeced by private trading banks, aa has been the case in the past. The present i3 a golden opportunity for this Parliament. The finances of the world are in the hands of a comparatively few men. These financiers control the banks. The banks, in their turn, control loan flotations, conversions, &c. They . inflate currency at- will. If they want to establish a new industry, they can do so ; if, on the other hand, they want to retard industry, they withhold financial support. These men, who govern the finances of Australia, masquerade as the original owners of various enterprises. They control our imports and exports, our shipping companies, our insurance companies, and various other financial institutions. In Australia there is no power greater than that exercised by the private banking institutions of the Commonwealth. By their control of our newspapers they retain the services of brainy writers to influence public opinion in favour of private enterprise. This is no laughing matter. These men, who, through their- newspapers, influence public opinion,, control armament manufacturers, and by this means the whole business of warfare is worked on and played with. The Minister (Senator Pearce), in introducing the bill, emphasized the need of a national banking institution such as eixists in the United States of America. Why refer to the United States? What happened there when President Roosevelt introduced a measure to deal with trusts and combines ? When fines- were imposed on Armour, Carnegie, Morgan, and others, they simply cornered all the gold in the United States, issued their own paper currency, and defied Roosevelt. Every private banking institution that refused to fall into line with these great trusts was squeezed out of existence. President Roosevelt, instead ‘ of asserting his authority, agreed that, for the time being, the anti-trust legislation should stand in abeyance, and the fines imposed on Armour, Carnegie, Morgan and Company were not collected. That incident, proved to the civilized world that the financial institutions of a country are the substance of government, and Parliament merely the shadow. If the position in Australia is to be the same as in the United States, then the “ people of this country will be far better without this legislation. Turning now to England,, the Minister emphasized that we should endeavour to make the Commonwealth Bank something akin to the Bank of England. As a matter of fact, the Bank of England is no more a national institution than is a bus in our city streets. If the Minister does- not know, he should know, that the Bank of England is a. joint stock institution, pure and simple. Of what value has it been to England 1 What happened upon the outbreak of war ? Four days prior to the declaration of war the private banks in England closed their doors. “ Payment suspended “ was the notice displayed outside their doors. So serious was the position that Mr. Lloyd George called the heads of the various institutions and the Stock Exchange together and laid before them a proposal that the Government should issue £1 and 10s. Treasury notes to re-establish public confidence. When asked what would be the backing of the notes, he said, that the paper would have behind it the credit of the United Kingdom. During the four and a half years of the war the total amount of gold in the Bank of England was less than £60,000,000. The war cost Great Britain £10,000,.000;000.. How could the bankers of England subscribe to British war loans? Since they had no credit other than that guaranteed by the British Government, how could they honestly subscribe to war loans? The banks, after confessing, their own bank:ruptcy, actually lent the British Government £10,000,000,000, simply by taking Government Treasury notes and lending them to the Government, charging interest and compound interest on money which had previously been made available to them by the Lloyd George Administration. That is what happened in England. This great Bank of England which Senator Pearce talks about, allowed the people to be fleeced every time and all the time.
– It enabled the country to carry on during the war.
– It simply used money made available by the Government and got interest upon it.. Do honorable senators contend that the British Government could not have done all this without the aid of the banking institutions? Had the Government been an honest custodian of the people’s purse it would not have allowed the private banking institutions to make £200,000,000 out of the. transaction whilst the best manhood in the world was fighting on the battlefields of Europe to make the world safe for democracy.
Silting suspended from 6.30 to 8 p.m.
– I desire on behalf of the Cabinet to announce that the Treasurer (Dr. Earle Page) to-day met the representatives of the banks who submitted a proposal that an amendment should be made in the bill to provide that the board shall have the power to issue notes to the banks in Australia against securities or notes held by the banks in England. The Government has agreed to accept this amendment, and the representatives of the banks have expressed themselves as satisfied.
– Mr. President-
– Order! The honorable sena.ator was not in attendance when lie Senate resumed, and has lost his right to continue his speech.
– I understood that Senator Hoare was about to continue his speech.
– Is the honorable senator raising a point of order?
– No, I intend to continue the debate. I understand that we are still debating the second reading of the bill.
– The honorable senator is entitled to speak to the motion for the second reading and - also to the amendment.
– In common with other honorable senators on this side of the chamber, it is my intention to oppose the second reading of the bill. At an interstate Labour conference which assembled in Brisbane in 1908, and at which you, Mr. President, were present as a delegate from the Australian Labour party, Mr. King O’Malley submitted for the consideration of the congress a scheme embodying the establishment of a Commonwealth Bank. At that gathering a sub-committee was appointed to consider the scheme, which consisted of Senator Lynch, Mr. Holman, ex-Premier of New South Wales, Mr. J. C. Watson, an exPrime Minister of the Commonwealth, and Mr. MacGowan, an ex-Premier of New South Wales. These men deliberated arid brought back to congress a report in which certain amendments Ware suggested. There is no doubt that as the result of their deliberations, it was determined to place .the establishment of a Commonwealth Bank upon the platform of the Australian Labour party.
– Our job was to deal with the financial policy of the Labour party.
– I admit that. Perhaps I may be permitted to repeat what honorable senators on -this side have said, that as a result of the operations of the bank, the Commonwealth was saved during the war in commercial brokerage, and in connexion with the flotation of loans, no less than £6,000,000. I may also be guilty of repetition when I say that the Commonwealth Bank was the sheet-anchor of the Commonwealth during the war, and that if it had not been for its existence prior to the outbreak of war, Australia would havebeen in as serious a financial position as she was at the end of 1893. When war was declared in 1914, the Bank of England closed its doors in order to ascertain exactly where it stood,, but the London branch of the Commonwealth Bank remained open. When the Collins-street office was opened for business, the then Prime Minister of the Commonwealth attended the opening ceremony, and made the first deposit of, I think, £1. Twelve years have elapsed, and in the interim, branches of the bank have been established in almost every part of the . British Empire. Although the bank was established without capital, the profits to date amount to £4,500,000, whilst the profits from the note issue approximate £11,500,000, making a total of £16,000,000. The title of the bill should be amended to read “ The Commonwealth Bank Burglary Bill.” The burglars are the agents in this Parliament of what is termed “high finance.” When the original bill was before the Senate, I remember the howls of derision with which it was greeted!, and the press criticisms which were levelled against it. I do not know of any; press organs, apart from those which represented the views of the Labour party in those days, which did not threaten that so soon as the then Labour
Government was defeated, the Commonwealth Bank Act would be repealed. Many governments have been in office since then, but they have not dared to touch the structure erected by the Labour party. Since the Commonwealth Bank Act has been in operation, the following governments, apart from. Labour Administrations, have been in office: - The Cook Government, from 1912 to 1914; the National Labour Government, from the end of 1916 to the beginning of 1917; and the Hughes-Cook Government, which was formed in February, 1917, and met its doom at the hands of the electors in 1922. The National Labour Government assumed office at the end of 1916, after a “ split “ had occurred in the ranks of the Labour party, and a composite ministry was formed, under Mr. Hughes and Sir Joseph Cook, in February, 1917. It is to the credit of the National Labour Government that it did not attempt to interfere with the edifice which some of its members had assisted to build. Other administrations have followed, but it has been left to this Government to attempt to destroy the structure, the foundations of which were so. carefully laid. The Government and their supporters are acting at the bidding of their masters outside.
– Who are they? Senator NEEDHAM.- Their financial masters.
– Who are they?
– Those who helped to put the honorable senator and his friends where they are to-day. Senator Drake-Brockman has just returned from a conference at which he has been endeavouring to placate his masters outside, who are anxious to place him and his party in an awkward position. Senator Reid was also present at the Labour congress in Brisbane which I have mentioned, and he must surely realize that this is an attempt to destroy the structure which he helped to erect. The Commonwealth Bank has not yet been destroyed, and its useful existence will depend upon the votes of the members of this Parliament. The Labour Government which was responsible for the Commonwealth Bank also established the Australian Navy, the Commonwealth Woollen Mill’s-
– The Commonwealth Woollen Mills are not mentioned in the bill. I ask the honorable senator to debate the question before the chair.
– I do not say that the Commonwealth Woollen Mills are mentioned in the bill.
– That is all the more reason why the honorable senator should conform to my ruling.
– You have not given a ruling, Mr. President.
– I have directed the honorable senator to discuss the bill.
– You, sir, generally allow an honorable senator a minute or two in which to lead up to a point. The Commonwealth Clothing Factory-
– The honorable senator must not evade my ruling in that way.
– I have not the slightest intention of evading your ruling, although you always seem to have the idea that I am attempting to disregard your directions. I know that I could not do it. The Small Arms Factory and the Harness Factory1-
– I ask the honorable senator to obey my ruling. When I intervened he was proceeding to enumerate the institutions that Labour had established. What the Labour party has done in the matters mentioned by him has nothing to do with the bill. He may deal with any subject relevant to the bill; but as the honorable senator knows, to go outside the scope of the bill is not in accordance with the Standing Orders.
