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Friday, 18 December 1914


The PRESIDENT - Order i I point out to Senator Findley that nobody knows whether the Senate will close up to-day. The matter is entirely for the Senate itself to decide. So far as I could catch the interjection of Senator de Largie, he was not striving to limit the remarks of Senator Findley, but was only pointing out that apparently the time at our disposal was limited, and that the honorable senator should not repeat remarks for the benefit of an honorable senator who had come into the chamber. Now that my attention has been called to the matter, I must remind Senator Findley that it is contrary to our Standing Orders and practice to indulge in repetition.


Senator McKissock - Senator de Largie was usurping your privilege.


Senator de Largie - I was not trying to usurp any privilege.


Senator FINDLEY - I do not desire to run counter to you, sir, or the Standing Orders. It was merely to emphasize and amplify a point I was endeavouring to make that I attempted to repeat some remarks, because I was prompted to do it by a pertinent interjection from Senator Ferricks. I do not desire to take up more time, but I feel that a Bill of this kind deserves the serious consideration of the Senate, and no measure that we have had, during the last few days, at any rate, concerns me more than this does. With some of its provisions I am in hearty accord, but I cannot become by any means enthusiastic in regard to the provision which empowers the Governor of the Commonwealth Bank to acquire other banks and the provision which enables the capital to be increased.

Senator Lt.-Colonel Sir ALBERTGOULD (New South Wales) [12.14]. - I do not propose to speak at great length, because I realize that time is precious and that other honorable senators desire to express their views. The Bill makes certain amendments of the principal Act. Personally I do not see any ground for objecting to the proposed amendments, when we take into consideration the whole principle and scope of that enactment. One of the less important proposals of the Bill is that to empower the Commonwealth Bank to establish branches in any part of the British Dominions. I do not object to that, because, inasmuch as we have established a Commonwealth Bank, it should enjoy every facility that is enjoyed by a private bank to enable it to deal with its own business. Another provision reads -

A trustee, executor, or administrator may invest any trust moneys in his hands in the purchase of debentures issued by the Bank, or on fixed deposit in the Bank.

I do not object to that provision, nor do I take exception to the amendment which is proposed in section 62 of the principal Act. The chief matter which we have to consider is the position of the Bank, which is of a three-fold character. In the first place, it should be a National Bank - that is, a Bank which transacts the whole of the business of the Governments of the Commonwealth. The Commonwealth, having established a Bank of its own, should strengthen its hands by doing all its own business through it, so long as the Bank does not encroach upon ground which the States have already traversed. By all means let the Bank deal with the national accounts. Then we have to consider the question of the Commonwealth Savings Banks. Here there has been considerable difference between the States and the Commonwealth as to which Savings B anks should transact this particular form of business. We all realize that the State Savings Banks are in reality national banks. They have no hungry shareholders to appease by paying them dividends, and consequently they are able to carry on their operations with a minimum of expense. When Senator Findley talks about the action of Victoria in setting up a Savings Bank in apposition to that established by the Commonwealth, he should recollect that it was the Commonwealth which endeavoured to oust the State Savings Banks from the business which they had previously transacted. I come now to the third aspect of the Commonwealth Bank, which relates to the competition into which it has entered with the ordinary private banks of the country. If it is going to compete with those institutions, I say unhesitatingly that it ought to be subjected to the same conditions as those to which our private banks are subjected. Then we should not hear of cases coming before the High Court for decision similar to that which is now occupying the attention of that tribunal. In effect, the Commonwealth has said to the private banks, " Although you have to pay stamp duty upon every cheque that is drawn by your customers, the Commonwealth Bank is not going to pay any such tax, because it is an instrumentality of the Commonwealth." Need I point out that in reality it is not the private banks which have to pay the tax of a penny upon every cheque drawn by their customers - it is the customers themselves. It will be seen, therefore, that the Commonwealth Bank occupies an advantageous position as compared with our private banks, which have to contribute to the revenue by way of stamp duty on cheques.


Senator Grant - That duty ought to be abolished.


Senator ALBERT GOULD (NEW SOUTH WALES) -Colonel Sir ALBERTGOULD. - If it suits a man to become a depositor in a private bank, it is only fair that he should pay a small tax to the State should the State require it for the government of the country. If the Commonwealth Bank is going to compete with private banks it ought not to occupy a different position from that occupied by those institutions. I come now to the proposal to empower the Commonwealth Bank to absorb any private bank. It has been urged that it will absorb only institutions which are in a " lame " position. Still the amount which will be paid by way of compensation to any private bank for taking over its business will be absolutely determined by the value of that business.Now, in a rough-and-ready way. we know how the public appraise the value of a bank. We all recognise that a bank's shares may be selling either at a premium or a discount. If they are selling at a discount that circumstance is indicative of the value which the public put upon the institution. It may have a capital of £1,000,000, but if its shares are selling at a discount, the Commonwealth Bank will purchase it only upon reasonable terms. Of course it is possible that the Commonwealth Bank may acquire a private bank which has a large number of branches established throughout the country. In that case it will be able to step into those branches immediately, and that will be a great advantage. That the Commonwealth Bank should enter into competition with our State Savings Banks is unreasonable. Of course, if the latter were prepared to surrender their business, the position would be different. Similarly, if the Commonwealth Bank chose to open Savings Banks in places where private banks have not been established, I would not utter a single word by way of complaint. But we have to divest our minds of the exaggerated idea which has been expressed by some honorable senators regarding the value of the services which the Commonwealth Bank has rendered to the community. Let us compare its position with that of our private banks. I find that the annual report of the Commonwealth Bank for the year ended 30th June, 1914, states -

The affairs of the Bank were subjected both in the Commonwealth and in London to complete inspection, and audit for the half-yearly period ended the 30th June last, with the result that a net profit of £8,093 8s. 5d. was earned by the Bank during the six months, in addition to £1,547 9s. 4d. shown as profit for the preceding six months, or £9,640 17s. 9d. for the whole financial year.

