20 July 1945

17th Parliament · 3rd Session

The President (Senator the Hon. Gordon Brown) took the chair at 10.30 a.m., and read prayers.

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Special Accounts

Senator LAMP:

asked the Leader of the Senate, upon notice -

  1. Has his attention been drawn to a statement by C. Barclay-Smith, of 209a Castlereagh-street, Sydney, .published in the’ New Era newspaper of the 6th July, 1946, to the effect that the £240,000,000 special funds lodged by the trading banks with the Commonwealth Bank is a clever swindle designed to enable the banks to obtain government securities in war-time by a back-stair method.
  2. Will he cause the said Barclay-Smith to be brought before the Bar of the Senate to explain the said swindle and to answer questions thereon T
Senator KEANE:
Minister for Trade and Customs · VICTORIA · ALP

– The answers to the honorable senator’s questions are as follows : -

  1. The statement attributed to C. BarclaySmith and .published in the New Era on the 6th July, 1945, is apparently intended to he a criticism of .part of the .Banking Bill at present under consideration. The ‘ special deposits lodged by the trading banks with the Commonwealth Bank are surplus investable funds deposited in accordance with the provisions of sub-regulation 9 of the National’ Security (War-time Banking Control) Regulations. This sub-regulation is being put into permanent legislation as set out in Division 3 of the Banking Bill at present before this chamber. It is defined in some detail at pages 7 and 8 of the memorandum explaining provisions of the bill. Government securities are not issued in respect of these deposits. The Commonwealth Bank pays three-quarters of one per cent, per annum interest on the deposits.
  2. No.

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Senator LAMP:

asked the Minister for Health and Minister for Social Services,. upon notice -

  1. Under, what conditions are English oldage pensioners paid in Australia?
  2. What are the conditions under which Australian old-age pensioners are paid in England ?
  3. What is the position in regard to the rates of exchange on such pensions? What aire the rates of pension paid in each case?
Senator FRASER:

– -The answers to the honorable senator’s questions are as follows : -

  1. The pensioner must have been a contributor under the British Widows and Old-age Contributory Pensions Act and .have arranged for payment to be transferred to the Commonwealth.
  2. Australian old-age pensioners are not [laid in England. With the exception of the Dominion of New Zealand, with which the Commonwealth has reciprocity for invalid and old-age pensions, Australian old-age .pensions are not paid outside Australia.
  3. Exchange at the ruling rate is paid .to English pensioners in Australia. The usual rate of pension iR 10s. .per week sterling; and quarterly payments of £6 10s. sterling or actually £8 2s. 6d. Australian, are made and subsequently recouped from the British Government.

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asked the Minister for Supply and Shipping, upon notice -

In view of the protest received by Tasmanian federal members from the Burnie Chamber of Commerce, also by the Minister, against the curtailment of the steamer Nairana’s weekly calls at the port of Burnie, and the Minister’s reply that the alteration of weekly calls to that of fortnightly calls gave increased facilities for the despatch of additional cargo, .will the Minister cause inquiries to be mode showing the amount of additional cargo parried from the ports of Burnie and. Devonport since the alteration of the ship’s time-table has been made?

Senator ASHLEY:
Minister for Supply and Shipping · NEW SOUTH WALES · ALP

– The answer to the honorable senator’s question is as follows : -

Since the alteration of the time-table of the Nairana, under which fortnightly calls are made direct to Burnie and Devonport in place of a weekly call to the two ports, the vessel has made three trips, two of which have been to Burnie and one to Devonport. On the three trips (prior to the alteration) on which the vessel called at both Burnie and Devonport on each trip a total, of 1,104 tons of cargo was carried to and from the two ports, an average of 368 tons .per trip. On the three trips since the alteration to the time-table, a total of J 589 tons has been carried both inwards and outwards, an average of 529 tons per trip. Thus on the average, an additional 161 tons of cargo has been lifted on each inward and outward voyage. During the period since the alteration, tie Nairana .was delayed on one occasion by pales, once by fog, and once by rain. No similar delays were experienced during the three trips immediately prior to the alteration. Notwithstanding these delays, the vessel was able to handle an average of 161 tons more cargo on each trip under the new programme.

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Bill received from the House of Representatives, and (on motion by Senator Keane) read a first time.

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Second Reading

Senator ASHLEY:
Minister for Supply and Shipping · New South Wales · ALP

– I move-

That the Bill be now read a second time.

Last year the late Prime Minister announced that a committee, representative of all parties, would be set up to consider the provision of a gratuity to members of the fighting forces in recognition of their services to the nation. After consultation with the leaders of the parties, a committee was appointed consisting of the Treasurer (Mr. Chifley) as chairman, the Minister for Repatriation and Minister in charge of War Service Homes (Mr. Frost), Senator Collett, Senator Cooper, Senator Finlay, the honorable member for Barker (Mr. Archie Cameron), the honorable member for Corangamite (Mr. McDonald), and the honorable member for Ballarat (Mr. Pollard). Subsequently, the committee furnished a report and recommendations to the Prime Minister covering all aspects of the subject referred to it. The terms of the report which has already been presented to the Senate indicate the care taken by the committee to examine all aspects of the subject and to arrive at equitable conclusions.

The bill now before the Senate embodies the recommendations of the allparty committee for the provision of a gratuity in recognition of honorable service in the fighting forces on abasis quite distinct from all other measures taken to assist members on discharge by legislation covering repatriation, employment, preference, vocational training, land settlement and like matters. The bill makes provision for payment of gratuity at the rate of £315s. per month for overseas service and for certain periods in Australia following overseas service. It also provides a gratuity of 15s. per month for Australian service after the 6th December, 1941, other than that for which payment at the overseas rate is made. New Guinea, Papua and Norfolk Island are regarded as overseas after the 6th December, 1941, but not earlier. Entitlement to gratuity ceases on discharge or twelve months after the end of the war if the member is still serving then.

As to what service should qualify for payment at the overseas rate, the committee’s examination revealed the complexity of the position. Its recommendation is based on taxation legislation which applies to all members of the forces, and under which a distinction is made between service in Australia and service outside Australia. The rates of gratuity are flat rates applicable to both men and women irrespective of rank.

Subject to a qualifying period of 90 days continuous or 180 days in the aggregate in twelve months, the overseas gratuity covers the full term of service overseas and for 90 days after the return of the member to Australia. In addition, if the member is invalidedback to Australia, the period spent in hospital on return and in convalescence will qualify at the overseas rate, and the 90 days will be added. All members who complete the qualifying period will be paid a minimum of twelve months’ gratuity at the overseas rate, irrespective of whether the full twelve months period has been completed or not. Service overseas must be as a member of a body, contingent or detachment of the defence force, and this definition is subject to necessary adaptations to cover the Royal Australian Air Force and the Navy. It is, of course, quite impracticable to fix a rate of gratuity which relates to actual periods of time spent by the troops in action, but the over-all rate applied to service overseas is such as to give some measure of recognition to the hazards and hardships which as a general rule are encountered by members who embark for overseas service.

