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Friday, 18 December 1914

Senator BAKHAP (Tasmania) . - I shall be very brief in my remarks. A great deal is made of the fact that certain members of the party to which I belong have criticised the consti tution of the Commonwealth Bank. I have never, during the whole of my political career, said a word against that Bank. I recognise that the possibility of the establishment of such a Bank was contemplated by the framers of our Constitution. If the Liberals who framed the Constitution had not conferred upon this Parliament its powers of legislation in connexion with banking, there could be no Commonwealth Bank; and how will the charge lie against the party which provided the foundation for the establishment of this Bank of being hostile to the institution itself ? No ! What members of my party have done has been to criticise its constitution. They have not been hostile to the establishment of a national bank, and the criticism has not been confined to members of my own party. I think it has been indulged in by a gentleman who professes to know a great deal of banking. The Hon. King O'Malley speaks in terms of great depreciation of the institution.

Senator de Largie - No.

Senator BAKHAP - I invite the honorable senator to read the newspaper report of the debate in another place only so late as last night.

Senator de Largie - I know his views on the Bank.

Senator BAKHAP - He, of course, is in favour of a national bank, and so is the Liberal party, but it differs from the Labour party in regard to the necessary provisions to make it a sound and allembracing institution. I give this measure my support, but I venture to say that it is singularly unsatisfactory to go in for the absorption of institutions which are not prepared to continue in the banking business. I remember reading some time ago a book called Monarchs who have Retired from Business. They had retired from business for the simple reason that they were given no opportunity of continuing it: they were dethroned monarchs.

Senator de Largie - Would you allow these banks to go out of business?

Senator BAKHAP - I would allow any failure to go out of business, for the law of the survival of the fittest insures that only those who are fitted to continue shall survive. The honorable member has expressed the hope that eventually we will make a national monopoly of banking. I hope we shall do no such thing, for although I have plenty of good will towards our national institution, I hope to see it make itself strong, and so justify itself in competition with other hanks. What have the poor other banks done? We have heard a great deal about patriotism, a. great deal about the contributions to funds which have been established for the national benefit during this time of crisis. The associated banks have, quite recently, come to the assistance of the Commonwealth with a loan of £10,000,000 in gold. That sum, I have no doubt, could have been used by the banks in connexion with the development of the resources of Australia, and in all probability it would have been returning something m the way of 6 per cent.- that is, £600,000.

Senator Russell - Are not the banks using the £10,000,000, or its equivalent in notes, in assisting to develop the country ?

Senator BAKHAP - They could have used the money if they had not thought fit to come to the assistance of the Commonwealth, and could have got at least 6 per cent, on it during this time of stress. In my opinion they have made the Commonwealth a present of £600,000, a sum which, in the aggregate, exceeds that of all the funds which have been established for patriotic purposes within the last four months.

The PRESIDENT - Order I The Bill does not lend itself merely to a eulogy of the banks for any action they have taken, but to an amendment of the principal Act. I ask the honorable senator not to go into a long statement of what other banks have done.

Senator BAKHAP - Very well, sir, but at the same time I respectfully call your attention to the fact that other banks have been alluded to.

The PRESIDENT - I always allow the honorable senator to make a casual reference by way of illustration, and there is no objection as long as it is not too long.

Senator BAKHAP - Very well, sir. I resent unfair criticism of the private banks just as I resent unfair criticism of the Commonwealth Bank. I deny the allegation that the Liberal party is hostile to this institution. I, for one, have not said a syllable against it. I know that a large number of politicians hope to see the Commonwealth Bank established as a sound and satisfactory institution, and the rest of the criticism which has been advanced from time to time is that there has not been an amplification of its powers, and that the spirit of cooperation with the States has not been observed. There has been no criticism of the institution itself. I, with Senator Findley, express a hope that there will be the closest criticism of any financial institution which the Commonwealth Bank is intended to absorb. When an insurance company seeks absorption at the hands of a greater institution, the natural inference is that the business of the former is not in every respect satisfactory. That inference I think I may be permitted to draw in connexion with institutions which desire to go out of business permanently. I hope that the greatest circumspection will be exercised in regard to the absorption, by the Commonwealth Bank, of any other financial institution within the limits of the Commonwealth. I hope that the capital will be given to the Bank. I have no quarrel with the Bank, nor has the Liberal party as a whole, because it is the party that provided the foundation for the erection of the structure. But I will say the final word against the idea in the minds of some gentlemen that paper is entirely satisfactory as a means of circulation, and that the people should be advised to allow any Administration to indulge in the issue and circulation of paper that has not a substantial gold backing. I have been recently in a country where paper was at a discount. The people of that country have the keenest knowledge of banking. They understand how to make money by exchange. They are an industrious commercial people, but had got it into their heads that theirs was an unsustained paper issue. During my journey in that country I was able to purchase for a note - a note issued by a bank in Hong Kong, exchangeable only for silver - three notes of assumed equal value issued by the Provincial Government of the country, that is to say, the notes were only interchangeable at a discount of 66 per cent. I admit that people, if they have confidence in the fact that they, may get gold or silver for a note, will be content with paper. But let them get the idea into their head that on presentation a note will not be paid in gold or silver, and there will be a calamitous result. While I agree with. Senator Findley's remarks as to the care we must exercise so far as the absorption of other banking businesses by the Commonwealth Bank is concerned, I sincerely deprecate the inferenceI drewfrom other remarks he made to the effect that we could at any time, because of the resources of this country, issue paper, which perhaps, in the long run, would have an insufficient gold backing. The resources of a country are not sufficient to give people confidence in a paper issue. They must have confidence, not only in the resources of a country in a general way, but in the resources of its Government to give them metallic money in exchange for paper which has been issued with the sanction of authority. I support this measure, and I dissociate myself from any expression of hostility towards the Commonwealth Bank. I insist that the Liberal party has not at any time criticised the Bank in an unfriendly spirit, but it does desire to sec recrimination cease. It desires to see hostility on the part of the National Administration towards the financial necessities of the States cease. It is known to honorable senators opposite that the State I assist to represent fell in with a proposal of the Commonwealth authorities in connexion with the savings bank business. We had to do it because that business in Tasmania was conducted through the medium of the post-office. We would have had to find hundreds of thousands of pounds to provide institutions for State banking.

Senator O'Keefe - We were not silly enough to do it, like Victoria.

Senator BAKHAP - That is so. As Senator Gould has pointed out, we were engaged in this business first, and the man in possession does not like to be dispossessed. We wanted the money - for what purpose ? The State was continually advancing the money it derived from the Savings Bank to the farmers to provide for the development of its landed resources to encourage the young men to go on the land. There was a natural spirit of reluctance on the part of the State authorities to see the whole of the savings bank business pass straight away to the Commonwealth. They wanted some guarantee that they would have control of a large amount of the money which is provided by the thrift of the people to develop our landed resources. There is no spirit of hostility to the Bank in the Liberal ranks. We wish it well, but we desire care and the spirit of co-operation to be exercised in connexion with all our natural opportunities.

Question resolved in the affirmative.

Bill read a second time.

In Committee:

Clause 1 agreed to.

Sit tingsuspended from1.30 to 2.30 p.m.

Clauses 2 to 10, and title, agreed to.

Bill reported without amendment; report adopted.

Bill read a third time.

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