15th Parliament · 2nd Session
The President (Senator the Hon.J. B. Hayes) took the chair at 3 p.m., and read prayers.
SenatorFRASER.- Will the Minister representing the Minister for Commerce state whether the agreement between the Commonwealth and the Imperial Government for the sale of the Australian wool clip provides for annual adjustments of price ? If so, will the Government, in view of the dissatisfaction amongst the woolgrowers throughout Australia, endeavour to have amendments made to increase the average price sufficiently to give to the wool-growers the cost of production plus a margin of profit?
– The agreement between the Commonwealth and the Government of the United Kingdom in connexion with the sale of Australian wool provides for a review of prices in May of each year. The other matter mentioned by the honorable senator will be considered by the Government.
– Will the Minister representing the Minister for Commerce state whether the Government intends to restore the fertilizer subsidy to 15s. a ton in order to assist small producers . to meet the increased - cost of production caused by the higher prices of fertilizers, mill offals and petrol?
– - It is not customary to indicate matters of government policy in answer to questions.
– Is the Minister representing the Minister for Commerce in a position to give any information to the Senate as to whether the subsidy on fertilizers will be continued in the coming financial year?
-I am not in a position to furnish anyinformation on that matter.
Broadcasting Facilities : Compulsory Conference: Supplies
– As I understand that the Prime Minister has arranged to address a meeting of the miners on the northern coal-fields on Friday next, and that his remarks will be broadcast through the national stations, thereby acquainting the public of Australia with the Government’s views on this matter, will the Minister representing the Prime Minister state whether similar facilities will be provided to the miners’ representatives to state their case likewise?
– The Prime Minister, in addressing the miners, proposes to make a statement on behalf of the Government. As to the second part of the question, I am not in a position to give a reply.
– If the Minister representing the Prime Minister in this chamber is not in a position to answer a question addressed to the Prime Minister, who is?
– I have a perfect right to answer which questions I choose, and in the manner I choose.
– Prior to. addressing a question to the Leader of the Senate, I draw his attention to the fact that I have received the following telegram from Victoria -
Unless strike settled early, metropolitan area will be without wood, coal, coke, briquettes and mallee roots. Stocks in yards will only last one week. - D. Elliston, Hawthornroad, Caulfleld.
Can the Minister give to the Senate any indication of the intention of the Government with regard to the dispute?
– I cannot do that. I point out to the honorable senator that the Government is in favour of the system of industrial arbitration. Personally I consider that arbitration awards should be obeyed.
asked the Minister representing the Minister for Industry, upon notice -
– The Minister for Industry has supplied’ the following answers : - 1.it is the duty of each judge of the court to endeavour to reconcile parties to a dispute in all cases in which it appears to him that his mediation is desirable in the public interest.
Returned Soldier Motor Drivers
– asked the Minister representing the Postmaster-General, upon notice -
Will the Postmaster-General inquire into the effect that the Public Service Arbitrator’s decision regarding increments will have upon returned soldier motor drivers . in . his department, and if it be found these employees are not sympathetically treated, will he take steps to remove . the anomaly ?
– The PostmasterGeneral has supplied the following answer : -
The normal method of determining incremental advancement under determinations of the Public Service Arbitrator was applied in the case of Determination No. 25 of 1939 affecting the Amalgamated Postal Workers Union and consequently nil motor drivers are receiving their correct rates of pay. It’ is impracticable to discriminate in the application of determinations as between officers who are returned soldiers’ and non-soldiers performing exactly similar duties.
Patents Office, Canberra
asked the Minister for the Interior, upon notice -
– The answers to the honorable senator’s questions are as follows : -
asked the Minis ter for the Interior, upon notice -
SenatorFOLL. - The information is being obtained.
asked the Minister representing the Minister for the Army, upon notice -
– The Minister for tire Army has supplied the following answers : -
asked the Minister for Trade and Customs, upon notice -
– The answers to the honorable senator’s questions are as follows : - 1 and 2. Early in October last the Interstate Shipping Companies increased freights by 20 20 cent, over rates prevailing on the 31st August, 1939. The Commonwealth Prices Commissioner after a preliminary survey of the facts available and pending” a detailed investigation, issued an order reducing the increase to 10 per cent. Subsequent inquiries disclosed that the shipping companies were carrying increased costs due to higher insurance, naval routing and loss of passenger traffic, but that no higher increase than 10 per cent, was justified. The question is continually under review and a quarterly check is being conducted of the operations of the companies so th at rates may be varied if necessary to meet changing conditions.
asked the Minister representing the Minister for Information, uponnotice -
– The Minister for Informationhas supplied the following . answers; -
asked the Minister representing the Treasurer, upon notice -
– The Treasurer has supplied the following answers: -
asked the Minister representing the Minister for Industry, upon notice -
Will the Minister supply the Senate with the names of the industries covered by the Arbitration Inspector, and the amounts recovered respectively for each industry to date?
– The Minister for Industry has supplied’ the following answers : -
Outside the Australian Capital Territory the Arbitration Inspector polices the awards covering journalists, and employees of banks, insurance companies, trustee companies and municipal corporations. Since Ms appointment in February, 1935, the Arbitration Inspector has recovered in respect of underpayments under those awards the amount of £13,243 lGs. 10d.
In addition, since his appointment, in December, 1938, as Inspector under the Industrial Board Ordinance of the Australian Capital Territory, the Inspector lias recovered - £712 (ls. in respect of underpayments under the various determinations of the Industrial Board.
asked the Minister representing the Minister for Industry, upon notice -
When will the suggested additional arbitration inspectors bc appointed?
– The Minister for Industry has supplied the following answer : -
A great number of applications were received and these are now being scrutinized. lt is expected that the appointments will be marie at an early date.
asked the Minister representing the Minister for the Army, upon notice -
– The Minister for the Army has supplied the following answers : -
asked the Minister representing the PostmasterGeneral, upon notice -
What is the reason for the exclusion of Western Australia from the national broadcast of Australian news items - following the broadcast of overseas news by the Australian Broadcasting Commission at approximately 1 1 a.m., 5.15 p.m. and 9.55 p.m. (Western Australian time) ?
– The PostmasterGeneral has supplied the following answers : -
The commission’s agreement with the Austraiian Newspapers Conference provides that Australian news may be broadcast at the times shown in the following schedule: - First morning news - not before 0.45 a.m.; second morning news (repeat) - about 8 a.m.; first mid day news - not before 12.50 p.m.; second midday news (repeat) - before 2 p.m.; first evening news - not before 7.10 p.m.; second evening news (repeat) - at about 9.30 p.m.; final news (repeat- at time to be decided by the commission.
The agreement also provides that Australian news must be taken, wherever possible, from local papers and not be relayed from other States. It will be seen that the schedule docs not provide for broadcasts of Australian news at 11 a.m. and 5.1.5 p.m. There is no reason why a local session of Australian news should not be broadcast in Western Australia at 9.55 p.m. after the conclusion of the relay from Sydney of overseas news. I understand that instructions have been issued to this effect, this new session replacing one which is now broadcast at 10.20 p.m. National stations in Western Australia broadcast Australian news six (0) times daily, at the following times: - fi.45 a.m., 7.30 a.m., 12.45 p.m., 7.15 p.m., 10.20 p.m. and 11.20 p.m.
Motion (by Senator McLeay) agreed to-
That the days of meeting of the Senate, unless otherwise ordered, be Wednesday. Thursday and Friday of each week; and that thu hour of meeting, unless otherwise ordered, be Three o’clock in the afternoon of Wednesday and Thursday, and Eleven o’clock in the forenoon of Friday.
Motion (by Senator McLeay) agreed to-
That, on all sitting days of the Senate during the present session, unless otherwise ordered, Government business shall take pre- cedence of all other business on the noticepaper, except questions and formal motions, and except that general business take precedence of Government business on Thursdays, after 8 p.m.; and that unless otherwise ordered, General Orders of the Day take precedence of general notices of motion on alternate Thursdays.
Motion (by Senator McLeay) agreed to -
That, during the present session, unless otherwise ordered, at four o’clock p.m., on Fridays, the President shall put the question - That the Senate do now adjourn, which question shall not be open to debate; if the Senate be in committee at that hour, the Chairman shall in like manner put the question - That he do leave the Chair and report to the Senate; and upon such report being made the President shall forthwith put the question - That the Senate do now adjourn, which question shall not be open to debate: Provided that if the Senate or the committee be in division at the time named, the President or the Chairman shall not put the question referred to until the result of such division has been declared; and if the business under discussion shall not have been disposed of at such adjournment it shall appear on the business-paper for the next sitting day.
Motion (by Senator McLeay) agreed to-
That, during the present session, unless otherwise ordered, the sittings of the Senate, or of a committee of the whole Senate, be suspended from 12.45 p.m. until 2.15 p.m., and from 6.15 p.m. until 8 p.m.
Motion (by Senator McLeay) agreed to -
That a Standing Orders Committee be appointed, to consist of the President, the Chairman of Committees, Senators Crawford, Darcey, Herbert Hays, Johnston, Lamp, A. J. McLachlan and Sheehan, with power to act during recess, and to confer with a similar committee of the House of Representatives.
Motion (by Senator McLeay) agreed to-
That a Library Committee be appointed, to consist of the President, Senators Abbott, Cameron, Collett, Collings, Fraser and James McLachlan, with power to act during recess, and to confer or sit as a joint committee with a similar committee of the House of Representatives.
Motion (by Senator McLeay) agreed to -
That a House Committee be appointed, to consist of the President, Senators Amour, Brand, Cooper, Grant,’ Keane and Uppill, with power to act during recess, and to confer or sit as a joint committee with a similar committee of the House of Representatives.
Motion (by Senator McLeay) agreed to-
That a Printing Committee be appointed, to consist of Senators Aylett,- Courtice, Cunningham, Dein, Johnston, Leckie and Wilson, with power to confer or sit as a joint committee with a similar committee of the House of Representatives.
- by leave - Since my last statement to the Senate on the progress of the war, events in Europe have developed, at first slowly, and then with dramatic speed. Activity on theWestern Front has been restricted to unimportant skirmishes and patrols by small parties from both sides, with occasional artillery exchanges on a small scale. . The Allies have been engaged in consolidating their positions, and in reconnoitring by observation flights over enemy territory. On the sea, the Royal Navy, with which Dominions naval vessels have co-operated, has kept up the traditions established in the past. German merchant shipping has ceased to move, while enemy naval losses have been substantial. One of the strongest proofs of Allied superiority at sea has been the success of the convoy system. Of more than 17,000 vessels convoyedby the Allied navies, less than one out of every 500 has been, sunk, , At the same time, reports have been received constantly of the sinking of German submarines, and during recent weeks, very little has been heard of their activities. The tightening of the economic blockade has forced Hitler into one desperatebid to ensure essential supplies. To this I shall refer later.
For the most part, air activity during the past four mouths has been restricted to patrols and reconnaissance flights, with spasmodic encounters between small numbers* of fighters and bombers1 in which the ‘German* have lost mo-re planes- than the Allies.
By patrolling tlie bases from which seaplanes set out on their magnetic mine-laying expeditions,, the Royal Air Force has put a complete stop to this kind of activity.
On the 16th March, the Germans sent a large force of aeroplanes to attack the British naval, base at .Scapa1 Flow but these failed to inflict any serious damage. Three days later, in retaliation for this raid, a large fleet of British bombers attacked the German base on the island of Sylt. Waves of bombers raided the base for seven hours, and inflicted very great damage. One British bomber was lost. The British success in this largest aerial action up to the present, is most encouraging.
On the Western. Front, there have been frequent encounters between groups of Allied and German planes, and in practically every case, the Allied pilots have inflicted much more severe losses on the enemy than they themselves suffered. In this way, superior .personal skill and equipment are overcoming the disadvantage of numbers.
The last ten days have seen a tremendous crescendo in the activity of all branches of the services. With what must have been deliberate planning for a long period ahead, Germany suddenly, and without warning, invaded two neutral and peaceful countries. Within a few hours Denmark was under German domination; a few hours later Norway was attacked, and her rugged country, untouched by war for many generations, became a battlefield in which, I am happy to say, the German occupation is now being effectively countered by the Allied arms.
If it is possible to admire organization when it has the effect of bringing domination and disaster to peaceful people, then one must pay a tribute to the secrecy and skilful planning with which this evil action was carried out. We are indeed up against a formidable foe. But the British Navy was not idle.
Within ‘24 hours, British: warships’ and the British air fleet were rendering assistance to the. Norwegian people. Since, then, the Skager Rak has been forced, the Baltic Sea has been mined1, and Allied’ forces are in possession of points on the Norwegian coast. Not only have these actions cut off from Germany those supplieS which it formerly received from! the- northern democracies, but we confidently expect that they have left stranded in Noway troops and equipment which must in the near- future fall into Allied hands.
During the various naval encounters, the German Navy suffered’ crippling losses. The battle cruiser Scharnhorst is known to have been severely damaged by two hits in its action with H.M.S. Renown on the 10th April. Three other cruisers and possibly a fourth are known to have been sunk.. Seven German destroyers were sunk at Narvik, and possibly three more have been put out of action. Two submarines also have been sunk. Tlie ‘British losses have been restricted to four destroyers, and four other destroyers have been damaged. The battle cruiser Renown “was very slightly damaged in its action with the Scharnhorst but the damage done by a bomb to the battleship Rodney was negligible.
I do not conceal from honorable senators my belief that, as a result of these events, we have entered upon a phase of this war which may well prove crucial. There is a tense expectancy in the air. Every neutral country in Europe has had its warning; each one has been told by Germany that it has no rights. The success of the Allied actions must surely have a tremendous effect upon those neutrals Who stand wavering and afraid in the shadow of the Third Reich. Are they to exchange their proud and historic independence for a prompt and relatively bloodless slavery by surrender, or are they to stand with these in whose victory resides the only hope for a new dawn of freedom for Europe? The next few weeks will provide the answer.
I now wish to examine in some detail the development of our own war effort since the beginning of December last.
In the period under review, there has been a steady expansion of navy personnel, amounting :to 1,000, and the number of ships in commission lias been increased by twelve, including ships formerly under construction and merchant vessels chartered. Since the outbreak of hostilities no less than 138 merchant ships have been defensively armed in Australia - an increase of 41 since early in December, 1939. To ensure the adequate training of gun crews, special gunnery training facilities for officers and men have been established in Melbourne and Sydney. Training courses in anti-submarine work arc also held for selected officers and ratings.
Traffic around the coasts of- Australia is safeguarded by His Majesty’s Australian ships of the Australian Station with the co-operation of the Royal Australian Air Force. The ships are continually employed patrolling and carrying out exercises calculated to maintain them in a high state of fighting efficiency.
The transportation of the Australian Imperial Force overseas involves considerable work in fitting out, equipping and provisioning merchant ships, in making detailed arrangements for sailing from the different ports of embarkation, and arranging adequate escort protection while the convoy is en route overseas.
The efficiency of the special coastwatching organization set up at the outbreak of hostilities is being increased continually.
The Admiralty has requested the Naval Victualling Department to supply large quantities of victualling stores to His Majesty’s ships and establishments of the Mediterranean, East Indies, China and South Africa stations. By the end of this year, some 50,000 tons deadweight of stores will have been supplied. Victualling stores are also supplied to the Australian Imperial Force for use abroad. The Admiralty has recently requested the Commonwealth Government to arrange for the building, as rapidly as possible, of anti-submarine vessels in Australia, and orders are about to be placed to the maximum of our capacity. Arrangements are well advanced for fitting ships with anti-magnetic mine equipment when this is considered necessary.
Finally, there is the progressive improvement at various ports of naval defence measures, increased storage arrangements, and facilities for embarking fuel, fresh water and stores.
By December, 1939, considerable progress had been made in connexion with the initial war programme approved for the Army. This programme provided for protection of vulnerable points, the completion of coast defence preparations, intensified militia training, the introduction of universal training beginning in January, 1940, and the raising of the Sixth Division and ancillary troops of the Australian Imperial Force. As the result of the recent comprehensive review by the “War Cabinet of Australia’s war effort, this programme has since been extended, mainly by the decisions to expand the Australian Imperial Force to a corps of two divisions and corps troops, and to raise one head-quarters railway construction and maintenance group, three railway construction companies, one railway survey company, and two forestry companies.
The garrison battalions enlisted from the Australian Imperial Force Reserve for guard duties in connexion with vulnerable points now total 4.655 personnel. Coast defence batteries are in a constant state of readiness, the permanent troops being supplemented by militia personnel called up for the duration of the war.
The first month’s period of camp training for the Militia was completed in December, 1939. The first series of three months’ camp training period for approximately half the Militia has, in many instances, been completed, and the second series, which will terminate ii< July next, has begun.
The present strength of the Militia - voluntary enlistment- is 62,328 personnel, 13,720 having been transferred to the Militia Reserve. Further transfers to the reserve are expected with the beginning of the second series of three months camps and at its conclusion. By June, 1940, it is anticipated that about 75,000 voluntarily enlisted and national service personnel will have received periods of training ranging from three to four months.
During the financial year 1940-41, militia training will revert to the prewar period of twelve days of camp training, with twelve days of home training for officers and reduced periods for other ranks.
The introduction of universal training under Part IV. of the Defence Act in January, 1940, has resulted in 20,727 national service personnel being called up for training. These men are being trained concurrently with the Militia for a period of eleven weeks of camp training. In addition, men who will have attained the age of 20 or 2.1. years during the calendar year 1940, and who have not been called up under Part IV. of the Defence Act, are being registered under Part XIV. of the act. Registrations to date number 47,003. Of these, 6,573 are serving under voluntary engagements with the Defence Forces. During the year 1940-41 the quota at present in training will carry out the same training as the Militia. The new quota called up in 1940-1 will receive 58 days of camp training, at the conclusion of which they will be trained with Militia units for 12 days of camp training.
The Sixth Division Advance Party and Head-quarters Overseas Base sailed on the 15th December, 1939. These were followed in January, 1940, by the first detachment of the Sixth Division, which arrived safely in the Middle East, and is continuing its training there.
Recruiting for the Seventh Division and corps troops will begin in May, 1940. The total strength of the corps, with first reinforcements, will approximate 50,000 personnel. Subsequent reinforcements will be provided for later. Training depots have been established, and, as a beginning, the second, third and fourth reinforcements for the Sixth Division are in process of being raised.
The forestry and railway construction companies will have a strength of 40 officers and 1,203 other ranks.
The organization of the Australian Imperial Force on the basis of British war establishments involves the provision of some thousands of mechanical vehicles for the Australian Corps, including light tanks, artillery tractors, lorries and trucks of various types, and Bren and scout carriers. In addition to rifles, light automatics and machine guns, various types of field and medium artillery and antitank weapons will have to be provided from Australian and British sources. Considerable progress has been made with the conversion of artillery equipments to pneumatic tires.
The clothing of the Sixth Division and ancillary troops and reinforcements, the Militia, national service personnel and garrison battalions has been completed. Provision has been made for replacements and the building up of reserve stocks at home and abroad.
Owing to the large number of personnel undergoing military training, it has been found necessary to make special provision for hutted and hospital accommodation.
All Australian Imperial Force personnel are now inoculated and X-rayed soon after enlistment, and the system of inoculation has been extended to the Militia Forces during the three months camp training period. A canteen service also has been established for the welfare of troops at home and abroad.
Since December last much has been done towards the achievement of the Government’s aim to complete the Air Force development programme by June of this year, twelve months ahead of the date originally intended, and to recruit and train air crews in accordance with the scale agreed upon as our contribution to the Empire air training scheme. To make our programme safe of achievement, the War Cabinet decided yesterday to place further orders in the United States of America for 49 Lockheed Hudson reconnaissance bombers, together with spare engines and a range of spare parts, kc. This will have the dual purpose of further strengthening our home defence squadrons, and at tlie same time making available Avro Anson aircraft for training purposes in connexion with the Empire air training scheme. Eighteen of the Hudsons will be allocated for the equipment of an additional general reconnaissance squadron, and the balance will be used for the re-equipment of squadrons from which the Ansons are withdrawn. The total cost of this order will be £2,277,000.
Many Hudson aircraft have arrived in Australia, and have been allotted to squadrons, and the Air Board has expressed itself completely satisfied with the performance of the Hudsons already in service. Our participation in the Empire scheme entails the building up of a vast training organization capable of fulfilling our commitments. This great expansion involves the solution of many serious problems of organization, personnel, supply, maintenance and works. To ensure the successful completion of the task, some measure of re-organization of the Air Force was considered necessary, and the two principal changes decided upon were the reconstitution of the Air Board in order to enable it to deal more efficiently with the problems mentioned, and the formation of area commands. The main changes in the Air Board were the appointment of Air Chief Marshal Sir Charles Burnett, as Chief of the Air Staff, the creation of an additional member for supply and production, and a re-distribution of duties among members. As an additional measure of decentralization to allow the staff of Air Force Head-quarters to concentrate upon questions of major policy, units of the service have been organized into four areas, namely, southern area, comprising all units in Victoria, South Australia, Tasmania and Southern Riverina ; central area, which will be composed of units of central New South “Wales; northern area, which will be composed of units of northern New South Wales, Queensland, Northern Territory and Papua; and western area, to include all units in Western Australia. The medical organization of the Royal Australian Air Force has been expanded to such an extent that it has been decided to separate it from army control, while at the same time providing machinery for coordination between the Navy, Army and Air Force.
