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Thursday, 13 March 1941

The PRESIDENT - An honorable senator has the right to ask another honorable senator to give the name of the newspaper from which he is quoting.

Senator DARCEY - It appeared in The Railway Officer, and was based on an article in the Melbourne Herald. The article in The Railway Officer continues -

If it is good enough for the private trading banks to accept Government securities and treasury-bills to the extent of £55,000,000 in exchange for private bank credit, what is wrong with the Government lodging the same securities and treasury-bills with the Commonwealth Bank in exchange for the use of the people's own credit, debt free and interest free?

The Herald finance editor also made the astounding statement that while the private tradingbanks increased their holdings of Government securities by £55,000,000 the people's Commonwealth Bank had reduced its holdings of Government securities by £9,200,000.

When information was sought some time ago in the Federal House regarding the pro portion of loans subscribed by the banks, the information was refused bythe Government, which indicates that it was not desired to let the people know the extent to which the banks had been allowed by the Government to manufacture credit for the purpose of lending to the people at the big " rake off " in interest. Honorable senators were informed some time ago that the flotation of the first war loan of £23,000,000 was to be arranged between the Commonwealth Bank and the private trading hanks. Subsequently, I submitted a question in this chamber asking the Government to state the proportions of the loan subscribed by the Commonwealth Bank and by the private banks. The information was not furnished, but Mr. Gillespie, the manager of the Bank of New South Wales stated at the annual meeting of shareholders that the private banks provided the whole of the £23,000,000 raised. I have contended on previous occasions that the whole of this money could have been advanced to the Government by the Commonwealth Bank free of interest. If the money had been provided by the Commonwealth Bank at the same rate of interest as the private banks received for their advances the annual interest bill would have been £600,000. I maintain that that amount could have been saved if the Government had done its duty. If the credits required by the Government were advanced through the Commonwealth Bank at an interest rate of 3¾ per cent., the amount paid in interest would go back to the nation through the revenue of the Commonwealth Bank. I cannot understand why the Government continues to borrow money in this insane way. We have been told that the Menzies Government will borrow £400,000,000 by 1944. Surely the Government should protect the taxpayers by securing interestfree money. On the 21st November last I submitted a proposal to the Government that a clause should be inserted in all government contracts stipulating that successful tenderers must use the Commonwealth Bank to finance their undertakings. I pointed out that this requirement would facilitate a reciprocity which in view of the fact that all profits from the Commonwealth Bank go back to the nation, would bring in a considerable revenue. The Government is spending millions of pounds on contracts, and the adoption of my proposal would bring in a larger revenue every year. Supposing that I, as a manufacturer of clothing, obtained a Government contract for £50,000. If my financial resources did not enable me to finance the contract I should have to borrow from a private trading bank and pay interest at the rate of 6 per cent. I would feel in duty bound to use the nation's bank in order to finance my Government contract. However, the Government took no notice of my proposal. I cannot understand why the Government does not adopt a policy of this nature.

In view of the fact that the House of Representatives has adjourned and that its members are waiting for honorable senators to attend an informal meeting of members of both Houses I shall not proceed with my speech. I shall discuss the subject further at a later date.

Question resolved in the affirmative.

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