– I have not the slightest intention of running counter to your ruling, sir. I was simply trying to connect the Commonwealth Bank, which this Government is attempting to destroy, with other national institutions established by the Labour party, which still exist. All those institutions were highly important during the war, and I submit that they are not less so now. I will admit that the Commonwealth Woollen Mills is not now part of our national equipment, for it was sold. The Government now proposes that the Commonwealth Bank shall be sold. I use the word “sold “ advisedly, for I consider that if the Government proposal is agreed to, not only will the Commonwealth Bank be “ sold,” but also the people generally will be “sold.” The Government wishes to place the bank in the maw of private enterprise. Its policy, of course, is to support private enterprise as against anything in the nature of national control. If the bill’ becomes law, the Commonwealth Bank will be .given over to private enterprise. I shall reserve my remarks on other aspects of this question for a subsequent occasion. There is an amendment before the Senate, and in speaking to it I do not think I have sacrificed my right to speak on the second reading of the bill.
– If the honorable senator concludes his speech now he will not have the right to speak later on in the second-reading debate.
– I shall take the risk of that, sir-, and will conclude by saying that I shall support the amendment. If it is defeated I shall vote against the second reading of th.e bill.
– It is quite clear that a bill of this kind is very important. Any measure which has for its object an interference with the financial arrangements and resources of the Commonwealth, whether prejudicially or otherwise, must necessarily be considered one of first-rate importance. I welcome the bill, but I do not share the views which have been expressed by some other honorable senators who have spoken in this debate. It is a measure which, in the natural order of things, had to be introduced. The right of the Commonwealth Government to embark on banking activities is no longer in doubt, although some honorable senators seem to think it is. The matter was effectively settled when the original Commonwealth Bank Bill was passed in 1911. Notwithstanding that, some honorable senators appear to think that the Government has travelled outside its proper sphere in dealing with it. The standards ‘ governing the spheres of Government seem to be as numerous to-day as brands of tea or whisky. The right of the Government to engage in banking operations was settled even before the original Commonwealth Bank Bill was passed; it was determined when the terms of the Commonwealth Constitution were fixed. Honorable senators will perhaps forgive me if 
I accept the task of refreshing their memories on the constitutional view - of this matter. When our Constitution received its finishing touches in Sydney, after it had been discussed in Sydney, Melbourne, and Adelaide, it was solemnly and deliberately agreed that banking should be one of the declared functions of, the Commonwealth Government. May I remind Senator Greene, and others who subscribe to his views that at that time the Premier of New South Wales used significant words to the effect that the idea of the; state engaging in banking business was becoming popular in this country. It can hardly be said with hope of general acceptance, therefore, that the Commonwealth Government travelled outside the proper scope of its activities when it first engaged in banking operations, for it simply carried out one of the functions which was deliberately allocated to it in the Constitution.
– I do not question that.
– If I correctly interpreted the honorable senator’s remarks, he said that there was still a doubt as to whether the Labour Government should have been allowed to embark upon the banking business.
– No, no.
– I hope the honorable . senator will pardon me if I have misinterpreted his words, but I understood him to say he was opposed to the Labour party .carrying out its avowed intention of legislating to give the Government power to engage in the banking business.
– I said I was against the nationalization of banking,- which is a very different thing.
– Banking includes the power to incorporate banks, as well as the power to engage in the banking business. The American Constitution, as we know, provides power for incorporating banks, but not for the nation to engage in the banking business. Even the power of incorporating banks was not originally thought to be in the Constitution of the United States, but in consequence of a decision by Chief Justice Marshall, it is agreed to-day that that is provided for. So much for the historical aspect of the subject.
It cannot now be contested successfully that we have no right to engage. in banking, for we are already in the business. The object of this bill is merely to develop and amplify the resources of our established bank. Before I make any direct reference, to the bill, I must admit that I am somewhat disappointed by the opinions expressed by the Leader of the Opposition (Senator Gardiner) and his colleagues, and also by . Senator Greene. Although the Leader of the Opposition and Senator Greene approached the subject from directly opposite points of view, they arrived at a similar conclusion. One said that the bill was conceived in the interests of the bankers of this country, and the other said that the banking interests were not1 consulted in regard to the basic principles of the bill. Both the honorable senators agree, however, .that the bill is bad - as bad as bad can be. They did not mince words about it. In fact, I might apply to their remarks “what was said of Dr. Johnson’s leg of mutton, namely, that it was “ illbred, ill-fed, ill-cooked, and ill-served.” That is my judgment upon the views of the honorable senators to whom I have referred. I might also take a hint from another classical authority, as I have been encouraged to do. The members of the French Academy of Science, having at one time undertaken the task of compiling a dictionary, were faced with the necessity of defining what a crab was. Before calling in the most distinguished authority available to them, Monsieur. Couvier, tfheythey proceeded to formulate a definition for themselves. . It was as follows: - “ The crab is a fish, it is red, and it walks backwards.” Having gone so far they called in Monsieur Couvier and consulted with him. He put on his .spectacles, read their definition, and then said, “ Except that a crab is not a fish, that it is not red, and that it does not walk backwards, your definition is admirable.” I apply that remark to the definitions of this bill which have been given by Senator Gardiner and Senator Greene.
– The honorable senator should be an authority on crabs.
Senator -LYNCH. - By way of com.parison, I am expressing my opinion of their opinions, but barring the luxury the Leader of the Opposition too often supplies, I am sorry to ‘have to say that, although we are always pleased to listen to Senator Gardiner’s remarks on matters that come before the
Senate, he, at times, destroys to a large extent the usefulness of his comments by going out of his way to tip his tongue with the bile of party bitterness. He uses hisundoubted talents to impart to many of our discussions an acerbity which materially lessens the value of his contributions to our debates. I say advisedly that it is a great pity that the honorable senator should blur in this;, way the pictures he is so capable of painting. Adverting] for a few momentsto the addresses on the bill which havebeen delivered by honorable senators generally, I must confess that they haveplaced me in a quandary. I am unableto reconcile some of the speeches which have been-made from the Opposition sideof this chamber with speeches on the same measure which were delivered by members of the Opposition in another place. Some honorable senators opposite tell us that the passing of this bill will destroy the bank, and, although they have said’ that they are desirous of developing thebank, they have indicated in the samespeech that they are willing to vote in a. way that would wipe it out of existenceSenator Gardiner’s colleague in another place stated that the Government intended to strangle the bank. Yet Mr. Charlton, his colleague in authority, was. not favorable to the proposal to increase the bank’s capital in order to make possible -an enlargement of its functions. It is extraordinary to find such diametrically opposite views expressed by members of the same party. The Labour party accuses the Government of an intention to strangle the bank-, but at the same time refuses tovote for an increase in its capital.. Who is the greater strangler in that case- - the honorable member who would not agree to the giving of a penny piece morethan was stipulated, or the Government,, which is prepared to double the resources of the bank to enable it to effect its purpose ? On this bill the declaration hasbeen repeatedly made, even so late as this-. ‘ evening, by honorable senators opposite, that the Government is merely doing thebidding of its paymasters outside. That is a very sweeping statement to make.
– Senator Crawford mentioned this evening the instructionsthat had been received from the private? banks. . Senator LYNCH. - We should strip our discussions of the constant innuendoes - this attempt to heap upon a responsible political party all the imputations that honorable senators’ puerile - I was going to say poisoned - imaginations can conjure up. Such a form of debate is belittling to the dignity of this Parliament and the importance of this hall of public opinion. When one. finds men who are prepared to cast aspersions upon the character of a political party, and its individual members, can one wonder that the parliamentary institution is being brought into contempt?
– The honorable senator has been the worst possible offender in that respect since I have known him.
– I have not. I contradict Senator Gardiner, by saying what I have frequently stated before, that there are in his platform many planks that I would go a hundred miles over a thorny track to support; but there are also many planks that I would go a thousand miles over a more thorny path to oppose. The Leader of the Opposition says, “ My duty is to oppose.” As one who claims to be Australian born, and to possess all the advantages that :thereby accrue to him, he misconceives his position when he contends that nothing but right can emanate_from his side, and nothing but wrong and corruption from this party. We are here to do the best we can for this country, whether we be Australians by adoption or by nativity. I yield to no one in my love of .and respect for this country. I regard it as the best country on God’s earth. When we are constantly taunted with this unadulterated nonsense that honorable senators opposite are the embodiment of everything that is pure in the public life of this country, that they are the closest approach to human perfection, while we are the reverse, it is time we took a stand against it. An honorable senator defiles and besmirches his position in this chamber when he casts unwarranted slurs upon honorable senators who are here by virtue of as independent a right as ever enabled him to come here. The other evening I demonstrated to the Leader of the Opposition that I am a thousand -times more independent than he is, because I pay my fare, while the hat has :to be sent round for. him. I am more independent than he or any honorable senator who sits behind him is.
– I should like to know’ exactly what bearing this has on the bill, in view of the ruling that was recently given by the President.
– The honorable senator should keep silent.
– .Order! This debate is degenerating into a squabble. The honorable senator has strayed from the question.
– You were very slow in finding that out.
– Order ! I call upon Senator Needham to withdraw the reflection upon the Chair.
– You pulled me up because I referred to the Commonwealth Woollen Mill. You have allowed this man to make accusations without pulling him up at all.
