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Friday, 1 May 1942

That represents a net reduction during the year of £19,616,660. During the same period governmental and municipal advances by the nine trading banks increased by £21,600,000- from £22,100,000 to £43,700,000. Treasury-bills increased by £14,400,000- from £23,900,000 to £38,300,000. The total increase amounted to approximately £35,000,000. Why should treasury-bills be issued to the banks? They are merely undated promissory notes, and the banks have the right to go to the Commonwealth Bank at any time and change them for notes. I remember the chairman of the associated trading banks saying on one occasion that he was sorry that the interest that he received for treasury-bills in London was only 10s. per cent., whereas in Australia he could get 30s. per cent. from the Commonwealth Government. That is the manner in which the private banks have managed the financial affairs of this nation. During the period which 1 have mentioned, the interest paid by the citizens of the Commonwealth to the nine trading banks amounted to £972,000 made up by 3½ per cent. on securities totalling £21,600,000, and l½ per cent. on treasury-bills totalling £14,400,000. This amount of nearly £1,000,000 per annum is added to taxation, whereas if it were provided bythe Commonwealth Government, it would be deducted from taxation as all profits from the Commonwealth Bank go to Consolidated Revenue, national debt reduction, or reserved funds. During the same period, government and municipal advances made by the Commonwealth Savings Bank increased by £263,841- from £141,149,782 to £141,413,623. I have urged on many occasions that our national credit should be fully utilized. The following is a system for utilizing national credit which has been prepared by one of Australia's leading accountants -


(Profits are not shown for the sake of clearness, but they do not materially affect the position. )

On the 30th June, 1940, those securities had been reduced to -

( 1 ) The private banking system issues a non- interest bearing loan of £1,000,000 to industry for production of consumption goods. It mokes a charge for its services.

(2) As the bank merely monetises the national credit for this purpose, it issues a debenture, secured upon its assets, for £1,000,000 and lodges it with the Commonwealth Bank. It is not permitted to make any advances without issuing such a debenture.

(3) As this debenture represents future national assets in the form of additional consumption goods, the Commonwealth Bank also issues a debenture, secured upon its new asset, for £1,000,000 to the nation's financial representative, the Commonwealth Treasurer.

(4) Industry sets to work and in the course of producing the goods distributes £1,000,000 among the general public.

(5) and (6) Industry then sells the goods to the general public for £1,000,000 and receives the money in prices.

(7) Industry repays its loan to the private banking system.

(8) Theprivate banking system redeems its debenture for £1,000,000 lodged with the Commonwealth Bank.

(9) The Commonwealth Bank redeems its debenture for £1,000,000 lodged with the Commonwealth Treasurer.

Result. - The Commonwealth Treasury has £1,000,000 of new money (credit) to spend on munitions of war which is absolutely debt and interest free. In times of peace this would be spent on ordinary expenses of government, and redemption of old bank created debts, thus eliminating the necessity of taxation. All money paid in cancellation of bank debts is itself cancelled.

Debate interrupted.

The PRESIDENT (Senator the Hon. J. Cunningham). - In conformity with the sessional order that unless otherwise ordered, the motion for adjournment shall be put on Fridays, at 4 p.m., I formally put the question -

That the Senate do now adjourn.

Question resolved in the affirmative.

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