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Thursday, 29 October 1931

Mr SCULLIN - The question is a somewhat comprehensive one to be asked without notice. The honorable member desires to know, in the first place, whether certain statements reported to have been made by Sir Robert Gibson are correct. I am not in a position to answer that question. One of the statements quoted was that there was no reason why the State Savings Bank should have closed on the ground of its unsoundness. I believe that a very full examination into' the position of that bank has proved that statement to be correct. There is no reason, on the ground of unsoundness, why that institution should have closed its doors. Unfortunately, the fact that the bank was sound was not taken into consideration when depositors lost confidence in the bank. The bank's depositors lost confidence in the bank when the head of the New South Wales Government, which guaranteed the bank's solvency, declared that the Government would not meet its obligations. ' When his government actually failed to pay on the due date the interest due to the bank, depositors, having lost confidence, became panicky, and made a run on the bank ; not because the bank's position was unsound, but because of the loss of faith in the guarantee of the Government. It is this want of confidence that makes it so difficult to re-establish the bank as a State institution, and seems to explain why the honorable member for Hunter (Mr. James) and others are asking the Commonwealth Government to loan the bank £10,000,000.

Mr Ward - How does the right honorable gentleman account for the run on the Western Australian Government Savings Bank?

Mr SCULLIN - There is no evidence of a similar run on that bank. There have been, undoubtedly, steady withdrawals from every savings bank in Australia. Because of the depression, depositors needed their money; but there is no evidence of such a run elsewhere as took place on the New South Wales Government Savings Bank. The honorable member for Hunter (Mr. James) has asked whether the Commonwealth Government will urge the Commonwealth Bank to loan to the New South Wales Savings Bank £10,000,000. That is merely an echo of a request that has been advocated at public meetings, and elsewhere. I ask in return what does the savings bank want £10,000,000 for? Is it expected that so soonas the doors of the bank are opened to the depositors in the old business division, there will be such a run on its funds that £10,000,000 will be required to meet their demands. That is not proof of a belief of confidence in the bank. I suggest that this question is propaganda against the New South Wales Government Savings Bank of the worst kind. I desire to see that bank re-established, and I want its old depositors to get back their money; but my desire is that the bank should continue as a savings bank, and not as a bank in liquidation. The request for £10,000,000 to pay off depositors is publication of the belief that the bank would have such a run made on it by its old depositors that this £10,000,000 would be required immediately.

Mr.James. - The people are putting money into the new department.

Mr SCULLIN - The re-establishment of the bank must be accompanied by a restoration of confidence. If it is opened as a Commonwealth bank, under a fair amalgamation agreement, there will be an immediate restoration of confidence. I believe that nothing like £10,000,000- not even a quarter of the sum - would be required in cash if there should be such an amalgamation, and I have no doubt that in less than three months the old depositors could be operating on their accounts, and could be paid in full.

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