– Order ! Will the honorable senator resume his seat? The honorable senator has ‘ repeated the offence by again reflecting upon the Chair, I call upon him to unreservedly withdraw and apologize.
– 1 do both.
– I was leading up to the point that objection has been lodged against the bill on the ground that it was conceived, designed, and placed before us in a spirit of subservience to and agreement with our masters outside - those people who are almost charged with being engaged in a marauding occupation because they are carrying ou the banking business of the country. If they are the embodiment of everything that is detestable, if they are financial cormorants, why has no serious attempt been made to deal with them in the past? The men who level that charge belong to a party that at one time or another was in power in the state sphere in four or five states; but while the saw-miller, the bricklayer, the butcher, the baker, and even the fisherman were brought to heel, those Labour Governments never once tackled the banking interests. Comparing the neglect of that power with the present declaration of the Labour party that the banking interests ought to be curbed, I am naturally driven to the conclusion that the attitude being. adopted to-day is nothing but humbug. First things being first, the Labour party should have tackled these evils in the state sphere. Had it endeavoured to do so it would have been entitled to hurl these charges. This neglect of big things and tackling of trifles reminds one of the old rhyme -
Why persecute the man who steals the goose ,From on” the common,
And let .the greater felon loose Who -steals the common from the goose?
I thoroughly believe in this bill, because it is in keeping with the natural evolution that has been going on in Australia for a number of years. We started, it is true, as a young, a struggling, a pioneering community. We advanced by slow and steady stages until now . we have arrived at the stage when it can be declared that we . are fairly well organized industrially and commercially. The transport industry furnishes a typical example. At first that industry merely sailed its ships. Later it obtained control of mines, and engaged in all kinds of commercial activity. To-day it is highly organized. So also are some of our primary industries. I remind Senator Greene that at Byron Bay there is now a butter factory which superseded the former arrangement under which the individual producer was thrown upon hisown resources. The butter producer now reaps from organization the full result of his labour. That previously was denied to him. So it is with banking. Banking, that is state banking, if it means anything, means the handling of the financial resources of the country. We know that, different standard works describe banking in various ways, but an ordinary definition which is sufficient for all practical purposes is that it is an activity by which the financial resources of a country are handled to the best advantage for the people. In the past, when banking organization lagged be: hind and we did not have the central bank that is now proposed, Australia passed through very serious crises, one of which was of sufficient magnitude to affect adversely every man and woman in Australia. I refer to the early nineties, when the banks were not so well organized as they are to-day, and when, for various reasons, they conducted their business in such a loose fashion that they were responsible for an unmeasured amount of hardship and misery in Aus- tralia. I do not want to labour that point. I merely want to say that, in order to avoid the pitfalls of the past, in order to make use of the financial resources of this country, and in order to apply those resources towards bringing together the producer and consumer and marketing our surplus products overseas, a bill of this description is necessary, because it makes provision for the establishment of a central bank. We are only travelling along the road that has been travelled by other countries. Mention has been made in this chamber and in another place of what other countries have done and arcdoing. Their efforts have been directed towards organizing their financial resources so that every section and every industry, great and small, shall benefit. We know what has happened in the United States of America ; we know what has happened in England since the- Bank of England was founded in the early part of the eighteenth century; we know what has happened in France and in Germany. All those countries have a central bank, which serves the same purpose that the central bank .which it is proposed to establish in Australia is intended to serve. In Germany before the war the central bank was vested with such power and authority that it really did the work of the Government. Even Japan, which rose from semi-barbarism only a few short years ago, has established a central bank. ‘ The Treasury advanced £500,000 towards its capital, and the balance was contributed by other people. For what purpose? For the purpose of’ accomplishing the end that this bank is intended to accomplish,- and doing the work that is done by a central bank in every civilized and advanced country. Yet opposition is shown to the proposal in this chamber and elsewhere. Why? Is it because this action was contemplated by the present critics of the bill, and they are jealous because the Government has forestalled them?’ I have said all I want to say in reference to the origin and the subsequent perfection of this idea in every country professing to have any claim to an advanced degree of civilization and industrial and commercial progress. In one thing we shall certainly not be backward; we are placing the bank in a strong financial position, and providing for its careful management. According to one critic, an avowed object of the bill is to trench upon the preserves of the private banks. If that will lead to an advancement of the public interest, I am in favour of it. I go further, and say that if the Govern-, meat has consulted only the bankers it has neglected its duty, unless at the same time it has preserved the interests of the general community. It is patent that the bankers deserve to be consulted. They pay taxes, just as any one else does. When it comes to a question of adopting their advice, it is another matter. It is quite clear that if the Government consulted the mouthpiece of any given activity as to how a bill should be drafted, it would be asked to draft it in the interest of that activity. That is quite natural. There is hardly a section ill this country, or in any democracy in the world, which, if given the chance, would not make laws in its own interest to the exclusion of the interest of other people. If the Government decided to bring in a companies bill, and asked the promoters of companies to furnish their advice, it is obvious that they would recommend a bill that would be decidedly in favour of the company promoters, and of very little benefit to anybody else. Similarly, if a number of dentists were called in to assist in drafting a dentists’ bill, the measure would be mainly in the interests of the gentlemen of the forceps. If the advice of bankrupts was sought on a bankruptcy bill they would naturally recommend legislation in the ‘direction of making the laws of bankruptcy so easy that I venture to say it would result in turning the commercial affairs of this country upside down. But just as there are other people to consider besides bankrupts, company promoters, and dentists - I refer to the broad masses of the community,’ whose interests must be conserved as much in this case as in any other - the Government is justified in consulting the wishes of the private banking institutions, but it is not incumbent upon it to accept their advice. The private banks deserve consideration in proportion to their importance in the community ; up to that point, and no further, will I give them consideration. Public interests must be first and foremost, and I take it that the consummation of those interests is the purpose of this bill. Not only have the interests of the private banks not been jeopardized by the existence of the Commonwealth Bank, but, on the contrary, their profits have been enhanced since they have had to meet the competition of the Commonwealth Bank. A report by Edward Dyason and Company, of Melbourne, shows that from 1914 to 1923 the ratio of profits to capital and reservesof the private banks increased from 9.04 per cent, to 9.19 per cent. Seeing that the Commonwealth Bank has not done injury to the private banks, what harm will come to them by developing its functions on such a scale as will benefit not only the people generally, but also the financial interests of the country and the people dependent on those interests. That appears to be the whole purport of the bill. Senator Greene contended, no doubt in a perfectly conscientious way, that the Government had no right to extend the functions of the Commonwealth Bank. My reply is that” the establishment of a bank, owned and controlled directly by the people, simply amounts to the use of the credit of the people for their own benefit. If that credit is superior to that of any private institutions, who, I ask, has the best right to enjoy the benefit of it? The natural answer is that those entitled to the benefit are those who are creating the credit, and they alone should enjoy the fruits of it. It has been said that it is not the proper function of the state to take a hand in banking, but that it should be left to private enterprise. I do not agree with that contention. Although, unfortunately, of recent years, I have had my faith sadly shaken in socialistic enterprises of a kind, I have not lost faith in the Commonwealth Bank. As one who in the past took an active part in the creation of certain socialistic enterprises, I have been sadly deceived, in coming to see their ghastly failure. They- were originally intended to confer a benefit upon the whole of the community, and particularly the employees in whose interests they were expressly brought into being; but, alas, our calculations went wrong in those cases.
I welcome the bilL for it proposes to strengthen the Commonwealth Bank and make it of great benefit to the people and the industries of Australia. If it strengthens the financial interests of this country, and averts catastrophies such as overtook us in the early nineties, it will undoubtedly be beneficial. We require an institution so strong that it will stand four-square to all the winds that blow, firmly embedded on a sound foundation that will enable it to sustain the country’s credit when its interests are in jeopardy. The Commonwealth Bank has already fulfilled that function. It has been said that it is not the province of the Government to interfere in banking, and that, even if it were, it would be detrimental to the public interests for a Government to do so. I dispute that contention, and I could refer to many historical instances where the power of the Government has been invoked in the interests of, not only the people, but the banks themselves. Take the case of the Bank of England: that stock example that is held up to the world as an agency whereby the finances of Great Britain are controlled and used for the benefit of the people. In 1793 great alarm was occasioned owing to the contraction of credit. The government of the day tried to prevail upon the bank to do its duty, but the bank resolutely refused to assist commercial credit. The Government then said, “ Since you will not do your duty we shall have to do it for you.” In the words of Mr. McLeod, the well-known economist -
Nearly £4,000,000 was advanced, however, amongst 238 applicants, and the whole sum advanced -was repaid. After all expenses were paid, there was a clear profit left to the Government .of over £4,000.
