BILL TO NATIONALISE THE AUSTRALIAN BANKS MOVED IN THE HOUSE

Wanganui Chronicle, 16 October 1947, Page 5

BILL TO NATIONALISE THE AUSTRALIAN BANKS MOVED IN THE HOUSE

At Second Reading Stage "GAG" APPLIED TO OPPOSITION .TO INTRODUCE THE MEASURE

Received 1.15 a.ui. CANBERRA. Oct, 15 "We shall fight here and outside until the people rise to defend their rights and throw the Government out of office," declared the Leader of the Opposition (Mr. Menzies), in the House of Representatives today. lie sought rejection of leave for the Prime Minister (Mr. Chifley) to introduce tonight a Bill to nationalise the private trading banks. The debate was gagged and leave was granted bv 40 votes to 25.

The Bill was brought before the House at night. Mr. Chifley moving its second reading. The Opposition opposed the second reading, whereupon the Bouse divided and the Opposition was outvoted and Air. Chifley went ahead and outlined the provisions of the Bill, which were closely studied by members of the Opposition.

Mr. Chifley explained the provisions of rhe Bill in detail, and frequently said that it was not the- intention of the Labour Government of Australia to go back to the dark days of the ]93o’.s when the people of the country were at the mercy of private individuals who controlled the issue of. or contraction of. credit.

Mr. Chiefly was frequently supported by loud “hear, hears” from Government benches. There were few interjections, an occasional note of ironical laughter from the Opposition benches.

When Mr. Chifley came to the end of his second reading speech he Leader of the Opposition (Mr. Menzies) moved the adjournment of the debate. This was agreed to.

When Mr. Chifley sought leave to introduce the Bill, Mr. Menzies voiced strong opposition. Declaring that it was a Bill to reduce substantially the normal freedom of Australian people, he said that it should be rejected firstly because the Australian electors had not been consulted, directly or indirectly; secondly, that the purjv»e ot the measure was to create a monopoly of a tyrannical kind, and, thirdly, that it would create bitterness and uncertainty which, at the moment would be the deadliest enemy of production. “A mandate for legislation is different trom constitutional power,'’ he continued. “It is something that must be obtained from the people. Mr. Chifley cannot profess that he has any affirmative mandate. ‘•By every implication he conveyed to the people al the last election that there would be no such proposal. In these circumstances the Government has a plain duty, either to hold a referendum or a general election.” Mr. L’adden (Country Party) spoke next and, as he concluded, Mr. Scully moved the gag in a burst of Opposition protest. Leave to introduce the Bill was then granted. “It looks as though the days of capitalism are numbered,” the Minister of immigration (Mr. Caiwell) was iward to remark. “Full public ownership of the banks will ensure the control of banking in tne puuhe ■..iLiest, ‘ said Mr. uhiney, introducing tne Bill to its second reading tonight. “It will ensure effective steps Doing taken against the danger a o. secondary innation. It will assist us to stave off depression and to avoid a repetition of the miserka . ... mis it will open the long-locked" doorway to deveiopmen. « a ix.oiiuu.idy ana oanking system truly adequate to our national requirements, and wholly devoted to the service of Australia.' EXIRA VAGAN T OPPOSITION. “The proposal to lake over the banks is being condemned in some quarters in recKiessiy extravagant terms,” he said. ‘ All Kinds of hiuaen purposes are being wrongly ascribed to it from tne same sources. The opponents of the banking change seem always to have wugiu against new developments while uelatemy approving such changes as nave been made, and which tney naa originally opposed.

“In 1937 they criticised the'BaiiKing Commission's i eport and deienueu tne old system, in 194 b tney nailed their colours to the banking report and resisted implacably legislation of that year, >nuw they seem di-posvd io make the 1945 legislation their rallying cry, whilst preparing lf.eiiLe..ca e.ice again io ale in a last ditch against a new logical and necessary development Their predictions Mx calumny win prove just as groundless as those tney have expressed so many times beiore. “There has been no political interference in hanking under the 1945 legislation and Were will be none under the new system. In not one instance since that legislation was passed has the Government intervened in administration of the Common wealth dank. Within the framework of the broad economic and financial po.icy laid down by the Government the bank has carried on it, work successfully and harmoniously. “On broad policy issues it has. in turn, advised the Government ana ceen advised by the Government. Conflict has not arisen at any stage. GOVERNMENT CANNOT INTERFERE.

“It is timely io record that under sect’.on 9 ot tne Commonwealth Bank Act of 1945, the Government cannot interfere in internal transactions of tne ban.;. Its power is limited to the laying dov»n, where necessary, of the broad lines of monetary and oanking policy. Business people and private citizens will have all the safeguards as to the conduct of their banking business which can be given by law and by the long rr d honourab’e administrative tradit on of the Coin: .onwealth Bank. On the purchase of acquisit* n if a bank. the shai vi.oldc-rs are assured of just compensation. Bank employees are protected, depositors are guaranteed and the business will be carried on without interruption.” Mr. Chiflley explained that the purpose of the Bill was to empower the Commonwealth Bank to take over the banking business at present conducted in Australia lv private banks, and that State oanks and Sayings Banks would not be affected. It would be ihe responsibility of the Commonwealth Bank under this legislation: (1) To provide, in accordance with the conditions of normal banking business, adequate banking facilities for any State or person requiring them. . . (2) To conduct tms business without discrimination. (5) To observe, except as otherwise required by law, the practices and usages customary among bankers, and, in particular, to maintain strict secrecy