The Australian rate of 15s. per month is to be paid for the period following the outbreak of the war with Japan on the 7th December, 1941, subject to a qualifying period of six months’ service. A member who bad already given six months’ service on the 7th December would qualify as from the 7th December. The all-party committee had regard to the material change of the conditions of service in Australia which arose out of Japan’s entry into the war, and to the fact that as from the 7th December, 1941, deferred pay was granted to all members serving in Australia.

Missing members and prisoners of war will qualify for gratuity in respect of the time they are recorded as missing or prisoners of war.

The committee paid special attention to death cases and made specific recommendations regarding the gratuity to be payable. In cases of death where members of the family were totally dependent on the deceased member, it is provided that the minimum payment shall be equivalent to three years’ gratuity calculated at the overseas gratuity rate. This rule will apply to deaths due to war service either overseas or in Australia where members of the family were totally dependent. There are special points about this rule. It covers not only death cases occurring during service which qualifies for gratuity under the conditions I have .outlined, and which are specifically set out’ in the bill, but also deaths -of members eligible for .gratuity which occurred between date of .discharge and a date twelve months after the end of the war. Furthermore, it will apply to deaths of members who have had no overseas .service and who, having ‘died in Australia before completion of six months service on or after the 7th December., 1941, did not qualify foa- gratuity payment. Apart from the special rule for a minimum payment of three years’ gratuity where total dependency exists, the bill provides that in all other cases of death, overseas and in Australia, due to war service, gratuity at the rate accruing to the member at the date of notification of his death will be continued for a period ending seven months after the date that death is notified. Taken in conjunction with the “rule for a minimum payment of twelve months’ gratuity for overseas service, the minimum payment in death cases will therefore be twelve months plus seven months. I have explained that gratuity accrues in respect of members reported missing, and should such members ultimately be reported dead, the gratuity will, in such cases, also run for seven months subsequent to notification of death. Discretion is left to a prescribed authority to investigate and give decisions, on. claims for gratuity presenting unusual features and on the method of disposal of gratuity in exceptional circumstances.

The bill provides that entitlement to gratuity shall be established, generally in the register on a date six months- after the end of the war. No bonds will be issued!, .but the member will be notified of the amount entered to his credit, arid five years later this will be paid to him in cash or, by his direction, into his bank account. The credit will bear interest at the rate for long-term Commonwealth bonds, namely, 3% per cent. Both the gratuity and interest will be tax free and will not be regarded as property or income for the purposes of the Australian Soldiers’ Repatriation Act or the Invalid and Old-age Pensions Act. The interest of members in their gratuity will be inalienable. The committee, in its report. referred to the economic situation which is likely to exist for some years after the war. With the demand for goods greatly exceeding the supply, the committee felt that it would be in the best interest of members not to make the substantial sum involved in war gratuity available at once. The estimated cost up to the end of June, 1945, ra £63,000,000. This is in addition to the £60,000,000 or more of deferred pay which will be paid to members, in cash, upon discharge. Generally, the view was taken by the committee, and endorsed by the Government, that Te-establishment measures will meet the needs of members on discharge, as they are designed to do. Nevertheless, special provision has been made for earlier cash payment in certain cases. Cash before due date may be paid to the widow of a member, the mother of a deceased member if she was1 dependent on him prior to his death, or is in necessitous circumstances, and to blind and permanently incapacitatedmembers. Consideration was also given to the question of earlier cash payment for investment in businesses of various types. The committee decided against this, but recommended that the gratuity fee made available in approved cases f or the erection or purchase of a home for the member, and this recommendation has been embodied in the bill.

The Government believes that the recommendations of the committee which are included: in this bill reflect the spirit in which the Government desired that the matter be approached, and which actuated the committee in its work, namely, that within the capacity of the nation a. generous and spontaneous gesture should he made in recognition of the services of members of the fighting forces. The plan recommended, and adopted in the bill, is on sound and workable lines,I commend the bill to the consideration of honorable senators.

Debate (on motion by Senator Collett) adjourned.

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Second Reading

Debate resumed from the 4th July (vide page 4013), on motion by Senator Keane -

That the bill be now read a second time.

Senator LECKIE:
Acting Leader of the Opposition · Victoria

– Honorable senators have already listened to a long discussion on banking generally, and there is no need for me, at this stage, to embark upon a discourse upon banking principles and ethics. As far as possible I shall confine my remarks to the salient features of this measure. I assume that the Minister for Trade and Customs (Senator Keane) would deny the soft impeachment that the Government’s banking legislation aim.-: at giving to the Commonwealth Bank the control of banking in Australia, but I have hopes that some of the less discreet members on the government benches, as, for instance, the Postmaster-General (Senator Cameron) and Senator Lamp, will not deny that the prime object of this bill is to get all banking; under one control.

Senator Cameron:

– The object is to provide a better hanking service for the people, and to bring banking practice up to date.

Senator LECKIE:

– I take that to mean, that, in the opinion of the Postmaster-General, the placing of all banking, under the control of the Commonwealth Bank will bring banking practice up to date.

Senator Cameron:

– I am competent to say what I mean.

Senator LECKIE:

– Frequently the Minister says what he means, and then has difficulty in getting out of the trouble that he has created for himself. He desires to abolish the private banks. The objects of this bill were set out by the Minister for Trade and Customs in his second-reading speech, when he said -

After taking these considerations into account, the Government has framed a bill designed to secure the following objects: -

To provide a legal framework, uniform throughout Australia, for regulating the banking system.

To safeguard depositors of the banks from loss.

To provide forthe co-ordination of banking policy under the directroir’ of the Commonwealth Bank.

To control the volume of credit in circulation and bank interest rates.

To mobilize, and to provide machinery for the control of, the foreign exchange and gold resources of the Australian economy.

To carry out these objects, the Government has decided on this legislation. This portion of the Government’s legislative programme in connexion with banking aims at suppressing all competition which might face the Commonwealth Bank. Under the plea that the Government’s purpose is “ to safeguard the depositors of the banks from loss “, the Government has set out to acquire the surplus funds in the hands of the banks. Not only so, but this bill also provides that the private banks shall not be permitted to increase their business beyond the level of 1939. Honorable senators will agree that the value of money has decreased during the war by from 20 per cent. to 25 per cent. Therefore, the result of the pegging of hanking business as at the 1939 level really means that the business of the private banks is to be reduced by about 25 per cent. That does not appear in the bill, but that will be the effect of this legislation. In order to prevent inflation, national security regulations were issued, under which the banks were required to place their surplus funds with the Commonwealth Bank. Those funds were then “ frozen “. There was not much danger in their action during wartime, but the position will be entirely different in times of peace. But as, in addition to depositing those funds, which amount to £240,000,000, in the Commonwealth Bank, the private banks will have to pay to the Commonwealth Bank any funds above the 1939 level, the effect of these provisions will be to reduce the operations of the private banks by at least 25 per cent, with no hope of increasing their business, or of competing successfully with the Commonwealth Bank. I do not know exactly what the Government has in mind in connexion with these special accounts, but it would appear that the Government is buiding on an insecure foundation. The Constitution provides - rightly, I believe - that the Government may not acquire property from any individual except on just terms. If the action contemplated in this measure does not amount to acquiring property on other than just terms, I do not know what it amounts to. The Government not only proposes to take the cash reserves of the private banks, and to prevent them from being used by the banks as reserves, but it also intends to use those funds in competition with the private banks.