When in 1794 the gold reserve of the United States of America, which was supposed to stand at 100,000,000 dollars, had dwindled down to almost 70,000,000 dollars, and. the gold-buyers or- those who were enengaged in speculative enterprise, either in Europe or elsewhere, through their agency, made such a remarkable demand on the Treasury that the gold reserve of 100,000,000 dollars sank to 40,000,000- dollars, the Government again came to the rescue by placing 5 per cent, bonds on the market - in two lots of 50,000,000 dollars each - and the last resource was to buy 3,500j000 ounces of gold for the price of 62,000,000 dollars. By that means - the combined effort of buying the gold and the flotation of the United States bonds - the Government managed to tide the country over a very grave and far-reaching crisis. I could multiply instances of where the state has come to the assistance of that admirable institution, the Bank of France, showing clearly that when a crisis comes the private banks, unless the Government steps in, are unable to cope with an impending catastrophe.
We are told, by the way, that it is dangerous to place in the hands of a board the power of inflation of the currency. There is no question raised as to the effect of deflation. The besetting danger always has been the inflation of currency for various reasons. We are told that banks never abused that power. History again supplies the incontestable evidence that they have done so. On another historic occasion, the Bank of England inflated the currency to an extraordinary extent. This was proved by the report of the famous Bullion Committee.
It has been stated that, .in regard to currency issues, the Notes Board, failed in its duty by not issuing notes to an amount sufficient to meet the seasonal business requirements of the country. I do not pretend to be an expert on this currency problem. I am inclined to agree with a British Prime Minister who declared that more men were driven mad by the study of this involvedquestion of currency than by love. We are told that when he asked the British House of .Commons, “ What is the pound i” he could get no answer. There is such a great diversity of opinion about currency and its effect upon the general financial position of a country that I am very wary in my steps when I, as a scrutator, spy from the outside to find out what should be done. Taking into account all the opinions expressed by rival experts, I have come to the conclusion that “ Safety First “ is the proper maxim to adopt. We should make perfectly sure that any board or other authority about, to be created shall not exceed its duty, and increase the difficulties of this country by the adoption of a policy of inflation. It is extremely difficult to say what is the right measure of inflation. Can any one say that our note issue, which is in the neighbourhood of £57,000,000, is not inflated? Judging by the only standard laid down. for our guidance, and measuring our paper currency by the world value of gold, we must come to the conclusion that, to some extent, our currency is inflated, The Gold Producers’ Association, for any quantity of gold that it has permission to export, gets, according to the paper currency value, something like £4 15s. per oz., or, roughly, 10 per cent, above paper currency. In other words, it would appear that the value of the paper £1 is about 10 per cent, below the £1 sterling. This 10 per cent, puzzles me, because I remember that in 1914 the business of the country was carried on with a note circulation of only about £14,000,000, and that at the end of 1924, whilst our imports and exports had increased by about 60 per cent., the note issue had increased by about 300 per cent, or more. If, according to some authorities, our currency to-day is, or is not, inflated, what position were we in in 1914, when, apparently, we were satisfied with one-third or onefourth of the notes in circulation to-day ? The issue is a bewildering one. I have come to the conclusion that there, is something more to be learned on the subject Since I have not this added knowledge, I can only say that in regard to commerce and industry our note issue has fulfilled up to the present a very useful function. No industrial crisis has arisen.
The price level of goods is another enigma. I find that price levels in Australia, where currency is supposed to be inflated, are about the same as in Canada or the United States of America, where currency has not been inflated.
– I do not think our note issue has affected very materially the price level of goods in Australia.
– The accepted maxim, at all events, is that if currency is inflated, that inflation is immediately reflected in price levels.
– Does the honorable senator say that there has been no inflation in Canada and the United States of America?
– I have examined the exchanges, and I find that the value of the gold dollar as compared with British sterling has appreciated. And yet according to the latest figures, the price level in United States of America in 1913 was 100, and in 1923 it was 154, an appreciation of roughly 50 per cent, in ten years. In Canada where again there has been no inflation of currency, there has been practically the same movement in price levels, the figures for 1923 being 153, and in Australia, where there has been inflation, the price level rose from 100 in 1913 to 179 in 1923. Therefore, when I am told that there has been an increase, in the cost of the necessaries of life in this country because of an inflation of our currency, I point to the position in both Canada and the United States and ask. why has there also been an increase in those countries. This increase, I am forced to believe, is due to a scarcity of the commodities in question, and to the operation of the law of supply and demand, due to the whole of the industrial machinery of the world being thrown out of gear in 1914. No statement is repeated oftener than that the exchange difficulty is due to the action of the Notes “Board in not making the issue of notes sufficiently elastic to ease the situation. It has been stated over and over again that the board should have issued more notes to meet our present difficulties, and to improve our exchange position with. London. On this point Senator Greene has stated that it has been the usual custom for the banks to maintain in the Old Country, credit amounting, I think, to about £18,000,000 a year.
– No, I said the. amount usually maintained there was from £11,000,000 to £14,000,000.
– And that at the present time, it was probably a much larger .amount.
– I have gone to some trouble to ascertain the balances remaining to1 the credit of the Australian banks in London from time to time, in order to test the statement that the Notes Issue Board had been at fault in withstanding this demand for more currency. I consulted Mr. Wickens, the Commonwealth Statistician. Mr. Wickens’ investigation showed that in 1914-15 our imports totalled £S0,000,000 in round figures, and that for the nine months of 1923-24 the figures were £206,000,000. During the” ten years this country paid for the goods it received, and interest on its loans and other outgoings a total of about £1,204,000: That is one side of the ledger. What did we receive during that period? I find .that our exports in 1914 totalled .£60,000,000. There was a gradual rise in value until 1920-21, when our exports approached about £190,000,000. In 1923- 24 the total was £94,000,000. This latter amount included about £7,000,000, the proceeds of Bawra which was a for.tunate windfall for the holders of unsold wool. There was a net increase in our debts abroad of about £12,000,000. There is a very interesting chart in the Argus of the 20th May, which shows the fluctuations in a most vivid way. In 1914-15 there was not a great margin between the money we had to pay and the amount received. In 1915-16 there was a smaller margin, representing approximately £15,000,000. In 1916-17 and in 1917-18 the exports exceeded the imports, and the margin was well maintained, but in the opposite direction. In 1918-19 there was a difference of little more than £5,000,000. In 1919- 20 there was an upward - movement in exports which substantially exceeded the imports, so that money was due to us, which made a very great difference. In 1920-21 the imports rose to high level point, and, of course, there was a reverse balance, which resulted in there being an extreme shortage of cash in London. That was when the exchanges were not in our favour. In 1921-22 there was a downward movement in imports, while the exports rose; but in 1922-23 the reverse was the case, and in 1923-24 there was a difference between money due to us and that which we had to pay of less than £6,000,000. When it is said that the cause of the present financial stringency and increase in the rate of interest is due to the action of the Notes Issue Board in not extending credit, I am compelled to say that, according to the figures I have just quoted, there is no evidence to support the contention that there is to-day an abnormal balance standing to the credit of the Australian banks in London. The responsibility and blame sought to be attached to the Notes Issue Board cannot, therefore, be sustained.
– Why does not the ^honorable senator refer to the banking returns, and obtain the actual figures ?
– I have searched for them in vain, and I have quoted the
Statistician’s figures, which are the only authentic ones available. I was informed this afternoon that the chairman of a big banking institution in London declared a couple of days ago’ that there was no abnormal balance standing to the credit of the Australian banks in London. (Extension of time granted.) If the Government were to consult me I would suggest that the bill should be amended to make the Commonwealth Bank pay taxation, and thus place it upon precisely the same plane as any other private activity. If that were done it would remove an objection which’ I now have to the bill, and at the same time place the institution upon its mettle. There is no reason why we should be wedded to the system that in the public interest Government enterprises should be embarked upon without regard to financial consistency, not to say financial morality, and allowed to drift until in the end the Treasury has to make good the losses incurred on such enterprises. It is about time we called a halt, and endeavoured to place the Commonwealth Bank upon an indepen-dent basis. Can any one say that there is any justification for giving such patronage to governmental institutions whilst their competitors have no such advantage 1 The time has come when we ought not to place Government concerns - if” their establishment is sound and can be sustained - on a more favorable footing than any others. Governmental enterprises should be made to pay their way, to ‘ prove that they are conducted with business ability and can show better profits than private concerns. I wish the capital and reserve placed upon a firm basis. I could quote a good deal to prove that it was owing to neglect of this feature of banking that the terrible financial catastrophe occurred in the early nineties. At that time thousands of .people were ruined and rendered homeless, mainly owing to the policy of the private banks, which, as Mr. Coghlan said, did not observe the first canon of the science of banking. I could quote the ‘ evidence of a leading bank director in England at the. time, who said that a bank should not be allowed to carry on business unless one-third of its total liabilities to the public was secured in banker’s capital, cash, or the requisite reserves to meet any emergency. He said that in his case his bank could have made £40,000 more profit in one year if it had broached its reserves and used them in the ordinary business of banking. The state laws remain in the same unsatisfactory state today, and I shall endeavour, so far as possible, to see that a provision is inserted to the effect that the bank shall not be allowed to carry on unless there is ample security in the form of capital and reserves to the amount of one-third of the total liabilities to the public. I shall oppose the profits of the bank being devoted to a loans redemption fund. The loans should pay for themselves. The bank should be placed upon a firm foundation, so that no suspicion can be held against it, and so that it shall be compelled to honour its trust, and be true to the thousands of people who do business with it. If that is done, the people will have confidence in the bank. I also wish to provide that there shall be no diversion of the profits of the bank,but that they shall remain in the resources of the bank until the one-third ratio is reached. The last important amendment I should like to see provided is that a director well versed in currency and doubly apprehensive of the evils of an . over-issue of notes, shall be selected from the wage-earners of this country. So far as my reading has gone, I have gathered that in the evils which arise from the inflation of currency no one suffers more than those who are the poorer sections of the community.’ There is no reason why in this case they should be ignored, and others whose interests are amply protected at present should be represented on the board. So far as I am able, I shall urge that a person shall be selected from that section which suffers most when there is an inflation of currency. Daniel Webster, the great American jurist, said that there was nothing which fertilized the fields of the rich more than the sweat and tears of the poor, and that the inflation of currency in. that country had done more in that direction than in any other. I shall endeavour to provide against such a catastrophe in this country. Otherwise I shall wholeheartedly support the bill. I believe its introduction is fully warranted, and if the amendments which I have suggested are adopted, the bank will be established upon a sure foundation, and will be the means of bestowing everlasting benefit upon the people of this country.
