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Thursday, 15 May 1924


Mr SPEAKER - The honorable member's time has expired.

Motion (by Dr. Earle Page) agreed to by an absolute majority of the members of the House -

That the Standing Orders be suspended to enable the honorable member to continue his speech .


Mr PRATTEN - I thank the Treasurer and honorable members for their courtesy. I wish to bring under the particular notice of the Treasurer the concluding words of the quotation I was reading - " In other words, we use a considerable portion of the borrowed money, not as capital, but. as revenue." Our ability to pay our debts depends entirely upon our work and production, and the surplus we can create over and above the cost of reasonable food, clothing, housing, and the miscellaneous requirements of the people. It is all very well to talk about " the great potentialities pf this glorious Commonwealth," to call it " God's own country," and to boast about the " untapped wealth of our great continent," and " the magnificent destiny of the Australian people." These, and other similar phrases, are heard frequently. While our financial position is not dangerous, or even unsafe, if we face it now, I am certain that, in fairness to young Australia, we ought not to leave legacies, of desolating debt without giving corresponding advantages to the next generation. We should not continue to cherish the illusions of the incurable optimist. There are many persons, of course, who do not think with me, but a judicious mixture of fact, as well as of faith and hope, is the tonic required for safe and permanent progress. The economic position, and the ramification of our debts and international trade, are a foundation upon which the solution of all other questions depends. They are the keystone of our arch of progress.. Unless we idealize their incidence, the foundation upon which we build is unsafe.

My friend, the Treasurer, talks about the proper balancing of primary and secondary industries, but without the balancing of our economic position such talk is unprofitable, particularly if no effort is made to stem the flood of imports brought about by the financial hegemony exercised -over us, particularly by British -banking institutions, especially as the weapon with which to solve them is in the hands of this Parliament. " When you run into debt," said Franklin, " you give another power over your liberty, and unless there be economic freedom there can be no other freedom." The Treasurer will pardon my saying that the economic question is infinitely more important than even the agitation for new States, an amendment of the Constitution, or an academic discussion upon the causes of people flocking from the country to increase the number of the denizens of the cities; and, in my opinion, it is really of more importance than the question of who is to govern Australia. The solution of this problem will solve many of the apparently greater, but really minor, problems that face us. It is for the majority of the people of Australia, and particularly the workers, to decide whether they import goods or manufacture those goods themselves, and so increase the wages paid in Australia. Among the problems we have to face there is not one I know of that is not more or less affected by the economic position. Defence, migration, and settlement are also wrapped up with it, and if we have a Protective policy, if we recognize that Protection is the policy believed in by the vast majority of the citizens of the Commonwealth, for Heaven's sake let us take it to its logical conclusion, and stop borrowing abroad, and reform, if necessary, our banking arrangements, whereby we can mobilize what credits may from time to time be due to us abroad, and not allow international financiers to take us where we do not want to go. I have reason to believe that at least some of the sagacious, cautious, and patriotic men in control of our Australian registered banks would welcome some change in our economic banking position that would work out better for the Commonwealth. But I am afraid it is almost too late, in view of the rush of imports and also the great expenditure abroad by visitors to the British Empire Exhibition, to hope to salvage much, if any, of the excess credits Australia, has owned in London within the last twelve months. I had hoped that the Government would have before this realized the importance of the question to Australia, because twelve months ago, in this House, I drew attention to the economic position and the matter of exchanges. But nothing has been done. By a policy of laisser -faire it is being allowed to solve itself, and the splendid accretion to the national wealth of the community, caused by the world's high prices for wool. &c. . will, I am, afraid, be dissipated through the importation of goods which Australians do not require and the absence of a. national banking policy. I do not wish to criticize any of my banking critics; but, in connexion with the probing of the problem, and in order to reach a practical solution whereby a repetition of our national economic dissipation can be prevented in the future, although it is hardly within my province as a private member to lay down hard and fast proposals for the consideration of the Government, which has the responsibility of solving the problem, I do venture to suggest some consideration of one or more of the following methods for the liquidation of Australia's future credits abroad, if we are fortunate enough to get any, otherwise than by the importation of goods: - Bankers' finance bills; Empire currency bills - a suggestion put forward some time ago by Mr. John Darling, but which has never been explored; Bank of England notes, legalized temporarily as currency here; the issue of more Australian notes against the cancellation of Government securities abroad. The last method, I am glad to say, has been approved by that responsible, careful, and sagacious journal, the Argus. We have not yet thoroughly examined the possibility of making our production of gold help towards the solution of the present difficulty. I do not desire to criticize the private banking position in Australia, but, if private bankers can do nothing towards helping the solution of our urgent economic problems, they must be reminded that banking liabilities in Australia increased during the ten years ending December, 1923, from £168,000,000 to £312,000,000, and that their liabilities at call, not bearing interest, increased from £71,500,000' to £126,500,000; but the gold, bullion, and

Australian notes held against these liabilities at call only increased from £41,000,000 to £50,000,000 in the period under review. Most of the proceeds of our note issue have been lent to the States, and we have their security, as well as the security of the Commonwealth, and also nearly 50 per cent, of gold behind that issue, but the banks in December last held £3,000,000 less in notes than they did seven years ago, while the public held £11,000,000 more. The volume of banking business has nearly doubled during the period, and surely there is some strong, sound, substantial reason for securing more elasticity in our currency here, particularly as regards the position of om- credits in London. Alternative methods for the solution of our troubles have never yet been fully explored from the Australian stand-point. True, the Economic Conference in Loudon arrived at a milk-and-water conclusion that the time was not opportune, or something of that sort. The problem, however, will have to be faced by the Treasurer in no uncertain way. It transcends all other problems. " Fine words butter no parsnips," and to his national plan for Australian development - whatever that may be - must be added, in order to give full effect to any national policy that >ve may decide to carry OUt, an Australian national economic policy that will not abrogate our national policy of Protection; will not place a premium upon imported goods we do not want: will not force upon us importations that strangle our secondary industries; but will allow us to keep our international ledger square while attending to our own affairs here, in our own way, by our own people, with the surplus of their own wealth created by their own work, industry, and natural advantages. The present economic position places Australia under the tutelage of British financiers, who, amongst other things, are taxing the primary producer more heavily in exchange than ever he was taxed through the ' Tariff. The mathematical result of this position must trend towards the sterilization of Australian development.

In my opinion, all the evidence is thatBritish Free Trade finance is being used to break down Australian Tariff Protection. I have tried to tell what, in my opinion, the position is. Now comes the question what steps, should the Government take, and by what principles should they be guided in bringing amended banking legislation into this Chamber. It will not be enough, in connexion with our Commonwealth Banking Act, to ' merely change from the one-man control now existing to a Board or Commission. Tho functioning of our Commonwealth Bank to-day is the same as that of any other bank doing business in Australia. A true national banking policy, in mv opinion, should be directed to the creation of a banking position that will enable the national bank to force the mobilization of Australian credits abroad - brought about by excess exports, but not by public borrowing - for the development of Australia, and not for purchasing British or foreign goods. We should also have some banking authority to help in the co-operation and co-ordination of all public borrowing in Australia. A real national Banking Act should also be able to help in the discouragement and cessation of public borrowing abroad. Our political policy should make sinking funds real, and should ensure that the administration and care of the credit resources and revenues of the people are husbanded and expended with prudence and sagacity.







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