Senator Gibson:

– They have to be investable funds.

Senator LECKIE:

– The Government will rob the private banks of those investable funds, and in addition-

Senator Lamp:

– The private banks robbed the people of those funds in the first place.

Senator LECKIE:

– The proposal contained in this bill amounts to robbery. No honorable senator will deny that if a person takes £10 from another person’s pocket, his action amounts to robbery, even though he may profess to have taken the money only to keep it in safe custody.

According to this legislation, the taking of £240,000,000 from the coffers of the private banks is not robbery, but an ordinary business transaction ! That is justified by honorable senators opposite. I am not a lawyer, but it seems to me that when the Government can take investable funds from the private banks, without giving them any compensation at all, it is engaging in a reprehensible practice. I am inclined to think that the High Court would have very great difficulty in discerning any difference between this provision and1 robbery. The banks cannot withdraw these funds without the consent of the Treasurer. The bill also provides that no one may carry on a banking, or semi-banking, business without being licensed so to do by the Government. Last evening we endeavoured to elicit a definition of banking from (he Minister, but, of course, he side-stepped that query as he has side-stepped most of the other queries that we have put to him.

Senator Keane:

– I supplied a legal answer.

Senator LECKIE:

– I am very sceptical of some of the legal opinions given to the Government.

Senator Keane:

– The Acting Leader of the Opposition, also, is being advised.

Senator LECKIE:

– All that I have *aid with respect to the Commonwealth Bank Bill and this measure is based on my own knowledge and experience of the matters involved. In any case, one does not need to obtain outside advice when the errors of the measures are so obvious. The Minister has not really defined! banking. He has merely stated that before a person can carry on the business of banking he must obtain a licence for that purpose; and the licence is to be given under conditions laid down by the Treasurer of the day. However, in r:ply to Senator Gibson last evening, the Minister said definitely that wool firms would not come under those provisions of the bill, and I think that Senator Gibson accepted that assurance. “We can take it then that, despite the provisions of the bill with respect to licences to enable persons to engage in the business of banking, the Government does not intend to interfere with any organization in that respect except those named in the appropriate schedule.

It is just as well to clarify that point, because it seems to me that the Government can declare any business dealing in finance to be carrying on the business of banking; and [ am afraid that such an interpretation! would be approved by some honorable senators opposite, particularly Senator Lamp. Under this bill, the Commonwealth Bank will be enabled to take over other banks, and also to investigate the affairs of any private bank at any time. Merely on the direction of the Treasurer of the day, the Commonwealth Bank may put auditors into any private banking institution. One can imagine the impression which would be immediately created .by such action. Just imagine the effect once it was made known in Pittstreet, or Collins-street, that the Commonwealth Bank’s auditors were investigating the affairs of a certain bank! imagine the effect of such action upon the depositors of a particular bank! These investigations have nothing to do with regular audits, or verification of the balance-sheets of private banks. It is specifically provided that at any time the Treasurer may put auditors into a private bank in order to investigate the affairs of that bank. Circumstances may arise where such action may be necessary; but, we must bear in mind that the objective of the bill is to wipe out all private banks. Obviously, one of the easiest ways of achieving that objective is to create doubts with respect to the solvency of a private bank. Once such doubts were created a position of affairs would arise under which the Commonwealth Bank would have to step in and take over the affairs of the bank concerned. Remembering that the officers of the bank are not sworn to secrecy in this respect, it would be the easiest thing in the world for the Commonwealth Bank to create a “run” on any private bank by simply putting its auditors into that bank. The bill goes even further than that. Clause 27 provides - ( 1 . ) Where the Commonwealth Bank is satisfied that it” is necessary or expedient to do so in the public interest, the Commonwealth Bank may determine the policy in relation to advances to be followed by banks, and each bank shall follow the policy so determined.

Penalty: One thousand pounds. (2.) Without limiting the generality of the last preceding sub-section, the Commonwealth Bank may give directions as to the classes or purposes for which advances may or may not be made by banks and each bank shall comply with any directions so given.

Penalty: One thousand pounds.

That provision is, indeed, remarkable. Under it the Commonwealth Bank may dictate to each bank the classes of security upon which it shall lend money. The Commonwealth Bank will have power to veto entirely any advance proposed to be made by any bank to any organization. If the Common wealth Bank decides that it shall have the business of say, the Ironworkers Federation, all it will need to do will be to prohibit private banks from lending money to it. I remind the Senate that these provisions relate not to the Commonwealth Bank, but only to the private banks, and, therefore, the Commonwealth Bank will be able to go its own sweet way. It may prohibit private banks from lending money in a certain direction and then itself advance the money. That is a drastic power to put into the hands of the Commonwealth Bank, because, by the exercise of it, the bank will be able to work its way into almost every industry in Australia. The Minister, of course, carefully avoided saying anything about that in his secondreading speech, but the provisions are in the bill in black and white. The Commonwealth Bank will decide who shall and who shall not receive advances. If a private bank lent even a few pounds to a man not in a category laid down by the Commonwealth Bank, it would render itself liable to a fine of £1.000. Henceforth, therefore, advances by the trading banks will be absolutely controlled by the Commonwealth Bank. There cannot be the slightest doubt that the aim of this legislation is the suppression of private banks. That is why this bill contains all these provisions to ensure that the Commonwealth Bank shall be so powerful that no one will dare to compete against it. That is not my conception of British fair play, although I know that the Government’s idea of fair play is something which gives it what it wants. Its “ Hitleresque “ attitude is, “ We have the majority.

This is our policy andno one shall turn usfrom our goal “. Honeyed phrases are used in speeches to divert attention from thereal purpose, hut it is only necessary to tell an ordinary person that theCommonwealth Bank will have the power to decide who shall receive advances, for him to realize that this hill spells the death of all privatebanking and money- lending.

Senator Herbert Hays:

– A lingering death !

Senator LECKIE:

– That is the trouble. If the Government were honest it would announce, without ambiguity “Wewill nationalize banking and all banking must be done by the Commonwealth Bank”. That would be the honest approach.

Senator Herbert Hays:

– It would be consistent with the Labour party’s policy.

Senator LECKIE:

– Yes, but knowing how vasta sum would be involved in compensation of the private banks if banking were nationalized by straightout honest methods, the Government has said to itself, “We will not pay the banks for their business. Instead, we will gradually strangle them”. This banking legislation is the cord around the neck of the private banking system and by it they willbe gradually strangled. The Government will then claim that the banks have fallen down on their job, forgetting that the people will be well aware that it will have made it impossible for the banks to workthrough depriving them of the life-giving air represented by the money that the Commonwealth Bank has taken from them and placed in vaults beyond their reach.

Senator Keane:

– The honorable senator will end up writing “ penny dreadfuls “, so picturesque are some of the ideas he gets.

Senator LECKIE:

– The hero of my novel will be of substantial appearance with a bland manner and a charming way of disarming every one. I do not know whether it would be necessary to have a love interest.

The PRESIDENT (Senator the Hon Gordon Brown:

– There is no question of love in this Banking Bill.