, - Senator Foll is to be congratulated upon having moved his amendment, as it has been responsible, at all events, for the announcement made this evening by Senator Crawford on behalf of the Government which is an acknowledgment of a very important principle that it is now proposed definitely to incorporate in the bill. At a time such as the present, when there is, notwithstanding the figures quoted by Senator Lynch, a large accumulation of Australian funds in London, it is now proposed to incorporate in the bill a definite recognition of the fact that it will be right and proper for the proposed board to issue notes against purchases of sterling in London. That is what it is now proposed to do by means of the amendment outlined by Senator Crawford. It is a most important provision, and one which I shall support. Had it been recognized by the Notes Issue Board, in the control which it has exercised it would, in my judgment, at all events, have prevented a great deal of the trouble which has arisen in Australia during the last few months, and which threatens to become accentuated in the future. I hope I rightly interpret the Government’s proposal. It is what the banks have been advocating for a considerable time. It is a principle that the Notes Issue Board has steadfastly and, I think, wrongly refused to recognize. I am the more surprised at it because some thirteen pages of the memorandum read by the Treasurer in another place, and referred to here on several occasions,, was a most elaborate justification of theattitude of the Notes Issue Board. If I had had a little more experience i» this chamber, I should have felt justified in traversing those arguments set out in such elaborate detail, and would have shown, as I think I could, most conclusively from my point of view that that justification is its own condemnation. I shall not take up the time of the Senate to-night further than to say that I appreciate very highly the attitude that Senator Foll has adopted, but I think that it would be well to postpone action along the lines that he has suggested. If the bill is permitted to go into ‘committee we shrill have an opportunity to ascertain exactly what the Government proposals amount to, and to suggest amendments which will materially alter them. I, and I suppose other honorable senators, have quite a number of suggestions to offer with the object of considerably improving the bill. In the circumstances, I trust u at Senator Foil will see his way clear to withdraw his amendment, at least for the time being. When the bill is in committee we shall be able to submit our arguments at greater length than is possible now.
– Not at greater length, but with more frequency.
– It is possible that, being able to speak with more frequency, .we shall be able to argue at- greater length. We may then be able to consider in greater dteta.il the memorandum to which I have referred.
, - As an apostle of the belief that it is always well to do one thing at a time, I propose to follow Senator Greene’s example, and confine my remarks to the amendment. I understand that if I do I shall be at liberty, after the amendment is disposed of one way or another, to express my views upon the bill. I say One way or another “ because, if the amendment is not carried, the discussion will doubtless proceed in the ordinary .way, but if it is carried we shall have to wait until the diligence of the members of the royal commission, by the direct intervention of Divine Providence, places honorable senators in a position to consider their report.
– Does the honorable senator think that royal commissions are -under the special care of Divine Providence?
– If the amendment is carried, the bill will disappear. But, much as i desire some of the details of the bill to be amended - and I assure honorable senators that I shall require a great deal of amendment to some of the clauses before they will be acceptable to mei - I am not prepared to forgo the opportunity to affirm my acceptance of the principle of the measure. Our discussion would have been very much clarified and shortened if the bill could have been referred to a select committee; but I think Senator Foil would be well advised if he withdrew his amendment for the time being. I understand that, having limited myself in this address to speaking to the amendment, I shall be able, later on, to mate some remarks on the substance of the bill.
The DEPUTY PRESIDENT (Senator Newland). - The honorable senator will not have another opportunity to discuss the bill during the second-reading debate.
– I am surprised at that ruling, Mr. Deputy President. Speaking on the spur of the moment on the general provisions of the measure, I do not think that the need for the proposed alterations in the general management of the bank has been satisfactorily proved. But, even granting that the desirableness of appointing a board of directors had been shown, I consider that a board of eight persons would be altogether too cumbersome, and would be likely to lead to complications rather than to simplifications. I should prefer a board of three to be appointed, and, instead of having a board within a board to deal with currency matters, I think that the three gentlemen on whose shoulders would rest the development of the general policy of the bank should also deal with currency matters. I cannot agree with the suggestion that local boards of advice should be appointed. In my experience the adoption of the principle of representation of localities or interests has led only to the accentuation of difficulties and to the creation cf disputes and acrimony among members of boards. I wish to refer to another matter that has not yet been touched upon. I venture to say that the success of our export trade depends to a great extent upon the proper representation of Australia in the countries with which we desire to trade. While commercial people can be trusted to make adequate provision for their representation in foreign countries with regard to the buying and selling of goods, I think it would be highly desirable for the Commonwealth Bank to establish branches in such countries. I do not know whether I am right in surmising that the bank at present has no authority to establish branches abroad. If that is so, opportunity should be taken while this bill is before Parliament to give it such authority. In my opinion, the bank should have branches in other countries, and not necessarily in British countries only.,
– In any case, exchange is always regulated through London. That is the invariable practice.
– Even so, I do not see any reason why the custom should not be altered.
– I also think it is dersirable for the bank to establish branches in foreign countries.
– As one who some time ago participated in an extensive inquiry into the question of our commercial relations with eastern countries, I consider that it is an absolute necessity. I do not know whether this matter has. been considered by the Government, but,, if it has not, it is high time that attention was given to it. I could ask leave to continue my remarks, but, as I shall have ample opportunity in committee to expatiate upon the points that I have not mentioned in this address, I do not propose to take that course. I was certainly under the impression when I rose to speak that, if I confined myself strictly to the amendment, I would later on have the opportunity to discuss the general principles of the hill. The fact that I was misled will probably be a gain to the Senate, as it prevents me from expressing opinions without the assistance of notes. In those circumstances, I merely state that I cannot support the amendment, but I shall support the second reading of the bill.
– I should not have risen to speak had any other honorable senator desired to do so. I hope that I have benefited as a result of the splendid lesson that was given to me by Senator Lynch, and that I shall address myself to the question in such a way that I shall not weaken my reputation. I do not know whether I shall ever reach the stage when I shall philosophically review my life and count up the schoolmasters who have added to my knowledge; but Senator .Lynch can rest assured that he would occupy a very high place in such a list. He nearly always lectures me, and his lectures have a great effect upon me ! He lectured me to-night because I said that the private banks were interested in this measure. At the conclusion of my speech I think it will be found that I have not marred my arguments by any outburst of venom, but that I have tried to use moderate, persuasive language. I thank Senator Lynch for his very fine lecture. There is much in common between him and me. His chief complaint to-night was that I endeavoured to make it appear that the Government was doing the work of its friends outside. That still is my contention. I say that the amendment was instigated by Senator Greene, and was brought forward in this chamber with the deliberate intention of holding up the Government until it raised its hands above its head and said “ Kamerad.” I do not think I can quote Senator Greene word for word, but I think the substance of what he said was that for a considerable time some authority on the Notes Issue Board had been standing out against the proposal to finance the private banks, which had credits in London, in order that .they could purchase in Australia. Let us see what the Government has agreed to do. I use the Government’s own words, delivered through the mouth of Senator Crawford, who said: -
The Treasurer to-day met the representatives of the banks, who submitted a proposal that an amendment should be made in the bill to provide that the board shall have power to issue notes to the banks in Australia against the securities or notes held by the banks in England. The Government has agreed to accept this amendment, and the representatives of the hanks have expressed themselves as satisfied.
Senator Greene, a representative of the banks, has expressed himself as satisfied. In effect, he ha*s now said to the Government, “You can go on with your bill.” Until the Government accepted the proposal of the banks, Senator Greene had a following sufficiently strong to enable him to say, “You shall not go on with your bill.”
– Did the banks have the honorable senator as an ally?