A recruiting organization comprising centres at the capital cities, and nine of the larger country towns, has been established. Air crows for entry into training establishments for at least six months ahead of the programme, have been selected and placed upon a waiting list, to be called up as additional schools are opened. Voluntary recruiting committees have been formed in each State, and are conducting a campaign to ensure that the response will continue to be satisfactory. It is worthy of note that at the outbreak of war the total strength of the
Royal Australian Air Force was approximately 3,500, whereas it now numbers over 9,000.
Due to the heavy demands of industry and of the other services upon the fitting trades, schools of technical training have been formed at Canberra, Sydney and Melbourne, where- recruits are being trained to the standard of trade efficiency required for entry to the engineering school. Since early in December of last year, the following new Air Force establishments have been formed, although some are not yet fully developed : - Six recruiting centres; three recruiting depots; three schools of technical training; one engineering school; two elementary flying training schools; one armament school; one seaplane training flight, and one equipment depot.
Under the Empire air training scheme a large number of additional flying instructors will be required. The training of flying instructors was taken in hand some months ago with the result, that our immediate and future requirements are now assured. Instructors in specialist subjects also are being trained rapidly. Certain deficiencies of specialist instructors are being supplied by the Royal Air Force, some of whom have arrived already in the country, and have been absorbed by the training organization. Elementary and service training establishments also have been working to capacity, and trained pilots are becoming available in sufficient numbers to meet the demands for new service and training units to be formed under the programme. Full advantage has been taken of the facilities for flying training offered by civil aviation companies, and of the services of skilled civil flying instructors in organizing’ the elementaryflying training of pupil pilots. The claims of home defence units have not been neglected and the plan for the full development programme for home defence is well under way. Number 10 Squadron, the nucleus of which was overseas at the outbreak of war, has been brought up to its full establishment of men and equipment, and is now employed with similar squadrons of the Royal Air Force upon active service flying operations.
As announced, it has been decided to send one Army Co-operation squadron overseas for Army Co-operation duties with the Australian Imperial Force. A squadron is available now, and it is expected that this unit will be despatched in the near future. Nearly all of the 100 Hudson aircraft previously ordered from abroad have reached Australia or are en route and the local production of Wirraways is proceeding satisfactorily. The rearmament of service squadrons with these types of aircraft, and the consequent conversion courses for the crews are well under way. Light training type aircraft also are being delivered in adequate numbers to meet our present needs. Apart from the work upon training, which comprises such a large part of our effort, mention should be made of the operational duties undertaken by the service squadrons. Patrols, to ensure the safety of shipping in coastal waters in co-operation with the Navy, ave regularly carried out. To assist in safeguarding the passage of the first convoy while in Australian waters, the Royal Australian Air Force patrolled areas totalling nearly half a. million square miles.
Finally, I wish to inform honorable senators something concerning the activities of the Department of Supply and Development. When Parliament adjourned in December this department was adapting the normal processes -of private industry to the new demands of war. The problem before it was very different from that which the old Department of Defence faced in 1914.’ Then the problem was one of recruiting men, and of sending them away with the barest essentials. The task we have undertaken now is to provide the full personnel and equipment o.f a modern mechanized army. Twentyfive years ago we were sending men away to help munition-making in England. To-day we are sending the munitions themselves, and not only for our own troops, but also for the three fighting services in Europe and in other parts of the Empire. Nevertheless, and although the actual production and supply to date has been on a scale which would have astounded our predecessors of twenty-five years ago, the work of the last .six months has been chiefly preparatory for larger production still to come. It is not pos- .sible in these days to launch an enterprise in modern manufacture very quickly. As honorable senators1 are aware, it is not uncommon for a period of two years or more to be used in active preparation before a single unit of output is produced. Modern armaments are highly complex products, demanding the finest degree of precision at all stages. Men and machines have to be trained and made. Elaborate foundations and structures need to be devised. These processes have been the main’ pre-occupation of the department, concurrently with the actual production and securing of other supplies. The Government’s own factories have been enlarged and extended, and some 25 annexes to private establishments have been or are being constructed and equipped. The chief purpose of these annexes is to produce munitions for our own defence in Australia, in the quantities that would be needed if war visited our own coasts, but already our output is such that we are using some of them for oversea purposes. More will be coming into production in the near future and the whole system is very well advanced.
Recently the Government established an Aircraft Production Commission to bake care of the construction programme now before us. The programme is doubtless the most ambitious part of the whole supply plan, and it is doubtful if any country has attempted to do mom in i-.ela.tion to its resources and experience. No small part of the problem of all this war production is that of skilled craftsmen. As time .goes on, this part of our problem will become more .apparent. Our .capacity to train mcn to cope with the technical aspects of munitions .and aircraft will .certainly determine our supply capacity. The training schemes now commencing are limited by the facilities available and procurable, in a world .all of which is demanding the same thing, as for example, precision machine tools. Australian capacity to produce these things is being mobilized to the utmost. In all of these efforts the Government has had to pay regard to any disturbances to civil industry ,and employment, and to its supplies. The .disturbances hav.e been remarkably slight, considering the magnitude of the task. An example of this policy will be found in the labour dilution plans recently approved by tlie engineering unions. thi Government has had to select the -work and the programmes on which concentration would be most effective.. It- kas- not launched out in every direction and dissipated1 energies’ and resources1. It. has pursued a policy directed to achieve the most important and effective: results;.
I have occupied some- time-,1 but I consider that honorable senators should? be given- full information of these- activities during the .period that the Senate h*» been in recess. The d’c termination of the Allies- to win this- war and’ to’ establish a just and lasting peace has not abated in the least since the conflict began, and I am pmu! to say- that Australia is playing ite part with vigour, skill ami resolution.
Debate, resumed from the 17th, April,, (vide- p. 27 )i on motion by Senator Wilson- -
That the following Address-in-Reply to His Excellency the Governor-General’s Speech bc agreed’ to: -
To Hi’s Excellency the Governor-General-
We, the Senate of the Commonwealth of Australia,, in Parliament assembled, desire to express our loyalty to our most gracious Sovereign and to thank Your Excellency for the speech, which you hare been pleased to address to. Parliament.
– With the terms, of Senator Wilson’s motion the- members- of the Opposition heartily agree,, although. I shall have something to say later concerning the speech delivered by him.. At the moment, I propose to deal with certain subjects in. a general way;, but I stress the. point that, the members of the Opposition do not underestimate in the slightest degree the Government’s responsibilities and difficulties. For our- part> we ai:e prepared to accept all the responsibilities and difficulties which the present situation, requires us- to accept, and to discharge those responsibilities so far as is possible. This party- has declared, its defence policy, and has consistently given its. support tff. the’ defence activities of the Government. The Government began somewhat belatedly, in spite of the warnings issued by this party long before, it apparently believed that there- was any need to act* and it has not yet overtaken national, needs.. We have just heard a statement, read by the Leader of the Senate (‘Sena tor McLeay), which is merely a rehash- of what we- have already read in* the press. We have- received very little information either as to what the Government is doing or as to what is- really happening on the other side of the world. Generally speaking, the members of this National Parliament have to accept such statements and allegations as the press sees: lit to make available to- them. I. again direct- the attention of the Leader of the Senate to the fact that- the northern part of this great continent is still in the main, very largely undefended, although it is undoubtedly the most vulnerable part of the Commonwealth.
The members of the Labour party have been chided’ because they have refused to become a part of a so-called national government. We have refused because we doubt the efficiency of a government consisting of two incompatibles, -and we, therefore,, doubt the wisdom of increasing its incompatibility by adding another incompatible to the mixture. We believe that, apart from; the insincere offer made by the Government and’ its supporters in this1 Parliament, there is little if any public support’ for such a proposal. When honorable senators opposite suggest that the Opposition’ should co-operate in a so-called national government, they do so with their- tongues in their cheeks because they believe that’ they can make political capital out of the fact that we refuse’ to sink our identity by joining the unholy combination. On: many occasions wo have said that we- can contribute a greater measure of assistance to the Government by remaining’ a separate entity. From my contact with- leading men in the business walks of life in Queensland, New South Wales and Victoria-, I firmly believe that the people of this country consider that a’ vigorous opposition in both branches of the Common-wealth Parliament is- the nation’s greatest essential at the moment. The people recognize that the OPpO. sit,ion which represents the Australian Labour party, provides a great safeguard in this-1 time of nacional emergency. I admit that th& Government has a policy; it would he a poor government if it had. not. It has a defence policy, some features of which we have heard elaborated to-day in a statement by the Leader of the Senate (Senator McLeay). We, on the Opposition side, also have a policy, for we have been units in the great organization that has built up that policy over the last half-century. We have a policy, and a continuous one, which we believe to he essential, not only in wartime, but also in times of peace. We have by our training, experience and capacity a policy which we are determined to implement, if and when we are called upon to do so.
Although we have pledged ourselves, in this chamber and in the House of Representatives, to assist the Government in bringing this war to a. successful conclusion, is it to be claimed that because of that pledge we have surrendered our right to criticize the methods adopted by the Government and its various departments in putting its policy into effect? Is it seriously suggested, as was done yesterday by Senator Wilson, that because we have the courage to say that The best administrative and legislative action has not been taken to implement the policy of the Government, and that something more effective towards securing ‘the end for which we all hope might have- been achieved, we should be accused of disloyalty, or of association with those who want to see the Allies lose this war? I submit that there is nothing to support such a suggestion in any situation- that has arisen since September, 1938, when the Government first awakened to the fact that a cloud then no bigger than a man’s hand had at least serious portents. The Opposition has not failed in a single instance to afford the Government the fullest support on the floor of this chamber. It has never cavilled at the amount of money said to be required to give effect to what the Government has considered to be necessary measures. We have suggested safeguards. We have recommended that money should not be expended in such a way that good value will not be obtained for it. We have suggested that there should be no profiteering. We have asked that every precaution should be taken to protect our citizens in their everyday life, and to uphold their civil liberties, but we have never asked that one pound should be deducted from the sums which the Government, through its expert advisers, has deemed to be necessary to carry on the war.
The Opposition is fighting a war on two fronts. We are trying to help the Government to fight the external war, and we are also doing our best to wage the internal war which is ever on. We are appealing to the Government constantly, and we do so mostly in vain, to help us to carry on the internal war; but the Government has never appealed to us in vain for help in carrying on the external fight, which for the moment is of paramount importance. The Opposition is fighting a great and fundamentally necessary war, so far as Australia and the needs of its people are concerned, when it wages a fight against economic insecurity, poverty, unemployment, low wages and evil industrial conditions. Because at this juncture we refuse to abate any of our energy and enthusiasm in the waging of the internal war, again I ask whether we are to be accused- of failure to implement the pledge that we have so often repeated in this chamber regarding the external war. Are we to be accused of disloyalty to the Empire, and of being unfaithful to our own pledges? We hear much said on the other side of the chamber of the need for national unity and the sinking of party differences. If honorable senators opposite are in earnest in their remarks regarding the war overseas, they should discontinue the methods all too frequently adopted by them in their speeches on this subject. The Labour party, which the Opposition represents in this chamber, is not alone in waging the internal war. I shall quote very briefly from the Brisbane Telegraph a speech delivered by Archbishop Duhig on the 14th April last. Nobody will accuse that ecclesiastical dignitary or his people of failing to do their part in the prosecution of this war. As many followers of his religious faith and of the nationality from which the people of that faith largely spring will be found in the different theatres of war on this occasion as in the last war; I say that with conviction, although I neither belong to that faith nor come from the country to which I allude. This is what Archbishop Duhig said -
While it is generally admitted that in our time a great deal has been done to improve the conditions of tlie worker, he is still, generally speaking, left with that awful heritage of his class, the spectre of uncertainty and want. If we could only eliminate unemployment and assure to the worker a fair and constant wage providing him against seasons of sickness and those unexpected domestic crises which so often come to upset family happiness and security, we would be putting thu crown on the endeavour of all the good men who have ever laboured for tlie emancipation of the poor and tlie rights of labour, and we would be likewise crowning ail the legislation that has been made for this excellent end. … It seems to me that this inequality can be removed only in one way, that is by the institution of child or family endowment - a subject on which I have before spoken at length in another phi.ee, and which is, I believe, operating in some parts of “this country. It would undoubtedly cost much to inaugurate it, but when we consider all that is now paid away in old-age pensions, the dole and rations for unemployed, &c, much of which might bo saved by means of” family endowment, if is, I think, a measure well worthy of consideration by any government or any country.
The Government talks of having kept down the prices of commodities, and of having prevented the cost of living from rising, but do honorable senators believe that? I do not know what the daily experience of honorable senators is, but I cannot understand how they could conceive the idea that the Government has kept down the cost of living. They must, know, as every working-class housewife is aware to her distress, that the cost of living is going up by leaps and bounds. [ shall refer to certain prices given in a printed document, and applying to the town of Manly, which is situated in the constituency represented in this Parliament by the Treasurer (Mr. Spender). On the 31st August last, the date from which the Government declared that no increase of prices could take place without the consent of the Price3 Commissioner, the cost of tea in Manly was l.s. Hid. per lb., but I find that ^to-day it is 2s. 5d. per lb. Bacon shoulders, which were sold in Manly on the 31st August last at 11½d. per lb., to-day cost ls. 4d. per lb. Potatoes on that date were l£d. per lb., and to-day they are 2½d. per lb.
– “What is the reason for that?
– The honorable senator will probably be at a loss to tell me why dried apricots, which are produced in vast quantities in this country, cost lOd. per lb. in Manly on the 31st August last, and to-day cost ls. 3d. per lb. Lamb chops, which were lOd. per lb., are now ls. 3d. per lb. The price of veal cutlets rose from 7£d. to 9½d., dripping from 4£ to 6d., porter-house steak from lOd. to ls. 2d., rump steak from ls. Id. to ls. 4d., fillet steak from ls. 4d. to ls. Sd., and cutlets from l£d. to 2£d. each. The prices of fish, of which we have teeming millions in our seas, also rose considerably. That of filleted flathead increased from ls. to ls. 9d., filleted bream from ls. to ls. 9d., filleted mullet from lOd. to ls. 6d., leather jackets from 6d. to 9d., and smoked haddock from ls. Id. to ls. 4£d. The prices of fruit and vegetables increased on an average by about 3d. in every shilling, and the prices of clothing, boots and shoes showed an average increase of 20 per cent.
– What about butter and bread?
– I have not the prices of butter and bread before me, but I know that a regulation has been gazetted prescribing that a soldier, an employee of the Defence Department in this clay of national need, who commits an offence against military discipline shall be deprived of a portion of his butter ration and given margarine as a substitute.
I read in to-day’s Canberra Times that the petrol tax may be increased by 3d. a gallon. That paper forecasts that the budget will announce a substantial rise of the duty on petrol. I do not know how that or any other newspaper is aware of what the budget will contain, but I do know that members of Parliament are denied such knowledge, whilst our experience shows that press forecasts on these matters always prove fairly correct. Our newspapers seem to have access to Cabinet secrets, but we, the representatives of the people, are refused knowledge of many matters which the Government has under consideration. Whilst we did not know the date on which Parliament was to re-assemble, the newspaper forecast of that date proved to be correct. I admit that the Government’s proposal to increase the duty on petrol will have the effect of rationing petrol, but it will not mean rationing to the big fellow, the man who has a high-powered car which he uses for pleasure. He will be able to afford the extra 3d. a gallon. Neither will thi3 increase mean rationing of petrol to the big business man, to whom another increase of 3d. a gallon is only a mere bagatelle compared with the profits he is able to make in his business. But this additional imposition will inflict untold hardship on unfortunate people at the bottom of the social scale, whose motor cars are out of date and badly equipped but none the less essential to their owners in order to enable them to make a living. I refer to fruit-hawkers and pedlars, and other classes of people who cannot exist unless they can afford to buy sufficient petrol to run their motor vehicles. This applies also to the small business owned by one man who operates it either alone or with the help of one or two employees. This additional imposition will severely hit people of those classes.
I propose now to refer to a matter which I have raised in this chamber on previous occasions. Parliament adjourned amidst one of the most disgraceful scenes of hurry and bustle and neglect of duty on the Sth December last, and we were called together again four months later, on the 17th April. I and every honorable member of the Opposition believe - and we have been frequently told that the Government holds the same belief - that this country is in danger, that the conflict on the other side of the world is growing daily more dangerous. Does the Government really believe that? If it does, what justification can it give for keeping Parliament in recess for four months? No other parliaments in the Empire have been kept in recess during that period for any lengthy time. The British Parliament has been in session almost continuously and has held more than one secret session to enable members to acquaint themselves with what is happening. Except for a dissolution for the purpose of an election, the Canadian
Parliament also has been sitting almost constantly, and the people’s representatives have been kept advised as to what was going on;, and the moves which the Government considered essential and had under consideration. Similarly the parliament of South Africa and that of our sister dominion in the Pacific have been kept continuously in session. It remains f or the National Parliament of Australia, under the control of perfervid patriots who never tire of slandering this Opposition concerning our attitude towards the war, to find it essential to keep Parliament in recess and to gag the people of this continent by closing the mouths of their parliamentary representatives, and, in spite of its Department of Information and its Department of External Affairs, to keep the people in ignorance of all matters of importance pertaining to the war.
I shall now refer briefly to this Government’s abuse of the Executive’s power to make regulations. Any government must possess certain defence powers. This Government possesses such powers and, unless I misunderstand them, they are as complete as any defence powers enjoyed by any government within the British Empire. But those powers are not sufficient for this Government. It may be true that in certain exigencies such powers might be insufficient to enable the Government to deal with defence matters effectively, but it cannot be said that this Government was justified in taking to itself under section 18 of the National Security Act, the power to abrogate any law already enacted in this country, and then at the same time to keep Parliament in recess for a period of four months, in the meantime pouring forth a flood of regulations,, some of which constitute a very serious interference with the civil liberties and rights of the people of this continent. I take the following quotation from a Melbourne paper of the 29th February : -
We need hardly point out that these vast powers make it possible to suppress not merely revolutionary propagandists or disaffected persons, but any one. uttering a criticism in matters of policy which the Government chooses to resent. It may be held rightly enough that no Australian government is likely to apply sich a law with anything like totalitarian rigour; but instances quoted recently in one of our weekly journals show that the petty harrying and questioning of citizens by officials has already begun; and, if the nascent evil is not checked, it may well prove tlie beginning of a veritable persecution. As Mr. Justice Evatt has reminded us, the present Constitution of Australia affords no safeguard whatever against the invasion of our liberties in this fashion.
At a meeting of the Empire Parliamentary Association this morning, we heard a speech which none of us will ever forget. If there was one note higher than another in that inspired address, it was the declaration that we still have the right to possess our own souls, our own bodies and our own consciences. But things are being done under the defence powers possessed by the Government in this time of national emergency which nullify that principle; and they are being done in such a way that if we are not careful, when the war is over, as we all hope it will be soon, and victoriously for us, wo shall find that it has been fought largely in vain, for the very evil which we are striving to defeat abroad will have been established in Australia. Because of that risk the Opposition is not prepared to merge itself with the party opposite, and to relinquish our sacred responsibility here as the walch dogs of the nation.
Before I deal directly with the GovernorGeneral’s Speech I shall refer briefly to the speeches made last night by Senator Wilson and Senator Abbott, the mover and seconder respectively of the Address.inReply. I have respect for Senator Wilson, but I believe that at least some of his language was ill-considered, and unnecessary and unworthy. He used the word’s, “ the most proficient liar and coldblooded murderer the world has . ever seen “.
– Does not the honorable senator agree with me? Doe3 he justify Hitler’s actions?
– I believe that tlie honorable senator’s language was illadvised, and also that much of the remainder of his speech, which be directed to members of the Opposition - while be pointed at us an accusing finger - and some of his remarks were directed personally to me - was both destructive and’ provocative.
– Does the honorable senator justify Hitler’s actions?
– That interjection is further evidence of Senator Wilson’s utter incapacity to sink that difference of feeling which he suggested last night should be sunk in this chamber. With much of the speech of Senator Abbott I wholeheartedly agree. With some of his remarks I do not agree, but the whole of Senator Abbott’s speech was persuasive and constructive. It was a worthwhile contribution to the subject before the chamber, and revealed a constructive mind capable of visualizing the situation, abroad; it eloquently portrayed what the honorable senator considered necessary for the successful carrying on of the war. In addition, it also disclosed a mind receptive to the needs of the new world which we hope fervently will emerge from the terrible conflict now in progress. In the one speech, there was nothing but provocation and destructive criticism; the other was an eloquent, persuasive and constructive address. I am prepared to credit Senator Wilson with having no evil intent. Probably he is suffering from fear, and not without very good cause. His world cannot go on much longer; our world - the world of the people we represent in this chamber - cannot continue much longer as it exists today. I have often declared in this chamber that there must be a new order of society, externally and internally, and a new world based on a better foundation of righteousness and justice. I have often warned honorable senators opposite, and [ warn Senator Wilson again this afternoon that to-day his profits are in jeopardy; to-morrow it will be his capital, and, before long, unless we can bring both the external and internal wars to a successful conclusion, the very lives of those people who represent vested interests - the profiteers and exploiters - will be in danger from those who are dispossessed of all things that make life worth while. Yet it is from that class of people that volunteers for military service are coming. 1 am proud of that. It is from the homes of the workers, from the fields, the factories, the mines and the workshops, that young men are responding to the call for help. But do not forget that when the external war is over, these young men will come back with a new orientation. and a determination never again to submit to the evils that exist to-day. They will demand a better order and a change of system.