Senator LECKIE:

– Indeed, no. I turn now toclause 28, which provides -

A bank specified inPart 1. of the First Schedulesh all not, except with the consent in writing of the Commonwealth Bank, purchase orsubscribe to -

securities of the Commonwealthor of a State, or of anyauthority of the Commonwealth or of a State;

) securities of any local governing body in Australia; or (c)securities listed on a Stock Exchange in Australia.

Asfar as Ican see, that means that if a man askeda bank for am overdraft and offered assecurity collateral securities of the Commonwealth, a State, or a local governing body such as the Metropolitan Board of Works, or securitieslisted on , the stock exchange, thebank manager would he compelled to say : “ It does not matter how much of that kind of security you have, even if it is valued at £1,000,000, wecannotadvance you even a £10 note, because we are not allowed to dealin securities of the Commonwealth, a State, a local governing body, or securities listed on the stock exchange.”

Senator McKenna:

– Clause 28 provides no prohibition against a bank lending on securities of that kind. The prohibition is against the purchasing of or subscribing to such securities.

Senator LECKIE:

– I know, but the honorable senator will see that a bank would have to realize on security in the event of default by the borrower.

Senator McKenna:

– There is no prohibition against the selling of securities.

Senator LECKIE:

– The words used are “ purchase or subscribe to “.

Senator McKenna:

– And that is all.

Senator LECKIE:

– My interpretation of the clause is that securities of that kind would be absolutely useless to a prospective borrower as collateral. However, this bill goes very much further than that in restricting the operations of private banks. Paragraph d of clause 29 provides that the Governor-General may make regulations -

Requiring any person who has power to sell, or to procure the sale of, any foreign currency to sell, or procure the sale of. that foreign currency as prescribed.

That means that any one holding shares overseas may be compelled by regulations made by the Governor-General tosell them. The clause will prevent him from sending security to any place outside Australia. Every one realizes the necessity of that provision in war-time. Why it should be carried on in peace-time I cannot understand. Paragraph / provides foi1* - (/) the prohibition of the importation or exportation of goods unless a licence Under the regulations to import or export the goods is in force.

Apparently, the Commonwealth Bank will have authority to decide what goods shall be imported into, or exported from, this country. Surely, if control over imports and exports is to be exercised at all, it should be exercised by the Parliament or by the Department of Trade and Customs, and not by the Commonwealth Bank. This is a revolutionary proposal which was not explained by the Minister in his second-reading speech. What view of this proposal is taken by the Loader of the Senate, not as Minister in charge of this bill, but as Minister for Trade and Customs? I should have thought that he would be jealous of the right of his department to control the importation and exportation of goods. This paragraph must have been included in the clause without due consideration. Control of imports and exports is completely foreign to banking administration, and can serve only to give to the Commonwealth Bank a strangehold over trade and commerce. Sub-clause 1 of clause 39 provides -

The Commonwealth Bank may, with the approval of the Treasurer, make regulations -

) making provision for and in relation to the control of rates of interest payable to or by banks, or to or by other persons in the course of any banking business carried on by them.

That, apparently, means that the Commonwealth Bank may prescribe the rates of interest to be paid to or by the private banks; but no obligation is imposed upon the Commonwealth Bank itself to observe the rates which it prescribes for other institutions. For instance, the Commonwealth Bank might determine that the private banks should lend money at 4 per cent., whereas the Commonwealth Bank itself would charge only 3 per cent. There, again, is an opportunity for the Commonwealth Bank to strangle the private banks. Clause 39 provides also that the Commonwealth Bank may make regulations -

  1. providing that interest shall not be payable in respect of -
  2. any amount deposited with a bank, or with any other person in the course of any banking business carried on by him and repayable on demand or after the ex Ill ration of a period specified in the regulations:

Thus, the Commonwealth Bank may prohibit a trading bank from paying interest upon fixed deposits, which, c* course, would be a complete departure from normal banking practice. Obviously, an individual would not put money into a bank on fixed deposit if he were not to receive any interest upon it. If the Commonwealth Bank is to be empowered to make rules governing the operations of the private banks, the Commonwealth Bank itself should observe these rules.

Senator Gibson:

– The Commonwealth Bank will become the head office of all banks.

Senator LECKIE:

– That is so. Presumably under this clause, if a private bank agreed to charge only 3 per cent, interest on loans whereas the rate prescribed by the Commonwealth Bank was 4 per cent., it would be guilty of a misdemeanor and could be fined heavily. This provision supports the point which 1 raised at the commencement of my speech, that the real object of the bill is gradually to eliminate all private banks. In its march towards that objective, the Government is not following the straightforward course of buying them out; instead, it prefers the more insidious way of gradually driving them out of existence. Clause 40 shows how the business of the private banks is to be exposed to the public gaze. It prorides that each private bank shall prepare a balance-sheet, a profit and loss account, and statements of its income and expenditure, liabilities and assets, and debits to customers’ accounts. That is to say, the whole of the accounts of the customers of a private bank must be disclosed to the Commonwealth Bank. Can there be fair -business competition on those terms? With that information in its possession, the Commonwealth Bank will be able to force such customers as it chooses to transfer their accounts to the Commonwealth Bank. This bill gives ample power to the Commonwealth Bank to do that.

Senator McKenna:

– Form E, to which reference is made in paragraph e of clause 40, does not deal with the accounts of individuals; it relates only to totals for States

Senator Ashley:

– The information required is the same as is now issued by the Commonwealth Bank.

Senator LECKIE:

– The paragraph referred to means that a private bank must supply to the Commonwealth Bank a ‘statement of debits to customers’ accounts. Other paragraphs require each private bank to supply a statement of loans, advances and bills discounted. Such information must be classified according to the purpose of the loan, advance or discounting; the rate of interest or discount chargeable; and the industry of the borrower or person for whom the bill is discounted.

Senator Ashley:

– It requires only totals, not particulars of individual accounts.

Senator LECKIE:

– That may be so in respect of Form E referred to in paragraph e but the position is different under paragraph g (iii) which requires that information regarding the borrower or person for whom the bill is discounted must be given. But whatever may be said regarding the information to be supplied under paragraphs a to h, under paragraph i the Commonwealth Bank can get any information it likes. That paragraph requires private banks to prepare “ such additional statements as are prescribed”. That paragraph empowers the Commonwealth Bank to demand any information about any private business firm, or individual that it desires to obtain. It can ask for particulars of the state of a man’s account, and of his financial position generally; and with that information in its possession it can take steps to force him to transfer his account from a private bank to the Commonwealth Bank. Under the Commonwealth Bank Bill the Commonwealth Bank is instructed to increase its general banking business. It will be seen that everything is loaded against the private banks. A further provision in this bill prevents any private bank from keeping the account of any State government or local governing body without the consent of the Treasurer. It will be some time before there is a branch of the Commonwealth Bank in every village in Australia, and, therefore, that provision will cause some difficulties. In some instances, the nearest branch of the Commonwealth Bank may be 200 miles from the office of a local governing body. This provision amounts to interference with the liberty of the individual.

Senator Ashley:

– Certain New South Wales legislation prevented local governing bodies from placing their accounts with the Commonwealth Bank.

Senator LECKIE:

– It would appear that this legislation is a form of retaliation against something that happened in one State.

Senator Ashley:

– The provision referred to is not new. If it was good in one instance, it should be good now.

