COMMONWEALTH BANK.

Dominion, Volume 5, Issue 1288, 17 November 1911, Page 5

COMMONWEALTH BANK.

DISCUSSION IN FEDERAL HOUSE. By Telccraph-Press Association—GoDyriehJ Melbourne, November 16. In the Federal House of Representatives, in moving the second reading of the Commonwealth Bank Bill, Mr. Fisher, Prime Minister and Treasurer, stated that the capital of tho bank would be .£1,000,000. The bank would not have power to issue bills payable on demand, as the Government intended to continue- the issue of Australian notes. The governor of tho bank would have absolute control, even autocratic power.J That would bo better than a board, which did nothing but draw salaries. An important matter was tho guarantee of tho Commonwealth to depositors aud creditors. He thought the passing of tho Act would mean that ultimately there would be only ono savings bank in Australia. Replying to a question whether a bank was necessary, Mr. Fisher declared "Yes." Last year, he said, four banks had made profits of .£1,170,000. Under these circumstances, he thought there was an opening for a Commonwealth Bank. The debate was adjourned. The "Sydney Morning Herald,' °in a recent issue, discussing the Commonwealth Bank Bill, states that it provides for an institution with a capital of .£1,000,000, which is to be raised by tho sale of debentures carrying a rate of interest to bo prescribed by tho regulations. So what the Government really proposes to do is to establish a bank owned, not by shareholders, who elect a. board of directors to manago their affairs, but by debentureho flers, who will havo no control, but will be rewarded by interest instead of bv dividends. The Government has to fail back on to the despised capitalist to find tho money, but gives him no fay as to now that money is to be used. As a substitute the debentures are to havo behind them a Government Guarantee. The deben-jure-liolders are therefore needful merely for the, purpose of supplying the necessary capital.

In pjace of that kind of control usually exorcised by a beard of directors elected on more or less democratic principles by. shareholder.; or by trustees nominated by the State and occupying a fiduciary position, tho Commonwealth Bank ls lo bo controlled by a governor appointed by the Governor-General-in-Council, and irremovable for seven vears. except on account of bad behaviour: while his salary, shall not be reducible during that period. A deputy-governor shall also be appointed. The governor shall have all tho powers of n Czar as far as officers are concerned, and as to policy he shall bo controlled by the Act only. This is indeed n heavy responsibility for anv one man to bear. We have political influence suppressed, but its place is taken bv an autocracy With a good man at the helm all might be well, but were the Government perchance to make a mistake in its first or any subsequent appointment the Position might easily become intolerable, in rase of conflict between the governor and lus deputy there is no knowing what would happen. There is a provision for the publication of half-yearly balance-sheets, which are to be subject to audit by tho AuditorGeneral. One of the features of the bnlwill, of course, be tho profit nnd oss account. If the bank is n I fortunate as to make a profit, the Bill projide> beforehand for its distribution. Onelialt is to ho placed to a reserve fund, tho other half to a redemption fund, which Jill bo utilised to pay oft the amount that the Procurer is to advance out of the Consolidated Revenue to enable the govsel the debentures After this debt is lira, rlated the fund may be used to pav hL-1 themselves, and after the* are al redeemed then it may be used til ? J 'i°i i ?i Con "nonwealrh debt or anv •Stale debts that the Commonwealth may s erling only is a small affair indeed in thp.je days. The new bank mil in all b!il ablllty , !", k0 °W (he Commonwealth of Trr K i" cl i'' ,vhll - c ~i; in ammmt < >s no ,1 C ? mmoilwoalU, has expanded enormously ilnrinp the past decade or so it is many years since a new bank was formed, heio is surely room for one now without disorganising things very much. To sum 7' t , > 1C ,w bwk will be a success on • if the man at the head of it is capable wo!,?/' I !,'™ 1 ' St , roDß :, Tho ™» ™ would have such wide powers that h» h<? 1 dO ,"f? W mkehiet. Tho Bill should be amendwl in such a way as to givo con- ™ c,t,e ;- «o triirtecs of wnimU-onm, and not to any single individual. The Tu 'I s , pr ° l)fKwl '" !> mc Soci«lis", controlled by individualism run mad.