– I hope they did count as their allies honorable senators sitting on this side. I do not think they would have any doubt as to the manner in which we should vote on an amendment to hold up this bill. Let us look at the position as it appears to Senator Poll. Senator Greene, not as the mouthpiece of the outside banks, but as an independent senator, thought that this bill had been brought down before sufficient information was available to enable an acceptable measure, to be framed. According to Senator Foil, a royal commission is necessary to obtain that information. Now Senator Foil says that he will be satisfied with the acceptance by the Government of the proposal put before it by the private banks, with regard to those millions that are lying in London. What has been keeping that money in London? If, in trading with Great Britain, we provide for the trade to flow in only one direction, we shall not remedy the matter by saying that the private banks shall be granted advances on the securities they hold in London. If it is desired that the Commonwealth Bank should issue credits, not notes, to enable trading to take place, it at present has that power. It is not a matter of issuing £5 notes or £100 notes; it is a matter merely of credit and exchange.
– That is the same thing.
– Instead of those credits being arranged by the Commonwealth Bank as part of its banking business, the private banks have had sufficient influence to force the Government into the position of pledging its credit. I do not think that any one has yet heard me speak offensively of the private banks. In the last speech that I made I said that they had assisted the development of this country. The position is, however, that they have huge credits in London while money is tight in Australia. They have, therefore, forced the Government to come to their rescue by giving them ‘credits, from which they will take the profits. Had the Government been interested in the development of the Commonwealth Bank it could have manipulated those credits in such a way that the private banks would have had to deal with the Commonwealth Bank.
– Not unless the Notes Issue Board was . prepared to issue the notes to the Commonwealth Bank.
– I remember Senator Greene also saying that for some time pressure had been brought to bear oh the gentlemen who control the issue of notes.
– I did not say anything about “ pressure.”
– Let me put it in this way - that for a considerable. time an effort has been made to induce those who are responsible for the issue of the notes to make this change. Does that fairly represent what the honorable senator said?
– I think that approximately represents what I said.
– That effort culminated successfully when Senator Greene held up the Senate. I congratulate him, but I do not congratulate the Government. May I be permitted to refer to the fact that Senator Wilson read at considerable length a defence of the Secretary to the Treasury. I take it that that was a defence prepared and written by the Secretary. It had a bearing upon this matter. Senator Greene’s original attack was made because the members of the Notes Issue Board had done their duty according .to their lights. Because they would not do “ something that the trading concerns wanted them to do, but which their consciences told them they, should not do, they became the victims of Senator Greene’s powers of invective. I have a very great respect for men who carry out, irrespective of any outside influence, the duties of the offices in which they are placed, whether that influence is exerted’ by strong banks or strong unions. Let us reverse the present position. If a Labour Government were in power, and some of its insurgent members, occupying the cross benches, held up a bill until one of its Ministers made a complete backdown, a howl would be heard from one end of the country to the other. The press would write pages of leading articles about the subserviency of the Labour Government to the Trades Hall. We shall not hear anything about the subserviency of the National party to the private banks. But Senator Crawford’s statement can never be retracted, because it has been made on the floor of the Senate, and will appear in Hansard.
– The honorable senator has not told lis whether, in his opinion, it is a wise or a right thing to do.
– It furnishes another very good reason why the bill should be referred to a royal commission. I cannot make up my mind in ten minutes whether it is right or wise. If a royal commission were appointed, these banking authorities, who are so ably represented by Senator Greene, could give their reasons to men who are skilful in forming opinions on such subjects. The amendment is one that the Ministry could well accept. I am not usually in favour of royal commissions, I prefer rather the appointment of a select committee of the Senate, because I think that no better authority could deal with any of these matters. There are additional reasons for the proposed appointment of a royal commission. In another place discussion on this measure was curtailed. Because of that fact, Senator Pearce has found it necessary to fore-, shadow the following amendments : -
Page 2, clause 5, line 19, leave out “ lent “ insert “granted”.
Page 2t clause 6, line 42, leave out “lend” insert “ grant “.
Page 3, clause G, line 3, leave out “ loan “ insert “ grant “.
Page 3, clause 6, line 5, leave out “ loans “ insert “grants”.
Page 4, clause 7, line 10, after “ GovernorGeneral “ insert “ upon the recommendation of the Board of Directors”.
Page 6, clause 7, line3 4-8, leave out “ the Directors voting for it include two of the following Directors, namely, the Governor, the Director who is the Secretary to the Treasury, and the Directors appointed in pursuance of paragraph (d) of sub-section (2.) of section eleven of this Act”, insert “six Directors vote for it at a meeting at which all the Directors are present or five Directors vote for it at a meeting from which any of the Directors are absent”.
Page 7, after clause 11 insert the following new clause: - “ 11a. Section thirty-four of the Principal Act is amended by omitting from subsection (2.) thereof the word ‘Governor’ and inserting in ‘its stead the word ‘ Board ‘ “.
Page 7, clause 10, line 10, after “ amended “ insert “ - (o) “.
Page 7, clause 16, at the end of the clause insert - “; and (6) by adding at the end thereof the following proviso: - ‘ Provided that Australian notes shall not ‘be issued to the Bank without the approval of the Treasurer ‘.” Page 7, after clause 16 insert the following new clause: - “ 16a. Section sixty p of the Principal Act .is repealed.” Page 7, clause 17, lines 15-16, leave out “ the thirty-first day of January One thousand nine hundred and twenty-five “ and insert “ a date to be fixed by proclamation “.
Page 8, clause 17, line 12, after “public” insert “ and allows interest thereon “.
If the foregoing amendments do not constitute an excellent reason for the suggested inquiry into this measure, what does? As honorable senators know, the amendments I have read will make a i tremendous difference to the bill.
– They will mean its reconstruction.
– Absolutely. Under the original provisions the board settled its differences by a certain method of voting, but under the proposed amendments a different procedure is to be adopted. The Government, having failed in another place to give the bill the consideration to “which it was entitled, has now of its own volition brought in amendments which, if carried, will practically create a new bill. In my opinion, it would be impossible to obtain unanimity among the large and small banking institutions of Australia. Some of. the banks are most profitable in directions that will not be affected by the bill, and there are others whose interests will be seriously affected. Senator Greene has presented a revolver at the head of the Government, and it has consented to meet the wishes of thebanks that he represents.
– The honorablesenator was prepared to support me, at any rate.
– I was prepared to give the measure further consideration. I have never shown a. willingness to’ support Senator Greene in anything. The Government has been weak enough to give way to the demands of the private banks. I do not care how far it goes in this matter, for the next elections are not far off, and if theLabour party is returned with a majority it will be able to undo the harm that theGovernment now contemplates doing.
– Two years hencethe honorable senator will be claiming that the central bank was the creation of the Labour party.
– I claim that the present Commonwealth Bank was the creation of my party; but the discussion so far has not convinced me that there is good reason for .the proposed alteration, and that the Commonwealth Bank will be brought into competition with the private banks. ‘ Senator PEARCE - There is nothing in the bill to prevent that.
– I agree with that statement; but I want the measure referred to a royal commission, 39 that the people may understand the effect of its provisions. If there was something in the bill yesterday that caused the Treasurer to meet representatives of the private banks, and agree to their demands, there may also be in it something that requires alteration in the interests of- other sections of the community.
– It was not because of. something that was in it, but because of something that was not in it.
– I accept the statement that the Treasurer agreed to put something into the bill that had been omitted from it.
– He agreed to have the amendment in question submitted to Parliament.
– I thank the honorable senator for that qualification. One set of people has obtained the ear -of the Treasurer, and has had the advantage of special pleading in this chamber by Senator Greene, and, therefore, I ask Senator Foll to have the courage to stand by his amendment so as to see that other important interests are safeguarded.
– If the Government has backed down to the extent of securing next year’s wool clip, I am satisfied.
– I am glad to have that candid admission. It supports .my previous contention that, in consequence of a revolver having been levelled at the head of the Government by Senator Greene, it has weakly bowed to the wishes of the private banking institutions. If Senator Foil merely wanted financial security for next year’s wool .clip, why was he not content to submit .an amendment to that effect?
– -Surely “the honorable senator is not adversely criticizing the proposed amendment?
– According to Senator Foil, he does not intend to press his amendment, because the promise of the Government has satisfied him; but he -adopted a very cumbersome method.
– I obtained what I set out to get.
– All I have to . say is that when, in future, Senator Foil .submits any amendment, we shall have to ask him what he is trying to get. First he said a royal commission was required, and now he does not ask for it.
– Senator Gardiner and his party, whatever it was that he wanted, were prepared to support him.
– I do not think ‘ that my attitude in the Senate justifies that accusation. I advise the Government to retain the correct attitude of humility to its outside masters, otherwise it will be given a good flogging, such as it received from Senator Greene on Friday last. Members of the Labour party were sent to Parliament to fight ‘ . the Government, but honorable senators opposite were returned to support it. Senators Greene and Foil now say that they do not want a royal commission, since the interests’ of the private banks are to be conserved.”
– We do not admit anything of the sort.
– We want to safeguard next year’s wool sales.
– Every sane man in Australia is anxious to safeguard the marketing and selling of next year’s wool clip, but if that is what Senator Foll is. after, why did he not say so? And! if that is what Senator Greene was after, why this clamour for a royal commission? The Minister makes a statement. After he has spoken, Senator Foil is satisfied, and Senator Greene admits that, he no longer wants a commission. No’w the Minister objects to my statement that what has been asked for has been given. It is all nonsense to talk about financing the wool clip. The business men on the other side of the world will see to that. It is to the interests of the country in which they live to finance them in that transaction. I venture to say it is more to the interests of Great Britain that her representative buyers should be able to buy our wool than for our growers to be able .to sell it, important as this may be to them.