Senator LECKIE:

– Clause 49 provides - (1.) The Auditor-General shall investigate periodically the .books, accounts and transactions of each bank, and shall furnish to the Treasurer and to the Commonwealth Bank such reports upon the affairs of each bank as the Treasurer directs. (2.) The Treasurer may at any time direct the Auditor-General to make an investigation of the books, accounts and transactions of a bank specified by the Treasurer and to furnish to the Treasurer and to the Commonwealth Bank such reports upon the affairs of that bank as the Treasurer directs and to the Auditor-General shall make an investigation and furnish reports accordingly.

Senator Sampson:

– The books of the private banks are audited now.

Senator LECKIE:

– Of course they are. Should the Treasurer of the day have a grievance against a private bank he may decide to investigate its affairs. Accordingly, he will direct the AuditorGeneral to investigate the books and accounts of that bank. Such action will soon become known, and public confidence in the bank will be destroyed, with the result that there may be a “ run “ on that bank.

Senator Courtice:

– The honorable senator is taking a pessimistic view of this legislation.

Senator LECKIE:

– As Senator McKenna was rather scornful of my remark that information regarding the accounts of individuals might be disclosed, I direct his attention to clause 50 which provides - (1.) Every hank shall furnish to the Commonwealth Bank such information in respect of its business as the Commonwealth Bank directs, and every person who carries on any banking business in Australia shall furnish to the Commonwealth Bank such information in connexion with his hanking business as the Commonwealth Bank directs.

Senator ASHLEY:

– Is there any more danger of information leaking out than there is of a leakage of information from the Taxation Department where the financial position of every person in the Commonwealth is known?

Senator LECKIE:

– There is greater danger because, unlike officers of the Taxation Department, bank officials are not sworn to secrecy. Under clause 51 it is provided that, except with the consent of the Treasurer, banks may not amalgamate. They can, of course, be absorbed by the Commonwealth Bank. In the past, banks have, at times, amalgamated in their own interests and in the interests of their customers, but under this bill that will no longer be possible. If we examine the bill closely we shall find that it is loaded against the private banks in almost every clause. This bill is complementary to the Commonwealth Bank Bill with which the Senate has already dealt. That measure supplied the Commonwealth Bank and the Treasurer of the day with certain weapons, and this bill shows how those weapons are to be used. In other words, the Commonwealth Bank Bill knocked the private banks clown, and this bill instructs the Commonwealth Bank to jump on them with both feet, so that all life will be knocked out of them. I cannot understand how a political party which claims to be democratic can suddenly become so totalitarian that to obtain its objectives it is prepared to permit injustices, and, indeed, to use any means at all to gain control of the finances of this country, and thereby to be in a position to create as much credit as it likes. I predict that there will be a hard “ back-kick “ from this legislation. Should the present Government remain on the treasury bench for a number of years it will find that its banking legislation, which it regards as the keystone of the arch of the edifice that it is building, will fall upon its own head. First and foremost, Britishers and Australians believe in fair play. But there is no fair play in this bill. If the standard set by this measure is the standard which the Government intends to set before the people of Australia, I predict a rude awakening; the people will rise and demand their rights against a totalitarian government.

Senator LAMP:

.- When it became known that the Government intended to introduce legislation to improve the Commonwealth Bank and also to regulate the private trading banks, a flood of propaganda against it was let loose throughout Australia. Like other honorable senators, I was pestered with roneo-ed and re-written letters which emanated from the banks. I received only about 115 of such letters but some members of the Labour party received up to five times that number.- That propaganda shows that the banks are prepared to do anything in order to discredit the Government in the eyes of the people. But let us see what some leaders in the community have to say on this matter. Writing in the Church Standard, the official organ of the Church of England in Australia, in April, 1945, the Primate of Australia, Dr. Le Fanu, stated -

I have had a circular from the National Bank of Australasia Limited, which I suppose many people have had. It is protesting rather too violently, I think, against the control of banking affairs by the State. I am afraid the circular did not convince me. The banks are so closely allied to each other that they are virtually a monopoly, and I find it hard to see why they should be considered more disinterested than the popularly elected representatives of the people in Parliament.

In 1935, this Primate said -

The fundamental Christian objection to tho existing capitalistic system and the banker’s control of money, from which it seems inseparable, is that it holds persons in serfdom to the exigencies of financial policy - but money was made for man.

Speaking of despotic economic domination, His Holiness Pope Pius XI., in a statement issued some time ago, said -

This domination is most powerfully exercised by those who, because they hold the control of money, also govern the credit and determine its allotment, for that reason supplying, so to speak, the life blood to the entire economic body, and grasping in their hands, as it were, the very soul of production, so that no one can breathe against their will.

Senator Allan MacDonald:

– Is the New Era beginning to use Has Holiness the Pope for propaganda?

Senator LAMP:

– That statement was not issued by the Douglas Credit people, but by the Church itself. It was issued in a pamphlet.

Senator Allan MacDonald:

– Some of the Douglas Credit people issued it.

Senator LAMP:

– If the honorable senator can show me any matter issued by the Douglas Credit people in which anything said by the Pope is recorded I shall be pleased to purchase a copy. The bankers in their attack upon the Government have issued volumes of propaganda written by their so-called economists. Professor Hytten, who was director of the Workers Educational Association in Tasmania for many years, and whom I know well, is now employed as an economist by the Bank of New South Wales. He is paid to write that sort of propaganda. The first matter he issued was poor, but he is now able to do the job as well as any other skilled propagandist for the bankers. I have in my hand the details of radio advertisements issued by the banks through the Sound Finance Association of Victoria. For this campaign, the banks had practically a monopoly of the air, arranging broadcasts over three metropolitan stations on six days during the fortnight ended the 22nd June, while in the same period they arranged similar broadcasts from local stations in Ballarat, Geelong, Hamilton, Sale, Shepparton, Swan Hill, and Warragul.

Senator Keane:

– That must cost thousands of pounds weekly.

Senator LAMP:

– Yes; and that cost is apart from the hundreds of thousands of pounds which the banks must have spent in respect of advertisements in the newspapers. Incidentally, I should like to know whether that money was taken from shareholders’ funds, or whether it was just an issue of credit by the banks?

Senator Keane:

– We might requirelater to investigate the source of those funds.

Senator LAMP:

– The bankers do not. wish to lose their power over industry and the lives of the people. The Acting Leader of the Opposition (Senator Leckie) said that the Government’s banking proposals could not be described as British fair, play. Was it British fair play on the part of the banks to foreclose on the farms of thousands of producers and the homes of thousands of workers? I know a man who lives not far from my residence who was a struggling farmer. Mainly because his land was over-capitalized, he got into difficulties during the depression, and the banks foreclosed on his property. To-day he is working for another farmer.

Senator Gibson:

– Why did he not obtain assistance from the Mortgage Bank Department?

