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Wednesday, 22 April 1931

Senator HOARE - That is so.

Senator DUNCAN (NEW SOUTH WALES) - I am glad to hear the honorable senators' admission.. Senator Kneebone has also said that the monetary problem is now an international one and that our present position is due to the fact that there is a system of monetary control by individuals or groups of individuals in other countries. This, he said, can be counteracted in Australia by the Government owning the banking institutions, and, as it were, nationalizing the whole of our banking operations. The honorable senator might have been able to express that opinion with a great deal more effect yesterday than to-day. We have not had many examples in the world of the failure of government banks. We have had, of course, many instances of the failure of privately controlled banks for one reason or another, but we have not had experience of that kind in Australia for. many years. In spite of the prevailing depression and the many great calls made upon them, the banking institutions of Australia are quite sound, and have not had to suspend payment. We learn to-day, however, that a government institution, a nationalized institution, has closed its doors.

Senator Daly - No nationalized institution has closed its doors. In fact, so far, no bank in Australia has closed its doors.

Senator DUNCAN (NEW SOUTH WALES) - I hope that what the honorable senator has said is correct, but I have heard otherwise, and we all know that certain negotiations have been commenced because a governmentcontrolled banking institution, by reason of circumstances over which. perhaps, its board has had no control, finds it extremely difficult to meet its obligations. That disposes of the argument of Senator Kneebone and others of his party that banking only needs to be nationalized to be made quite safe and sound; that industry only needs to be nationalized or socialized to be made quite sound and of immense service and nothing else but service to the people. We differ, of course, on that point, but I have always been a strong advocate of the principle of a central reserve bank. I have not only been convinced: that {fis inauguration of such a system in Australia was necessary,but I have also' advocated it on m-a'ny occasions on public platforms in New' South Wales. I have said that it would have been infinitely better for Australia, and the country would have been' much better equipped to meet a crisis such as the present, if we had had a central reserve bank.

Senator Dooley - With the Government having some voice in its control.

Senator DUNCAN (NEW SOUTH WALES) - The Government would have had some voice in its inauguration, but that would hot imply government control, to which I am totally opposed.

If immediately after the war we had realized the true position, and the Government of the day had brought down a bill for the establishment of a central reserve bank, that institution would have been a veritable Rock of Gibraltar to-day so far as Australia's finances are concerned. What is the position how? To upset the whole of the banking equilibrium of Australia by creating a central reserve bank which would take months, perhaps as long 'as two years, to get into effective operation would not be likely to solve our immediate difficulties, but would rather tend to increase them.

Senator Daly - - What functions would such a bank perform?

Senator DUNCAN (NEW SOUTH WALES) - I will explain my meaning by a homely illustration. When a whole town is burning, it is too late to consider the ordering of equipment for a fire brigade. In order to cope with the conflagration, you must use the means at your immediate command: That is the position in regard to the establishment of a central reserve bank in Australia. It is unfortunate that it was not inaugurated years ago, so that it would have been in operation now.

Senator Daly - What functions would a central reserve bank perform that are not now performed by the Commonwealth Bank?

Senator DUNCAN (NEW SOUTH WALES) - A central reserve bank would undertake several functions that cannot be effectively and properly undertaken, at any rate for a considerable time, by the Commonwealth Bank. I shall deal with the honorable senator's question more fully later on.

I wats rather surprised to' hear attacks -some of them- most- vicious in their nature - that have been made on the banking institutions of Australia. I refer' to the private banks. It is admitted, of course, that those institutions, and the banking system generally, have their limitations, but we must not forget the great service these banks have rendered to Australia in the years they have been in existence. They have done good work for this country, although, perhaps, at the same time they may have done very well for themselves. We have reached a stage, however, in our national development, when something more is required. Other countries, faced with almost similar crises to ours, have solved their problems by the adoption of a system of central reserve banks, and in nearly all of these countries the governments of the day, with commendable wisdom, have followed scientific lines in framing their legislation. Where they have not done so; where they have hurriedly pushed legislation through Parliament to get these banks going', they have had to retrace their steps and follow proper lines.

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