– But that does not bring the money here.
– Of course not. But Senator Greene, who speaks so ably as a representative of private banking institutions - I hope he will’ not think I am personal - seems to think that Australian, finance is sO strong that -it can handle the- business, not only on the Australian side, but on Britain’s side as’-‘well. I suggest that that is a- little over -the odds. This proposal means, if it means anything at all: that private institutions cannot take the risk, and because the bill would otherwise be held up, the Government now propose to insert in it an amendment under which the Commonwealth Bank will now issue notes on London! credits. The amendment is a shameful interference with the management of the Notes Issue Board and the bank. If a Labour Government had dared to interfere with the management . of an. institution in this way,. I venture . to say it would, not have got off so lightly as’ the present Government will over this matter.
– It means an expansion of the paper currency.
– It reminds me of a quip I read the other day -
Paper is made from rags,
Notes are made from paper,
Banks are made by notes,
Loans and mortgages are made by banks,
Loans and mortgages make bankrupts,
Bankrupts make rags,
Rags make notes,-
Shall I go on ? Senator Lynch, in the course of his remarks, said that the - Australian note was roughly 10 per cent, below the par value of gold. In order to disprove his statement, I now issue a challenge to the honorable senator. I invite him to come with me to the refreshment room, accompanied by all other honorable senators. I shall tender one of “ Fisher’s flimsies “ for refreshments and he can tender 20s. worth of silver. If with his silver he can buy more than I can buy with my “flimsy,” I shall pay for the refreshments; but if, on the other hand, he does not enjoy this advantage, I shall expect him to pay. I go further and challenge him to go with mo to any grocery establishment or warehouse in the Commonwealth and test the relative values of the Australian note as against 20s. worth of silver. I mention silver for the simple reason that silver is in circulation, for, whilst gold is legal tender, it has practically been withdrawn from circulation. Senator Lynch knows as well as I do that there is absolutely no difference in the relative value of our currency. There has been no inflation of notes. I really believe that, in view of the enormous growth of our trade I within the last few years, there has been ! a substantial deflation. Whilst I do not agree with the policy of the Notes Issue Board in not issuing more notes, I uphold its members in withstanding outside interference. This proposal is an impudent attempt to force the hands of the board.
– ‘ If the honorable senator says that there has-been deflation, why does he object to the proposal to increase the note issue?
– As far as the note issue is concerned, if it is made clear that there is not enough for ordinary trading purposes, I shall not complain. I want to make it clear that if, in the opinion of the Notes Issue Board, the note circulation is sufficient for our trade requirements, it is wrong for this
Parliament to force the hands of the board.
– The banks are also the agents for the English buyers.
– That makes it worse. I am very much obliged to Senator Elliott for his interjection. This amendment will not help the private banks so much as it will help the English buyers who want to- purchase our wool and other .products.
– By helping the English buyers to purchase we shall also help our own farmers.
– Of course. There are always good reasons,. I made the statement before that Britain must buy our wool. Her industrial position makes that essential. We have one-half of the wool clip of the world. This interference with trade is unsatisfactory and uncalled-for. I remind Senator Elliott that a primary producer worth £5,000 would appeal in vain to the Commonwealth Bank for an advance of £1,500 to enable him to develop his property by erecting’ rabbitproof fencing, purchasing machinery, or increasing his business activities in any other direction. He would be referred to the private trading banks. It appears that whilst we cannot make available a few thousand pounds for the benefit of our producers we can, when occasion demands, find millions for British buyers.
-But a great deal of that money will go to our own farmers and pastoralists.
– -Surely our Australian institutions should transact Australian business. I thank Senator Lynch for the excellent lecture which he gave me on deportment and the manner in which I should address this chamber. I can assure him that if, subsequently, I throw off this boisterous manner, and have time to reflect on his good advice, I shall wonder how the schoolmaster who taught me so much should evidence so little of that wisdom which he possesses. The hour is late, and 1 have no doubt that the Government is anxious to go to a division on this amendment. Ministers will have the support of Senator Greene and Senator Foil, because they have got what they asked for. I am glad that loyal supporters are once more ‘behind the Government, because I want to assure them that if they are fight- ing in the one battalion we shall be able to beat them the more easily at the next election. But if any one displays any independence, the writing is - “ PLAIN.” The letters were displayed prominently in the Victorian Parliament last night.
– The honorable senator should not crow over a beaten man.
– I am merely quoting him as a shocking example of what happened to him at the hands, not of the Labour party, but of his own friends, and of what will happen’ to the Minister himself.
– I am man enough, at all events, not to crow over a beaten opponent. And if I am beaten, I shall not whine.
– I am not crowing, as the Minister suggests. I am merely reminding the Minister of what happened yesterday. The fact, that the Government and its supporters are a united body does not concern me at all. Senator Greene is satisfied, and Senator Foil has got what he asked for to-day, so why should they worry. And Senator Elliott has just told us that the proposal will not help the local banks so much as the British buyers.
– And, indirectly, Australia.
– I am wondering how long we shall continue this neglect of Australia for any other country. The time is here and now for the Commonwealth Bank, with its power and wealth, to be placed in the position of being able to finance the wool clip. When we established the Commonwealth Bank we had behind it more than gold; Ave had behind it the credit of the people of Australia. What nonsense it is to say that the acceptance by the Government of the point desired by the honorable senator who moved the amendment to refer the bill to a royal commission is sufficient, and that further inquiry is unnecessary? It is not sufficient so far as I am concerned. I want to know what is behind the bill. I want the men who negotiated with the Government to give evidence before a royal commission, so that the people may know what they are after. I want the Government to tell us why the provision which these people desired was not inserted in the bill at least a month ago. Surely the mea sure Was only introduced after consultation with the banking interests and banking authorities. If I were to introduce a measure dealing with unions, I should know everything the unions wanted in it, and if I were to introduce a bill dealing with banking, I should never dream of bringing it forward before all avenues of information had been explored, particularly those available to the men who are conducting the banking interests of Australia. If we are to be guided by the speeches delivered by Senator Foll and Senator Greene, and by the amendment which the Government propose to submit, that common-sense course has not been pursued. The board of directors of the Commonwealth Bank may not assume the attitude taken by members of the Notes Issue Board, who would not come .to heel when the Treasurer wanted them to do so. According to Senator Greene, they, apparently, would not listen to the advice of people who realized the effect of the restriction of currency and felt that the issue of notes should be extended. But if there is nothing in that charge, the public ought to know it, and how better could they get to know it than by the appointment of a royal commission, as suggested by Senator Foil? He that knoweth which is right and doeth it not shall be beaten by many votes. Senator Foil and Senator Greene know what is right, but, because they have got what they were asking for, they are running away from their amendment. Besides the banks, there may be other financial institutions, trading concerns, and private individuals to be considered before we proceed with this bill. I think that the amendment Senator Foll has moved should be carried, and that the bill should stand over if necessary for twelve months. The purchase of the wool clip would not be affected if the Government wanted to assist in it. I should not like to mention how many millions have been spent in purchasing wool. I know that there was an overdraft of £18,000,000 in connexion with the purchase of wheat, and there was not very much security for that advance. Indeed, in those days there was not very much security for the empire itself. It was questionable whether out of the turmoil any one would emerge to carry on trade. Nevertheless, we could get credit to. the extent of millions of pounds to finance huge -concerns. However, this amendment is apparently to go by the board, because the Government say they are prepared to accede to the request of the private banks. It shall not go by the board so far as I am concerned. I congratulate Senator Greene on the victory he has achieved on behalf of the people for whom he spoke, with his threat hanging over the Government. Mr. Pratten, who delivered a speech some time ago on the exact lines of the amendment, is nowa member of the Ministry. I listened to Senator Greene on Friday, and ever since I have been wondering what was behind it all ; but now that I have put things together, I realize that the huge financial concerns of the world are exercising that influence which enables them to manipulate the actions of the Governments they put in power.
– In view of the announcement that it is the intention of the Government to grant what it was my de sire to secure, I ask leave to withdraw my amendment.
– Is it the pleasure of the Senate that the honorable senator have leave to withdraw his amendment?
Honorable Senators of the Opposition.No.
Question - That the words proposed to be left out (Senator Foll’s amendment) he left out - put. The Senate divided.
Majority . . . . 6
Question so resolved in the negative.
Debate (on motion by Senator Duncan) adjourned.
Repairs to s.s. “COOEE.”
Motion (by Senator Pearce) proposed -
That the Senate do now adjourn.
– In common with Senator Kingsmill, I have to complain concerning the misleading replies supplied by the Commonwealth Shipping Board in answer to questions submitted in the Senate. Some time ago I submitted two questions to the Leader of the Government in the Senate, in which I asked if certain repairs to the s.s. Cooee had been undertaken, and to both questions I received a negative reply. There have been some communications between the Federated Society of. Boilermakers and the Commonwealth Shipping Board in reference to these matters, and these I propose to put before the Senate. Although repairs to the Cooee have been undertaken abroad, I was informed that such was not the case. This clearly proves that some one is endeavouring to mislead this branch of the Legislature. The Commonwealth ShippingBoard has promised that repairs to ships shall,, as far as possible, be carried out in Australia, but, so far as we have been able to gather, certain repair work has been undertaken in Great Britain and in foreign, countries. The s.s. Cooee has been forsome time going to sea in an unseaworthy condition.
