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Friday, 18 November 1927

Senator HOARE (South Australia) . - While sympathetic towards the mining industry, I cannot support the amendment moved by Senator Lynch. The gold-mining industry has reached its present parlous condition because of the desire of mining directors to make huge profits for their shareholders. In discarding all but the high-grade ores, they certainly made the mines pay, so that huge dividends were paid to the shareholders; but they killed the mine3. Later, when only ore of a lower grade remained, their profits decreased, until with the higher cost of production, they were converted into losses. Had the mining companies been content to work both the high grade and the lower grade ores simultaneously, those mines would still be able to carry on without loss. In that case there would' have been no need for Senator Lynch's amendment. At present the cost of producing gold is greater than the value of the gold that is won. For that state of affairs I blame those who, in the past, controlled the mines. While I cannot support the amendment, I should have regarded differently a proposal to provide for the granting of a bonus to the gold-mining industry. To invest the savings of the people in a risky venture, such as gold-mining undoubtedly is, would be dangerous. That precedent, once established, would lead to further fictions of a similar nature, probably with disastrous results. I agree with Senator Herbert Hays that, rather than devote the funds of the savings bank to the assistance of established mining companies, it would be better to expend them in the direction of developing new fields.

Senator Herbert Hays - I did not suggest that the funds of the savings bank should be expended in that direction.

Senator HOARE - The honorable senator suggested the payment of a bounty. I agree that that would be better than granting money to continue operations in worn-out mines. Senator Andrew said that we should support the amendment because it would stabilize the gold-mining industry. I do not agree that that would be so. In any case, it would not stabilize the bank. Gold as a basis of currency has always failed in any great financial crisis. In times of financial disaster, nations have invariably resorted to the issue of a paper currency. The Bank of Venice, which is founded on a paper currency, has stood for 600 years without a failure. A bank established on a gold basis is, at best, a fairweather structure. At the beginning of the Great War the gold at the disposal of the whole of the banks in England amounted to less than £60,000,000. That sum would not have gone far towards meeting the demands of depositors had they claimed a. refund of their deposits. Senator Lynch said that private banking institutions had advanced money to assist gold-mining. We can be certain that in that case they had good security, and that the eyes had not been picked out of the mines. That is not the position to-day. Even if private banks are willing to make advances on such security as is now offering, there is no justification for the Commonwealth Savings Bank doing the same.

Senator Lynch - I take it that the honorable senator is opposed to the Commonwealth Bank assisting gold-mining, as it is now doing.

Senator HOARE - If Senator Lynch's amendment were agreed to, those engaged in mining copper, radium or silver, would be entitled to claim assistance from the savings bank. Even the owners of the worn-out copper mines at Wallaroo could ask for assistance. If assistance were granted in such directions, it is not difficult to visualize the position in which the bank would soon find itself.While favorable to the granting of a bounty to assist gold-mining, I am unable to support the amendment.

Senator Sir HENRYBARWELL (South Australia) [12.38].- It is a sad reflection upon the intelligence of honorable senators that they should be found seriously discussing a hair-brained proposition such as the amendment moved by Senator Lynch.

Senator Lynch - Is the policy of the Commonwealth Bank, by which it now assists gold-mining, hair-brained?

Senator Sir HENRY BARWELL - It is a hair-brained suggestion that funds of the Commonwealth Savings Bank should be invested in a speculative enterprise such as gold-mining.

Senator Lynch - The Commonwealth Bank is assisting gold-mining companies to-day.

Senator Sir HENRYBARWELL.The suggestion of the honorable senator is unthinkable: we should not be discussing it. Senator Lynch says that there has been a discrimination against goldmining. There has been nothing of the kind. No savings bank has the right to invest its funds in risky enterprises. It has always been our proud boast that a bigger percentage of the people of Australia have deposits with the savings bank than is the case in other countries. That is because Australian savings banks have been built up on safe and sound foundations. Those who are in control ofthe Commonwealth Savings Bank are merely the trustees of the savings of the people. Honorable senators know the restrictions placed upon ordinary trustees in relation, to the investment of trust moneys. They can only invest such. moneys in authorized channels. In every case they are gilt-edged investments, in which there is no element of risk. If that is the position in relation to private trustees, how much more cautious should we be when dealing with the savings of the people?

Senator Lynch - -What proportion of the people's savings would be devoted to this purpose?

Senator Sir HENRY BARWELL - None of their savings should be expended in the way suggested by the honorable senator, or in any other speculative enterprise. They should be devoted to purposes unattended by risk. The question before us is not whether it is right or wrong to assist the gold-mining industry. It may be perfectly right to grant assistance to that industry; but it would not be right to assist it from funds built up on the savings of the people.

Senator Lynch - That is a magnificent bogey.

Senator Sir HENRYBARWELL.I repeat that it is absurd for this committee to devote its time to such a proposition as that contained in Senator Lynch's amendment.

Sitting suspended from12.45 to 2.15 p.m.

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