I listened very attentively to the Governor-General’s Speech, and I shall refer briefly to a few of the paragraphs in it. In paragraph 3 will be found the following words : - . . Not only the most active measures possible for ensuring the local Defence and security of Australia but also a full participation in the naval, military and air activities of the Allied forces abroad.
I hope I shall not be accused of doing something that I should not do - nothing is further from my desire - when I ask whether the Government is prepared to tell us, through the medium of the Leader of the Senate, what the final alinement of the European nations, and for that matter the Asiatic nations, will be. I am of the opinion that the Leader of the Government does not know what the final alinement will be. I am also of the opinion that he does not know any more than does the Government what the alinement of nations will be this time tomorrow, because it is changing rapidly. I should like to know, therefore, what is meant by the words “ full participation “. I realize, but apparently the Government does not, that if events continue to develop as they are now developing, every available unit of Australian man-power will be required to defend this country in the Pacific in co-operation with our sister Dominion of New Zealand. Once again I ask - what is the import of the words “ full participation “ ? Will the Leader of the Senate or some other representative of the Government, inform honorable senators how Australia can keep up to the demands and the needs of primary production and factory output if the man-power of this country is to be continuously depleted by the sending of forces overseas? How will it be possible to live up to the Prime Minister’s slogan, “ Business as usual “ ? How shall we provide the primary producers with the labour which they require to sow and reap their crops which are so urgently needed, both here and in other parts of the world ?
– To what is all this leading? Does the Leader of the Oppo- sition suggest that no troops should be sent from this country?
– I am merely asking some questions relating to matters which Senator Wilson has obviously overlooked, or which he is incapable of fully understanding. Once again, I ask the Leader of the Government will somebody in this chamber stand in his place and give honorable senators an explanation of the pregnant words, “ full participation “. That is all I ask. To Senator Wilson who inquires what we on this side of the chamber say, or what our policy is, I say that we are not the Government. When the time comes, and we are called upon to implement our policy, I promise that we shall be able to give full effect to a policy for the people of this continent, which will be just as effective abroad, and curative at home, as anything that this Government has yet attempted. That is not an idle boast; it is a definite promise.
I notice also that in His Excellency’s speech, there is a very eloquent allusion to the splendid response for volunteers for military service abroad.* It states -
My advisers have noted with keen appreciation the splendid response which is lining made by the young men of Australia to the call of national service.
I hope that honorable senators opposite have carefully noted that splendid response. In view of some actions which have been taken under the powers of the National Security Act, and other special defence legislation, I ask the Government to admit that the response by the young manhood of Australia to recruiting appeals has been so generous that it has caused great embarrassment to the Defence ‘authorities, which even to-day are unable to make full use of the services which we on this side of the chamber knew well would be offered. Once again Labour’s policy is justified; it has always been our contention that there is no need for compulsion in matters such as this.
Paragraph 5 of the Speech contains the following words : -
Employment was but little affected by the first impact of war and both employment and incomes have since risen to higher levels.
I ask the Leader of the Government to submit some justification for that statement. It is well known “that the Governor-
General did not draft hia Speech. His delivery of it is merely one of the pleasant fictions of parliamentary procedure; it is a tradition which I do not think does any harm. In fact, I rather enjoyed the ceremony yesterday because such functions take one’s mind off the seriousness of the situation, and add to the gaiety of proceedings. But I repeat that I should like some evidence of the statement that employment was little affected by the first impact of the war and that both employment and incomes have since risen to higher levels. I submit that the Government has made His Excellency say something for which there is little or no foundation. I demand to know what is meant by that statement, in order that [ and my colleagues may pass the information on to our electors. We would like to be in a position to tell those who have sent us here just whose incomes have risen and where greater employment has been given. During the past few months, while not touring the State in which I live, I was continuously in attendance at my office in the Federal Members’ Rooms, Brisbane. There I, and many of my colleagues, were besieged continuously by harrowing appeals for employment, mainly from men whose sole opportunity foi- work was 011 the waterfront. Thousands of them could not get work, and they came and asked us to help them. Other inquiries were principally from nien whose sole occupations are those of storemen and packers. One man came to me and asked if I could get him a storeman and packer’s ticket, because if he bad the ticket he could obtain work. Accordingly, I rang the secretary of the Storemen and Packers Union. He said “ We would like to do it but we have 300 men on the unemployed list. Come up and see our unemployment room any morning after 9 o’clock “. And those are the men for whom, according to the GovernorGeneral’s Speech, employment has been increased ! Actually there is serious! unemployment in the building trades. In Queensland and in every other part of Australia, including the National Capital, building construction men are out of work. This afternoon I asked some questions of Ministers in this chamber about building work to be undertaken with money that is to be made available for expenditure in the Australian Capital Territory. Those questions were not answered. There u need for great building activity in the National Capital, yet nothing is being done to give relief to those people who depend for a living entirely upon building construction. I and my colleagues, when we are in the capital cities of the States, are besieged every day by parents who, after making great sacrifices to give their children the advantages of the wonderful educational opportunities in our high schools and colleges, have been unable to find employment for them.
– That is an exaggeration.
– Honorable senators opposite know, as we know, that employment is not available. I listened attentively while His Excellency was reading paragraph 6 of his Speech. Afterwards I obtained a copy of the Speech and read it. If the situation were not so tragic I should have been inclined to laugh at the promises contained in that portion of the document. I hope that Senator Abbott will pay close attention to my remarks under this head, because,I assure the honorable gentleman that we an this side are taking this war seriously. We do not regard it as a game. We want to win this war as well as the industrial fight of which I have spoken, and we want to be sure that we are listened to by those who carry the responsibility of administering the nation’s war effort. Paragraph fi of the Speech reads -
My advisers have given full consideration to the problem of financing the huge costs of war. They are convinced that, while a liberal and modern approach must be made to it, there is no easy path to be followed. They are resolved to avoid the evils of monetary inflation, since it imposes unjust and inequitable financial burdens, particularly upon the wage and salary earner, destroys public confidence, is destructive of savings and would lead inevitably, if pursued, to financial collapse and post-war depression ….
That reads beautifully. Its construction is good. It flows easily from the tongue, lt embraces within its ambit of sympathy the wage-earners, the people with savings, the investors and the rest of the country’s financial interests. It brings them all in. But I would like to know if this policy, which the Government assures us it is now adopting, was tried in 1914-18 ? Was there inflation in those war years? Will the Leader of the Senate answer these questions when he makes his contribution to this debate? Inflation seems to be a blessed word, like “ Mesopotamia “. It is intended to strike terror into the hearts of people who do not understand its meaning. Surely it is clear that if we do not have inflation, we shall have deflation. The Government assures us that it does not intend to have inflation during this war. But it is a government of the same political colour, it approves the same old policy and it tells the same bed-time stories in times of emergency, as the Government that was in office during the last war. Did the people of this country experience inflation then? Is there not inflation of prices to-day? And since there is inflation already, can we expect, later, to escape deflation and post-war depression? The Government knows that deflation and another depression are inevitable. This nation cannot blow countless millions of money into the air for destructive purposes’ and avoid paying for it afterwards. We have a population of only 7,000,000 people, and yet we are paying out £1,000,000 every week to meet interest bills on our obligations. Is the Government doing anything about that? It boasts, in His Excellency’s Speech, that it intends to continue its efforts “ to effectuate its policy of low public and private interest rates”. What is the lowest rate of which the Government can boast to-day ? Has it come down to 3 per centyet? Perhaps it may try to bring the rate to that level a little later, but I want to know when it will tell the big financial interests the same harrowing story about a condition of emergency that it is continually retailing to the poorer classes in Australia. We do not deny the truth of that story. We agree that a condition of national emergency exists, but we contend that the greatest burden should be placed upon those who are making a profit out of this war - the big financial interests of this country. If I were Prime Minister of Australia I would outline the financial policy of my government, and, whatever else that policy might contain, it at least would declare to the financial interests that the most they would get for their liquid assets, if they were paid at all, would be 1$ per cent, or 2 per cent., and if the nation’s need became greater, I would confiscate 20s. in the £1 over and above those amounts of the profits which the financial interests considered to be a fair basic wage for members of the working class. Is this Government prepared to introduce a wealth tax and to confiscate the great surpluses of the predatory, wealthy interests of this country? Of course not! The Commonwealth Prices Commissioner, a highly-salaried official with a big staff, has not stabilized prices ; he has merely stabilized profits.
I come now to that part of His Excellency’s Speech which mentions that many thousands of Australian workmen are on strike. The Government has stated its own case. There is another side to this dispute. My colleague, Senator Ashley, to-day asked a question relating to this matter. It was a very simple inquiry, and there should have been no difficulty at all in answering it or, if there were difficulty, an officer could have been despatched immediately to the Prime Minister to obtain a reply. Senator Ashley asked if the same facilities will be given to the miners to state their case over the national broadcasting stations as will be afforded to the Prime Minister when he visits Kurri Kurri during this weekend to speak to the miners. The Minister said he did not know what arrangements would be made. The Australian Labour party stands for arbitration and conciliation. I support that policy with all the sincerity that I can command. I happen to be one of those older men in the Labour movement who can remember the time when there were no arbitration courts, no conciliation commissions, no wages boards and no means to regulate industrial conditions. I, with others of similar age, set to work and built up the Labour party’s policy of industrial conciliation and arbitration to what it is to-day. Therefore I stand whole-heartedly for it. When an appeal was made to the Queensland Parliamentary Labour party in connexion with this dispute the Premier replied : “ Arbitration and conciliation is the policy of this Government “. What is this new-found love of industrial arbitration which Senator Wilson mouthed in this chamber last night? How long has he been a convert to this policy? Is it not true to say that he was a supporter of an earlier Commonwealth Government which appealed to the people to abolish Commonwealth arbitration; and is it nottrue that for the first time in the history of this country a Prime Minister was defeated in his own electorate?
The Prime Minister could have ended this, strike weeks ago had he wished to do so. That is no idle statement. Tt is a. statement of fact. The right honorable gentleman could have called into operation the conciliation powers of the court for use in such circumstances, but he has not done so. I do not know what are his intentions, but I say very definitely and with all respect that I do not believe that he, or the party which he represents, wants to settle this strike.
– That is an unfair statement.
– I accept full responsibility for it and I am prepared, if necessary, to repeat it personally to the Prime Minister. The AttorneyGeneral, who is administering the industrial laws of this country, said : “ I have tried to settle this dispute, but I have not found the employers in the industry helpful in my efforts to bring it to a conclusion”. I go further and say that I believe that supporters’ of the Government, with some exceptions, have no more desire to settle this dispute than has the Prime Minister. . Judging by the attitude of Government supporters, one might imagine that never before in the history of Australia had there been a strike while a war was in progress. The coal strike and the activities of the Communist party in Australia are the greatest political allies which honorable senators opposite possess, and they are making full use of them in their attempts to engineer the defeat of the Labour party at the next election. I do not believe that their efforts will be successful. I hope that the strike will be settled. I know that the Prime Minister would ask, “Do you expect me to instruct the court?” The Labour party does not expect that, but it demands that the Prime Minister shall indicate to the people of Australia, who include members of the court, that he wants the strike settled. The Prime Minister knows, as we know, that it can be settled in this way. Do honorable senators opposite think that tens of thousands of men would go out on strike merely for the sake of being idle? How many honorable senators opposite have been into the bowels of the earth and witnessed the conditions under which the coal-miners have to work ? Have they ever been into the homes of the miners and chatted with the wives of the workers or seen the conditions under which families have to live? What do they know concerning the daily lives of the men who are seeking improved industrial conditions?
– The object of the strike is not to secure improved industrial conditions; it has ‘ been engineered for another purpose.
– Does Senator Dein suggest that thousands of men have ceased work merely for the fun of it? Surely he realizes that there is another side of the case, and that the public does not know all the facts. I have already said that the members of the Australian Labour party support conciliation and arbitration. The Prime Minister has the power to set the necessary machinery in operation to terminate this unfortunate industrial dispute. He declines to do so because a big industrial upheaval is his best political ally. How he delights to tell the people that in a national emergency the coal-miners have gone on strike, and that it is the fault of the Labour party.
– Will the honorable senator indicate the powers which the Prime Minister can exercise, to bring about a termination of the strike?
– I know a good deal concerning conciliation and arbitration. I was associated with wages boards and other industrial tribunals long before honorable senators opposite had any interest in arbitration. I state most definitely that the predecessors of the supporters of the present Government did everything possible to prevent industrialists from receiving the benefit of conciliation and arbitration or improved working conditions. The political predecessors of honorable senators opposite have from the time when Lord Shaftesbury introduced the Reform Bill in England actively participated in a policy to prevent the introduction and functioning of a workable arbitration system, and by that policy have compelled the workers to face starvation and social ostracism. Senator A. J. McLachlan suggests that I know nothing of our arbitration system.
– I should like the honorable senator to state under what section of our arbitration legislation the Government has power to act.
– If I did so the honorable senator would not be more conversant with the position than he now is.
– There is no such provision.
– I now wish to refer briefly to the subject of communism. Every Labour member of the Federal Parliament has to sign the following pledge : -
I,…… ‘…… hereby pledge myself notto oppose the candidate selected by the recognized political Labour organization, and, if elected, to do my utmost to carry out the principles embodied in the Australian Labour party’s platform, and on all questions affecting the platform to vote as a majority of the parliamentary party may decide at a duly constituted caucus meeting. I hereby declare that I am not a member of a Communist organization or party, or of any political party having objects and methods in any way opposed to the Australian Labour party.
That pledge has to be signed before any person can become a candidate for election, quite apart from becoming a member of the Australian Labour party. In addition every Labour party in any part of the British Dominions has banned Communists from membership of the party. No member of the Australian Labour party can be a member of a Communist organization, and no member of the Communist party can become or remain a member of the Labour party. Those are the facts.
– What of Mr. Orr and Mr. Nelson?
– It is most remarkable that honorable senators opposite have a greater knowledge of the activities of the Communist party and a closer acquaintance with individual members of that party than have any other members of the community. We are continually told that the Australian Labour party is closely associated with the Com munist party. Although those who make the statement know that they are not stating facts they keep on repeating them. I have already said that honorable senators opposite and those with whom they are associated are using the coal strike and communism merely for political purposes. Action is not taken by the Government against Communists because they are useful in its dirty political work of attempting to defeat the political aspirations of the Australian Labour party. Senator Wilson, by interjection, mentioned the names of two persons whom I have never met. I do not suppose that he has ever met them, but he says that they are Communists, and are associated with our political activities. I remind Senator Wilson that industrial unions are formed, not for political purposes, but in order to protect the industrial rights of their members’. We have no right to inquire as to the political faith of those seeking membership and we do not do so.
– Do they not pay a levy ?
– Here again the honorable senator displays knowledge which astounds me. I have stated previously in this chamber when some of my friends opposite have been waving a blue book, others a red book, some a Communist weekly and . another the Tribune, that it is most remarkable that those honorable gentlemen opposite should be so closely acquainted with the working and activities of ‘the Communist party. I have been associated with the Labour movement for 50 years, and for fourteen years conducted organizing work in Queensland where Communists are not associated with the Labour party. I was amused last night when Senator Wilson, in reply to an interjection, “ What about the Corio by-election?”, madeby an honorable senator on this side of the chamber, almost tearfully asked if the debate could not be conducted on a higher plane. The honorable senator appeared so earnest that I began to wonder if a colleague of mine could have been responsible. Senator Wilson asked if we did not realize that a state of national emergency exists. He tried to make it appear that my colleague was a perfect rascal to interject as he did.
But in the Melbourne Age, an antiLabour paper, of the 14th February last, the following paragraph appeared: -
Tlie Prime Minister said lie was glad that the Leader of the Opposition had undertaken to fight the by-election on the issue of the Government’s Defence policy.
It was the Prime Minister and not the Age newspaper which made that statement. Mr. Curtin did not say anything of the kind. He said that the by-election would be fought on the Government’s Defence policy and all the other things which tlie Government was doing to which the Labour party was opposed. The Prime Minister went on to say -
It was the issue, but no doubt, attempts would be made to introduce side issues which depended upon purely local factors. Everything to-day must be subsidiary to the task of winning the war - a war which had been approved as a just and necessary war by Government and Opposition alike.
In other words the Prime Minister said that he would take the verdict of Corio as a test of approval or disapproval of the Government’s Defence policy. That was unwise, because no experienced statesman ever stakes his all on one issue in a by-election. We are not claiming that Corio was won by the Labour party on the one issue; but when my colleague interjected concerning that by-election Senator Wilson became perturbed and suggested that the debate should be conducted on. a higher plane. In the impassioned appeals made yesterday by th: mover and seconder of the motion for tb adoption of tlie Address-in-Reply and by the Leader of the Senate to-day, reference was made to the fearful state of affairs confronting the world. We do not deny that; we have never denied it. I stated earlier that at all times we have cooperated with the Government in its defence policy but because we do so we should not be deprived of our right to criticize the Government’s policy. Wc have never attempted to prevent the Government from getting the money necessary for defence purposes., and have not taken exception to its policy in that respect. When I hear of the- necessity to conduct the debate on a higher plane I am astounded. Honorable senators opposite, who have had the advantage of a better education, greater wealth and more social prestige than we have ever enjoyed, have been responsible for lower ing, instead of raising, the tone of the debate. The Government cannot persuade the people of this country that the position is so serious as it is while it continues to keep Parliament almost continually in recess. It cannot persuade us that it wants to conduct all its activities on the highest level when we realize that in March last it was engaged in sordid internal intrigue for political benefits at a time when the whole of its activities should have been devoted to assisting to win the war. During this sordid party intrigue members of the two parties now forming the Government were hurrying and scurrying between party rooms in an endeavour to bring about a coalition for their own personal benefit. Every cabinet post was up for sale at a time of national emergency. We on this side were the silent observers, but were powerless to lift the matter to a higher plane. Cabinet Ministers did not know from one half hour to the next whether they would retain their positions. The war paled into comparative insignificance during the sordid intrigue and struggle for the other fellow’s job. Honorable senators opposite talk to the Opposition of lifting debates to a higher plane, although they have dragged political life into the sewer of intrigue. I say that advisedly. If proof he wanted-
– We are listening to the honorable senator for proof now.
– The honorable senator has listened to me patiently, and I know what a hard task it is, because he is one of the age-old opponents of every kind of reform which means the uplifting of society. I do not regard him as affording an example of how to reach a higher plane.
The Speech of His Excellency the GovernorGeneral mainly deals with the war, the coal strike and communism. I omitted to say that under the present law the Government has all the power required to deal effectively with Communists. ‘ If it has not, it could take all necessary power under section 18 of the National Security Act, but it does not take action in this regard because it knows that Communists are of use to it politically.
Paragraph 16 of His Excellency’s Speech states -
A bill will be introduced to make amendments to the electoral law.
When the nation is engaged on the biggest struggle in our history, the Government and its supporters suggest that the Opposition represents the last word in disloyalty to the Empire! They never find anything of a congratulatory nature to say regarding the Opposition. They brought down a detailed account of all the troubles that confront them. I began my speech by saying that I understood the difficulties being experienced by the Government. I know something of the trouble to which my friend the Leader of the Senate (Senator McLeay) has gone in order to make arrangements for the orderly marketing and transportation abroad of millions of tons of primary products. I do not minimize the importance of this work, for I realize that some day I may be called upon to accept a share of the great responsibility which he and other members of the Cabinet have accepted and discharged to the best of their ability; but can they take pride in the fact that the only paragraph in the Governor-General’s Speech that lias no relation to the war effort consists of a single line to the effect that a bill will be introduced to make amendments to the electoral law? For what purpose will that measure be brought down? Senator Wilson, at the beginning of his address, said that he would like to see a national government formed, with the Labour party represented in it. He wanted all petty differences put aside, so that all should do their best to bring the war effort to a successful conclusion. The way in which the Government proposes to settle petty differences is to introduce a bill to amend the electoral law! The measure will be a cunningly - I almost said cleverly - disguised one planned to make it more difficult for the common citizen, who has not had great educational advantages, to cast an effective vote, in the vain hope, I believe, that the number of informal votes will be increased to such an extent that the Labour party will be unable to gain control of the treasury bench. .
– That is absurd.
– Will this bill be introduced in order to place the Government at a disadvantage? Are Ministers such novices that they will cut their own political throats? The political throats proposed to be cut by this measure are those of honorable senators who sit on this side of the chamber. If I were prepared to indulge in the undignified practice of saying “ I told you so “, I could go back over the political history of Australia for the last few months, and indicate the results of various by-elections in constituencies regarded as sacred to the opponents of Labour, at which supporters of the Government were ignominously defeated. The Premier of South Australia was one of those so defeated. All of the big guns were brought into these fights, but the people could not be deceived by them.
I have done my best to lift this discussion to a high plane. At all events, I have made a sincere attempt to let the people know, as far as we are able to reach them, where the Labour party stands in this double-fronted war. We are determined to help the Government to win the external war, and we are just as anxious to ensure that, when the war is over, Australia shall have won the peace.