That shows the very small profit which the Bank has made during the period that it has been in existence. Its deposits, accrued interest, and rebate amount to £4,559,264, depositors' balances in the Savings Bank department, with interest accrued, to £4,645,268, making a total, with contingent liabilities, of £9,773,690.


Senator Millen - Is that the Savings Bank side alone?


Senator Lt Colonel Sir ALBERT GOULD - No. The assets are shown to be: Coin, bullion, and cash balances, £2,670,446 ; bank premises, £38,379 ; profit and loss, £36,995. Now, let us see what are the deposits in our ordinary banks. In 1913 the deposits in the banks of issue in Australia totalled £154,500,000, as against deposits in the Commonwealth Bank of £9,000,000. The coin and bullion held by the private banks at that time totalled £33,684,000. I have some still later figures which I can furnish to honorable senators. During the September quarter of the current year, the Commonwealth Bank held in coin and bullion only £151,390, whereas the private banks held no less a sum than £35,264,000. The Commonwealth Bank had made advances to the extent of £1,550,000 as against advances made by our private banks amounting to £118,000,000. I have quoted these figures to show that honorable senators opposite are mistaken when they declare that the Commonwealth Bank has been the means of steadying the financial position in this country, and that it has assisted our private banks. I do not quote them for the purpose of decrying the Commonwealth Bank, but merely for the purpose of illustrating the extravagant ideas which are entertained by some honorable senators. I come now to the question of notes. The Commonwealth Bank does not control the note issue, although I believe that ultimately it will do so. Senator Findley stated that in Great Britain the public are so anxious to get paper money into their hands that they are taking Government paper money and giving sovereigns in return for it. But I would point out that the Bank of England does not issue notes of less than £5 in value, and that there is great difficulty in getting such notes changed except at the Bank itself.


Senator de Largie - The honorable senator is in error there.


Senator Lt Colonel Sir ALBERT GOULD - I happen to have had a little experience. The British Government are now issuing notes of the value of 10s. and £1, because they are more convenient than are notes of a larger denomination. To a great extent these notes of small value take the place of the half-sovereign and sovereign. If I did more than refer briefly to certain provisions in this Bill I should be obliged to take up considerable time - a course which I do not propose to follow at this stage of the session. Let me disabuse honorable senators' minds of the idea that the other banking institutions are in any way dependent upon the Commonwealth Bank. As a man interested in private banks, I have no objection to the Commonwealth Bank doing its business so long as it is placed on exactly the same footing as the others. I know that if I wanted an overdraft, I would have to pay the same rate of interest and put up the same amount of security with one as with the other. This is only natural when we place a bank under independent control as we intended to place the Commonwealth Bank. It may be true that the control of one man is not sufficient, and it may be desirable to appoint some one else to act with him in regard to certain general principles, although matters of detail and matters as between the Bank and its clients should be kept within the knowledge of as few individuals as possible. It would be undesirable to make the Treasurer a director of the Bank to such an extent that he would have to make himself familiar with all the intricacies and details of its business, because Treasurers come and go, continuity would be destroyed, and public confidence in the secrecy of the Bank's relations with its customers would be to some extent destroyed. People in a large way of business who have to go to a bank to obtain money, do not want all the details of their business made known to persons not primarily interested in the control or management of the institution. We know this Bill is going to be passed, and that it is useless to attempt to improve or add to it. Our only consolation is that many of the amendments proposed are very necessary, and that a number of safeguards are provided in relation to the absorption of any private bank. The Treasurer has to be consulted and to approve, and the Auditor-General has to make a report. I am sure that great care will be exercised in any transaction of the kind, or I sincerely hope it will be. In any case, I trust that we shall take every care to keep the Bank as free as possible from political control, and to insure that, when it comes into competition with other institutions, it shall be placed on exactly the same footing with them as regards taxation or other obligations. I do not think there is any obligation to put up a certain sum before a bank can be established, and, even if there was, we should not expect the Commonwealth to be called upon to do it: but, in all other respects, the Commonwealth Bank and the private banks should be on an equal footing. We have established a Bank which has behind it no capital except the power to raise certain money. We are now going to extend that power so far as to enable it to raise a capital of £10,000,000 instead of £1,000,000, and we must be careful that that power is not used detrimentally to the best interests of the community. I should have liked to say something as to the desir ableness of placing thenote issue under the control of the Bank, but as others desire to speak I shall not pursue the subject now. I may have an opportunity to discuss it in the general debate on the financial proposals of the Government.







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