– Who furnished the Minister with the replies to which the honorable senator objects?
– The Com monwealth Shipping Board. I shall read the letters, which thoroughly explain the matter. The secretary of the Boilermakers Society, of which I have been a financial member for many years, writing on the 24th July, 1924, states -
I am forwarding, to you the reply you received in connexion with certain questions you asked in the Senate re the repairs to the s.s. Cooee, and also some correspondence I have had with the Shipping Board, over the repairs to the same steamer, s.s. Cooee.
You will note that the answers you got to the questions were “No; No,” and they must have been incorrect, because the date of the answers given is the 15th March, 1924 (see paper marked No. 1) ; and on the 3rd April I wrote to the Director of Shipping in connexion with the same steamer and repairs (see letter marked No. 2), and they have just answered me by stating that certain repairs were effected abroad in connexion with their survey, which had fallen due (see letter marked No. S).
I am forwarding letters to you marked 3, 4, 5, 0, 7, and 0, in addition to the others I mention for to permit you to see exactly what has been done.
I desire to draw your attention to this fact: How can the policy of the Shipping Board to have all repairs done here if the surveys fall due while they are abroad, and if they intend to carry out their policy, then they Will have to change the venue of survey from abroad to Australia.
I am not -aware yet whether the new backs have been placed in vessel, hut you may be able to find out that by asking if any repairs have ‘been done to her while abroad, and, if so, what was the nature of them.
Hoping you will be able to use the information herein contained to your own and the above society’s advantage, and expose the misleading answers you have received if they have put these new hacks into this vessel.
Thanking you in anticipation of an early reply.
The dates will show, if the reports are correct, how’ long this vessel has been sailing in a very bad state.
On the 15th March I asked the Minister representing the Prime Minister -
The answer was “No” in each instance. On the 3rd April, 1924, the following letter was despatched by the secretary of the Federated Society of Boilermakers and Iron Shipbuilders of Australia (Sydney Branch, No. 1) to the Director of Shipbuilding, Cockatoo Island, Sydney: -
At our last interview, you informed us that the policy of your Shipping Board was to have done here in Australia all repairs wanted to any of the Commonwealth ships (minor running repairs excepted), which we were pleased to learn, and I have now to ask you, if there is any truth in the rumour T have just heard, that the s.s. Cooee has a very defective back end in the centre furnace of the port boiler, which will he renewed when that vessel arrives hack in the Old Country, as my informant states that on the last trip, a mould of the furnace back was made, so as to enable them to have it ready when she arrives hack on this occasion ?
Thanking you for an early reply.
On the 7th April, 1924, the following: reply was received from Mr. Farquhar, of the Australian Commonwealth Shipping Board: -
I have; to acknowledge the receipt of your letter of the 3rd inst., re the s.s. Cooee, and have, forwarded the same on to the secretary of the Australian Commonwealth Shipping Board,. Q.N.B. Chambers, corner Pitt and Hunter streets, Sydney
I shall be obliged if you will address any further communications re matters pertaining to vessels of the Line direct to the secretary of the board.
On the 2nd May the following letter was despatched by the secretary of the society to the secretary of the Australian Commonwealth Shipping Board: -
On the 3rd ult. I wrote a letter, re a report I had received re the s.s. Cooee. and addressed it to Mr. R. Farquhar at Cockatoo Island, Sydney.
He replied to me, stating that he had forwarded that letter to your board for consideration, and requested me to in future address all correspondence to you, on matters of that description.
Having been thus advised,, that my letter wasforwarded to you for consideration, and having received no reply, I have -by directions to again forward a copy of that letter to you direct, requesting your board to consider the subjectmatter therein contained.
Awaiting an early reply.
A reply, dated 5th May, was received as follows : -
I am directed to acknowledge the receipt of your letter of the 2nd inst., enclosing a copy of letter addressed to the Director of Shipbuilding, Cockatoo Island, dated the 3rd ult., and to advise you that no information is available here in regard to the repairs which you mention, but inquiries are being made on this subject.
The next letter was from the secretary of the Boilermakers Society, and was as follows: -
Trades Hall, Sydney, 2Sth May, 1924. To the Secretary, Esq., Aust. Shipping Board, O’Connell-street, Sydney.
Dear Sir. - On the 2nd inst. I wrote. soliciting some information as to a report that was current re the s.s. Cooee getting repaired in the Old Country, whereas we were informed that all future repairs were to be done in Aus’tralia and your reply to me was that you would make inquiries as nothing was known of the matter here.
At my meeting held last night the matter was brought up and I was again instructed to write soliciting off you whether you had kept your promise and made these inquiries, and if 30, what were they, so as we can verify the reports or otherwise.
Thanking you for an early reply, (Signed) Gilbert J. Sinclair, i … N _ _ Secretary.
To that letter no reply was received, and later the following letter was sent: -
Trades Hall, Sydney, 11th June, 1924. To the Secretary, Esq., Aust. Shipping Board, O’Connell-street, Sydney.
Dear Sir, - On the 2nd ult. I wrote soliciting information re the s.s. Cooee, to which’ you replied that you would make inquiries, and not receiving any further information from you, I wrote again on the 28th ult., and to that letter I have not even got an acknowledgment.
I now have to request that you will favour nro with the information Bought in my letter of the 2nd ult., or a statement thai you are unable to supply it, or that you will not make the information available to us.
Thanking you in anticipation of an early reply,
Yours faithfully, (Signed) Gilbert J. Sinclair,
The following reply was received from the Shipping Board: -
Cr. Pitt and Hunter streets,
Dear Sir, - I have to acknowledge receipt* of your favours of the 28th ult. and 11th., in reference to the above.
I have been instructed to advise you that it is the policy of the Board to have all repairs to our steamers executed at Cockatoo as far as possible, but to point out that this is governed to some extent by the position of the steamer’ when repairs are necessary.
In the case of the Cooee certain repairs were carried out abroad in connexion with the survey which had fallen due.
Yours faithfully, (Signed) W. Lewis,
The last letter was the following from the Boilermakers Society: -
Trades Hall, Sydney, 18th June, 1924. To the Secretary, Esq., Aust. Comwlth Shipping Board, Pitt & Hunter streets, Sydney.
Dear Sir, - Your favour of the 14th inst. to hand and same was duly placed before the members of my Executive Committee last night, ‘and I have to advise that they are grateful for your Board confirming in writing the verbal statement “That all work is to be done in Australia “ as being the policy of your Board, but we regret that our inquiries have not yet been answered, and we still seek that information asked for, or an intimation that you cannot or will not supply it.
Thanking you for an early reply,
Yours faithfully, (Signed) Gilbert J. Sinclair,
No reply was received to that letter. In the Senate to-day I asked the following questions on the subject: -
The answers I received were -
I object to the reiteration of the same old answer to the second question. No inquiries have been made. An explanation could easily have been given instead of a blunt “ no.” As a practical boilermaker and iron shipbuilder, I say that if this ship has been running in the condition admitted by the department, she is unsafe. The risk has been taken so that repairs could be made outside Australia. Australian workmen can do_ these repairs as well as any other workmen. Recently a case came under my notice in which a vessel was repaired abroad, but when she came to Australia it cost as much as was paid for the repairs to make them good. I am dissatisfied with the replies to my questions. An explanation might have been given in reply to my second question. There may be a reply to the question, but I am not going to put into the Minister’s mouth what he ought to say. So long as I represent the people of this country in this branch of our federal legislature, I shall demand proper answers to the questions that I ask. I insist that all the work done on these vessels shall, as far as practicable, which means nearly always, be done in Australia by Australian workmen. That is a demand that we, as workers, say is just. The people of this country are penalized to a certain extent in carrying on the shipping line, but whenever the Government has money to spend on repairs, it deliberately spends it in another country. I hope that the Minister in future, whenever he finds that work can be done better in Australia than abroad, will see that it is done in Australia. The ships will then be in better condition, and the repairs to them will last longer, because they will be done by better workmen. The cost will also be reduced.
– It is hardly necessary for me to assure Senator McDougall that the Government, and I personally, are exceedingly anxious that all work on Government ships shall be done, whenever possible, in Australia. When I spoke on the Shipping Bill, I said that such work should be done in Australia as a measure of defence, and I have no doubt that that argument influenced honorable senators in supporting the bill. I assure the honorable senator that I shall take the necessary action to bring his complaints under the notice of the Prime Minister, so that they will be dealt with in a proper manner, and I hope that when he receives the detailed facts. he will feel more satisfied.
Question resolved in the affirmative.
Senate adjourned at 10.58 p.m.
Cite as: Australia, Senate, Debates, 23 July 1924, viewed 22 October 2017, <http://historichansard.net/senate/1924/19240723_senate_9_107/>.