– I congratulate the mover and seconder of the motion for the adoption of the Address-in-Reply upon their able speeches. I have also listened with interest to the case put forward by the Leader of the Opposition (SenatoCollings). For a considerable time wehave been trying to find out what the Labour party’s war policy really is, and I had hoped that this afternoon the Leader of the Opposition, would have told us, because there is no doubt that, when the Opposition faces the electors on the next occasion, it will not be able to put up the smoke screen used by the Leader of the Opposition this afternoon. I draw attention to certain references to the cost of living, unemployment, profiteering, &c, and I say at the outset that many of the statements made, although true in some respects, were grossly exaggerated, having regard to the figures supplied from reliable sources. I suggest that the unemployment and cost-of-living figures furnished recently show that these matters have been carefully handled during the war, and that the country has benefited from the experience of the last war. The Leader of the Opposition has asked me> to reply to certain points made by him in his speech. I do not propose to go into great detail, but I shall deal with the point raised by him at the close of his address, when he quoted from a certain little book. 1 did not notice whether the colour of the cover was red, white or blue, but he declared that every member of the Labour party had to sign a pledge that he was not a member of the Communist party. The agitation by the extremists in the Communist party is doing enormous harm to Australia, and much to retard our present war effort. I am amazed to find that, in spite of the decision that no Communist may be a member of the Labour party, at an important meeting of the Labour party in New South Wales, the “Hands off Russia “ resolution was carried by an overwhelming majority. I am at a loss to reconcile that fact with the statement made this afternoon by the Leader of the Opposition. I do not blame all sections of the Labour party, but I suggest to Senator Collings, and to other members of that party who exercise great political influence in this country, that if they want to help the Government in its war efforts they should have the courage of their convictions, and take political action against those persons in the community who are causing so much trouble.
– Does the Minister stand for a “Hands on Russia” policy?
– The resolution of the Labour conference in New South Wales was a. disgrace to the Labour movement. Has Russia played the game with Britain and France, or with Poland and Finland?- If the Opposition is anxious to assist the Government, Labour members now have an opportunity to show their real worth.
– Mr. Chamberlain himself said, as we say, “ We are not at war with Russia “.
– I quite agree, but is the Labour party at war with those Communists in New South Wales who caused the coal strike? Are honorable senators opposite in accord with those persons who carried the “ Hands off Russia” resolution? I regret that the Leader of the Opposition, perhaps in the heat of debate, said that the Prime Minister (Mr. Menzies) did not want the strike to be settled. That is very unfair. The Prime Minister has announced that he is going to the coal-fields at this weekend in order to speak to the miners. Labour Prime Ministers have taken similar action in the past. We who have been associated with the Prime Minister in the Cabinet since the outbreak of war appreciate the enormous responsibilities which rest upon him. Long hours of work are but one phase of his labours. It is very unfair to suggest that the Prime Minister, or any other member of this Government, is not anxious that the coal strike should be settled as soon as possible.
– If the Prime Minister wishes he can end the strike to-morrow.
– The Prime Minister has stated that the Government is in favour of industrial arbitration. On that issue we have no quarrel with the Opposition. In this dispute the Arbitration Court has given a decision, and it is the duty of both parties to the dispute to observe the award of the court. The present leaders of the Labour movement, instead of adopting the spineless attitude of declining to deal with the Communists in the movement, should persuade the miners to rely on the court. The extremists in the Labour movement, and not the coal-miners themselves, are responsible for the strike. If the Labour party genuinely desires to assist the Government and the country in this dispute, its leaders should say unequivocally that the Labour party supports the policy of industrial arbitration and stands firmly for the observance of Arbitration Court awards.
The Leader of the Opposition stated that inflation occurred in Australia in 1914. That is so ; but if the Labour party had had its way we should have had a degree of inflation which would have ruined this country. However; the attitude adopted by the Senate at that time - and the Government will ‘ adopt a similar attitude on this occasion - defeated Labour’s proposals. Immediately on the outbreak of this war the Government took prompt measures to control prices. Honorable senators have had an opportunity to study the relevant figures. In addition, interest rates are now considerably lower than they were at the corresponding period of the last war.
The Leader of the Opposition also asked what is really meant by full participation in the war. On that point I again take an opportunity to ask bini what is the real policy of the Labour party towards the war. The Government realizes the seriousness of the situation and will do all in. its power to render assistance to Great Britain and its Allies in the conflict. What I should like to see displayed by present Labour leaders and Labour members of Parliament is something of the spirit of the old Labour party of 1914. When those men were asked to state their attitude towards the last war they replied that they would render assistance to Great Britain “ to the last man and the last shilling “. The things for which we are fighting in this conflict are equally important. The Leader of the Opposition wanted to know what the final alinement in this war would be, and he answered himself by saying that at present no one can tell. If Labour were now in office would it be prepared to send men overseas to help Great Britain and France at the front line where the real fight is being fought? There can be no doubt that if Britain be defeated Australia will be defeated also. Consequently the policy of this Government is to do everything within its power to assist Great Britain on the other side of the world. It is in this respect that the Labour party has fallen down on its job. I am amazed to find any organization in this country passing a resolution urging Labour members of Parliament to prevent volunteers from going abroad on active service. Surely Labour leaders must realize the seriousness of our situation. The Leader of the Opposition again declared that the great majority of the volunteers will come from the homes of the workers, implying, of course, that the majority of them will be men who are supporters of the Labour party.
– The great majority come from working-class homes.
– They come from all sections of the community, rich and poor alike. ‘If the honorable senator says that the great majority of our soldiers come from working-class homes, his desire that all sections of the community should make equal sacrifice can be met only by compulsory service. The Labour party, however, is opposed to compulsory military service. Criticism has been levelled against the monied men of this country. If the Leader of the Opposition could take a glance at the taxation assessments that have already gone out this year, he would realize that the men who are making money in this country are making their just contribution towards the enormous expenditure we are incurring in this conflict.
The policy of the Government to deal with the Bed element in the community is a matter of the utmost importance, and we look to the Opposition for assistance in this direction.
– What is the Government’s policy for dealing with the Communists ?
– I do not propose to go into detail at this juncture, but the honorable senator will be acquainted with that policy when the relevant legislation is introduced. If this Parliament as a whole is in favour of industrial arbitration, it is the duty of all parties to see that awards of the court are observed.
The leaders of the Labour party in thi.« Parliament declare that they are behind France and Great Britain in this conflict, but when they are asked whether they are prepared to encourage men to serve abroad in order to help our Allies, they reply “ No “. They are behind France and Great Britain - 12,000 miles behind !
I was interested in the comment made by the Leader of the Opposition that our primary and secondary industries would suffer if we continued our defence expenditure at the present rate, or if we continued to send contingents abroad. On that point I can only ask honorable senators opposite to try to appreciate what Groat Britain has already done for Australia in this crisis. In view of that assistance their attitude is indeed selfish. Up to date we have sold to the United
Kingdom Government primary products to the value of £120,000,000. Some people say that Great Britain agreed to purchase those goods because it requires them; but let us consider what the economic position of Australia would be if Great Britain were unable to provide the ships required lo transport this enormous volume of primary products overseas.
– Had this Government adopted a wise shipping policy we should now possess sufficient ships for that purpose.
– The honorable senator is exaggerating if he suggests that within the limited time available we could have constructed sufficient ships to handle this quantity of goods. In spite of the fact that the British Government could have secured wheat from another dominion in a third of the time required to transport it from Australia, it still agreed to purchase from us wheat to the value of £14,000,000. Our economic existence depends on the sale of our exportable commodities to the British Government. Therefore, we must rely upon the protection of the British navy for the protection of our sea-borne trade. I again assure honorable senators that the Government will make every effort in its power to defend Australia, and to assist our Allies on the other side of the world where the real battle is being fought.
– Senator “Wilson’s speech has been so fully and trenchantly dealt with by my Leader (Senator Collings) that I shall abandon my original intention to reply to him. The honorable senator’s wellrounded phrases seemed familiar to me, and before he had spoken for very long I realized that what he was saying could be found almost word for word in any anti-Labour newspaper. He complimented the Government on its financial proposals, particularly on the fact, that it. recently raised its loan of £18,000,000 at the low interest, rate of 3 per cent. However, he failed to tell the Senate that the Government could secure the whole of that sum. through the Commonwealth Bank free of interest. It does not cost an orthodox economist or an ill-instructed member of Parliament very much effort to see that it. is not sound finance to pay 3 per cent, for money when it can be got free of interest. I again point, out that when the whole of that loan is subscribed, no money will go to the Treasury. All that the Government will get will be the right to draw cheques to that amount on the banks which have subscribed to the loan. These so-called voluntary contributions are obtained in various ways. Day after day I used to read of the additional applications in connexion with the loan. However, I should like to point out exactly the procedure followed in the raising of this money. Persons with bank overdrafts are having their overdrafts called up. I know of one man who secured an overdraft of £1,500, offering as security a block of flats which the bank itself valued at £9,000. Recently, he received a letter from the manager of the bank asking him to call at the bank. The interview was along these lines : The manager said, “ Mr. Brown, my directors are very concerned about your overdraft. We want you to reduce it “. Mr. Brown replied, “That is impossible. I am a builder, and you know that more builders have gone broke than any other class of business men. Why worry me to-day ? You know I have no work; in the meantime you have my property valued at £9,000 as security against my overdraft, which amounts to only £1,500 “. The manager then told Mr. Brown to think the matter over. Mr. Brown, however, was unable to meet the bank’s demand. A few months later he received another letter asking for another interview. On this occasion, fearing the worst, he said to his wife, “ Do not be surprised if, when [ come back, I have to sell our house in order to meet the bank’s demand “. However, on meeting the manager, he got a surprise. He was offered a cigar. The manager said, “ You know there is an £1S, 000,000 government loan on the market. We want you to subscribe £1,000 to that, loan “. Mr. Brown replied that, that wa< impossible. The manager then said, “Forget about your overdraft. All you have to do is to sign this application for £1,000 in the loan “. Mr. Brown then asked whether that would not add to his liability to the hank, and the manager replied, “ Wo, we shall buy the bonds and draw the interest, and vo a can forget about your overdraft “. The customer signed for £.1,000 worth of bonds, and then signed another paper transferring the bonds to the bank. The trick is that the bank gets £ per cent, on every pound raised in that way.
– What security is he given?
– Security is not necessary. The bank pays no money; it merely applies for the bonds, which are not taxable, but on which interest is paid. The bank customer has everything to gain and nothing to lose by signing the application. That is what is called “ volun tary contribution by the public, to the war loan “, whereas in actual fact, it is nothing but bank intimidation. In the case to which I am referring, the manager became confidential with the customer, and said the quota for his district was £25,000. All he had to do was to keep on calling up the overdrafts of his customers, the Browns and Jones, until he obtained that £25,000. The alternative offered to the purchase of the bonds was the repayment of the overdraft. Oan such procedure truly be called “ voluntary contribution by the public “ ? The banks do not actually put any money into the loan at all.
– Why do the banks pay interest on deposits if they can obtain money in the way the honorable senator suggests?
– The banks need deposits to back their advances. They do not actually lend money; they make advances amounting to ten times the sum of their deposits. I challenge any honora bio senator to controvert anything 1 have said.
– Why do the banks need to borrow money from private persons if they create credit as the honorable senator suggests?
– Because, as I have said, each deposit enables them to advance ten times as much credit. They would have no money at all if they had no deposits.
The Treasurer (Mr. Spender) has announced, that the Commonwealth Government intends to raise an additional £33,000,000 by means of new taxation, and I point out that that money will be drawn mostly from the middle classes, and not from those wealthy individuals who can best afford to pay it. Perhaps when honorable senators opposite find their salaries are to be cut in half, they will pay more attention to what I say. Mr. Spender also said that the Commonwealth expected to lose £13,000,000 owing to the prohibition of imports. It seems, therefore, that one amount will cancel the other, and £180,000,000 will still be required for war expenditure during the next two years. Taxes have to be paid in cash. The source of economic trouble in the world to-day is the lack of purchasing power on the part of the people. For that reason, consumption has never been able to keep up with production. As I have said many times, the amount of money in circulation at any time is determined by the banks. They alone can give credit, and to-day 99 per cent, of the world’s business is run on credit. I know for a fact that the bank to which. I have referred held £1,500,000 worth of bonds in the loan, and the whole of that amount was subscribed by customers.
At the last meeting of the Loan Council, the Premier of Tasmania, Mr. DwyerGray, endeavoured to show the racket that was going on in the flotation and conversion of loans. He said that loans raised in Australia by the Loan Council, for the Commonwealth and State Governments, for purposes other than meeting deficits, conversion, or repayments, during the four years 1935-7, amounted to £’7,000,000. The expenses in connexion with the flotation of the loans amounted to £494,000, and the total amount that will have to be paid in interest during the period covered by the loans will be £34,000,000. Yet, it ‘was pointed out by the Royal Commission on Banking and Monetary Reform, that this credit could be obtained from the Commonwealth Bank free of interest. Under the existing system not only is there a big interest bill, but conversion costs also are tremendous. It will interest honorable senators from Tasmania in particular to know a. few facts in connexion with the Tasmanian loan of 4^ millions, issued at 3^ per cent., which fell due last year. Conversion of that loan was entrusted to the Australian High Commissioner in London, Mr. S. M. Bruce, who issued the new loan for two years at £98 10s. per cent. _ The discount represented a loss of £62,000. In addition, conversion costs amounted to £75,000. The interest rate of the converted loan was 4 per cent., which was £ per cent, higher than the original rate. At about the same time South Africa floated a big loan at 3£ per cent. It can be seen, therefore, ‘that that conversion cost Tasmania £137,000, which is 12s. 6d. per head of the population of that State, men, women and children. The same procedure will have to he gone through again in two years when the loan again falls due. Is it not time that we paid some attention to the subject of loans and their conversion? In answer to a question which I asked in this chamber recently, I was told that the costs of conversion loans handled by Mr. Bruce amounted to nearly £3,000,000. Again I ask, is it not time we had an expert in charge of these conversions?
– Whom would the honorable senator suggest?
– There is a branch of the Commonwealth Bank in London which could handle that business. Once again I draw attention to the fact that the former Commonwealth agents in London, Nivison and Son, charged £2 7s. lOd. per cent, for the raising of loans, as compared with a cast of 4s. 3d. for a loan raised by Sir Denison. Miller through the Commonwealth Bank. A statement to that effect is contained in the report of a former Federal Treasurer, MY. Higgs, issued in 1916. It is a record that cannot be controverted.
– ‘That is not so.
– I am quoting a statement made by a former Treasurer of the Commonwealth. Honorable senators need not question me upon iti
The Commonwealth Bank has been in existence since 1912, and had all Commonwealth loans been financed by that bank, the national debt of Australia would not be £1,300,000,000 as it is today, even before we start paying for the present war.
– What was the rate of interest in 1914-15?
– That was fixed by the banks. They make all the terms* Under our present financial system money cannot be obtained unless it is advanced by the banks. Earlier in my speech Senator Herbert Hays asked why the banks paid interest, on deposits. The answer is that the banks can only advance credit against their deposits. They can advance eight or ten times as much as the sum of their deposits.
– That is not correct* and the honorable senator knows it.
– That statement is a reflection on my veracity. While the honorable senator may be entitled to say that my statement is not correct, I submit that he cannot say that I am knowingly saying what is inaccurate. I resent his remark, and ask that it bo withdrawn. My honesty has been questioned.
– I do not think that Senator Dein had any intention of reflecting on the honesty of Senator Darcey.
- Senator Dein said that I was aware that I was making a wrong statement. I ask that his remark be withdrawn.
– Did Senator Dein intend to cast any reflection upon Senator Darcey’s honesty?
– If my interjection is objectionable to the honorable senator I withdraw it, but I refer him .to bank statistics.
– I am citing them to the honorable senator.
– I entered this chamber as a missionary in the banking field, but I must confess that I did not expect to find so much paganism on finance. Apparently I shall be obliged to continue to exercise the missionary spirit. I thought I had spoken enough on this subject last year to convert anybody who was open to conviction, but apparently, in the manner of a missionary handling blackfellows, I shall have to talk and talk until what I am saying becomes fixed in the heads of my listeners.
A few weeks ago, Professor Copland, Commissioner of Price Fixing, addressed the Hobart Chamber of Commerce, of which I am a member. Incidentally, Professor Copland opened his address with the words, “ I have a lousy job “. I think that Professor Copland’s salary from the Commonwealth Government is approximately £1,750. In addition he receives £1,000 a year from th e University of Melbourne, £300 a year for his job as adviser to the Government of Victoria, and ?500 a year as a commissioner of the State Savings Bank of Victoria. That hardly seems to me a lousy job”. That, however, is apart from the point. “When Professor Copland finished his address, I informed the chairman at the meeting that I would like to draw Professor Copland’s attention to one commodity which had ‘ not yet been tackled by the price-fixing authorities. .1 pointed out that there is a commodity sold to the community known as bank credit. Bank credit is made on the premises. The . raw materials are pen, ink and paper. It is an indispensable commodity to modern business, and it is never sold at less than 100 per cent, profit. It is an axiom of economics that all costs must be recovered through the selling price, and therefore this tremendous bank C03t is added to everything that the purchaser buys. The purchasers of credit are paying the bank 100 per cent, for something that is indispensable in modern business. In reply to my question Professor Copland said, “ Senator, I think you will find that we shall raise this money at a lower rate of interest than you anticipate “. That, of course, had nothing to do with my question. It is just typical of the manner in which all orthodox economists avoid fundamentals.
At the Loan Council meeting last year Mie then Premier of Tasmania (Mr. Dwyer-Gray) made the following statement : -
The determination of the Menzies Government to borrow ?10,000,000 at 3i per cent, is an ignoble concession to an antiquated system of finance. Business men recollect the heavy taxation which followed the last war, and it is quite unnecessary, with the Commonwealth Bank, for the Government to put any interest on any loan flotation.
Mr. DwyerGray also said ; ft is just as necessary to defeat the present financial system as the Germans. . . .
Instead of the Government tackling the question and facing the issue, it has come to an arrangement with the private banks to share part of the resultant “boodle”.
Unfortunately there is only one newspaper in Hobart, and as the views of that paper did not coincide with those of Mr. Dwyer-Gray, the statement was not recorded. However, a week or two later, the same paper had no hesitation in
Senator Darcey reporting, under a twocolumn heading, a condemnation by the Leader of the Opposition of Mr. DwyerGray’s efforts at the Loan Council meeting. I have been laughed at and told that mine was a voice crying in the wilderness, to which I replied that so long as there was a wilderness of ignorance regarding finance I would be found crying in it.
There is a world-wide demand for monetary reform. The Prime Minister has had forwarded to him scores of resolutions passed by public bodies throughout Australia urging that the Commonwealth Bank be used in the way it was intended to be used by the Government that created it, namely, to provide interest-free money for governmental purposes, and to help primary producers by giving accommodation for a reasonable charge. Only a few days ago I received a letter from the Bunbury Waterside Workers Association, which is certainly not a socialistic body, thanking me for the fight I have been putting up in the Senate to secure monetary reform. Since I have been a member of this chamber I have had hundreds of letters from all over Australia supporting me in my crusade. Despite the nation-wide demand for a change of our monetary and hanking systems, the Government is adamant. It refuses to utilize the resources of the nation through the medium of the Commonwealth Bank to advance the interests of the people.
Not long ago the Parliament of South Australia by seventeen votes to thirteen passed a motion urging the Government to use the machinery of the Commonwealth Bank to finance the war by the issue of interest-free money. Later Mr. Playford, the Premier of that State, came to a meeting of the Loan Council in Canberra and when he was asked why he did not support in the Loan Council the resolution passed by his own Parliament he replied, “ Oh well, it won’t cost me my seat at the next election ‘”. What do honorable senators think of such a reply from the Premier of a State?
– Who told the honorable senator that story?
– I obtained my information from the then Premier of Tasmania, Mr. Dwyer-Gray. whose honesty of purpose no one would dare to question.
– If the honorable senator continues to talk like this he will be making trouble between the State Premiers.
– That does not worry me. I remind Senator Johnston that the Parliament of “Western Australia passed a similar motion on the voices. So also did the Parliament of Tasmania, and although I may have been regarded as a voice crying in the wilderness, I seem to be getting a hearing, because three of the six State Parliaments in the Commonwealth have come round to my way of thinking.
– I hope that the honorable senator remains in the wilderness.
– On other occasions I have remarked on the Minister’s nonchalance and flippancy about what to me and many others is a serious issue. [ have to confess that since I came to Canberra to take part in the deliberations of this Parliament I have been disappointed at the levity displayed and the frequency and irrelevancy of many interjections in the discussion of some of the issues that have come before us. I have sat in this chamber for many hours listening to debates and I have never interrupted a speaker by an interjection.
– Oh, yes !
– I stand corrected. On one occasion I did interject, but that was because an honorable senator declared that, if there bad not been a social credit system in operation in Germany there would not have been a war in Europe to-day. I could not let that statement go unchallenged. But I believe that that was the only occasion on which I have interrupted a speaker, and I think that I was fully justified. It is a sound rule in the Senate that a member speaking shall be heard without interruption. All honorable senators should observe that rule.
