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Friday, 1 May 1942

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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