within the law as to the affairs and dealings of its customers. The Bill also envisaged the development, under public ownership, o£ a comprehensive banking service that would strengthen and assist growth qt Australian economy and provide facilities adequate to its rapidly expanding and changing needs. He quoted views expressed tn in the report of the Royal Commission on monetary and banking systems in Australia that “The general objective of the economic system for Australia should be to achieve the best use of our productive resources, both present and future." "This means," he said, "the fullest possible employment of people and resources under conditions that will provide the highest standard of living. It means, too, reduction of fluctuation in general economic activity. Since the monetary and banking system is an integral part of L'>' economic system its objective win be to assist, with all the means at its disposal, in achieving these ends. Mr. Chifley said that these views were subscribed to by all members of the commission, even though there was some difference of opinion as to the ways of achieving them. ENTIRE CONTROL OF MONEY The Labour Party had maintained for many years that since the influence of money was so great the entire monetary and banking system should be controlled by public authori ties, responsible, through the Government and Parliament, to the nation. _ , "On this principle the Labour Partv held further that, since private'banks were conducted primarily for nrofit and, therefore. followed policies which in important respects ran counter to public interest, their business should be transferred to public ownership. For this view the strongest reasons could be stated. (It In the absence of control private banks could expand or contract the volume of their lending and so vary within wide limits, the supply or money available to the public; they. could determine when and where they would lend and upon what terms, and in those operations were guided prinjarily by the interests of those who owned and controlled them: (3) whatever regard they might claim to pay to the wider concerns of the nation their policies were dictated, in the last resort, by a desire to make profits and to secure the value of their own assets.

“The experience of the past had been that private banks in-

creased their lending in good times and contracted it in bad times, lent always where profits seemed largest and most assured and charged the highest rates they could obtain for their loans and general services.” By amalgamation the power of private banking in Australia had become concentrated in the hands of boards of directors, comprising relatively tew men, who were responsible for the exercise of their powers, not to the nation, but to a limited number of people, some here and seme abroad who had invested money in bank shares. ‘•fime and again the policies of private banks have run counter to the national needs for steady growth and high levels ol emi. loynient, ’ de ciared Mr. Chifley. “it is correct to say that the hanks fed the boom and promoted unsound development in the twenties. When the depression came the banks, as a whole, ietiiiCvCU new lending and called in advances. •Between December, 1929, and Marcn, 1932, their advances fell by approximately £45,000,000. The eb feet of this was to accentuate Inccon traction of business and unemployment of those years. Tncy Helped but little in recovery during the thirties, waiting rather ior improve' ment to come irom other sources instead oi taxing tne initiative and he.ping to promote recovery. They followed these courses because it seemea best and saiest irom the standpoint oi their own interests. A ieduction of mterest rates was an important part of policy. Me added that tne Labour policy envisaged the strengthening of the Commonwealth Bank so that its services would be extended to meet the needs of all sections of the people. LOWERING of interest. -Assisted by the existence of a Commonwealth Bank the Labour Government has been able to make notable progress in the carrying out of its policy of lower interest rates’ said Mr. Chifley. After the 1914-18 war the interest rate on Government loam, reached as high as 62 per cent At the outbreak of the k-t war tn* rate tor long teim Government 'oars was almost four ner c-mt It is now 1-8-per c?n The Treasury Bili rate is now one per cent, as com died pared with six per cent, in 1930. The maximum overdraft rate has been restricted to 4i per cent., as compared with rates of from live per cent, to six per cent, and higher. A substantial reduction also has bpen made in the rates at which semi-Governmental bodies are able to borrow, and "in many other rates. “In all the record of the Commonwealth Bank stands as a great justification of a publicly-owned banking and demonstrates, beyond question, that a public banking institution is capable of being highly efficient, progressive and adaptable.’’ “The experience of the war years emphasised the vital importance of public control of the banking system,’’ Mr. Chifley said. “Through Governmental expenditure for war purposes the liquid resources of the trading banks, and hence their capacity to expand credit, increased rapidly. To prevent secondary inflation arising from such an expansion of credit the,

then Treasurer (Mr. Fadden) felt that. .■Kime action was necessary. In 1941 he obtained an undertaking from the private banks that they would inform the Commonwealth Bank of the amount of surplus investible funds they held from time to time, and that they would deposit, with the Commonwealth Bank such amounts as were determined by that bank. “On assuming office in November, 1941, the Labour Government carefully examined the arrangements ■'••• '• by lhe previous Government and decided that it was necessary to in--1 odi.'t? National Security (Wartime Banking Control! Regulations. “These greatly strengthened and increased in scone the arrangements agreed to by the previous Government. They also assured that private banks would not make unreasonable profits from lhe war and implemented certain recommendations of the Banking Commission. Tn the light of the experience gained in the administration of these regulations the Government decided, in 1945, that the main principles on which thgy were based should be embodied in substantive legislation. At the same time the Government decided to reconstitute the Commonwealth Bank and to assume greater powers over banking nnl i rv.