I take this subject of finance seriously. The nation is at war, and I am at war with any senator who will not realize and accept the responsibility of his office. We are fighting a war for democracy, the meaning of which Abraham Lincoln summed up in a dozen words when he said that “democracy is government of the -people by the people for the people “. Political economy, or government, has been defined by Bernard Shaw as “ the art of spending the national income in such a way as will bring happiness and prosperity to the greatest number of people “. Will any Government supporter dare to say that that is how Australia has been, and is being, governed? The friends of the Government are well aware that the greatest good comes to the least number of people in Australia; hence our slums, and poverty and unemployment.
– Do the slum dwellers and unemployed constitute the greatest number of people in Australia?
– They do. The smallest number of people have the greatest incomes, the highest culture, the best housing and the most luxurious motor cars. If the true principles of political economy were observed in this country we should be free of slums and poverty. Australia would be so governed that slums could not exist.
The Leader of the Opposition (Senator Collings) referred this afternoon to Australia’s interest bill, which is causing the Government so much concern. This is because the only bank ever established to provide the people with interest-free money - the Commonwealth Bank of Australia - has not been used as it should have been.
– Has it ever given interest-free money?
– It is empowered to do so by its constitution. That it has not provided interest-free money is due to the fact that Australian governments have never favoured a change of the existing banking system.
– Did not the Labour party set up the bank?
– Did the Labour party provide interest-free money?
– No, because Australia has never had a. government of any political colour worthy of its heritage. If any of the governments bad possessed knowledge of banking or finance, they would have used this bank in the proper way. Even the government that brought it into being did not make full use of its opportunity to do service to the people of this country.
– What about Mr. King O’Malley?
– He was not a member of the Labour Ministry when it established the Commonwealth Bank. Some time ago T had a six-hour interview with him, and I still consider that he is the greatest man in Australia. He told me that he had read every word that I have said in this chamber, and added that I was championing the cause which lie had to relinquish 25 years ago.
– He claims that he established the Commonwealth Bank.
– He did, but he was not a member of the Ministry at that time. He had nothing to do with the drafting of the bill which was passed through Parliament to provide for the establishment of the bank. I asked him about that section in the act which empowered, the Government to issue £1,000,000 worth of debentures. He told me that he would have opposed it had he been associated with the drafting of the measure. Fortunately, we had in Sir Denison Miller, the first governor of the Commonwealth Bank, an honest man with wide vision. He said to the Government, “Whatever you do, do not sell those debentures “. When I asked an ex-Prime Minister how that section came to be included in the act he told me that it was inserted on the recommendation of the Government’s expert financial advisers. I replied that if those debentures had been sold, the Commonwealth Bank would have been strangled at birth, because under company law, if debenture holders are not satisfied with the way in which a business is being conducted, they may take charge of the company’s operations. It was very fortunate for Australia that the Commonwealth Bank debentures were not sold.
The taxation imposts which have been forecast by the Treasurer will affect incomes in the middle-class range, probably those ranging up to £1,000 a year. The Commonwealth Bank was established with £10,000. I am interested in its history because it was that financial genius, Mr. King O’Malley, who visited Hobart and persuaded the then Premier of Tasmania, Mr. Solomon, to transfer the
Tasmanian Savings Bank account to the Commonwealth Bank.
Sitting suspended from 6.15. to 8 p.m.
– I was about to refer to the circumstances in which the Commonwealth Bank was established. It may not be known to some honorable senators that the general business of the Commonwealth Bank was established by the Tasmanian Government transferring ita savings bank deposits to the Commonwealth Bank. Mr. Denison Miller, the governor of the bank, then commenced to establish savings banks throughout the country; but the assistance of the Tasmanian authorities enabled the ordinary business of the Commonwealth Bank to be commenced. The degree to which its activities have progressed will be found in the fact that its deposits now amount to over £120,000,000, and, according to the balance-sheet for 1939, its assets over liabilities total over £19,000,000. In studying the balance-sheet for 1938 with the assistance of a Sydney accountant, we worked out that the profit for that year on a trading capital of £6,000,000 amounted to just under 25 per cent. It is well known that the bank could earn twice as much as it is now earning, as during the year mentioned its profits on the basis of 25 per cent, amounted to £138,000. Why does not the Commonwealth Bank look for additional business instead of turning away business that is offering? I know that in Tasmania before a person can open an account with the Commonwealth Bank the representative of that institution submits particulars to the head office which ascertains the reason for the prospective customer discontinuing his connexion with one of the private banks. The Commonwealth Bank is supposed to be carried on in the interests of the people of Australia; but I have no hesitation in saying that profits twice as great as those which are now earned could be made if the bank so desired. It declines to take a good deal of the business that is offering. It is sending customers to the private banks when it should not do so.
– It is not sending them away.
– To my own knowledge the Commonwealth Bank in Hobart is sending customers to the private banks.
– And in other capital cities too.
– Yes ; that is the policy which it adopts throughout Australia. I have on the notice-paper a motion dealing with treasury-bills which is one of the biggest rackets in connexion with banking. A treasury-bill is an undated promissory note and can be changed at any time for paper currency. I do not know the rate of interest on treasury-bills in Australia; but I know that the rate charged in Great Britain varied in a period of twelve months from 14s. 2d. to £3 10s. “When Mr. Stokes, a member of the British Parliament, asked the Chancellor of the Exchequer who were the officials charged with the responsibility of fixing the rate on treasury-bills he could not obtain the information. Apparently these persons fix the rate which the British taxpayers have to pay on treasury-bills. In 1938 the interest on treasury-bills in Great Britain for one. month amounted to £1,872,816, and as I have said the rate varied from ‘£3 10s. to 14s. 2d., which was the rate ruling in the previous year. “What sort of men have we in authority? “Why should they have power to vary the rate to that degree? The manager of the Bank of New South Wales stated in his annual report that he regretted that that institution could earn only 10s. per cent, on treasury-bills in the London market. The bank racket continued after the Commonwealth Bank Act was amended by the Bruce-Page Government in 1924, when the government of the day got the men it required appointed to the Commonwealth Bank Board. In that year it applied to the bank for an increase of the note issue by £S, 000,000. Instead of charging a lower rate of interest the Government had to nay 7 per cent. It notified the banks that notes were available. Did it take thom up? It did not. The bank could lend money against them and did so. It could lend ten times the amount involved. What sort of governments have we when they allow this sort of thing to continue? Are they protecting the interests of the people? Australia entered this war with a national debt of £1,300,000,000, a burden which has to’ be borne by a population of 7,000,000 persons. Before the last war
Great Britain with a population of 40,000,000 persons had a national debt of £650,000,o00. To-day that debt is over £9,000,000,000 and we have only started the conflict. Unfortunately for Australia we have inherited the British banking system, and our national debt will soon be double that of Great Britain in 1914. To-day Britain’s national debt is two-thirds of the total value of Britain’s national assets, and Australia in common with Great Britain will, if it does not adopt sound financial methods, have to repudiate its liabilities. What is the use of appointing a banking commission which cost the country £27,000 if the Government will not permit Parliament to discuss its report? Over twelve months ago I asked if that report could be brought before Parliament for discussion before the Christmas vacation in 193S, and I was informed that such an opportunity would be afforded. The present financial system cannot continue indefinitely. When a recent meeting of the Loan Council concluded the present Treasurer was asked if he could say whether the Government could carry on under the present system if the war lasted two years, and he said that it could not. During the last war the private banking institutions admitted that they could not carry on, and the responsibility had to be shouldered by the Commonwealth Bank. We would not be faced with our present tremendous national debt if the Commonwealth Bank were used for the purpose for which it was established. I have related on previous occasions the experience of Mr. W. H. Higgs, when Commonwealth Treasurer, in 1916. By raising a loan through Nivison and Son the flotation expenses were £2 7s. Id. per cent., whereas Sir Denison Miller raised through the Commonwealth Bank many millions of pounds at a cost of only 4s. lOd. per cent. In that one transaction the employment of a private underwriting agency meant a loss to the Commonwealth of £774,000. The Leader of the Opposition (Senator Collings) referred to the fact that at present we are paying approximately £1,000,000 a week in interest. Mr. Towers, of the Canadian Central Bank, said that that bank, being a government bank could lend money free of interest and that there was no need to repay the capital, because the increased prosperity of the people enabled it to be repaid indirectly. But this Government and those which have preceded it still persist in paying exorbitant interest rates.
– Shame !
– It is a shame that the taxpayers should have to meet this unnecessary charge.
– How are they getting on in Alberta ?
– I informed the honorable senator on that point twelve months ago.
– They are not any better off in Alberta than we are in Australia.
– The social credit system advocated in Alberta was never brought into operation. I can, if the Assistant Minister desires, produce a pamphlet, to show him that the Government of Alberta is the only government which is paying ofl its national debt and reducing its taxation. Does he want anything more convincing than that? The financial system to which the Assistant Minister refers was never brought into o Deration in Alberta because the Ottawa Government, which is as bank-ridden as most governments, claimed that under the North America Act the system would be unconstitutional. Social credit was never introduced. It is ridiculous to say that a system which has never been tried has failed. The manager of the Bank of New South Wales regretted that be could obtain only 10s. per cent, on treasurybills in London. The Commonwealth Bank hhs power tinder existing legislation to instruct the Commonwealth Bank Hoard to issue loans free of interest. Paragraph 530 of the report <>f the royal commission on banking reads -
In our view, the proper relations between the two authorities are these. The Federal Parliament is ultimately responsible for monetary policy, and the Government nf the day is the executive of the Parliament. The Commonwealth Bank has certain powers delegated to it hy statute, and the hoard’s duty to the community is to exorcise those powers ro ‘he best nf its ability. Where there is a conflict l«’t.w«en the Government’s view of what is best in the national interest, anil the hoard’s- view, the first essential is full and frank discussion between the two authorities with a view to exploring the whole problem. Should their views be still- ‘irreconcilable the Government shall tell the bank board that it can and will take full responsibility in the matter and instruct the bank board bow to act.
Under the constitution the Commonwealth Government has certain powers which it should exercise. The paragraph which I have just cited had the support it the chairman of the commission, who is a judge of the Supreme Court and after twelve months of investigation he should have known whether his recommendation was constitutional. That recommendation has been entirely disregarded by the present. Government mid I suppose it always will. be. If we do not destroy the Menzies Government in trie ni-‘xt flection it will destroy Australia. We cannot fight a war unless we have interest-free money. If we come out of this conflict victorious we shall be ruined financially. I have shown how our national debt is increasing and how unnecessary costs are incurred in connexion with ordinary and conversion loans. We are continually converting loans at a. tremendous cost. Why should we ask the High Commissioner in London to arrange the conversion of loans or to deal with any other business concerning which he knows nothing? On one occasion Mr. Baldwin was sent by the British Government to deal with the Wal] Street crowd in America and the negotiations resulted in that British Government having to pay £65,000,000 a year over a period of 60 years on its war debt to the United States of America. Clemenceau said that France was not. for sale and that he would not- pledge his country to Wall Street. Do honorable senators realize why we have been elected to this Parliament? I often think that they do not. The way in which this war is to be financed is the most serious matter that we have to consider. Australia cannot be defended adequately if we are to pay interest at the rate of from 3 per cent, to 4 per cent, on loans. Prior to the dinner suspension, I mentioned the cost of the loans floated since 1934. It will be necessary to repudiate them, as was done by Great Britain in respect, of loans raised in the United States of America for the purposes of the last war. That country was in the war for a year and eight months before it put one soldier into the firing line. In view of the price paid by Great Britain in blood in that war, I consider that the United States of America was not entitled to repayment of the British loans. The Bank of England is no more entitled to that name than it is to be called the Bank of New York. Honorable senators will recall the famous saying of Goering that the Germans preferred guns to butter; but when Dr. Schacht said that Germany must have another loan from the United States of America, Sir Montague Norman and Sir Walter Runciman travelled on the Queen Mary to New York in order to float a loan, but not for the purchase of butter for the half-starved people of Germany.
No honorable senator opposite has been able to contravert anything that I have said regarding banking and finance. The experience of Christian missionaries is that it is a good deal easier to convert to Christianity untutored blacks than the people of a highly civilized country, where prejudices have to be overcome. Similarly, I” find it impossible to counteract prejudices by logical reasoning, and that is why I have muchtrouble in inducing members of the Senate to accept my financial views. ] hope that Australia will not be ruined financially before the theories that I have advanced are put into practice. Those views are in accord with the first plank of the political platform of the Labour party. I am at war with any body of men who are not prepared to face this situation seriously. A fortnight ago I saw troops marching in the streets of Sydney. Some of them were men from Tasmania whom I knew, butI could not cheer. I have visited the hospitals in Hobart during the last 20 years, and 1 have seen too many of the wrecks of the last war. I happen to be president of the Hobart branch of the League of Nations Union. At one time I thought that the league had provided the necessary machinery for the preservation of world peace, but my belief was shattered when I heard that Sir Harry Strakosch had been appointed by Sir Montague Norman as financial adviser to the league. After the last war a committee of the league found -
That armament firms have -
) Been active in fomenting war scares, and in persuading their own countries to adopt war-like policies.
Attempted to bribe Government officials both at home and abroad.
Disseminated false reports concerning the military and naval programmes of various countries in order to stimulate armament expenditure.
Sought to influence public opinion through the control of newspapers in their own and foreign countries.
Organized international armament rings through which the armament race has been accentuated by playing off one country against another.
Organized armament trusts by which they have increased the price of armaments to governments.
When one reads a letter in an English newspaper by a military officer of high rank, one often -finds on inquiry that he is a member of the directorate of one of the big armament firms. I have the same respect as my leader has- for Senator Abbott, but until we get down to the real causes of war it is hopeless to expect satisfactory results from’ an armament conference such as he proposes. We cannot prescribe the medicine until we diagnose the disease. The financial magnates have created a Frankenstein that will eventually destroy them. The millionaires in Great Britain are to-day in greater danger from bombs than were the men in the front-line trenches in 191 4. In 1936, Lord Baldwin, in his book Should this War Eventuate . said -
Anarchy and chaos will prevail. The people will rise against their governments and destroy them.
I believe that that is true. I was greatly relieved to hear what our visitor from England told us to-day; but, even if we win in this struggle, in what position shall we be financially? During the last war the profits of the armament rings were almost, beyond belief. We remember the shortage of shells that occurred in the first two years. Mr. Lloyd George, when he was Prime Minister of Great Britain, said that great difficulty was being experienced in obtaining armaments, and that if the prices were not reduced Great Britain would either have to drop out of the war or adopt some drastic measure. The result was that the manufacture of armaments was taken from the private firms, and the British Government assumed control of all private manufacturing enterprises. Mr. Lloyd George informed Parliament subsequently that lS-lb. shells, for which 22s. 6d. each had been previously charged, were being made under Government supervision for J.2s. each. There was a specific saving in the period under review of ?S5,000,000. For Lewis guns, the average price charged by private firms had been ?165 each, and under Government supervision they were made for ?35 each. This shows the patriotism of the armament rings. Rifles that were costing 42s. each were afterwards produced under Government supervision for 14s. each. Germany obtained 50 per cent, of its iron ore throughout the last war from French soil. It captured the Briey Basin, and the mine was immune from bombardment by the French. Subsequent enquiry proved that a big French firm working in conjunction with Thyssen in Germany had agreed to halve the profits during the war.
I refer honorable senators to Financiers and Nation by the Right Honorable Thomas Johnson, ex-Lord Privy Seal, who occupied one of the highest positions in the British realm. That writer stated -
The British banks created over ?2,000,000,000 out of nothing.
Mr. R. G. Hawtrey, exsecretary of the British Treasury, in an article in the Encyclopedia Britannica, remarked ;
The banks are institutions for tlie creation of credit, which they create out of nothing.
I have already told honorable senators how the first British loan was raised during the last. war. I gave a specific illustration. A man with an hotel worth ?20,000 had paid for it, probably by borrowing the money through a bank, which wrote to him and said that his patriotic duty was to put some of his money into the first war loan. When he said that he had not any money to invest-, the bank replied : “ We can easily arrange that. The Government is giving 5 per cent., and we can lend you the money at 4 per cent.” Between his patriotic duty and the inducement of a profit of 1 per cent, he fell into the trap, and took a mortgage of ?10,000. When the second war loan was floated he received another note from his bank manager, who told him that he ought to take up another ?5,000 worth of bonds, as it was only necessary for him to hand over to the bank his ?10,000 worth of bonds. Of course, the bank was creating this money. There is not a bank in Australia to-day that could pay 2s. in the ?1. He put the ?10,000 worth of bonds in the bank and got another ?5,000 worth. When the bank decided to call up the overdraft of ?20,000, he could not meet the demand, and, consequently, the bank closed down on his hotel. This policy brought about stagnation generally in England at that time, and tens of thousands of firms passed into the bank’s hands. A banker has been defined as a man who lends you an umbrella when it is fine, and calls for it when it rains.
The other day in Canberra I listened to a lecture by a prominent Australian economist. He spoke for an hour on overseas trade. He made one mistake; he declared that the disastrous drop of prices in 1929 ruined the primary producers of Australia. He said that the only way in which we could protect our exports would be by penalizing the local consumer. Apparently that policy is being followed to-day, because a pound of Australian butter which costs 2s. in Sydney can be bought in London for ls. 6d. At the conclusion of his address, I asked the lecturer if he would tell his audience what brought about the disastrous drop of prices in 1929. He refused to answer my question. I proceeded immediately to explain the point to the audience. I pointed out that Gustav Cassell, the noted Swedish economist, who for some time was a lecturer at Oxford University, declared that concerted action on the part of the banks in the restriction of credit, dictated by high finance, brought about the drop of prices in 1929, which ruined the primary producers of not only Australia but also the rest of the world. Of course, the banks in Australia have no say whatever in their policy.- They simply take their instructions from London. When he was asked how long the depression would last Professor Cassell replied,- “ The banks having deliberately created the depression, can lift it. whenever they like”. No man ever spoke truer words. We live in a money economy and we cannot, either as individuals or nations,, implement a single wish, without money, and so long as we stick to the present financial system, tie deeper we get into debt either as individuals or nations, the less individual liberties Ave enjoy. For instance, if I were a retailer and got into debt with a merchant, sooner or later the merchant would say to me: “Darcey, you are behind with your payments. Unless you buy the whole of your future requirements from us, we shall put you through the bankruptcy court”. The system of barter went out of vogue long ago, but many efforts have been made to re-introduce it. However, those efforts have failed, because of the opposition of the banks which realize that there is no profit in the barter system. When the Bank of New South Wales was established, its trading capital was only £225,000, whereas to-day it amounts to between £S,000,000 and £9,000,000. It is hopeless for a layman to endeavour to discover the profits made by a bank from an examination of its annual balancesheet. It is the practice of the banks to transfer hundreds of thousands of pounds to secret reserves. In many cases these secret reserves are greater than the paidup capital, of the bank.
– Who let the honorable senator into those secrets?
– As, I said before, I studied this subject long before I entered this chamber. Apparently it is well that I did, because certainly I would not learn these thing3 in the .Senate.
– And neither can the honorable senator teach these matters.
– I recall that the honorable senator who has just interjected declared that if it had not been for the adoption of social credit in Germany, there would be no war in Europe to-day.
– That is so.
– I point out that it is not the system itself, but the application of the system that is wrong. Germany discarded the old debt system. I am not defending the German action at all. Four years ago Germany discarded the system which this Government still stands for, with the result that the resources of Germany are being exploited for the purpose of building up arma ments. If Hitler had used that money for the progress of the German people by building more schools and providing more efficient social services, for instance, Germany to-day would be the greatest and most progressive nation in Europe. Let me take the aeroplane to illustrate this point. I can fly from Hobart to Canberra in five hours, but it would take me forty hours to do the journey by boat and train. That is a progressive use of the aeroplane, but convert the same machine into a bomber and the application of that machine is entirely ‘diff erent. It is evident from the economic position in England to-day that that country will be ruined financially. On the 4th May last year I read a statement in this chamber entitled “Warning Europe.” On that occasion I spoke for about threequarters of an hour, but not a daily paper in Australia printed a line of my speech for the simple reason that our press is controlled by the financial institutions and it would not suit them to broadcast any of my remarks. However, it is necessary for me to keep on telling honorable senators opposite how this country should be governed financially. This year Ave have been able to sell our primary products, but very soon the Government will be experiencing hard times. For instance, Tasmania exported 5,000,000 bushels of fresh fruits last year, but it is doubtful whether transport can now he found for 1,000,000 bushels. The Government says that itwill buy that fruit, but what it will do with it, we do not know. If Ave could use the national credit for the national good, Ave should not have hospitals overcrowded with patients; as they are today. Whenever the Government has been approached with a request to finance some essential undertaking in the community, the orthodox economists and politicians invariably ask where the money is to come from. They have been asking that question so often because they are so little enlightened on the problem of finance. In the meantime many people are dying in their homes for want of proper medical attention.
– - That is not correct.
– The honorable senator knows very well that what I am saying is true.
– It is not true.