Senator LAMP:

– Because he was tied up with the private banks. On previous occasions, I have shown how the private banks have controlled the lives of the people. The late Sir Robert Gibson, when Chairman of the Commonwealth Bank Board, refused to make available to the Scullin Government the finance necessary to enable . the Government to function, unless it reduced wages, pensions and social service benefits generally. Subsequent to that incident, Sir Bertram Stevens, on the 21st November, 1932, when he was Premier of New, South Wales, said in a public statement -

Within the last few months, the Government has been endeavouring to lay the foundations of proper economic progress. Now that we have done that, we are prepared, as courageously ns our bankers will allow, to get out into the field of development to assist, in arresting the drift from the country to the city.

Sir Bertram Stevens was a banker’s, man who had to do as the bankers directed. The late Mr. Lyons, when he was Prime Minister, addressed a public meeting, in the Adelaide Town Hall and during: the course of his remarks said -

The banks had confidence in my Government, and we were allowed to carry on.

Honorable senators opposite oan check those statements. They will find them recorded in the press reports at the time. It “was a sorry time for Australia when the Government of the nation was allowed to carry on only at the will of the private banks. Therefore, I welcome this legislation. The Government now proposes to rectify .that position. On previous occasions, I have made it clear that I do not condemn bank managers and others who are in charge of the present banking system. They merely operate the banks as an integral part of the capitalist system, of which they are servants. I do not know many bankers, but those I have met are excellent gentlemen and very good citizens. However, it is their job to work for the money power, about which William Jennings Bryan had this to say-

The money power preys upon the nation in times of peace and conspires against it in the hour- of calamity. It is more despotic than monarchy, more insolent than aristocracy, mon selfish than bureaucracy. It accumulates by conscious fraud more money than it can use. It denounces as public enemies all who question its methods or throw a. light upon its crimes. It can only be overthrown by the awakened conscience of the nation.

This Government is awakening the conscience of the nation. The Acting Leader of the Opposition says that supporters of the Government are the enemies of the people, simply because the Government intends to control the private banks. It must be clear that if the Government does not control the private banks, they will control the Government; and on such an issue, I know where I stand. Brailsford in his War of Steel and Gold, writes -

In every country there is a powerful group of. capitalists, firmly entrenched in society, well served by politicians and journalists, whose business is to exploit the jealousies of the nations and practise the alchemy which transmutes hatred into gold. Diplomacy is the tool of the vast aggregations of capital in oil trusts, steel trusts and money trusts. Wherever combinations of capital arc competing the reactions are exhibited in the relations of their governments. For service of the rival monsters the working classes are regimented in conscript armies - armies and Herts arc the material arguments behind financial diplomacy. Finance is the arbiter of war and peace, the master nf despotisms, the unseen power in democracies.

The late Lord Bryce in his book Modern Democracies, writes -

Democracy has no more persistent or- insidious foe than the money power to which it may say, as Dante said when he reached in his journey through Hell, the dwelling of the God of Riches : “ Here we found wealth, the great enemy “. That enemy is formidable, because he works secretly by persuasion or deceit, rather than by force, and so takes men unawares. He ie a danger to good governments everywhere.

With that view I heartily agree. The secret weapons of finance create trouble not only between nations, but also between people of the one nation. The Government is determined to provide adequate employment for all our people, and it realizes the necessity to arrive at agreements with other nations in order to establish justice and equity in our economic life. I believe in Christianity, and I have no hesitation in quoting the statements of leaders of Christianity when they deal with questions of the day. Dr. F. W. Norwood, formerly of the London City Temple, has said -

We have reached the end of the road, and wo cannot persist in the paradox of simultaneously demanding scarcity and plenty.

I am almost heartbroken with the world’s beauty, wonder and fertility,, side by side with its hunger, weariness, and ‘ hate. We have conquered scarcity but we have no technique for handling abundance. . . . The world is frightened with the earth’s fertility and is practising contraception upon the seeds of wheat, on wool, sugar, cotton., silk, rubber, rice, tin, and coffee, stifling at birth the fundamental necessities to man for the fear of disturbing prices. . . . God gave us abundance to make a heaven upon this earth, We have made boom, slump and war.

Carlye said -

The saddest sight on this earth is the poverty of a man willing to work, anxious to work, and yet compelled to tramp the high, ways of’ our land hungry and homeless because he can find no master who will hire him. And what can be said of an economic system that produces this fate for millions of our citizens ?

The position is the same to-day. Whenthis war is over we shall probably have another boom and later another slump, but, thank the Lord, this Government is in power to try to prevent such economic disasters. We call ourselves Christians and we ought to try to operate s Christian society. I make no apology foi supporting the restriction of the activities of the private banks. It is only right that they should operate under licence from the Commonwealth Government. The same conditions should be applied to the big pastoral and other firms associated with primary production. Several times I have referred to the Commissioner of Taxation the operations of certain firms in Tasmania which a«t as bankers. The primary producers sow their crops, breed their herds or produce their wool and are provided with credit by the storekeeper.

Senator Allan MacDonald:

– He is their banker.

Senator LAMP:

– In return the storekeeper supplies them with all their needs. Periodical balances and adjustments are made accordingly. Storekeepers in rural areas are in a great many instances bankers, and should be licenced as such and compelled to make returns to the Commonwealth Government, the State Government and the Commissioner of Taxation in order that there may be a check on their operations as well as on the operations of those who trade with them. Recently a young man in a country district of Tasmania was discussing with the manager of a store the purchase of a block of land for the sale of which the store was agent. The young man clinched the deal, saying that he desired to pay the deposit immediately. Ee drew from his pocket £900 in notes. The storekeeper can cover up the income of his clients, for the Commonwealth Government has no check of the income of men who do not deal with banks. It is right, therefore, that even firms which do only a little banking business should make returns to the Government in respect of that banking in order that the authorities may know exactly what it and its clients are doing.

Senator Leckie sneered at the Government’s claim that in this banking legislation it is acting to protect depositors. The provisions for that purpose are the most important iri the bill. In one of bis jeers Senator Leckie said that banking was founded on confidence and that a mere whisper that a bank was unsafe would bring about such a state of affairs that the Commonwealth Bank would be able to exercise its power to take it over. I remind the honorable gentleman of how the Government Savings Bank of New South Wales was wrecked in the depres sion by means of the whispering campaign carried out by the anti-Lang interests in political and other circle? when Mr. Lang was Premier of New South Wales. Notwithstanding that that bank’s assets exceeded its liabilities it was forced to close its doors because the Commonwealth Bank declined to enable it to meet the demands of the panic-stricken depositors by liquifying its assets. Had the Commonwealth Bank possessed the statutory powers intended for it under th,i3 legislation and been able thereby to take over the Government Savings Bank, the depositors would not have lost their money.

Senator Allan MacDonald:

– The people who lost their money were those who sold their savings bank pass-books to usurers at a discount.

