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Thursday, 3 November 1927

Senator GRANT (New South Wales) . - The Government has taken Parliament into its confidence to only a very limited extent in connexion with this bill and the Housing Bill, to which it is closely related. Those who have supported the measure have not attempted to show why the savings-bank business should be separated from the general banking business of the Commonwealth Bank in order to formulate a housing scheme. My impression has always been that the reasons which actuated those who favoured the establishment of the Commonwealth Bank were that it would soon become the sole banking authority in the Commonwealth. As honorable senators are aware, banking crises occur from time to time. In 1890 a considerable number .of building societies in Melbourne and Sydney which were unable to meet the demands made upon them closed their doors. A number of the chartered banks a little later on did the same. If my memory serves me aright, very few of the private banking institutions were able to keep their doors open and meet all the demand's made upon them. I again express my emphatic condemnation of the action of a number of banks which retained the money of depositors which they were able to repay. It is scandalous to realize that privately controlled banks in New South Wales have been able to take advantage of legislation, and by paying the depositors the nominal sum of 3 per cent., retain deposits year after year, whilst refusing, except at the bank's option, to terminate such an arrangement. It stands to the credit of the Commercial Banking Company of Sydney that it repaid its depositors immediately it was in the position to do so. Its example was followed by a number of other banks ; but some failed to do so, with the result that a certain number of banks now operating in Sydney, and, I believe, elsewhere in the Commonwealth, have been improperly holding on to deposits, which are now worth only about lis. instead of 20s. to the fi. It is generally believed that the people in New South Wales lost about £5,000,000, and the people of Victoria about £14,000,000, through the failure of private -banks in the early nineties. This is a phase of private banking practice that should not be overlooked. It is one reason why the Labour party, when it came into office, established the Commonwealth Bank. Unfortunately the bank has always been ' under the control of people distinctly anti-labour in their outlook. It is not a matter of surprise, therefore, that its development has been retarded. Indeed, there is a desire on the part of some people to destroy the bank so that Australia will get back to the position it occupied when private institutions had control of the people's money. According to the last balance-sheet, the deposits in the Comonwealth Savings Bank, together with the accrued interest on 30th June, 1927, amounted to "£46,479,020 16s. 5d. The total would have been larger had the management of the bank been in the hands of authorities who had the interests of the people at heart. For some inscrutable reason no director of the bank and no supporter of the bill has explained why the Commonwealth Savings Bank pays only per cent, interest on deposits, as compared with 4 per cent, by the Savings Bank of New South Wales. Surely the credit of the Commonwealth is as good as the credit of any of the States. I am aware that, when the amount at deposit reaches a certain sum, the rate of interest is reduced; but it is a fact that on the minimum amount of deposit the rate paid by the Commonwealth Savings Bank is i per cent, less than is paid by State savings banks. The New South Wales Savings Bank has erected one of the finest banking chambers in the Commonwealth. The palatial structure in Castlereagh-street, Sydney, will cost, when completed, nearly £1,000,000.- Yet that bank can pay 4 per cent, interest to its depositors, and it can also deal liberally with all who desire to obtain advances for the erection of homes. The total amount to the credit of depositors in the Commonwealth general bank at 30th June, 1927. was £32,277,337 14s. lid. It is obvious, from these figures that, despite the efforts of the directors, backed up by this Government, to hamper the progress of the bank, the people are determined to give it very substantial support. They know perfectly well that their money is absolutely safe, and that they are never likely to see over the doors of the bank the sign - " Closed pending reconstruction ", as was the case with many private banking institutions between1890 and 1893. I understand it is the intention of the Government to discontinue the trading activities of the Commonwealth Bank in order to establish it as a bank of reserve. The adoption of this policy will, in my opinion, destroy the ideal which was in the minds of those who were responsible for its establishment. Honorable senators may rest assured, however, that when the Labour party comes again into power it will immediately take steps to restore the bank to its proper position. A government that does not give effect to its proposals ought not to remain in office for one day. I do not blame this Government, because its objective is the destruction of the Commonwealth Bank as we know it. I ask leave to continue my remarks at a later date.

Leave granted; debate adjourned.

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