– To-day preparations are being made for the construction of a hospital in Melbourne with double the capacity of the present public hospital in that city, simply because the existing hospital cannot cope with the numbers who seek to enter for medical attention. In addition, health officers throughout Australia tell us of the evil of malnutrition among our children. I submit that the means to erect sufficient hospitals and to provide our children with proper food is at hand. We have only to ask the Commonwealth Bank for the money. The Government will not do so, however, because it is a friend of the private banks. Unfortunately for Australia, we have not a real national Parliament. This Parliament is composed of men who come here to serve certain interests, and should those interests be threatened they would vote against the best measure that comes before them. I recall attending political meetings when federation was still in the air, and I well remember the promises that were made as to what would be done when federation was brought about. Those promises have not been honoured and never will be honoured unless we get a thoroughly national government. When we looked for a Federal Constitution for Australia, we adopted the American Constitution almost to a word, because that Constitution had stood the test of 100 years without amendment. It is a function of the Senate to deal with measures referred to it from the House of Representatives and if such measure: are in the interests of the country we pass them in this’ chamber. That is the only justification for the existence of the Senate. However, in the last eighteen months, that practice has not been strictly carried out. On many occasions I have instructed several honorable senators opposite at their own request, on the subject of finance. In one case, after giving such instruction to one honorable senator opposite, he immediately entered this chamber and voted for a loan of £10,000,000 for defence purposes, to be borrowed at 3% per cent, interest. This practice will be followed by fh’.s Government until the country 5s mined financially. On one occasion I met the present Treasurer (Mr. Spender) and at the request of his committee, spoke to him on the subject of finance, lie admitted that he knew nothing whatever about hanking and finance, adding that he was a lawyer.
– Every one is not so brainy; that is the trouble.
– What I am most concerned with in this instance is what followed. I was deputed to give him a few lessons, and he accepted that instruction. However, there was a disturbance a little later in the House of Representatives and it was rumoured that Mr. Spender would probably be appointed Attorney-General. At that time he was an Independent, and an Independent be remained until it seemed probable that he might be appointed Attorney-General. Consequently, he surrendered his independence, and was later appointed not Attorney-General, but Treasurer. As Treasurer, he issued a pamphlet dealing with the national credit. He stated that it would be madness for any government to create unlimited credit. No one with whom I have spoken has suggested for one moment that the Government should create unlimited credit. It is easy, however, to put up an Aunt Sally and knock it down. Mr. Spender concluded his pamphlet by saying that the people of Australia should get into their heads the fact that they cannot get something for nothing. Under the banking system a bank can create £10,000,000 of credit out of nothing and can get 3 per cent, interest on that credit, as well as all the perquisites in connexion with loan conversion. Are not the banks getting something for nothing? Senator Herbert Hays asked by interjection why the banks should pay interest on deposits if they can create credit out of nothing. I pointed out that the banks could not go on lending money unless they had a certain amount of deposits.
– Then I must be right.
– The banks must create the credit out of deposits.
– I shall enlighten honorable senators on that point. A man, who to-day is the secretary of a big company in Hobart, once told me that he had been employed as a bank clerk for fifteen years. When he heard that I was standing for election to the Senate, he raised the question of monetary reform and said that all the talk about credit was bunkum. He produced a balancesheet of the Bank of New South Wales on which deposits were shown to amount to £54,000,000. Coming to that item, I asked him what it really meant, and he replied that that was the amount of deposits placed in the bank by depositors and on which the bank loaned money to its clients. On hearing that explanation, I said to him, “ And you were for fifteen years employed in. a bank”. He replied, “ Yes, and the manager of the bank said that I was one of his most assiduous employees”. I said to my friend, “Do you know there has never been more than £57,000,000 worth of deposits in Australia? How could ‘the Bank of New South Wales have had £54,000,000 of deposits when there are eight other banks?”
Every body knows that money is lent to the banks in the form of deposits. At times even I have put money in the hank. I was paid 2 per cent, for the money which I deposited, but when on one occasion I asked for a business overdraft I was informed that the interest rate on it would be 6 per cent. Honorable senators will no doubt think that a man of my education should have had more sense, but that occurred years ago before I had made a thorough study of banking. The difference between 2$ per cent, and 6 per cent, represents a profit of 125 per cent. Even that would not be so bad if the banks actually loaned the money, but they do not ; they merely advance credit.
– What did the bank do with the money that the honorable senator lent to it?
– They utilized it as a basis on which to advance money at a much higher rate of interest. That is the way in which they carry on their business. They extend credit to many times the value of their deposits. Money is not actually used in bank transactions at all. Ninety-nine per cent, of the world’s business is carried on without money, by means of bank drafts, promissory notes, cheques, &c.
I purchased a property early in 1914 and when war broke out I expected to receive a severe financial setback. I’ mortgaged my house, but like every body else who had something to sell during the war, I made money, and I was.able to pay £1,000 off the property. Subsequently the mortgagee came to me and said that the mortgage was due, and that he needed money for business reasons. I had not the required sum and the mortgagee suggested that I approach my bank manager. As I have said, 1 did not know much about banking in those ..days. ‘ I went to the bank and asked for the money and the manager asked what security I could offer. Being innocent of banking methods, I replied that I had a wife and three children worth a million pounds each. The manager said unfortunately these could not be regarded by the bank as security, and he asked what I had in the nature of bricks and mortar. Fortunately I had security of this nature and I obtained the money. Some years later I saw that bank manager again and he said, “ How are those assets of yours getting on ? “, and I replied, “ The oldest is in breeches and I have two more since I saw you last “. Unfortunately banking and finance is a very dull subject, and perhaps I shall be excused for endeavouring to brighten it with anecdotes. Beturning to the point which I wish to make, the bank manager asked me how much I wanted, and I said £1,500. The bank advanced the money, for which I signed a document, which in effect meant that I transferred to the bank property worth between £6,000 and £7,000, in return for which I was given the authority to write a cheque for £1,500. That cost me £96 in interest annually. The money was put to the credit of his current account, on which the bank paid no interest. With the money which I paid to him, the former mortgagee of my property bought £900 worth of tools and equipment, for which he paid by cheque; the man who sold the tools and equipment paid for them by cheque, and the manufacturer of the tools and equipment bought his raw material and paid the wages of his employees by cheque. It can be seen, therefore, that there was no money involved in the transaction at all.
– A cheque is as good as money.
– Of course it is. That is why we are £700,000.000 in debt to the banks to-day, when there is only £57,000,000 of money in Australia. If the banks did not create credit how could we be that* much in their debt?
It is commonly believed that to start a bank it is necessary to have millions of pounds. That, however, is a fallacy. The Commonwealth Bank started with only £10,000, but now it has £122,000,000 in deposits and the excess of assets over its liabilities amounts to £19,000,000. Who says that there is no profit in banking? I cite also the case of a son of the late Andrew Mellon, one of the richest men in America. Mellon, jun. was taxed on an income of $600,000 in one year. He protested that he did not earn that much, but of course he bad to pay it, and claim a refund. He sued the Government for a refund of $122,000. During the hearing in court, he was asked by the lawyer conducting the government case whether or not a greater part of his income was derived from the bank, and he replied that it was. The government representative then asked what was the paid-up capita] of the bank,- and Mr. Mellon replied, “ My bank has no paid-up capital; my father’s good name is the capital of my bank “. It appeared, therefore, that Mellon, jun., had an income of $600,000 merely because his father was a. rich man. When he opened his bank the name “ Mellon “ was something to conjure with because his father owned half the railways and banks in the country. People put their money into “the Mellon bank” and with every $10,000 deposited the bank was able to advance $800,000 or $900,000 worth of credit at 6 per cent. I would start a bank next week if I could, but unfortunately I could not do it. The richest man in the world could not start a bank in Australia unless he had the support of the other banks. Sir Denison Miller found that out when the private banking institutions threatened! not to clear the cheques of. the new Commonwealth Bank. Eventually the Bank of New South Wales agreed to do this, and of course all the other banks had to follow suit. Banking is the only business which it is impossible for a man to undertake in Australia. I believe that ‘an American firm with a great amount of capital tried to start a bank in Australia, but it was unsuccessful, because the other banks resolved not to clear its cheques. The monopoly at present in existence is 30 tight that it cannot be broken. I challenge honorable senators to name any other business activity which is so exclusive.
– What about starting a bank and carrying it on entirely with credit ?
– I repeat that a bank cannot be started unless the other banks will clear its cheques. I think I told the honorable senator that a year ago, and I do not think that my voice can be regarded as small and difficult to hear. In fact one of the main objections I have to the use of amplifiers at elections is that the man with a small voice is just1 as well off as I am. I protested against the use of the amplifiers but my protest was ignored and I was asked, “ What will happen to you when television comes in, and the people can see you?” That, however, is departing once again from the serious to the jocular, but I believe that if an audience is kept in a good humour it is all to the good. Perhaps I shall get a good hearing next time, without any smiles from honorable senators opposite. Perhaps I shall even get a few converts. I must confess that there were so many financial pagans in this chamber when I came here eighteen months ago that for a while I almost despaired of ever getting a convert, but I shall persevere.
Although I cannot take all the credit for it, it is well known to the Government that there have been hundreds of demands from various associations throughout Australia that the Government should use the Commonwealth Bank to finance national undertakings and war expenditure. It can be done. I challenge any honorable senator to prove otherwise. I have the backing of a royal commission set up by the Lyons Government. I have a question on to-morrow’s notice-paper asking why the Government persists in ignoring the recommendation of that royal commission, and when its findings will be discussed in this Parliament. I hope that that question will be satisfactorily answered.
– No doubt paragraphs 504 and 530 will receive considerable attention.
– Paragraph 530 is the more important of the two because it tells the Government what it ought to do.
– It also indicates what will happen if the system which the honorable senator suggests be adopted.
– I have already explained what would happen, and once again I challenge honorable senators to disprove my statement. I am open to correction by anybody. I have no desire to make statements in this chamber which are not absolutely in accordance with facts.
I think I have given a clear statement of the financial position of Australia, and the much worse position which will come about if this war lasts for a couple of years. Australia cannot possibly finance by Joans and taxation the expenditure which will be required of it. The smash which must come will be the responsibility of the Government, because the Government is the executive of this Parliament. I have outlined to honorable senators the true principles of political economy and the reasons why we are now in financial difficulties. If those principles were observed we would not bc in this predicament to-day. A report was sent from the United States Secret Sei- vice to France regarding the banking fiirm of Kulin Loeb and Company, of New York. This big banking (inn which includes the Pierpont Morgan group sent Lenin and his 56 Jews to Russia to start the Russian revolution. I have already shown what armament firms can do, and I shall now mention just what can be done by financial institutions. A revolution could not be started in a population of 100,000,000 without a lot of money. Thirty million Russians lost their lives in that revolution. I do not say that, they had. no justification for revolting against the conditions which obtained during the Czarist regime. If this war continues and Italy becomes involved, Great Britain, France, Germany and Italy will be ruined with the los3, possibly, of millions of lives and thousands of millions of pounds’ worth of property. Yet the root-cause of all wars will remain untouched. “We cannot talk now about postwar planning, because no one can conceive what this world will be like when these forces of high finance are let loose. Once high finance has ruined the countries I have mentioned, only two would remain - the United States of America and Russia, both of which are under the thumb of high finance. The reward which Kuhn Loeb and Company received for financing the Russian revolution was the sole right to finance the Russian fiveyear plan which developed into a ten-year plan and now has become the fifteenyear plan. That company is still financing Russia. The deeper a nation gets into debt, the less chance there is that it will ever emerge from its troubles. The so-called rule of the proletariat in Russia is a farce. The proletariat of that country has no more voice in the government of Russia than has the man in the moon. Big finance rules everything. Walter Lippmann, the great financial expert who was an adviser to the late President Wilson, and is now financial adviser to President Roosevelt, has declared that the President of the United States of America is not actually in charge of that great country; it is governed by the financial magnates. In 1912 there was such a disturbance in that country over the operations of trusts and combines that President Wilson had to institute an inquiry. I read the report of that investigation. It disclosed that Jacob Schiff, head of the firm of Kuhn Loeb and Company, had control of five of the largest banks in the country and 125 smaller banks, as well as a large number of big companies associated with these banks, representing a capital of $22,000,0.00,000, which in English money is about £4,999,000,000. So powerful was this financial group that it could stop every industrial wheel in the United States of America. When the Sherman Trust Act was passed the federal government “fined these financial interests the sum of $20,000,000, but they were so powerful that they refused to pay the fine and actually defied the Government of the United States of America. [Extension of time granted.]
Under the present orthodox system of finance governments cannot continue without borrowing. Consequently, the first tact by President Roosevelt when his famous “ Brain Trust “ was established was to borrow £1,000,000,000 ster- ling from the banks, which, by that operation, brought about the financial depression in the United States of America. During the war of 1914-18 the United States of America became enormously rich, principally from the sale of vast quantities of munitions and other goods to the Allies. Most of the business firms took their businesses out of the hands of the banks, and themselves began to lend money. The banks replied to the challenge by calling up overdrafts and taking credit out of circulation. The result was that manufacturers, being unable to sell their output, had to come to heel at the call of the banks. It- may appear to be strange, but nevertheless it is true to say that the borrowing by the President of the United States of America of £1,000,000,000 from the banks was responsible for the depression in that country. The only way in which a. depression can begin is through the calling up of overdrafts and the refusal of banks to issue further credit. Honorable senators should find this easy to understand, because the world is run on credit. That is why the United Kingdom is in such a sorry plight to-day. Great Britain has a national debt of £9,000,000,000, all of which was borrowed through the banks. Mr. Reddaway, a former employee of the Bank of England, and now lecturer on economics at the Melbourne University, recently in Hobart gave an interesting lecture on banking operations, with particular reference to the Bank of England. Discussing applications for loans in London he told us that the difficulty in floating loans was not to raise the money required, but to have applications accepted. I had seen in the newspapers a statement, intended to demonstrate the financial stability of the British Empire, to the effect that a loan of £89,000,000 was put on the market one morning and was floated before dinner time. Mr. Reddaway explained how that was done, and after hearing what he had to say I could readily understand that it would have been just as easy to float a loan of £800,000,000. As the Bank of England does not employ underwriters, it receives nil the profits from loans raised by it. When it floats a £20,000,000 loan it takes out of that amount as much as it wants. In telling us this story of finance as seen from within the Bank of England, Mr. Reddaway broke the rule of that bank which requires employees to sign a declaration that they will not disclose anything that takes place inside the bank, so I am quite sure that he will never be re-employed by that institution. He told us that so heavy are applications for these loans that one of £20,000,000 may be opened at 10 o’clock in the morning and closed fully subscribed twenty minutes later. A number of operators on the London Stock Exchange, known as stags, make applications for loans under a dozen different names. Mr. Reddaway, speaking in jocular vein, said that the bank received so many applications under different names from one address in London that he wrote to the health authorities complaining of overcrowding in that house ! That was his joke, but it is a true indication of the state of affairs in connexion with loan flotations. The operation is really very simple. These financiers do not lend the money. They merely telephone to the institutions in which they hold monetary interests; in Australia they might ring up the Broken Hill Proprietary Company Limited - and ask tb en] whether they would like to take £100,000 in a new Australian loan at oi per cent. The institutions always accept readily and would be glad to get £200,000 at that price. Some people may say that these loans will never be repaid. Of course, they will not be redeemed. It is physically impossible to repay the national debts. But none of these financial giants wants to be paid back. So long as the security is good, and the government of the country concerned has the capacity to tax its people to meet the interest bill, these men do not want to reclaim their capital. London balances to meet the annual interest bill are generally two years ahead. When Sir Otto Niemeyer and Mr. Guggenheim visited Australia some years ago, they told us that we were living beyond our income. At the annual meeting of the Bank of New South Wales a few months ago, the general manager declared that the standard of living in Australia would have to fall as the result of the war, but he said nothing about lowering interest rates. If we allow this racket to continue we shall be ruined. The banks of Australia can only lend against their deposits, but if the present monetary system were altered the Commonwealth Bank could lend against the productivity of the country, which is 100 times greater than the amount of actual bank deposits.
During the last election campaign in which I participated, I listened to a bank apologist in a broadcast over the air. He said that the banks filled a useful position in the community ; that if a man had £500 for which he had no immediate use he could go to his banker and put it on deposit. Of course he could, but all he would receive in exchange would be a bank receipt. He would be given no guarantee that he would get his money back. How different is the position when a man goes to a bank to borrow money. The banker will hedge about lending up to one-half the certified value of property offered as security. The manager of my bank said to me one day that the great difficulty about finance in time of economic stress was want of confidence. I told him that I had read an article about banking which said that the essence of credit was faith - faith on the part of the depositor that the bank in which he deposited his money was safe, and faith on the part of the banker that the people to whom, he made advances would pay back their loans at the stipulated time. I said that that was all wrong; that the essence of credit was approved security. Money was not lent on faith. My manager did not argue the point. Moratorium legislation was passed in Australia in order to save the people from the effect of the bank-created depression. At that time a friend of mine in Hobart had a flourishing business, but unfortunately he encountered difficulties and his bank manager told him to reduce his overdraft. As he could not do so, the bank put in a receiver. However, he had a friend who was a bank manager. He went to this friend, told him his position and said that he would like to transfer his account. His friend told him that he had no chance of doing so because there was a so-called gentlemen’s agreement by which the banks must not accept the transfer of accounts during a depression.
I was asked last night why the banks called up overdrafts in Australia. I replied that the Australian banks had no say in the matter. They received their instructions from London; The richest men in the world control the banks. They only want the extra money they obtain because of the power which it gives to them. They have millions of pounds which they cannot possibly spend, but they are involved in a system in which monetary power counts for everything. The people of Russia and the United States of America are under the sway of this power. If the governments of the world had been aware of this plot, the present war would never have occurred. The peoples of the world do not want this war, and it could be stopped if honest men controlled international finance, but under the present system wars will continue for so long as profits can be wrung from them.
Post-war reconstruction cannot take place effectively until this monetary system, which alone is the cause of all modern wars, is changed. We in Australia have a serious responsibility. I hope that what I have said to-night will not be disregarded. As, honorable men our duty is to protect the interests of the people who send us here. Party political differences should be put oil one side. The only way to end party political intrigues is to make each member of Parliament responsible for his own actions.
– The Speech delivered yesterday afternoon by the Governor-General and the speeches made in this chamber, with the exception of those delivered from this side, have been very barren. The Government’s proposals fall very far short of the requirements of this country. During the recess the Government has performed very few administrative acts that have not been purely for the wellbeing of big business concerns and vested interests. Every board that the Government has appointed has a thumb in the Commonwealth financial pie. Every Government action has been for the benefit of the wealthy classes. In a question which I submitted yesterday I innocently transgressed procedure. I learned later that the question would have involved the forfeiture .of my seat in this chamber had it been accepted by the President. Yesterday I offended unwittingly. To-night I propose to speak of some of the things that prompted me to ask the question, and state what I consider to be the duty of the Government. The subject should have been mentioned in the Governor-General’s Speech, because it is second only in importance to that of the successful prosecution of the war. I refer to the production of petroleum in Australia. Before I resume my seat I believe that I shall be able to convince any unbiased person that the failure to discover flow oil in Australia is owing to one of the greatest ramps we have ever known. About twelve months ago an American citizen who has been responsible for the production of large quantities of oil in the United States of America came to this country. His sole reason for doing so was because the Government of the United States of America, at the behest of American vested interests, had introduced what is known as the -pro rata law whereby the production of petrol in some instances is limited to 1 per cent. The gentleman to whom I refer, being a producer of oil from wells which he himself had discovered, decided to take a holiday and come to Australia. At the same time he noticed in an American newspaper a paragraph stating that the Commonwealth Government was offering £250,000 to any person who could discover petroleum in Australia. On reading that paragraph he decided to “kill two birds with one stone “, and being a qualified geophysicist he brought his technical equipment with him. On arrival in Australia his reputation became known, and he endeavoured to ascertain whether the £250,000 could be made available to him. He visited Canberra and was informed that in 1936 the Commonwealth Government had made that amount available to certain persons desiring to search for flow oil. I shall enlighten honorable senators as I proceed concerning the amount mentioned. After being informed that the £250,000 was not now available 1 had a long discussion with him in Sydney. He has been associated with friends of mine in America, and what I am about to tell the Senate is correct in every detail. During his stay in Kew South Wales, his reputation became known, and he was commissioned by a Mr. W. A. Freeman, a resident of that State and the president of the oil search company, to pay a visit to the Kulnura Bore near Gosford, where he was directed to use -the* special equipment which he had with him. He inspected the bore and submitted a report to th effect that those engaged in the project were just as likely to obtain oil in China. The Kulnura site near Gosford was selected on the recommendation of the Oil Advisory Committee of which Dr. Woolnough, Dr. Keith Ward and Dr. Wade are members. I understand that the last mentioned waa brought to this country in 1924. I understand that £17,000 of the taxpayers’ money has been spent on the bore near Gosford and that the operations are conducted on a £1 for £1 basis. Any person desiring to search for oil has to apply to the Government for a grant and must undertake to incur an expenditure equal to the amount advanced. If £17,000 has been advanced on that site, another £17,000 has also been provided by the company and a total expenditure of £34,000 is involved. The bore was sunk to a depth of approximately 4,000 feet, so that the approximate cost has been £8 a foot for boring. He disclosed the results secured after the bore had been sunk over 1,000 feet, and said that they might just as well be drilling in China. The site selected by the Oil Advisory Committee has been a dismal failure, and those interested have thrown their money away. Nearly £3,000 has been expended on a site near Penrith where those engaged in the project would have to penetrate about 4,000 feet of sandstone before they could expect to reach suitable strata. Some time later this American expert visited Melbourne where his reputation became known. In that city he was commissioned by Mr. John Wren who wished to invest £10,000 in a search for oil at Roma. The expert visited the site and used his instrument, which is the only one of its kind in existence. After the inspection he told Mr. Wren to keep his money in his pocket because there was no payable oil there. While in the vicinity he made a further inspection on a property which he had not been invited to inspect; therefore he had no actual right on the land. His report concerning the Roma site was similar to that on the bore near Gosford. The expert informed me in conversation that under the pro rata law in America he was on a 1 per cent, basis, whereas on properties adjacent large oil companies were operating for 24 hours a day. The small operators were tied down to 1 per cent. He said that in the United States of America the petroleum men were “ the salt of the earth “. Some time later a campaign was started against him by persons who were promoting a company similar to that in which Mr. Wren was to invest £10,000. That campaign was started in a most sinister way. Shortly afterwards he was approached by two men - I was nearly going to say gentlemen - who asked him to submit a report on a Bite in connexion with which they were going to float a company with a capital of £75,000. At this stage I do not propose to give the names of the two men, but I believe that regardless of consequences I shall be compelled to do so within the next two months. Although [ am privileged when speaking in the Senate I am prepared to make the same statement outside. It has been said before that the Australian press is in the grip of the distributing oil companies and we read a. good deal of abuse, such as is written by an amateur on the staff of the Sydney Bulletin, concerning some ventures. These two men, who proposed to use this expert for their own benefit, asked him to submit a geophysical report in order to enable them to go ahead with the floating of a company. He met them the next day in their office and after some discussion they said “ We do not want any drilling done; we do not intend to bore “. All they wanted was his report and to obtain £70,000 in Australia, £7,000 or £8,000 of which was to be paid to him.
