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Wednesday, 6 June 1928


Mr THEODORE (Dalley) .- It would probably have been much better had the Treasurer asked leave earlier in the day to make a statement on this subject. He might also have asked for the printing of the papers in connexion with it. We should then have been given a proper opportunity to discuss the subject. I gathered from the statement of the Treasurer that a new condition was being made in respect of this loan. It appears that the underwriters - that is the banks that have acted in the capacity of underwriters for Commonwealth loans since 1924, but have not fulfilled all the obligations "of underwriters, are undertaking on this occasion to take up any unsubscribed portion of the loan, on the definite closing date. If that is so, it is a new provision. It is probably for that reason that the Treasurer has stated that the closing date of this loan will not be extended. I should like the Treasurer to inform me if it is a fact that the banks will be prepared to take up any unsubscribed portion of this loan upon the closing date.


Dr Earle Page - That is so.


Mr RODGERS (WANNON, VICTORIA) - As underwriters they would be 'obliged to do so.


Mr THEODORE - The banks have been regarded as underwriters hitherto, but they have never really acted as such.


Dr Earle Page - They took up over £10,000,000 of the conversion loan in December last.


Mr THEODORE - But only after the closing date had been extended sufficiently to enable them to subscribe the money without inconvenience.


Dr Earle Page - They were prepared to take up the unsubscribed balance on the date upon which the loan was first announced to close.


Mr THEODORE - The date was extended.


Dr Earle Page - Yes.


Mr Ley - It was a concession.


Mr THEODORE - Yes ; but it is not intended to make that concession in this instance. The Treasurer will remember that when the first arrangement was made with the banks to underwrite an Australian loan he consulted with the State Treasurers, and I think that the Prime Minister was present at the conference. The banks were approached to ascertain how far they would undertake to underwrite the loan of £10,300,000 which was at that time projected. I think that they were offered a commission of 20s. per cent, if they would undertake fully the obligations which would normally rest upon underwriters, but they declined to do so. They undertook, however, to use their organizations in order to give an impetus to it. For that they charged a commission of 10s. per cent., and I take it that that rate is still operative. In this case the banks are to underwrite the whole of the loan, and to accept the full obligation in respect of it?


Dr Earle Page - That is so.


Mr THEODORE - Any portion of the loan that is unsubscribed must be provided by the banks. We are treating them generously by allowing them the normal commission upon the whole of the amount subscribed to this conversion loan, particularly when it is known that a large percentage of the loan will be converted. It seems to me that the Treasurer ought to give more consideration to the method of handling loans in Australia. That obligation rests partly upon him, but more particularly upon the Loan Council. I am quite convinced that we have not yet established a fully developed scheme for managing the loans issued in Australia, and the Loan Council should pay more attention to the provision of adequate machinery for the underwriting of loans and the handling of subscriptions.







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