Senator LAMP:

– Of course. I am one who believes that this bill does not go far enough in restricting the activities of the private banks. They should not have the power to create credit, as they have done to the amount of hundreds of millions of pounds. The amounts held to the credit of the private banks by the Commonwealth Bank in special war-time deposits, which, under this bill, will remain deposited with the Commonwealth Bank were created by the private banks by an ingenious method. In his secondreading speech on the Banking Bill, the Treasurer (Mr. Chifley) referred to the special deposits as follows: -

The Commonwealth Government, in order U> obtain man-power and materials required for the effective prosecution of the war, had to obtain finance, in addition to the revenue derived from greatly increased rates of taxation, by borrowing from the public and the Commonwealth Bank. The result has been a considerable increase of the amount of purchasing power in the hands of the public, comprising notes, savings banks deposits, and deposits with the trading banks. The increase of the deposit liabilities of the trading banks was balanced roughly by an increase of the deposits they lodged with the Commonwealth Bank. The base of liquid reserves, on which trading banks normally build a superstructure of secondary credit, was therefore enlarged. To prevent secondary inflation, it was necessary to immobilize some part of the banks’ deposits with the Commonwealth Bank in special accounts, from which the banks were not allowed to withdraw any amounts, except with the consent of the Commonwealth Bank. In the aggregate these special deposits at present amount to about £230,000.000.

  1. understand that they now amount to £240,000,000. How do these special deposits accumulate? I -believe that Senator Cooper was right in saying that the majority of the deposits result from repaid overdrafts. A man obtaining an overdraft from a bank is not lent depositors’ money, because that is a liability; ho is lent credit against the depositors’ money. Previously I have cited world authorities to show that that is correct, and it is not necessary for me to cite them again. Every one who understands banking knows that credit is created against the assets of the bank, which are the people’s deposits. They are the liabilities of the bank. The amount of the overdraft is written into the borrower’s account. Let us take a case involving £1,000. When the borrower repays the amount the entry should be cancelled, but it is not cancelled, lt becomes a credit against which further credit is created.
Senator Mattner:

– That is a new theory.

Senator LAMP:

– It is not. lt is exactly what happens. That is admitted by bankers all over the world. The honorable senator’s education is hopelessly inadequate if he does not know that that is exactly what happens and that that is how this £240,000,000 came into existence. That is why I say that this measure does not go far enough. The private banks should be prevented from making overdrafts against credit or using credit in any shape or form. Credit, I agree with Senator Leckie, is based on confidence. Not every one with money on deposit requires that money at the same time. Therefore banking is based ou the confidence of the people, not the confidence of the banks, in the ability of the banks to repay them when they require to be repaid. If the banking system could not do that it would collapse. The banking system could not operate without the confidence of the people. Therefore, it is only right that the people who have the confidence should control the credit built on their confidence. I am not ashamed to express my agreement with the bulk of the propaganda of the New

Era in reference to the special deposits. The New Era .says - .

The £240,000,000 special funds lodged by the trading banks with the Commonwealth Hank is a clever swindle designed to enable the banks to obtain Government securities in war-time by a back-stair method.

I believe that is right.

Senator Herbert Hays:

– Does the honorable senator suggest that the private banks do not re-lend to customers money held by them on fixed deposit?

Senator LAMP:

– Whatever is placed in the custody of a bank, whether it be notes or cheques, is entered in account. That money becomes a liability of the bank. It has to be repaid whenever it is required. The bank knows what accounts it has and the amount involved. It trades upon the fact that all its clients with money on deposit will not require repayment at the one time. Therefore, it considers that it is justified in lending ten times the amount it has on fixed deposit.

Senator Herbert Hays:

– The money on fixed deposit is placed in the bank’s custody for .fixed terms - two years, three years, four years and so on.

Senator LAMP:

– If the honorable senator cannot understand the system, it is his fault, not mine. 1 understand exactly how it works. The Leader of the Opposition said that this bill was not “ British fair play “. He said that the assets of the private banks would be reduced by 25 per cent. In spite of the controls that have operated since the war began, the private banks have greatly expanded their holdings, and correspondingly increased their assets to an extent perhaps exceeding any pre-war period of the same time. The following figure’s taken from the Quarterly Summary of Australian Statistics Bulletin No. 173, September, 1943, prove conclusively the truth of my statement : -

Iti 1.031) the assets and liabilities of the nine Australian trading banks were as follows: Total assets, 1939,”£3S1, 902,000; total liabilities. 1930, f 328,007 ,000; increase of assets over liabilities total £53,895.000.

In 1943. after four years of war, assets and liabilities are as follows: Nine Australian trading banks - total assets 1943. £536.857,000, total liabilities. 1943, £470,43(1.000 : total increase of assets over liabilities 1B43, £06,421,000, showing a total net gain to the banksof assets over liabilities of £12,526,000, during the four years of war. Thus the nine Australian banks are £12,526,000 richer than they were at the end of 1938.

During the war, the nine Australian trading banks have increased the balance of their assets over liabilities by £12,526,000. Any one who suggests, therefore, that these banks are being persecuted and that the rules of British fair play are not being observed by the Government is wide of the mark.

Senator Allan MacDonald:

– The banks are permitted to pay dividends of only 4 per cent. That is the real test.

Senator LAMP:

– What about their secret funds ?I should like to have some of that money. The private banks have been ableto write down the capital value of their buildings to one-tenth of their actual value, and get away with it. Dealing with the war-time regulation of banking, Mr. Ward, chairman of the English, Scottish and Australian Bank in London, has stated -

We do not regard these regulations as unduly disturbing.

He did not regard them as unduly disturbing because they did not take from the private banks the power to issue credit. The trading banks can still create credits and make them available to the Commonwealth Bank at 17s. per cent. interest. The banks to-day are on just as good a wicket as they have ever been on. In my view, the Government has not gone far enough in controlling banking. It should have stopped the creation of credit, because credit is based on confidence, and confidence is the property of the people of the Commonwealth. Recently, I discussed this matter with a manufacturer and storekeeper in Launceston. I asked him what he thought of the banking proposals, and he said, “They will not affect us. We have to put up some sort of a fight or else people would not know that we were alive “. This legislation will give to the Commonwealth Government greater power over the mobility of credit. The Government will be able to make credit available in whatever channels it desires, and in accordance with whatever policy it may determine.

The Acting Leader of the Opposition (Senator Leckie) had something to say about the control of interest rates. I well remember having to pay 8 per cent. interest on money I borrowed after the last war. I know too, that certain municipalities had to pay 7 per cent. and 7½ per cent. on money borrowed to carry out essential works, despite the fact that gilt-edged securities were held. That shows what “ bushrangers “ the banks were in those days. It is time that the Commonwealth Government took steps to ensure that money shall be made available on reasonable terms to members of the community who have the necessary security. That is the object of this measure. The Tasmanian railways cost between £7,000,000 and £10,000,000. Already, £15,000,000 has been paid in interest charges without any reduction of the capital having been effected. How long is that state of affairs to exist ? Provision should be made for the reexamination of such undertakings after they have been in operation for a certain period, with a view to reassessing values on a more reasonable basis.

I come now to the question of gold- backing for notes. I believe that it is absolutely unnecessary to hold any backing whatever for our note issue. My view is that the productive capacity of the nation is the only basis upon which credit should be issued. Notes or cheques are only “ ticket “ money. We work for one another and keep the wheels of industry moving. We are paid wages, and if we have any surplus over what if required for our immediate needs, we may deposit it in the banks. The banks use that money over again. A productive economic system is all the backing that is necessary for our currency. In his book Man Versus Money Professor Soddy, an eminent authority on currency states -

The gigantic interests in the private issue of money have always pretended it to be the public that insist on there being something behind paper or credit money. But during the war the change from gold coins to paper money was effected without the public being in the least disturbed. In fact it may be said that they welcomed the change. These interests are always trying to persuade the public of the unsoundness of any kind of money they have not the issue of. But to any impartial person forming conclusions from the evidence, the present system must appear as fundamentally the worst and most unsound monetary system the world has ever known.