– Who said that?
– I have already stated that I do not propose to mention the names at this juncture, but I may enlighten honorable senators to some degree by saying that one is known as “Racecourse Harry”. The expert informed them that he was not short of money and did not want to have anything to do with their project. They then said “We will give you 48 hours to consider it and if you do not give us a report we shall see that you are deported from Australia “. The question then arises as to how this was .brought about.
A company with which I was associated, and of which I am to-day a director was formed to search for oil. It, was registered in Victoria as a company with a capital of £500,000 issued in 5,000,000 share3 at 2s. each. I insisted that the shares should be fully paid at 2s., and that parcels of shares to as low a value as £5 could be taken up, in order to give an opportunity to as many people as possible to participate in any benefits that might accrue from the production of oil in this country. As it is necessary to fight the oil combine, it was considered wise to have as many adherents as possible to our cause. The company set about its work, and up to the present time it has called up only a little over £32,000 of its capital. It has no desire or intention to issue all of its shares, and with the capital of £32,000 already raised it is doing more to-day than any other company or combination of persons has done in Australia in the last 100 years. We are drilling seven well; simultaneously, and at some of them work is proceeding night and day. Arc any other companies doing that, although they have received cash assistance from the Commonwealth? No; they have let their . money go up in smoke on the advice of ‘ geologists who have proved themselves to be dismal failure’s.
– Has the company in which the honorable senator is interested found any oil yet?
– I said that we are drilling seven wells. One at Nelson, near the South Australian border, is now down 1,500 feet, and we expect to strike petroleum at a depth of 3,000 feet. A well at Portland has been drilled to a depth of 1,870 feet, and we expect to find petroleum at 2,700 feet. The Lake Boga well is down 820 feet, and should provide oil at 2,000 feet. The well at Dutson has been drilled to a depth of 1,650 feet, and we hope to obtain petroleum at 2,750 feet. The Tamar River well, now 500 feet deep, is expected to show results at 2,000 feet. At Mount Gambier our well is down 700 feet, a.nd we expect to reach bottom, geologically, or strike oil at 2,000 feet. These operalions are superintended by a man who, we were told, could not remain in Australia after the 4th June next.
– How long does the honorable senator anticipate it will take to reach the desired depths?
– I have mentioned the bore at Howlong. When we spudded that bore, our expert told us that we ought to get gas at a depth of 700 feet, and strike petroleum between 1,200 feet and 1,300 feet, and also between 1,500 feet and 1,600 feet. We have to supply the Mines Department with a report weekly. When we reached a depth of about 600 feet the report was sent to the department, and the driller received a reply telling us to stop operations. It was stated that we had struck granite, and would be wasting the shareholders’ money if we continued the bore to a greater depth. A determined attempt was made to prevent us from sinking further. [ am a practical miner in all classes of rnining throughout Australia and New Zealand, and familiar with some of the strata of the earth from both the theoretical and practical points of view. When I saw the core, I was of the opinion that it was composed of micaceous sandstone, and not granite, but the official document stated that we were down to granite. However, we continued to drill, and at 6S9 feet we received a telegram informing us that a voluminous flow of gas bad occurred. Our expert hurried from Sydney by motor car, and, when a. sample of the gas was tested, it was found to be petroliferous. If we had taken the advice of the geologist, the work of boring at that well would have been stopped, as was done in the case of 36 other wells in Victoria. We have now drilled to a depth of just on 900 feet, and the instruments show that it is necessary to go another 400 feet in order to strike oil- The bore at Portland is 1,S70 feet deep to-day, and it is considered necessary to drill practically another 1,000 feet. The strata through which we are passing, according to those who are in a. position to give expert advice, are very promising. One significant fact is that before we start to drill a well, we have sufficient cash in the bank in escrow to pay for the whole of the work. Advances are made and .the bank retains 25 per cent, of the money until the drill is finished to the depth contracted for. The cost of the Kulnura bore at Gosford was £8 a foot, but the company with which I am associated has drilling contracts at from £1 5s. to £1 10s. a foot.
– Does the honorable senator believe in the contract system ?
– Yes; and I also believe in having an armed guard over a well when drilling for oil is being carried out in Australia.
In lieu of what I said yesterday, I shall now submit an offer to the Government, and I hope that the Minister for ihe Interior (Senator Foll) will convey it to his Cabinet. If the Government will place at the disposal of Producers’ Oil Wells Supplies Limited a drill and all necessary drilling equipment, which I understand it has lying idle in Gippsland, such plant and equipment to be in good workable order and subject to an examination by an expert named by me; alternatively if the Government will defray the cost of removing the largest drilling plant in Australia, owned by Producers’ Oil Wells Supplies Limited, to a location named by me, extend the permit of an American citizen already in Australia to enable him to remain here for twelve months in order to superintend drilling operations and arrange for and bring about the production “of petroleum, and place at the disposal of the company £10,000 for drilling purposes; then if that company does not produce petroleum in commercial quantities in twelve months - although I think that it will do it within 60 days from the time when drilling is commenced - I shall be prepared to resign my seat in this chamber and not contest it again. Further, the company will insist that the Government pay the cost of an armed guard, the personnel of which will be selected by the company, until such time as the Government is satisfied that petroleum or its products, in commercial quantities, is being marketed, and that the Government uses the powers conferred on it under the National Security Act or the Defence Act to secure for the exclusive use of
Producers’ Oil “Wells Supplies Limited the petroleum rights to 100 square miles of laud in each of two localities named by the company for the duration of the war and ten years thereafter.
– The honorable senator is a publicity agent for the company.
– I make that offer, and its conditions will be observed. Will the Government save to this country the £20,000,000 or £30,000,000 that is going every year to foreign vested interests ? Will it give my company a chance to help Australia to become a great nation with a population of 30,000,000? The employment that would be provided, if oil were commercially produced in this country, would help to solve the problem of the repatriation of returned soldiers when the war is over. If the company fails in its undertaking, I shall resign from this Senate.
In order to belittle the efforts of this company the oil companies, through their emissaries, the Premiers of the States, made certain statements.
– Does the honorable senator refer to the Premier of Queensland ?
– I shall deal with the attitude adopted by the Premier of Queensland on this matter. I regard this subject as being beyond party political considerations; it is a national question. Mr. Dunstan, the Premier of Victoria, is reported in the press of the 23rd March last as follows: -
Warning to the public to exercise the utmost care before investing in shares of oil companies formed or about to be formed was given by the Premier (Mr. Dunstan) last night.
Intending investors would do well to consult a member of the Stock Exchange of Melbourne or any other qualified financial adviser, he said.
Just fancy consulting such persons !
A number of complaints had reached him from country districts that extravagant claims were being made by persons interested in the promotion of oil companies.
Such operations furnished strong justification for the Companies Act amendment which would operate from May 1 and would prevent share hawking.
The Premier declared that recently a country newspaper advertisement contained a statement that either of two companies being formed had a first class chance of claiming a £50,000 prize said to have been offered by the Commonwealth Government to the first producer of payable oil.
He had received a telegram from the Commonwealth denying that it had offered the reward.
Mr. Dunstan added that, in a report of a meeting, reference was made to a “ radiograph, which was used by one party, as being an instrument which was most sensitive geophysically
The Minister of Mines (Mr. Hogan) had been anxious to see it, hut had been refused permission. “ In these circumstances one can only draw his own conclusions “, said Mr. Dunstan.
That statement was not only widely circulated in the press but was also broadcast over the air on four occasions on the following day.
– Why not read the next paragraph of Mr. Dunstan’s statement as reported in that article?
– I shall read it as I go along. In that statement Mr. Dunstan referred to an advertisement which was published in a country newspaper. The advertisement convened a public meeting in connexion with the activities of this company, an employee of which organized the meeting. In passing, I may say that my experience in New South Wales has been that employees of the major oil companies invariably make a determined attempt to sabotage meetings of this kind. An employee of the company attended this meeting, and before he left Melbourne purchased a booklet, entitled “ Gippsland East, Its Geological and Mining Development “. The booklet was written by George Brown, and published in 1936, under the authority of the Victorian Minister of Mines, Mr. E. J. Hogan. On page 14 of this booklet which I have in my hand appears the following statement : -
In January, 1920, the Federal Government offered a reward of £50,000 for the discovery of petroleum in commercial quantities in Australia.
That statement was the authority for the reference to the prize of £50,000 mentioned in the advertisement; yet Mr. Dunstan declared that no prize had ever been offered for the discovery of petroleum in Australia. All honorable senators are aware that the Commonwealth Government offered a prize of that amount, but we also know that this offer was withdrawn in 1925. I have in my hand another booklet identical with that from which the statement in this advertisement was taken, but this booklet bears a stamp indicating that theCommonwealth Government offer had been withdrawn in 1925. I . know that only three weeks ago another of these booklets was purchased at the Mines Department in Victoria which did notbear a stamp in- dicating that this offer hadbeen withdrawn. In these circumstances the blame for circulation of the statement condemned by Mr. Dunstan should he laid at the door of the Victorian Mines Department. It is rather interesting to inquire why the CommonwealthGovernment withdrew its offer of a prize of £50,000 for the discovery -of petroleum in Australia. In 1923 a syndicate was boring “for oil atCullen Bullen, a little over 20 miles from Lithgow, where I was working as a miner when I was elected to the Senate. ‘This -syndicate struck petroleum at a depth of about 300 feet, and immediately took steps to form !a company. Itsecured the services of a Sydney solicitor who attended the firstmeeting called for that purpose. That gentleman offered the syndicate £10,000 for its lease, . but the syndicate refused theoffer. Argument “ensued a t the meeting, with the result ‘that no company was formed. Alittle later -the leader of that syndicate visited ‘Sydney in order to attend the funeral of his daughter, but on his return to ‘the “well he found that the plant had been “sabotaged. The cable had ‘been cut, and he presumedthat ‘tools which were missing hadbeen thrown Sown’ the drill hole. At this juncture the syndicate was ‘short of money, so he returned to Sydney with theobject of raising capital. During his visit he was approached at the top of Willi am-street bythree well-dressed gentlemen who said to him, “ Are you the man who found petroleum at ‘Cullen Bullen?” He replied, “ Yes “. The men thereupon brutally assaulted him, with the result that he had to remain in ‘hospital for a . period of six months. That man is Mr. Beatty, of Chatswood.
SenatorFoll. - Who does the honorable senator -suggest were the three- men whobashed Beatty ?
– I haste no doubt that they were agents of the . -major oil companies.
– Does not the Vacuum Oil Company claimthatit has spent £1,000,000 of its own money in searching for oil in this -country ?
– I -shall deal with that point, and the honorable -senator will see for himself how that money was expended. I now propose to deal with Mr. Dunstan’s assertion that Mr. Steinbuchel refused to allow Mr. Hogan to inspect his “ . radiograph “. In this connexion I take the following quotation from the Wichita Eagle.; -
Max Steinbuchel, who drilled the Martin well to the Wilcox sand and gave to Wichita a new splurge in the oil world, was born in Wichita and ‘has centered his -activities here. In recent -years he -has turned his ‘attention to oil but priorto thathe was abuilder and investor.
Apartment houses -attractedhis . attention and got . him into thebuilding activity. Spanish Court, East Elm, was -built by ‘him as were a number of smaller apartment houses -and dwellings. -He . also invested in business properties.
Oil developments later attracted his interest and it is said that he has an oil finding apparatus that really works. It worked on the Martin test. Many oil men have ‘endeavoured to get him to revealhow it works but he has refrained and handles the machine mainly at night, friends say, in order to “avoid the curious.
I myself can confirm that statement. I have- accompanied . Mr..Steinbuchel on several trips. We always travelled at night in order to . avoid the curious. The extract continues -
At one time -he was said to be the -wealthiest Wichita born citizenand, with the Martin test showing for a big producer, friends are of the opinion that hehas -another fortune . to his credit.
He -resides withhis another, Mrs. , H. Steinbuchel, , 705Faulkner. The Steinbuchelhome. built -to overlook Littleriver above the Central avenue dam, . has beenfor . years one , of the more . substantial residences °,of theRiverside district. Mrs. -Elizabeth Wilson ishis . sister. Herman Steinbuchel is.his . only . brother.
Steinbuchel and his driller, I. W. -Murfin, put down , the 3,491 foottest . with a machine land mast. A testbelow 3,00.0 ‘isnearly always drilled by either a standard or rotary rig, in fact most tests ‘below 2,000 feet are drilled with a derrick . instead of mast and machine.
Oil -men reported to-daythat had . it not . been for Mr.. . Steinbuchel’s faith in his . own geology the Martin test wouldhavebeen abandoned when the pay horizon of the Robbins . pool to . the cast was barren . of oil. But theWichitan insisted that the . drill . be carried . on andhis faith . was . rewarded.
Although activeas builder landoil man the Wichitanalso -has -hobbies, -one . of which is horses. He loveshorses ‘and has owned -many fine animals. He is unmarried.
– The honorable senator apparently is quoting from a photostat. Bias- he- seen the original?
Senator- ARTHUR. - Yes, and I shall allow the Minister to inspect it at any time.
– What has this got to- do with Australia ?’
– I am answering a diabolical attack made by the Premier of Victoria on a company which has- been formed with the object of discovering oil in Australia. It has at its disposal the services of an expert who has found oil in the United States of America, and’ is confident that he will discover oil in this’ country, provided that he is not interfered with by the Minister foi- the Interior (Senator Foll’)’ under pressure from the major oil’ companies. I have shown that Mr. Steinbuchel had good reason for refusing to allow Mr. Hogan to examine’ his “ radiograph “.
Any company which desires to- raise or increase- capital must’ apply for permission to do so to the Treasurer who inmatters of this kind is guided; by the advice of the National Security Control’ Advisory Board. This: particular company proposed. to raise ?50;000 of. additional: capital in order, to enable it. to1 go ahead with drilling- operations.. I. point out. that every ls. of this: capital is: devoted to- this work; nobody in the– company receives any remuneration whatever. Mr. Steinbuchel does: not draw: a penny of this- capital, I -handed the- company’s application’ to the– Treasurer on the 16th January last.- He told me So make a few corrections, and added that the application would be referred first of all to the Oil Advisory Committee. Three days later, on the 19th January, the Sydney Morning Herald reported Senator Foil’s statement that the Government had decided that no further assistance would be- given, in connexion with the search for oil’.- Is the same paper, on. the 31st. January - twelve clays- later - Senator Fall is; reported as having said that assistance would be given. In- his statement to the press, the honorable senator gave a list of: oil wells,, but apparently he forgot to mention that more than ?90.000 had been paid for obsolete: drilling machines which, could h’ave been bought for- one-third of the price. I wonder where the rake-off. went?; In some eases, portions of drills were left? behind,, and, in one instance; a drill was taken without a base. It is all very well’ for honorable senators opposite to– say, “ Why don’t- you do- something.?”. The answer is1 that we- shall’ do> something. I d’raw the attention- of honorable senators to the’ list of gentlemen comprising the National Security Advisory Control’ Committee -
Sir Waler MasseyGreene
This gentleman is also a member of the Treasury Finance: Committee:. I db not know to- what extent he is associated with J. B-. Were and: Son. and. the: Baillieu’ group in Melbourne -
Mr. James McCann
Sir Ernest’ Fisk (ex officio’ member ) .
An application for permission- to raise ?50l,00’0for drilling- purposes was made to the Treasurer-. The matter was’ passedon to- the National Security Control Advisory Committee. Senator Foilwas reported’ in the Sydney: Morning’ Herald as having said that investigations by geologists had Been disappointing. Thousands- of pounds had been expended1, a’nd! the results: were disappointing because of the dismal failures of the geologists on the Oil’ Advisory Committee..
– None: of the men. mentioned. by Senator Foll has ever discovered a single barrel of oil, whereas the
Other gentleman. has- discovered and sold’ millions, of barrels: of oil.
– Dr.. Wade has had vast experience in. the location of oil.
– Te a- certain, extent he is a company ma!n: and I’ shall’ explain5 later what I mean” by that;. They asked tha’t some one* should: be appointed, to- examine- our process and our. method.. The real desire was to see the secret instrument owned by Steinbuchel. The machine- is not patented but if gives good results-. The process’ involves’ the use of geophysics, and the method is by drilling. Surely a man could have been sent to conduct tests. For instance, drilling could have been witnessed at Howlong or Portland where wells are being sunk. Apparently, the Government desired only an adverse report, and I believe that the members of the Oil Advisory Committee are agents, not of the Government, but of the major oil companies.
– I rise to a point of order. It is quite easy for the honorable senator to damn faithful public servants, and charge them with being the tools of the oil companies, when they have no opportunity to defend themselves. I submit that the honorable senator should not be permitted to continue such remarks.
The PRESIDENT (Senator the Hon. J. B. Hayes). - I realize that the honorable senator has made some very serious statements, but I should not like to take the responsibility of ruling that statements criticizing officers of the Public Service cannot be made. I presume that the honorable senator will substantiate his statements. He should be given an opportunity to do so in the interests of those officers. I would be accepting a grave responsibility if I ruled that he should not be permitted to make those statements.
– If the honorable senator’s accusations are true they should be inquired into by a royal commission.
– Of what use is a royal commission? There has already been a petrol commission which cost the country thousands of pounds. A report was presented, but honorable senators are apparently not to be given an opportunity to discuss it. One statement made before that royal commission, and not up to the present time challenged, was that between 1921 and 1933, 300,000,000 gallons of petrol were smuggled into this country in the guise of crude oil by the Shell Oil Company of Australia Limited and the Commonwealth Oil Refineries Limited. Of that amount 200,000,000 gallons came into “Western Australia, and the remainder to South Australia., Tasmania and Queensland. Although the object of bringing crude oil into the country was to provide employment for Australian workmen in con nexion with refining operations, I point out that neither Tasmania, South Australia, Western Australia nor Queensland has a refinery. At the commission’s inquiry the Commonwealth Oil Refineries Limited and the Shell Oil Company of Australia Limited were represented by Mr. R. G. Menzies, then AttorneyGeneral for the State of Victoria, afterwards Attorney-General for the Commonwealth, and now Prime Minister. On behalf of his clients, the right honorable gentleman refused to produce books called for by the commission.
– Just the same as the honorable senator refused to produce the machine.
– As I have said, the machine has not been patented. The evidence to which I am referring was given to a royal commission set up by the Commonwealth Government in April, 1933.
– Is the honorable senator prepared to make these statements outside this chamber?
– I am prepared to repeat what was stated on oath before the royal commission. I say further evidence was given to the effect that some of the customs regulations relating to the importation of these products were fraudulent. Crude oil throughout the world contains anything from 2 per cent, to 30 per cent, of petrol, which is only one of the 244 by-products of petroleum; the world’s average petrol content was less than 15 per cent, at this time. Yet there is a fraudulent regulation under our customs legislation, which permits the entry into the Commonwealth of crude oil containing 70 per cent, of petrol. Will the Minister deny that statement? He cannot deny it, because he does not know anything about it. He has not taken an interest in the matter. But that is not all. Not only is crude oil containing 70 per cent, of petrol imported into Australia, but there is in force another regulation which, by comparison with the American testing standard for army and navy petrol measures 36£ per cent, short. Will the Minister deny that? One regulation permits crude oil containing 70 per cent, petrol to be admitted, and the other measures that 70 per cent. 36^ per cent, short. In other words, Mr. President, should you have a pound in your pocket, when measured in accordance with the principle of the regulation to which I have referred, that £1 would be only 13s. Further sworn evidence given at the commission’s inquiry was to the effect that the people of the Commonwealth had been robbed by means of smuggling, overcharges, and unduly high distributing costs, to the amount of £250,000,000.’ Yet the Government refuses to give to members of this Parliament an opportunity to discuss the commission’s report. What more can we do? We can only examine the report and arrive at our own conclusions. Following the finding of the royal commission 17,000 copies of a pamphlet were printed by a certain gentleman. These pamphlets were distributed throughout the electorate of Mr. Menzies, who, as I have said, was counsel for the Commonwealth Oil Refineries Limited and the Shell Oil Company of Australia Limited at that time.