In the future we should not ‘bother with any pretence of backing our note issue with metal. Our currency system should be based on confidence. To a degree, that is the case at present, but the confidence should be founded on reason which is not the case at present. Confidence should consist in the belief that the purchasing power of Australian money in Australia shall be kept as steady as possible. Such confidence would be justified because with that sole aim in view the Government desires to entrust the regulation of credit to an impartial department created by the Commonwealth Bank to issue notes and carry on general business. My view of the position is supported by the report of the Economic Crisis Committee1 of the Southampton Chamber of Commerce, which, on economic matters works in close co-operation with the London Chamber of Commerce. The report states -

Our constructive recommendations follow directly from the root causes of the world situation revealed by our analysis.

  1. Money supply should be governed by the real credit of the community as represented by its productive capacity. This appears to involve the abandonment of any arbitrary restriction of the quantity of money, and the limitation of internal money supply by any Such instrument as the international gold standard.
  2. T” order to ensure that money performs its true function of operating as a means of exchange and distribution, it is desirable that it should cease to be traded as a commodity.
  3. Money being merely a vehicle for the credit of the community, and the power which the control of money carries with it being nothing less than the control of the entire economic life of the nation, it is desirable that the administration of financial policy should be vested in a national authority directly responsible to the sovereign of his people.

The clause compelling State government instrumentalities and semi-governmental bodies to deal with the Commonwealth Bank is necessary. At present many municipalities are unable to do business with the Commonwealth Bank because there is not. a branch of that institution in their particular locality. In his second-reading speech, the Minister sta tod that the transfer of accounts to the Commonwealth Bank would be gradual. That of course must be the case in connexion with municipal authorities because it will not bc until after the war has ended that material and man power will be available to build all the new branches of the Commonwealth Bank that will be required. This Government is determined that full employment shall be brought about in this country, and it is to be congratulated upon its determination to ensure that the banking system shall play its part in keeping the wheels of industry moving, so that there can be created a state of affairs in which there will be security for all.

Western Australia

– In the brief period available to me I should like to discuss aspects of this measure which were not touched upon whilst the Commonwealth Bank Bill was before this chamber. The bill is much more drastic than the Commonwealth Bank Bill, and it is our duty to do more than protest against it. We should fight it clause by clause. Whilst the war provides that the Treasurer of the Commonwealth shall grant licences to the trading banks to continue their activities, the word “ licence “ could better be applied to the action of the Government in taking away the liberty of the trading banks. This is one of the most drastic measures that has ever come before this chamber. In fact it should be named the “ Robbery under Arms Privilege Bill “. I do not propose to quote His Grace Archbishop LeFanu, or any other church dignitary, as Senator Lamp did. I shall deal with the wording of the bill which Senator Lamp studiously avoided. The honorable senator’s tirade reminded me of the saying, “ The devil can cite Scripture for his purpose”. In his quotations, the honorable senator ranged from the elevation of His Holiness the Pope to the nethermost depths of hell. In fact, tha honorable senator discussed everything but the bill. I am here to protect, not the shareholders of the private banks, but those of the citizens of this country. This measure is viewed by the people of Australia with grave concern because it is a direct attack upon individual liberty. There is no immediate hurry for the passage of this legislation, and the Government would be well advised to reconsider its drastic provisions. I have no quarrel with the Government’s aim to control the credit resources of the nation because that power is fundamental to central banking. But there is no need to make a direct attack on the private banks of the country in order to achieve that objective. I fear that the gentlemen who drafted this legislation either do not appreciate, or have not been allowed to consider, what actually happens in banking practice. The measure before us is an attempt to license the Treasurer of the day to interfere in the affairs of other people who are engaged in trading in the Commonwealth. Under clause 12 and subsequent provisions, the private banks, which, through the action of the Government, are nearing the end of their course, will have to submit to the Commonwealth Bank full information of their operations supported by statutory declaration and those unable to meet their obligations will be required to submit to an independent investigation. If that is not rubbing salt into an open wound I do not know what it is. It is the essence of indignity. This legislation has been deliberately designed to undermine the private banks as commercial institutions. The Commonwealth Bank is to demand not only its pound of flesh but, apparently, it is also to gloat over its victims. This measure anticipates that some private banks will not be able to meet their obligations. It reminds me of a person getting ready to catch a head as it falls from the guillotine. I hope that the Opposition will fight every clause of this bill. A great deal too much has been said as to the influence of trading banks on the commercial life of Australia. I have not had experience of any such sinister influence as has been suggested by supporters of the Government. The private banks have no move overriding power in the community than have many other commercial institutions which exist in order to give service to the people. Banks, like stores, are branches of commerce, but the private banks have been singled out as the arch thieves of the community. A study of banking history will reveal that that description is no more warranted in respect of private banks than it is in respect of any other commercial enterprise.We can all rail at people whom we do not like, but when we compare the dividends paid to shareholders of private banks with dividends paid to shareholders of other commercial enterprises it will be seen that the banking institutions of this country are no greater menace to the community generally than are other institutions. The charge that the private banks have the power that some honorable senators attribute to them is so much tarradiddle. I ask honorable senators to consider what harmful influence these financial ogres have had on the carrying on of the war; how much power they exercised over the late Prime Minister (Mr. Curtin), and how great their influence is likely to be on the present Prime Minister (Mr. Chifley). I say unhesitatingly that the financial houses of Australia have no influence at all on such men. The statements so frequently made as to the influence of moneyed people on the economic future of Australia are ridiculous. I regret that some honorable senators have quoted extensively from the writings of persons whose theories are based on wrong premises. The trouble is that the more frequently these remarks are repeated the more they are believed. I ask leave to continue my remarks at a later date.

Leave granted ; debate adjourned.

page 4342


Motion (by Senator Keane) agreed to -

That the Senate, at itsrising, adjourn to Tuesday next, at 3 p.m.

page 4342


Rabbit Destruction - Synthetic Fibres

Motion (by Senator Keane) proposed -

That the Senate do now adjourn.

Western Australia

– There are two matters concerning which I should like an early announcement by the Minister for Trade and Customs (Senator Keane). First, I should like him to say what encouragement the Government is giving to the Council for Scientific and Industrial Research to discover and develop an effective rabbit virus. Secondly, I should like an early statement as to the

Government’s attitude towards the synthetic fibre industry, which is becoming an increasing menace to our wool industry. On a number of occasions I have referred to these two matters, and I should like the Minister to make an early announcement in regard to them.

Senator Keane:

– I undertake to do that.

Question resolved in the affirmative.

page 4343


The following papers were presented : -

National Security Act-

National Security (Emergency Control) Regulations- Orders - Military powers during emergency (2).

National Security (General) Regulations - Orders -

Taking possession of land, &c. (11).

Use of land (2).

National Security (Maritime Industry) Regulations - Order - No. 51.

Senate adjourned at 12.30 p.m.

Cite as: Australia, Senate, Debates, 20 July 1945, viewed 22 October 2017, <>.