– Did anybody take any notice of the pamphlet?
– It soon became evident that somebody was taking notice of it because the gentleman who paid for the printing of the pamphlet, and was engaged in distributing copies of it, received a knock on the head, and to-day there is a hole in his head into which a thumb could be inserted. He was left for dead, and the circumstances of that accident are very suspicious, to say the least of it.
– The honorable senator seems to have a good knowledge of the basher gang.
– It is my business to have such a knowledge in the interests of this country.
– Who gave the evidence to which the honorable senator has referred ?
– It was given by Mr. Pollock. Reference to the report will show that certain witnesses were insulted and sneered at by the chairman of the commission, Mr. Lamb, K.C. A majority report was issued by Messrs. Hancock and Gunn and the minority report was issued by Mr. Lamb. There are certain clauses in Mr. Lamb’s report which very likely will call for an answer before this Parliament.
I have dealt with Mr. Dunstan, and I should like now to deal with another gentleman who holds very much the same views. I refer to Major Davies, the Minister for Mines in Tasmania. Major Davies made a speech on the night that a meeting was to be held to enlighten the public regarding the conditions affecting oil research in this country. He told the people that the company had no permit to drill where it was working. He repeated that statement and refused to withdraw it. I have that permit in my possession, and the date it bears proves that it was in existence when Major Davies made his attack in order to bolster up his case on behalf of the professional geologist of his department, who had declared that there was no chance of finding oil there. That geologist admitted that he had to make out a good case from very imperfect data. He said that without drilling he was not able to state whether oil existed 2,000 feet below the surface, and he had not sunk even a scout drill within 50 miles of the site chosen by the company. A geophysicist, however, is able to discover the presence of oil below the surface. I submit the following declarations: -
Pursuant to the provisions of the Mining Act, 1929, I, Frank Norwood Stops, Warden of Mines for Tasmania, hereby grant to William Robert Richmond, of C/o. Clarke and Gee, permission to enter upon the land hereinafter described, for the purpose of searching thereon for , subject to the conditions hereunder written: -
Particulars - Being 3,200 acres granted to Daniel “Sutton and 320 acres granted to William Joynes
Maximum area of surface that may be broken by trenching or sinking thereon - One-half of an acre.
Duration of permit - Six months from date.
Amount deposited as security against damage - Two pounds.
Dated at Launceston, in Tasmania, this twenty-sixth day of September, 193!>.
In further support of my case I quote a letter from Messrs. Clarke and Gee, solicitors, of 59 Brisbane-street, Launceston, Tasmania, as follows: -
Under the permit to-day delivered to you, prospecting operations may bc carried on throughout the whole of the above property, for a period aggregating six months. During that time application for a mining lease of such portion as is required should be made. Rent of 1s. per acre is payable inrespect of the land comprised in the lease, and the effect of the lease will be to give exclusive power to mine the area comprised. I enclose memorandum of costs and expenses in connexion with the permit, and plan for your use.
Another letter, dated the 3rd November, 1939, states-
In reference to the drilling now taking place on the property of Mr. George Luck at Danbury Park, I beg to advise . that under instructions from your Mr. Richmond, I attended Mr. Luck and obtained his full consent and permission for your company to prospect for oil on his property, giving the usual undertakings regarding compensation for damages, &c.
– He was an emissary of the overseas oil companies, and he was endeavouring to damage the reputation of the company, which was doing an honest job on behalf of Australia. He had no other object in view. I should like to know why he said that no permit had been issued, when one was actually in the possession of the company at that time. If the Minister wishes to examine the permit I shall make it available to him.
– What has this to do with the Commonwealth?
– Apparently the Minister has not “read the secret file dealing with this subject.
– What did Major Davies state?
– He warned the public against the company.
– When did this occur?
– A few months ago. This permit is dated the 26th September, 1939.
– I wish to know the date on which Major Davies made his statement.
– He made it during November, 1939. We already had the permit in our possession at that time. I emphasize once more that the Government Geologist said that he had to make the best of a bad job from the data at his disposal. Attacks were made against the company on two occasions in New South Walesby Mr. Vincent, the
Minister for Mines in that State. He said that extravagant statements were being made and that the company had issued a pamphlet in which it stated that- 18,000,000 gallons of oil was being produced daily from a pool bored by Mr. Steinbuchel in America. He added that he had searched an American geological and geophysical publication and had . been unable to find the name of the company’s expert. The science of geophysics is only eighteen years old, and Mr. Steinbuchel has been practising it for fifteen years. Of the last 46 wells which he located and drilled, 41 are producers. Mr. Vincent referred to a speech which I made in this chamber on the’ 8th December, 1939, in which I said that one of the pools that Mr.Steinbuchel had discovered in Kansas had a potential output of 18,000,000 gallons a day.
– What was the actual output?
– If the Minister were conversant with the petroleum industry he would be aware of what I previously stated that in America the output was at that time rationed to 1 per cent. Since then it has been increased to 9 per cent. The practice in America is to make monthly tests.
If the Minister will make investigations in the Parliamentary Library he may enlighten himself on the operation of the system. The “ potential “ is the possible output. Every well is pumped dry for a certain period and the potential is estimated from that result. A scrap book, which I have with me, shows the extent of the field and contains a map giving the location of each of the wells discovered by Mr. Steinbuchel. Mr. Vincent declared that my statement that the potential output of one of the pools in Kansas was 18,000,000 gallons a day was extravagant. He said that we had claimed that the output of only one well was 18,000,000 gallons a day. He did not understand the difference between a well and a pool. I spoke of the Rice and Barton County Pool. Mr. Vincent tried to discredit the company in the eyes of the people of New South Wales simply because it was not robbing the public, but intended to go ahead in spite of all opposition. Even if Mr. Steinbuchel is sent out of the country the company will continue in the face of opposition from the Shell Oil Company of Australia Limited, the Commonwealth Oil Refineries Limited or any other oil interests.
-Why did not the company drill one well first?
– We are drilling seven wells.
– - The company will have seven “ duds “ on its hands, instead of one.
– I repeat that the sites had been selected by a gentleman who has discovered, . produced, owned and sold millions of gallons of _ his own crude oil. He is using the same instruments as he used in America, and is getting better reactions in Australia.
– If he has discovered 41 wells in America, why does he not stop there and look after them?
– Because, as I have said, the American Government had rationed output to 1 per cent, of the potential production. That ration was strictly enforced on independent operators, of which Mr. Steinbuchel was one, whereas the major oil companies were permitted to pump their wells for 24 hours a day. Mr. Steinbuchel came to Australia, intending to enjoy a holiday here, and to have a look around. Another- attack was made on the company by Mr. Playford, the Premier of South Australia. Before discussing his attitude I wish to read to the Senate two statutory declarations. The first was made by Mr. E. V. Gerloff, who stated-
Mr. Gerloff and six other gentlemen, whose testimony must carry much weight, can be brought before the Senate at 48 hours’ notice to substantiate my statements. I have here a second declaration made by Mr. F. H. Unger, which reads -
My company drilling to-day has sunk a bore to a depth of 700 feet within a mile and a half of the site where the discovery was made.
– Has any geological report been received concerning the possibilities in that locality? It is volcanic country and probably all the oil has been consumed by fire.
– From the information I have already given to the Senate it will be seen that geologists know verylittle concerning the localities in which oil may be discovered.
– What have they been doing for the last fifteen years ?
– Possibly what was done at Kingston, where oil was once discovered, but certain interests immediately placed a concrete block over the bore and subsequently ‘ constructed a dwelling on the site and placed an armed guard over it.
– And the water from that bore is now being forced out to a height of 20 foot.
– That is not so. When the oil sands, which are of a honeycomb formation, are penetrated, oil rises to the surface, but if mud is forced into the bore, the oil is choked and the oil cannot reach the surface. This bore was sunk to a depth of 2,100 feet, and the geologist advised that another bore should be sunk 5 feet away. As the surrounding oil sands had been blocked by forcing mud into the adjoining bore, it was unlikely that supplies could be obtained, so the result was a dry well and the geologists were pleased. The records show that the company received from Mr. Playford the right to search for oil over a considerable area; but it was suddenly decided that operations should be delayed. When Mr. Playford was asked why a lease had not been granted, he said that he had heard certain things from Mr. Dunstan and others. Notwithstanding the fact that money had been paid for a lease which was subsequently cancelled, the money has not been repaid. I understand that a Mr. Laidlaw has a certain option, under which he cannot do anything without the consent of the Minister.
– What did Mr. Playford say?
– He warned the public about investing money in the company, which, he said, should not continue to operate. When Mr. McKay, the managing director, asked Mr. Playford the reason for his action, he produced a letter from a certain South Australian politician, but when the general manager questioned him concerning any accusations, he said, “ There is no accusation “.
That is as far as the discussion went. Mr. Playford will verify what I have said; but the fact remains that had he not interfered, we would have been drilling in that vicinity instead of a mile and a half away. On the 7th December last, the Minister for the Interior (Senator Foll), when speaking on the development of the Newnes township, said that one of the reasons why oil had not been discovered in Australia was the absence of uniform legislation on the subject. He further said that as the result of the submission of a draft agreement at a recent Premiers’ Conference-
– I referred to a draft bill.
– The Hansard report reads: “As a result of the submission to the States at a recent Premiers’ Conference of a draft of model legislation “-
– I referred to draft legislation.
– The Minister went on to say that he was very pleased to learn that some of the States had passed the model legislation, and he was delighted that the Queensland Government had entered into an agreement with the Shell Oil Company of Australia Limited under which that company had been given the right to search for oil on a large area in southwestern Queensland. He also said that the company proposed to spend £300,000 over a period of years. He further stated that large companies such as the Shell Oil Company of Australia Limited, were the most likely to discover oil in this country.
– I am still of that opinion.
– I have made some inquiries into this subject, and I have no hesitation in saying that no government was justified in making such a grant.
– That legislation was passed by the Queensland Parliament.
– It may have been, but it is a shame that any company should be given rights over such a large area, particularly when we realize that the Shell Company has not drilled one bore anywhere in Australia. Do honorable senators realize that the Shell Company has the right to operate on an area totalling 136,000 square miles, or 87,000,000 acres. The area in question is one-half the size of New South Wales, one and a half times larger than Victoria, five times larger than Tasmania, and 113 times larger than the Australian Capital Territory. [Extension of time granted.] I produce a plan of the State of Queensland showing the area over which this company has the right to operate. Can we realize the significance of what has been done with the support of the Com-, monwealth Government?
– The Commonwealth Government could not grant land to the Shell Oil Company of Australia Limited, or to any other company.
– The proposal had the support of the Commonwealth Government. The company with which I aru associated is boring in seven different centres, but the Shell Oil Company of Australia Limited, which was to spend a large amount of money, has not sunk one bore in any part of Australia. The same can be said of the Vacuum Oil Company. I have received the following letter from the Queensland Minister for Mines, dated the 12th April, 1940:-
In reply to yours of the 10th instant, I have to advise that the Shell Company of Australia Limited has undertaken to make a search for oil in Queensland.
They have, under our acts, obtained an authority to prospect over a good portion of the south-western area, comprising 130,000 square miles, this being reduced, from the second year, by 20 per cent, of the area and a further reduction of approximately 10 per cent, per annum during the period of their authority, which covers ten years in the first instance, with the option, under certain conditions, of a further five years’ search.
– Undoubtedly. I shall oppose it with all my strength.
– Queensland has a Labour Government.
– I would denounce any Government that would give away the birthright of Australians to an overseas company.
– Every safeguard is provided.
– The oil combine desires that the British Empire shall never have its own petroleum wells. The letter goes on -
It is not possible to supply a copy of tho agreement between those companies who are operating and the Government as this .is a private document.
Could there be anything more outrageous than that a Government should grant 136,000 square miles of country to a company in order to enable it to drill a hole 14 inches across the top and 6 inches wide at the bottom? We were told on the 7th December last that the Minister for the Interior was delighted about the agreement made with a company that has not drilled a single bore. In the United States of America, a company man has no soul, knows no God, and cares for no company except that which employs him. When Mr. J. B. Burnett, who is now in Australia, retires, his salary will be increased by 200 per cent. He is associated with the two exploratory companies operating in New Guinea in connexion with the search for oil, and in a brochure issued to members of Parliament it is stated that his services will be available to the Commonwealth Government. After the next elections, if I take over Senator Foil’s portfolio as Minister for the Interior, I shall take steps to deport Mr. Burnett as an undesirable alien. He is associated with various American companies, interlocked with which is Commonwealth Oil Refineries Limited, in which the Commonwealth Government owns half the shares plus one, the remainder “ being held by the Anglo-Persian Oil Company, which has recently changed its name to the Anglo-Iranian Oil Company. On the board of directors of Commonwealth Oil Refineries Limited there are three directors representing the Commonwealth Government and four representing the Anglo-Iranian Oil Company. The letter from the Minister for Mines in Queensland continued - .
The company has undertaken to spend in the search, during the first year, not less than £40,000; during the second year, not less than £50,000; during the third year, not less than £00,000; during the fourth year, not less than £70,000; during the fifth and each succeeding vear, not less than £80,000.
The conditions of the agreement are in conformity with the Petroleum Acts of 1923 to 1929 and the Amending Act of 1939.
I presume that the amending act of 1939 is the measure to which the Minister for the Interior referred on the 7th December, 1939, as embodying a very good agreement.
– I am proud of that particular piece of legislation.
– Similar legislation is already drafted for presentation to the Parliament of New South Wales, but I hope that the Australian company with which I am associated will eventually prevent its passage.
The undertaking provides for topographical, geological and geophysical examinations, aerial surveys, scout and deep-test drilling and any other examinations or tests for the purpose of determining the existence of petroleum, and favorable structures for further development of the petroleum search.
The reason why this large area has been granted is that the country which I have indicated to honorable senators on a map is regarded as useless for oilsearch purposes. Even since this Parliament met yesterday we have heard of the Government’s intention to increase the price of petrol by 3d. a gallon. All the petrol companies are, as we know, linked together, and the amount which this particular company proposes to expend on oil research amounts to only one-sixtieth of one penny in every £1 collected. The rest is sent overseas for the benefit of vested interests. This letter continues -
It is open to any company or person who desires to conduct a search for oil, under our acts, to obtain an authority to prospect over certain areas, followed by permit or lease covering the certain area required under the restrictions set out in the act.
It does not. say that anyone else may go into the prescribed area. Neither does it say that the Shell Oil Company of Australia Limited, or any of the other major oil companies, ever imported any up-to-date drilling equipment into this country. “We have here the old-fashioned water drills, which arc slow, although they do eventually get down. The letter states further -
This covers what is known as large-scale investigation and there is also provision for smaller companies to undertake certain search under authority, permit or lease as suits their individual circumstances.
Certainly there is. It means that such companies have to put up a very substantial deposit before they are allowed to start drilling, and there is a big chance that they will not get their deposit back if they fail to go ahead with the drilling. It concludes -
Provision is made for a substantial cash deposit to cover the bona fides of any one desiring to take up a permit and authority to prospect under the acts.
I believe that Mr. Steinbuchel, the expert to whom I have been referring, will find oil in Australia. However, he has been notified that he cannot remain in Australia after the 4th June next. Whether he leaves Australia or not, we shall complete the job. We have made arrangements to that end, but I should like to see him remain here. The Minister for the Interior has said that he has a certain file in his possession relating to this man’s record. He offered to let me sec it in confidence, but I refused to see it on those terms because I did not want to have my mouth closed. If there, is on that file any matter regarding his record which is not contained in the particulars I am about to read out, Mr. Steinbuchel is prepared to give £50 to the Lady Gowrie Fund. Here are the particulars -
No. 1. - Mr. Steinbuchel found out, after he was in Australia, that at one time during the political election night in Kansas City, several people were involved in an election fight in an hotel, and that warrants were sworn out for all of the guests of this hotel. As he happened to be a guest, his name was included, but the warrants were never served, and when he heard that they were in existence, he cabled to America, and they were immediately dismissed.
No. 2. - His police record of America shows that the only time he was ever fined was for running through a red light at a traffic station, andhe paid a fine of 10s.
No. 3. - While in Australia, he was set upon by a drunken thug and struck back in defence, and had to stand trial for assault. He was immediately acquitted, the jury being out one minute.
No. 4. - When landing in Australia, he brought with him a nine-shot . 22 calibre pea revolver with a 10 in. barrel, which he used for shooting rabbits when making geophysical tests. In Melbourne he was Set upon and robbed of £38 and a diamond ring. He then went to his car and got this long target revolver, and was arrested for having a pistol without a licence. He had it registered in New South Wales and thought that being in a Commonwealth, the registration would hold good throughout Australia.
– He seems to have been a most unfortunate man.
– -In some of my correspondence with him while he was in the United States of America I mentioned that in the back country in Australia rabbits were to be found, sometimes in great numbers. Most people carry a gun when they go into the bush; I myself., do. When Mr. Steinbuchel landed in Australia, he left his gun with the customs authorities . and it was released from them by Mr. W. A. Freeman, the head of the oil research. Mr. Steinbuchel used the. gun for shooting rabbits in the back country ; and whenhe went to Victoria he took it with him. It was -lying in his oar for three months. ‘ This matter ought to be investigated in order to get at the truth. We should not allow the situation to be clouded by the misrepresentations of interests which were prepared to offer thousands of pounds for the bringing in of a. “ crook “ report.
I have given a brief outline of some of the matters which should occupy the attentionof the Government in connexion with the search for oil in this country. Should we fail to find oil in Australia -we should be placed in a very difficult position if at any time an aggressor bombarded our shores and coastal cities, destroying our main reserves of oil. In that case our defence would be crippled within three months. Our ‘ aeroplanes would be left idle on the ground, and our railways, which now use 1,000,000 gallons - of oil annually for lubrication, would be brought to a standstill. It cannot be said that there is no oil in Australia, because 150,000 gallons has been produced at Lakes Entrance. Should our main reserves of oil be destroyed, great industries like the steel works of the Broken Hill Proprietary Company Limited would be rendered idle. Our army would be crippled for lack of . transport. I urge the Government to allow Mr. Steinbuchel to remain in this country. He is as honest as the average Australian. Since bis arrival here he has done no. harm to any one. On the contrary, he has done much good. . In spite of these facts, the Minister has decided that he shall not remain in Australia after the 4th Juno next. He is the only man to visit this country who has proved that he can produce oil. He knows the oil business thoroughly, and. has made’’ fortunes in recent years by the use of his own methods in the discovery of oil. Although, as I have pointed out, the major oil companies have expended hundreds of thousands of pounds allegedly in the search for oil, not one of them has drilled a single well in Australia. This particular company on whose behalf I have made representations to-night- is drilling seven, wells, and is about to start on two others. Its operations will be conducted right under the nose of the Government, but . apparently the Government will not give it any encouragement unless it ‘discloses its methods, and processes. It has no intention of doing so. It. is determined to proceed with its work. I ask again, in the interests of future generations of Australians, that the Government shall allow Mr. Steinbuchel to remain in Australia in order to assist the company in discovering ‘oil. In this matter the Government -should bo influenced by only “one motive, namely, the establishment of an industry which will solve permanently our . unemployment problem. To-day in New South “Wales alone 40,000 men are unemployed, whilst 33,000 are living on the dole. I repeat that if Mr. Steinbuchel be allowed to stay hero I shall resign my seat in the Senate should this company fail to discover oil under his direction.
Debate (on motion by Senator Foll) adjourned.
The following . papers were pre sented : -
Commonwealth Public Service Act - Appointments - Department of -
Interior- W. J. Greenfield, J. M. Hall, G. T. Rutherford, and D. S. Wright.
Treasury - L. B. Brand.
Lands Acquisition Act - Land acquired at
Lidcombe, Hew South Wales - For Defence purposes.
Nationality Act - Return showing the number of persons to . whom certificates . of naturalization were granted during the year 1939, and the countries whence the applicants came.
Northern Territory Acceptance . Act and Northern- Territory “ (Administration) Act -
Ordinance No. 27 of 1939 - Married Women’s Protection.
Ordinances of 1940 -
No. 1 - Mental Defectives.
No.2 - Birds Protection.
No. 3 - Native . Constabulary.
No. 4 - Darwin Kates.
No. 5 - Gold Buyers.
No.6- Regulations Publication.
Marine Ordinance - Regulations amended. Mines Regulation Ordinance - . Regulations.
Mining Development Ordinance - Regulations amended.
Slaughtering Ordinance - Regulations amended.
Advances to Settlers Act - Statement of cases in which the Minister has varied, under the provisions of clause 19a of the Advances to Settlers Regulations, the terms and conditions of repayments of advances for the purchase of wire and wire-netting- Quarter ended 31st December, 1939.
Commonwealth Bank. Act - Treasurer’s Statement of Combined Accounts of the Commonwealth Bank of Australia and Commonwealth Savings Bank at 31st December, 1939, certified to by the Auditor-General.
Nauru- Ordinance No.11 of 1939 - Lands.
Papua - Annual Report for 1938-1939.
Senate adjourned at 11.10 p.m.
Cite as: Australia, Senate, Debates, 18 April 1940, viewed 22 October 2017, <http://historichansard.net/senate/1940/19400418_senate_15_163/>.